Securities and Exchange Board of India supports revised stock exchange framework to standardise broker sanctions, introduce lead-exchange levies and relabel minor lapses as financial disincentives

The Securities and Exchange Board of India (SEBI) announced that Indian stock exchanges, in consultation with SEBI, have issued a revised framework to rationalise and standardise sanctions imposed on stock brokers. The update aims to remove differences in the nature and size of sanctions across exchanges and to prevent brokers with multiple exchange memberships from being penalised multiple times for the same observation. Key changes include using a lead exchange to levy sanctions for violations common across exchanges, and replacing the term “penalty” with “financial disincentive” for procedural lapses and technical errors to reduce reputational impact. In the first phase, 235 existing penalty items were reviewed: 40 violations had sanctions removed, and 105 minor procedural lapses were reclassified as “financial disincentive”, leaving 90 violations where “penalties” remain; within these 90, 36 were rationalised, seven were converted to advisory or warning for a first instance, six introduced capping, 29 were unchanged, and 12 new penalties were introduced. The revised framework is also to be applied to ongoing enforcement proceedings. SEBI also provided an update on the Samuhik Prativedan Manch (SPM), a common reporting mechanism enabling brokers to file a common report at one exchange instead of multiple exchanges. The first phase operationalised 40 compliance reports from August 01, 2025, with a second phase adding 30 additional compliance reports from October 15, 2025.