NSE Barred Stock Brokers for Distributing Third-Party Lending Products

The National Stock Exchange of India Ltd (NSE) has reiterated that stock brokers are prohibited from offering or distributing banking loan products, including home, vehicle, personal, education loans, or loans against securities, even if they are registered as research analysts. 

The clarification comes after the exchange observed instances where trading members, who also hold research analyst registrations, were involved in distributing such loan products.

Only SEBI-Permitted Lending Activities Allowed

In a circular issued on December 22, 2025, NSE reminded trading members to strictly comply with its June 16, 2025, framework governing the distribution of third-party products. Under this framework, brokers are allowed to engage only in lending activities explicitly permitted by the Securities and Exchange Board of India (SEBI), such as a margin trading facility (MTF) and T+1+5 funding. All other loan products are expressly prohibited. 

The circular stated that “stock brokers are not permitted to engage, as distributors, in any lending products including home loans, vehicle loans, personal loans, education loans or loans against securities other than those specifically approved by SEBI from time to time.”

The exchange noted that it had identified cases where trading members registered as research analysts were distributing various banking loan products, prompting the need for renewed clarification.

Reference to SEBI’s Research Analyst FAQs

This reiteration follows SEBI’s FAQs issued in July 2025 on research analyst regulations, which permit research analysts to distribute non-SEBI-regulated products, such as banking products, only at a family or group level. Such activities fall outside SEBI’s grievance redressal mechanism.

NSE announced that its regulatory framework for trading members takes precedence, irrespective of any additional registrations held by brokers. The exchange directed members to ensure strict adherence to the rules, warning that any violation could attract regulatory action.

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