Execution-only platforms: What’s new for customers

economictimes.indiatimes.com:

Suresh Sadagopan, Founder, Ladder7 Financial Advisories, says: «There are two types of platforms. EOP1 is going to be an agent of the asset management companies and they will align with and integrate the platform with the asset management companies. The registrar and transfer agents will be charging the asset management companies and there will be no charge to the client. So this is one kind of platform. Then there is the other kind of platform, EOP2 where if people are doing some work with a stock broker and they want to continue there and they want to see all their transactions reflected in their Demat accounts, they can go through a stock broker and the stock broker will put through the transactions and will directly charge a certain fee as specified by SEBI under this regulation.»


Let us begin with the execution only platform. We knew that the SEBI was about to come up with some guidelines and now they have clearly defined both the categories and the kind of work and implementation that they need to take care of. What exactly has been introduced in terms of norms for both EOP platforms?
I will give some background.

Previously, there were certain platforms like ET Money and various other platforms like Paytm Money and all that and they were providing execution services and they were not really providing any advisory. But still they had to register as investment advisors. They were coming under IA regulation but they were actually not providing any advisory services so this was a regulatory gray area because the clients were actually doing the transactions on that platform.