Facilitation to SEBI registered Stock Brokers to access Negotiated Dealing System-Order Matching (NDS-OM) for trading in Government Securities - Separate Business Units (SBU)
Summary
This circular permits SEBI-registered non-bank stock brokers to access the Negotiated Dealing System-Order Matching (NDS-OM) for Government Securities trading. It mandates that such activities must be conducted through a Separate Business Unit (SBU) that is ring-fenced from the broker's other securities market operations. The regulatory jurisdiction, including risk management and investor grievances, rests with the Reserve Bank of India rather than SEBI or stock exchanges.
Text
Reserve Bank of India vide its notification dated February 07, 2025 permitted access of SEBI-registered non-bank brokers to Negotiated Dealing System-Order Matching (NDS-OM)
it has been decided that they may do so under a Separate Business Unit (SBU) of the stock broking entity itself
all activities of the business unit of stock broker facilitating trading on NDS-OM would be under the jurisdiction of that regulatory authority
some of the key safeguards are being prescribed as under
Stock brokers shall ensure that activities of the NDS-OM under a SBU are segregated and ring-fenced from the securities market related activities of the stock broker and arms-length relationship between these activities are maintained
Such SBU shall be exclusively engaged in activities of transacting on NDS-OM only
Stock brokers shall prepare and maintain a separate account for the SBU on arms-length basis
The net worth of the SBU shall be kept segregated from the net worth of the stock broker in the securities market. Net worth criteria for stock broker shall be satisfied after excluding account of the SBU
Grievance Redressal Mechanism and Investor Protection Fund (IPF) of the stock exchanges and SCORES shall not be available for investors availing the services of the SBU
This circular is issued in exercise of powers conferred under Section 11(1) of Chapter IV of the Securities and Exchange Board of India Act, 1992, read with regulation 30 of the SEBI (Stock Brokers) Regulations 1992
Source: SecMarx — Facilitation to SEBI registered Stock Brokers to access Negotiated Dealing System-Order Matching (NDS-OM) for trading in Government Securities - Separate Business Units (SBU). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.