Standardisation of “trading preferences” to generate volumes for exchanges: Industry insiders

For brokers, the new format will make the know your customer (KYC) process easier by streamlining it.

Through a recent circular, the market regulator has made it possible for investors to trade the segment of their choice across exchanges, versus submitting separate forms for trading in the same segment in a new exchange.

The Securities and Exchange Board of India (Sebi) circular dated June 21 stated, “Based on the representations received and in consultation with Stock Exchanges, it has been decided to standardize the format of “Trading Preferences” in order to ensure that clients are permitted to access all the stock exchanges in which the stock brokers are registered for the same segment.”

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This is a significant move for exchanges, according to industry insiders.

“It's a significant move for exchanges because segment-wise activation could help them get volumes for segments which are new or less penetrated,” said Tejas Khoday, co-founder and CEO of Fyers.

“For example, Commodities a is a new segment for NSE. Clients can gain access to both MCX and NSE commodities by activating commodities segment. Similarly, if a trader selected F&O, he can get access to BSE F&O segment as well as NSE F&O,” he added.

For traders, the standardisation will them participate in the same segments across exchanges without having to activate them separately.

“Traders trading across all segments will benefit as they will be able to access instruments across the exchanges,” said Khoday.

For brokers, the new format will make the know your customer (KYC) process easier by streamlining it.

The Sebi has asked all stock brokers to register their new clients on all the active stock exchanges after obtaining the trading preferences in the new format, released through the recent circular.

The circular added that for existing clients, the brokers must make this option available within three months.

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It stated, “For existing clients, the stock brokers are mandated to offer them access on all the active stock exchanges for the segments already opted by them, as a default mode, within three months from the effective date of the circular and inform their respective clients through email / SMS.”

The circular added, “Clients shall be given a choice to opt out of such access by providing negative consent in this regard. Further, the stock brokers shall activate / deactivate the segments based on the preference of the clients.”