Mumbai : Back in 2020 when the Covid pandemic broke out, the market regulator was in favor of allowing brokers, dealers and fund managers to work from home permanently. Two years later, the Securities and Exchange Board of India (SEBI) is rolling back the so-called location restrictions, inspired by the recent scandal that surfaced.
The market regulator has sent a circular to broking houses and fund houses that every person with a trading terminal registration will have to work from office, three people with direct knowledge of the matter demanded anonymity.
“The regulator is of the view that two years of work-from-home monitoring due to the pandemic led to a spurt in cases of manipulation,” a SEBI official said.
However, in July 2020, former SEBI chief Ajay Tyagi had said: “Stock brokers working from home permanently are worth considering. Currently, business from home works without any glitches or defaults. For the time being, working from home is a temporary exemption. We will also analyze the shortcomings.”
Following the SEBI circular, the Association of Mutual Funds in India (AMFI) has issued an advisory to all fund houses and members, asking them to resume work from office. “The flexibility given to employees to work from home, especially those handling critical functions that pertain to markets such as investment, dealing, operations, compliance, risk management, etc., may be withdrawn. It may be implemented at the earliest, but not later than June 10, 2022,” AMFI said in a circular dated May 25.
Whenever a stockbroker operates the terminal from a particular location, that location is considered as his branch office and the display of the name board and certificate of the stockbroker is required.
The broker is also required to register the location in the exchange system. On 20 March 2020, as the pandemic spread, SEBI relaxed this rule, and exchanges allowed trading from locations other than registered locations.
The second person said, “The regulator did not extend this exemption and in fact, in the third week of this month issued instructions to the brokers that whoever operates a trading terminal should work from office.”
“While traditional brokers were on their way to recall their entire work force from home anyway, this would have a major impact on new-age fintech firms that were offering their employees work from home as an incentive,” said third person. Said, a top executive of a brokerage.
90% of the employees of discount brokerage firm Zerodha are working from home. “The 10% of employees who come to the office are at risk, compliance officers and anyone who owns a registration of a trading terminal and is trading on behalf of our client. For us, it may not make much difference because Most of our customers prefer to do business on their own through the app,” said a Zerodha executive.
“Since the COVID pandemic began, one of the biggest risks and challenges facing almost all organizations is the security of the organization and its customer data. Raunak said it is more challenging for companies involved in fintech businesses like broking, mutual fund houses and asset management companies (financial intermediaries) as they are dealing with customer data and using trading platforms highly monitored by the market regulator. are using. Singh, Partner, Avitra Legal.
However, not all employees are happy with the change. “There is a protest from employees who are questioning the policies to return to work. He says if no question has been raised in the last two years, then why are the regulators not trusting now? Also, SEBI will have to examine the sensitivity of the data at multiple levels. Nirmala Menon, founder, Interweave Consultancy, which works on work-life issues, said regulated entities and regulatory bodies are facing a similar issue like India Inc, where resignations are taking place because they do not want to work from office.
However, Singh said: “Given that there is a steady decline in the number of COVID cases, and many companies have started physical operations in full force, SEBI’s plan to bring back employees of financial intermediaries to the office should be given more priority. Resistance may not be encountered. However, for a long-term solution, SEBI should hold talks with industry associations and work out a middle way to allow work from home for employees without compromising on data leakage while maintaining system and financial integrity. “
Jayshree.p@livemint.com