The Securities and Exchange Board of India (SEBI) has instructed stock brokers operating exclusively within the Execution Only Platforms (EOP) segment to maintain a minimum capital deposit of Rs 10 lakh with the exchange. The EOP is a digital or online platform that enables transactions in direct plans of mutual funds without the involvement of intermediaries.

According to the new rule, entities seeking to provide execution-only services for direct plans of mutual funds can register under two categories: Category 1 EOP as an agent of asset management companies registered with the Association of Mutual Funds in India (AMFI) or Category 2 EOP as an agent of investors, registered as a stock broker.

SEBI stated in a circular, “It has been decided that the members of stock exchanges functioning only in EOP segment (Category 2 EOP) shall maintain a sum of Rs 10 lakh with the stock exchange as BMC (base minimum capital) deposit.” However, for members with registration in multiple segments on the same stock exchange, the BMC deposit requirement will not be cumulative and will be the highest applicable BMC deposit across various segments.

These new requirements are effective immediately, according to SEBI. In June, SEBI introduced a regulatory framework for ‘Execution Only Platforms’ for direct plans of mutual fund schemes in order to safeguard investors dealing in such schemes.