Karvy scandal fallout: Brokers fear escalation of compliance costs

Market regulator Sebi is expected to further tighten regulatory framework for brokerages

Broking houses fear escalation in compliance costs as the Securities and Exchange Board of India (Sebi) is set to further tighten the regulatory framework in the aftermath of the Karvy scandal. The domestic broking industry has already been under pressure amid falling yields, drop in volumes, and rising costs because of technological and regulatory changes.

Market participants say smaller brokerages are likely to find it more challenging to absorb the spike in compliance costs. The number of brokers is already dwindling. From 5,899 in 2014-15, the number of brokers stood at 3,542, down 34 per cent, as of December 31,