Regulatory overkill

Sebi must take a balanced view on capital adequacy

A recent statement by Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi suggests that brokerages might soon need more capital. It is cause for concern across the brokerage industry, which is already struggling to adjust to stiffer margin requirements, allied to harsh penalties. There are pros and cons to a possible upward revision of capital adequacy norms. These were last revised in 2012 and amount to anywhere between Rs 75 lakh and Rs 10 crore, depending on the specific segment covered by a broker. In addition, a very conservative formula is used to calculate capital adequacy — only