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SEBI plans dropping word 'Penalty' in action against brokers to avoid stigma

SEBI is aiming to replace the term "penalty" with less stigmatizing language. The changes aim to ease business operations and improve the image of the broking industry.

SEBI to Drop "Penalty" Term for Brokers and their business to avoid stigma
SEBI to Drop "Penalty" Term for Brokers and their business to avoid stigma
| Updated on: Jul 07, 2025 | 07:00 PM

New Delhi: KC Varshney, a full-time member of SEBI, on Monday said the word "penalty" carries a lot of negative connotations to the brokers and their business, and the market regulator is in the process of dropping this reference whenever there comes an action against problem-creating brokers.

Varshney further said that the regulator is also in the process of rationalising the penalties while launching the proxy advisory recommendations feature on the e-voting system in investor apps.

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"You know many of these are not actually penalties. And unnecessarily, it is a stigma on the broker when it is imposed. So can we have a better name?" Varshney said.

Varshney, formerly an officer with Indian Revenue Services, said that there exist some core issues that are affecting the functioning of the broking industries while simultaneously tarnishing their image. He further said that in this regard, the Industry Standard Forum (ISF) has conducted its meeting and deliberated hard on the above issues so as to ease the business doing measures.

The SEBI member said a consensus to some of the issues is building between the meeting that witnessed the participation of NSE, BSE, and SEBI officials. An announcement in this matter is likely, Varshney commented.

"Each one of us is satisfied that now we can move forward, and at least the first phase of this rationalization should happen very soon," he said.

Additionally, SEBI is also looking to make one market exchange (NSE or BSE) as the nodal authority for imposing the penalties.

In order to streamline the process for broking industry to function properly, SEBI is in discussion with Finance Ministry to look up the issues that are currently acting as a roadblock for the industry

Kamlesh Chandra Varshney (K.C. Varshney) became the full-time member of SEBI on September 20, 2023.

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