The Securities and Exchange Board of India (Sebi) has proposed significant changes to the capital rules governing stock brokers, aiming to enhance risk management in the evolving trading landscape. The new framework will link brokers' variable net worth directly to the number of active clients and their average credit balances, moving away from the existing method that calculates net worth as 10% of average daily cash balances over six months. This shift is intended to provide a more accurate reflection of a broker's risk profile and ensure they have sufficient capital to absorb losses. Under the new guidelines, brokers servicing between 10,000 and 50,000 clients will need a base capital of ₹50 lakh (approximately $60,000 USD), with additional capital required for every further 50,000 clients. Raj Shah, co-founder of EPP Securities, noted that while the changes are stabilizing, they may pose challenges for undercapitalized brokers. The draft proposal is currently open for public feedback as part of Sebi's broader initiative to strengthen market risk management.