Sebi streamlines mkt intermediaries' inspection framework, cuts FY27 target

SEBI will cut its FY27 inspections to about one-third of last year's level, relying on joint checks by exchanges and depositories and a more risk-based approach

Markets regulator Sebi on Friday streamlined inspection of market intermediaries by mandating joint inspections by stock exchanges and depositories and reducing its inspection target for FY27 to about one-third of the previous year's level.

The revamped inspection framework, which follows consultations with Market Infrastructure Institutions (MIIs) and the Supervisory Body for Investment Advisers (IAs) and Research Analysts (RAs), will be implemented from the financial year 2026-27.

As part of the changes, Sebi has rationalised its inspection target for FY27 to around one-third of the inspections conducted in the previous financial year, taking into account the regular inspections already carried out by stock exchanges and depositories.

 

"Considering the regular inspections of stock brokers, DPs, IAs and RAs done by stock exchanges and depositories, the targeted number of inspections to be carried out by Sebi in the Financial Year 2026-27 has been rationalised to approximately one-third of the inspections conducted in the preceding financial year," Sebi said in a statement.

The regulator said the move is aimed at strengthening regulatory oversight through a dynamic risk-based approach while enhancing ease of doing business for intermediaries by reducing the frequency of inspection visits.

Sebi has also decided to discontinue repetitive annual comprehensive inspections of compliant entities, particularly Qualified Stock Brokers (QSBs). However, entities that repeatedly feature across risk parameters, carry high risk scores, or trigger multiple alerts generated by exchanges will continue to receive priority for inspections.

Further, inspections of entities holding multiple intermediary registrations will be conducted jointly by different Sebi departments, wherever feasible, to minimise multiple inspection visits during the year.

The regulator said it will place greater emphasis on alerts generated by exchanges, investor complaints and social media inputs to identify potential violations. Accordingly, the shortlisting of entities for inspections will now be undertaken on a quarterly basis.

In addition, Sebi said inspections will also be initiated based on market intelligence and references received from its regional and local offices.

These may cover issues such as technical glitches, cyber incidents and matters relating to authorised persons of stock brokers.

According to Sebi, the revised inspection framework is intended to strengthen supervision while making the compliance process more efficient and less burdensome for market intermediaries.

During 2025-26, Sebi and exchanges conducted 179 inspections (162 thematic and 17 comprehensive) of 106 brokers.

Independently, exchanges completed 973 inspections of 822 brokers across various market segments, according to the regulator's annual report released on Thursday.

Further, Sebi and depositories conducted 28 joint inspections of 23 depository participants, while depositories executed 617 inspections of 583 depository participants to safeguard securities holding systems.