SEBI’s New Rules for Authorized Persons in 2026 - What You Need to Know ( Covering NISM certification requirements and the latest compliance updates.)

The securities market has changed rapidly over the last few years. With the number of people investing and trading in the market rising, there is a need for better rules that can ensure safety. Also, this is where the role of advisors is rising as well.

That is where Authorized Persons, commonly known as APs, come into the picture. The latest SEBI new rules for 2026 are aimed at making the AP ecosystem more structured, more accountable, and far more compliance-focused than before. 

These latest SEBI stockbroker regulations 2026 changes are also important for people searching for sub-broker opportunities because the regulatory structure around sub-brokers and Authorized Persons is now becoming more compliance-focused than before. 

If you are planning to enter this space or are already associated with a broker, understanding these changes now can save you from major issues later.

Why SEBI Is Tightening The Rules Around Authorized Persons

For a long time, APs have played a major role in expanding stock market access across India. In many Tier 2 and Tier 3 cities, the AP is often the first person investors interact with before entering the market.

But at the same time, SEBI has also seen growing concerns around:

• Mis-selling of products
• Guaranteed return promises
• Excessive derivatives trading encouragement
• Weak compliance awareness
• Poor investor grievance handling

The regulator’s concern is simple. If investors are entering the market through APs, then the quality and accountability of APs matter just as much as the broker itself.

That is the core thinking behind the new SEBI rules introduced in 2026.

Who Is An Authorized Person?

An Authorized Person is someone appointed by a SEBI-registered stockbroker to act on their behalf through the stock exchange platform.

In practical terms, APs help clients with:

• Account opening
• Trading support
• Product guidance
• Basic market assistance
• Client servicing

However, APs work under the supervision and compliance framework of the main broker.

This distinction is becoming even more important under the updated SEBI new rules.

Difference Between Sub Broker And Authorized Person

Many people still use the term sub broker interchangeably with Authorized Person. However, SEBI replaced the traditional sub broker structure with the Authorized Person model years ago.

An Authorized Person now operates under a SEBI-registered stockbroker through exchange approval and follows a stricter compliance framework. This difference between sub broker and authorized person has become even more important under the latest SEBI rules for 2026.

Basis	Sub Broker	Authorized Person
Regulatory Structure	Older intermediary model	Current SEBI-approved structure
Status	Replaced by SEBI framework changes	Active and recognised under exchanges
Working Model	Worked between the broker and the client	Operates directly under a stockbroker
Compliance	Comparatively less structured	Stricter compliance and monitoring
Exchange Approval	Earlier framework	Mandatory under current exchange rules
Investor Protection Focus	Limited	Higher accountability and investor protection

Key Changes Under The New SEBI Rules 2026

The 2026 framework brings a few major changes that every AP should know about. These changes will impact how you plan and connect with the clients. Also, if you are a new AP entering the market, it will impact your eligibility as well.

1. Revised Authorized Person Eligibility Criteria 2026

One of the biggest changes is around who can actually become an Authorized Person.

Earlier, the entry barrier was relatively low. But now SEBI wants APs to have stronger market understanding and practical experience before handling investors.

Under the proposed framework:

• Graduates need at least 3 years of securities market experience.
• Non-graduates who are 10th pass may need 10 years of relevant market experience.
• Individuals below 18 years remain ineligible.
• Anyone barred by SEBI or an exchange cannot register as an AP.
• HUFs are not allowed to operate as Authorized Persons.

This is clearly a move towards professionalising the role instead of treating it as just another referral-based opportunity.

2. Mandatory NISM Certification Is Now Central

This is probably the most discussed part of the new SEBI rules.

SEBI now expects APs to hold certifications based on the segment they operate in. Earlier, many people treated certifications as secondary. That approach is no longer practical.

For most APs, the primary requirement is:

• NISM Series VII: Securities Operations and Risk Management (SORM)

The NISM Series 7 authorized person exam is now becoming one of the most important certifications for people planning to work as an AP or sub-broker in the securities market ecosystem.

This certification focuses on:

• Securities market basics
• Broking operations
• Risk management
• Clearing and settlement
• Investor grievance handling

Depending on your role, additional certifications may also apply.

For example:

• NISM Series X-A and X-B for investment advisory activities
• NISM Series XV for research analyst functions
• NISM Series XXV-A for research-related sales and support roles

Understanding NISM certification eligibility has now become extremely important because operating without a valid certification can directly impact your AP registration. 

The authorized person registration process NSE BSE 2026 is expected to become more documentation and compliance-oriented compared to earlier years.

3. Brokers Will Also Face Greater Responsibility

Earlier, most compliance discussions focused only on the AP. Now SEBI is placing stronger responsibility on brokers as well.

As per the new rules, the brokers are expected to:

• Conduct proper due diligence before onboarding APs
• Monitor how APs are working regularly 
• Ensure client communication remains compliant
• Act against misleading sales practices

This changes the broker-AP relationship significantly. Compliance is now a part of the overall business structure.

4. AP Deposit Requirement Under SEBI New Rules

Another important update under the SEBI new rules is the proposed security deposit structure. This is not confirmed yet, but is aimed at ensuring better working in the market.

Current discussions suggest:

• Individual APs may need to maintain a ₹5 lakh deposit
• Corporate APs may require deposits up to ₹25 lakhs

While the exact numbers may still evolve, the larger message is clear. SEBI wants APs to operate with greater seriousness and long-term commitment.

For many people entering the industry casually, this could become a filtering point.

5. Handling Client Funds Is Strictly Prohibited

This is not entirely new, but enforcement is expected to become stricter.

Authorized Persons cannot:

• Collect cash from clients
• Hold investor funds
• Accept transfers in personal accounts

All payments must happen directly through broker-approved channels.

Violating this can lead to immediate regulatory action and possible cancellation of registration.

Understanding NISM Certification Eligibility

There is a lot of confusion around the NISM certification eligibility. This is especially around age, education, and renewal rules.

So, if you are planning for the same exam. Here are some of the things to know:

• There is generally no upper age limit for NISM exams.
• Eligibility depends on the certification series.
• Most exams are open to candidates who meet basic educational requirements.
• Certifications remain valid for 3 years.
• Renewal is mandatory through re-examination or CPE programs.

NISM has also expanded accessibility significantly over time.

Today, candidates can access:

• 300+ test centres
• 200+ cities across India
• Remote proctored examinations

For people entering the AP ecosystem seriously, certifications are no longer optional credentials. They are becoming the foundation of long-term credibility.

What Happens If You Ignore These Rules?

Many APs still assume compliance issues only matter during inspections. But this is wrong as it can impact the investors greatly. Now, the non-compliance can lead to:

• AP registration cancellation
• Financial penalties
• Restrictions from exchanges
• Legal exposure in investor complaints
• Action against the associated broker

More importantly, it can damage professional credibility permanently.

In a business built heavily on trust and referrals, reputation loss can hurt far more than penalties.

Why This Matters For New-Age Financial Advisors

The AP industry is clearly moving away from informal operations towards a more professional advisory ecosystem.

That may feel difficult initially, but in the long run, it actually benefits serious advisors.

Better-qualified APs generally build:

• Stronger investor trust
• Better long-term client relationships
• Higher-value client books
• More sustainable income streams

The people who adapt early to these SEBI new rules will likely be in a much stronger position over the next few years.

Start Right with Choice Connect 

Understanding regulations, certifications, and operational requirements together can feel overwhelming when you are starting out.

That is where platforms like Choice Connect can make the process more structured. By joining as the Authorised Person here, you can get all the support and guidance you need to move ahead in a systematic and well-planned manner.

You can gain access to the latest SEBI new rules for Authorized Persons and also guidance on how you can upskill yourself to stay ahead of the rest. For the professionals who genuinely want to build trust and long-term credibility in the market, this shift could actually create better opportunities over time with the right support on your side.

So, the earlier you adapt to these regulations, the easier it becomes to build a stable and compliant career in the securities market.

FAQs

1. Who Is An Authorised Person Under SEBI?

An Authorised Person is an entity permitted by a SEBI-registered stockbroker. He acts on behalf of the broker using the stock exchange platform. They help clients access trading and investment-related services while operating under the broker’s supervision.

2. What Is The 2026 Regulation Of SEBI Stock Brokers?

The 2026 SEBI stockbroker regulations focus on stronger compliance mainly. It aims at investor protection and broker accountability. The focus is on stricter operational standards to ensure there is a proper system in the market.

3. What Is The Notification Of SEBI 2027?

SEBI regularly releases notifications for the traders and APs. The expected 2027 updates mainly focus on transparency, digital acceptance, and investor protection.

4. How To Become A SEBI Authorised Person?

To become an Authorized Person, you must associate with a SEBI-registered broker. You must meet the basic eligibility conditions and have a valid certificate to start with.

5. Is NISM Certification Mandatory To Become An Authorized Person?

Yes. Under the updated SEBI rules, a valid NISM certification is a mandate to become an AP.

6. What Is The SEBI Penalty For Authorized Person Non Compliance?

SEBI can impose penalties such as registration cancellation, exchange restrictions, monetary fines, and disciplinary action against both the AP and the associated broker for serious non-compliance issues.

7. What Is The Difference Between A Sub Broker And An Authorized Person?

Earlier, sub-brokers operated as intermediaries between investors and brokers. Today, SEBI follows the Authorized Person structure instead. APs work under stricter exchange supervision and compliance rules compared to the older sub-broker model.