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Sebi's move to set trading limits based on net worth is ill-advised

The Securities and Exchange Board of India’s (Sebi's) proposal to restrict retail investors from taking large exposures in the stock market by setting trading limits based on income, or net worth, is ill-conceived. According to the proposal, which came from the Committee on Fair Market Conduct headed by T K Vishwanathan, Sebi should limit the trading activity of retail participants based on their net worth. The market regulator is now said to be asking brokers to set up systems where clients will submit a net worth certificate to the broker. Trading limits will be set accordingly. This is conceived as