BSE, Angel One, Groww stocks crash on RBI's new rules
What's the story
Shares of leading stock market intermediaries including BSE, Angel One, and Groww crashed by up to 10% on Monday. The drastic fall came after the Reserve Bank of India (RBI) imposed stricter lending rules. Under the new regulations, effective from April 1, 2026, banks are required to provide only fully secured funding to capital market intermediaries. This is a major departure from current practices where guarantees could be partially backed by unsecured instruments.
Stricter regulations
Proprietary traders to bear brunt of higher cash collateral requirements
The RBI's new rules are even more stringent for margin trading facilities. Now, 50% of the 100% collateral requirement has to be in cash. Equity shares accepted as collateral will also face a major haircut of 40%. Jefferies estimates these new norms could reduce BSE's earnings by around 10%, as proprietary traders already struggling with a recent securities transaction tax hike are likely to bear the brunt of higher cash collateral requirements.
Market response
Retail brokers expected to feel immediate impact
The RBI's new rules are expected to have an immediate impact on retail brokers. JM Financial has suggested that Angel One may have to reconsider its funding for its MTF book, which stands at ₹6,100 crore. Groww, with 2% market share in margin trading, uses its own equity to fund its MTF book. Jefferies noted this could limit the requirement for bank support but warned of potential "second-order impact" if liquidity in cash and options declines as proprietary traders backtrack.
Funding shift
New framework shuts bank funding window for most brokers
The new framework effectively shuts the bank funding window for most brokers, pushing them toward costlier alternatives like commercial paper and non-convertible debentures. Banks can no longer extend loans for proprietary trading and must treat all broker exposures as capital market exposure. This could reduce their willingness to lend to the sector altogether. For bank guarantees given to exchanges, a minimum 50% collateral is now required with at least 25% in cash.
Future strategies
Shift toward non-Bank financial companies for borrowing expected
In light of these changes, Angel One is likely to turn to non-bank financial companies for borrowing. It had an outstanding amount of ₹800 crore with NBFCs in March 2025 and is looking at NCD offerings while continuing with commercial paper. Groww, despite a profit of ₹5.5 billion in Q3 and raising ₹1.1 billion through its IPO, will have to tap debt markets due to its margin trading book expanding fourfold in the quarter.