Requirement of Base Minimum Capital for Stock Broker and Trading Member

Press Release
Securities and Exchange Board of India
Dec 19, 2012
PR No.: 105/2012
  1. SEBI has decided to realign the Base Minimum Capital (BMC) deposit requirements. The stock broker and trading members shall be required to provide BMC deposit based on their profiles i.e. whether trading on proprietary account only, or trading on behalf of clients only, or both including with or without algorithmic trading. The BMC deposit requirement prescribed for the different profiles ranges from Rs.10 Lacs to Rs. 50 Lacs for members of stock exchanges have nation-wide trading terminals. For members of other stock exchanges the requirement would be 40%.

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  2. The BMC deposit shall be maintained for meeting contingencies in any segment of the exchange. For members having registration for more than one segment of the same exchange, the BMC deposit requirement shall not be additive for such number of segments and shall be the highest applicable BMC deposit, across various segment.

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  3. The BMC deposit requirement was prescribed for stock broker in cash segment to be commensurate with the risks, other than market risk, that the broker may bring to the system. SEBI vide circular no SMD/SED/RCG/270/96 dated January 19, 1996 had prescribed differential Base Minimum Capital (BMC) requirements ranging from Rs. 4 Lacs to Rs. 10 Lacs for various stock exchanges. Further, SEBI vide circular no MRD/DoP/SE/Cir-07/2005 dated February 23, 2005 prescribed additional provisions for BMC for stock brokers.

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  4. Over the years the market structure has undergone significant structural changes. The various technological changes and the increased speeds of trading have brought to fore the greater quantum of risks arising during the course of execution of transactions. Hence based on deliberations at various forums, it has been decided to review and enhance the requirement of BMC and same shall be implemented by March 31, 2013.

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  5. The full text of the SEBI circular on “Requirement of Base Minimum Capital for Stock Broker and Trading Member” dated December 19, 2012 is available on www.sebi.gov.in