Stock Market New Rules: These are the new rules that led to a sharp decline in the shares of brokerage house companies and BSE.

News Topical, Digital Desk : Stock Market New Rules: New RBI regulations will come into effect on April 1, 2026, completely changing the funding system for stockbrokers. 100% secured funding will be mandatory, bank guarantees will require a fixed collateral, a 40% haircut on equity will apply, and bank funding for prop trading will be prohibited. Continuous collateral monitoring and margin calls will also be mandatory. Let's understand through questions and answers how this will impact brokers and ordinary investors.

The Reserve Bank of India's (RBI) new, stricter regulations were clearly affecting companies involved in the stock market. On February 16th, shares of the BSE and other capital market companies fell by 2% to 10%. The biggest reason for this decline was the RBI's new circular, which tightened the rules for loans given by banks to brokers and market intermediaries.

According to new regulations issued on February 13th, brokers will now be required to provide 100% collateral for loans from banks for proprietary trading. Furthermore, banks are prohibited from funding brokers to purchase securities for their own accounts. Brokerage firm Jefferies believes that these regulations will have the greatest impact on the BSE. According to the report, this could impact the exchange operator's earnings by approximately 10%. According to HDFC Securities expert Devarsh Vakil, this RBI decision will make trading more expensive for brokers and reduce liquidity in the market. The impact will be particularly pronounced in the derivatives segment, where approximately 40% of trading is conducted through proprietary desks. However, industry experts say that while the RBI's goal is to safeguard the banking system, this could increase pressure on market liquidity and trading activity. You can find the full details by clicking on the PDF released by the RBI. 

Question 1: What has the RBI changed? Answer: The biggest change is that brokers will now be required to maintain 100% secured funding. Previously, a bank guarantee of Rs. 100 was sufficient with a fixed deposit of Rs. 50 and an unsecured guarantee (such as a promoter guarantee) of Rs. 50. This will no longer be acceptable. The entire guarantee will need to be backed by solid security. 

Question 2: What does the new rule on bank guarantees say? Answer: If a bank guarantee is being provided in favor of an exchange or clearing corporation, at least 50% collateral must be provided. And 25% of that 50% must be in cash. The meaning is clear: brokers will have to block more cash or solid assets. 

Question 3: What does a 40% haircut on equity collateral mean? Answer: Suppose you pledged a share worth Rs. 100. The bank will now consider it worth only Rs. 60, a 40% reduction. This will force brokers to provide more shares or collateral of a higher value than before. 

Question 4: What will be the impact on prop trading? Answer: Banks will no longer provide funding for prop trading. Only a few exceptions, such as market making or limited debt warehousing, will be permitted. This means that brokers will not be able to use bank funds for their own trading activities. 

Question 5: What does "all exposures are capital market exposure" mean? Answer: Now, any funding banks provide to brokers will be considered capital market exposure. The overall limits for banks will apply. This may reduce their lending capacity and make them more cautious. 

Question 6: Why continuous collateral monitoring and margin calls? Answer: The value of collateral will now be continuously monitored. If there is a shortfall, a margin call will be issued immediately. This will reduce risk, but brokers will have to operate with greater discipline. 

Question 7: What will this impact on ordinary investors?

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