SEBI Introduces Standardised Reporting Rules: What It Means for Brokerages, Market Participants

Securities and Exchange Board of India (SEBI) on Wednesday said its initiative of a standardised reporting format for brokers, clearing members and depository participants is expected to save more than Rs 200 crore over the next five years.

The regulator will reduce reporting requirements for brokerages and other members by 90 per cent and give a lower cost of entry for fintechs according to a press release issued by SEBI on September 26.

The new standardized file formats, termed Unified Distilled File Formats (UDiFF), enhance efficiency, productivity and interoperability at reduced costs, the regulator said.

“UDiFF, which is in conformity with international ISO standards, has been implemented in a phased manner. To facilitate a smooth transition for members and the markets, there was a parallel run of the existing system for nearly two quarters, and the old file formats were phased out in a staggered manner,” the statement added.

Trading Members (TMs), Clearing Members (CMs) and Depository Participants operating in the Indian securities markets are required to file multiple reports daily for processing various types of transactions, with their respective Market Infrastructure Institutions (MIIs) including Exchanges, Clearing Corporations and Depositories.

Previously, members had to submit reports in more than 200 different proprietary formats for processing various types of transactions resulting in significant operational complexity and higher costs.

With the latest reporting format, this number has been reduced to 23 every day. The reporting format was introduced over two quarters in parallel with old formats, which have now been phased out in a staggered way, said the press statement.

How will standardized reporting framework impact brokerages?

According to SEBI, through standardised reporting and a reduction in reporting formats by over 90 per cent for brokers, DPs and CMs will help improve the ease of doing business and operational efficiency.

Lower operation expenses will result in estimated savings of over Rs 200 crore over the next five years to the market ecosystem, lower cost of integration with MIIs for new Fintechs and flexible file formats to facilitate future readiness.

Kranthi Bathini, Director at Wealthmills Securities says the regulator has introduced several measures in recent years to make the system more efficient and transparent.

“By streamlining compliance processes, SEBI is not only enhancing accuracy but also reducing operational costs. This modernization effort plays a crucial role in ensuring the long-term growth and resilience of the financial ecosystem," he said.

In addition, the rationalised and standardised file formats will streamline the flow of information among MIIs as well as improve efficiency in regulatory oversight and supervision. The interoperable MII-Member interface will facilitate a seamless transition with no additional development costs.