Brokers urge government to impose timetable on Sebi for issuing show cause notices


Ahead of the Union budget, the stockbrokers association Anmi urged the government to prescribe a deadline for Sebi for issuing justification notices and to reduce the minimum fine for small investors to Rs 1 lakh against Rs 5 lakh currently for breach of market rules.

Currently, the Securities and Exchange Board of India Act, 1992 does not prescribe any limitation period for the issuance of a show cause notice (SCN) or the completion of the auction process.

This resulted in the opening of several proceedings by the regulator several years after the alleged violation, causing unnecessary hardship and serious prejudice for market participants and affecting their ability to respond effectively to such a notice, Anmi said in a statement. Monday.

In the pre-budget proposals for the Union budget 2022-2023, the National Stock Exchanges Association of India Members (Anmi), on behalf of its 900 stock brokers, said a deadline should be imposed. to Sebi in terms of the outer limit for issuing a justification notice.

“Such a time limit would considerably improve the efficiency of the securities market regulator,” he added.

In addition, the brokerage association has called on the government to reduce the minimum penalty from Rs 5 lakh to Rs 1 lakh for small investors.

“There is no discretion with the arbitrator to apply his mind or consider the gravity or gravity of the offense and small investors suffer because of the minimum penalty of Rs 5 lakh imposed even for a minor offense” , he added.

Under the rules, anyone who engages in fraudulent and unfair securities trading practices is liable to a fine of Rs 25 crore or three times the amount of profit from such practices, whichever is greater. two being subject to the payment of a minimum fine. of Rs 5 lakh.

In addition, stock brokers have requested industry status for market intermediaries registered by Sebi and rationalization of the goods and services tax (GST) rates for the brokerage industry.

Industry status for market intermediaries will remove unwarranted restrictions and funding costs and fundraising requirements for market intermediaries.

He also called on the government to remove the concept of speculative income and limit the classification of income from capital market transactions to business income, long-term capital gains, and short-term capital gains.

In addition, the association urged the government to grant a tax exemption of up to Rs 1 lakh on short-term capital gains as well as a senior citizen tax exemption for dividends earned up to Rs 50,000.

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