The Disruption Of The Indian Stockbroker

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DR. P. SAI RANI , VIJAYA KITU MANDA

Abstract

Stockbrokers are critical financial intermediaries facilitating traders and investors to access the capital markets. These middlemen who connect the end market participants to the stock exchanges and settle their securities face severe recent regulatory moves and are on the edge of getting disrupted. Global trends are that stockbrokers are getting eliminated because of the potential implementation of Direct Market Access (DMA). This explanatory case examines the possibility of such an idea as the Indian capital market regulator, the SEBI, in 2020, gave a hint of the potential implementation of DMA in the country. SEBI also began tightening regulations, such as the peak margin rule, which threatens the stockbroker community. The case discusses the happenings in the capital market ecosystem that lead to broker disruption. It also highlights critical challenges for stock exchanges in implementing DMA. Finance students from Business Schools will have the opportunity to understand the importance and functions of market intermediaries in the capital market as a part of their classroom discussion.

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