The Securities and Exchange Board of India (Sebi) has proposed revisions to the variable net worth regulations for stock brokers, aiming to enhance investor protection and align capital requirements with operational risks. According to a consultation paper released on Friday, brokers will be required to maintain variable net worth based on the average credit balance of client funds and the number of active clients. Specifically, brokers will need to maintain 10% of the average credit balance of clients over the past six months as part of their variable net worth. For brokers with more than 10,000 direct active clients, an additional net worth requirement of ₹5 million ($53,051.81) will be mandated, with another ₹5 million required for every additional 50,000 clients. Furthermore, additional capital requirements for clients served through authorized persons will increase in slabs from ₹0.5 million to ₹5 million as client numbers grow. This proposal follows the introduction of an upstreaming framework that mandates brokers to transfer client funds to clearing corporations, thereby reducing the balances previously used to calculate variable net worth. Sebi has invited public comments on the consultation paper until May 15.