NSE has issued a circular on how brokers can and cannot position loan products around trading.
As per the guidance, stockbrokers should not push or distribute loan products, except those clearly permitted for trading, like MTF. This applies even if the broker is also registered as a research analyst.
Why this matters is straightforward:
- Easy borrowing placed inside or around a trading journey can lead people to take bigger risks than they planned.
- Borrowed money can quickly move into markets.
- With unsecured loans, the downside can grow fast.
One nuance worth noting: a broker’s parent company can still place broking and lending next to each other in a “super app” today, since there are currently no direct restrictions on the parent entity. Even if that is allowed right now, the concern remains that boundaries can blur.
At Alice Blue, we have always believed trading and borrowing should stay separate. Trading should be backed by understanding and discipline, not easy credit.
This circular feels like a good first step. Hoping to see more measures that keep investing safer and more responsible for everyone.
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When borrowing is placed right inside the trading journey, it stops feeling like a loan and starts feeling like “extra funds.” That is where many traders slip. You do not plan to overdo risk. It happens step by step: the market dips, you want to buy more, credit is shown as a quick option, your position becomes bigger than your comfort level, and suddenly the trade is driven by pressure, not judgment.
What’s good about NSE’s guidance is the clarity it brings:
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Leverage should be a choice, not something encouraged.
MTF is clearly linked to trading. Other loans are not. Those loans can create long-lasting problems if a trade goes wrong.
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It lowers the chance of taking on two kinds of stress at once.
Market ups and downs are hard enough. Adding monthly repayment pressure can push people into rushed decisions and panic selling.
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It supports healthier investing habits.
Easy credit can lead to short-term, impulsive trading. When that unwinds, losses can become bigger and faster.
The “super app” point is also important. Even if lending and broking can sit side by side at a parent company level, the risk remains that people may mix borrowing with trading without thinking it through. A clear separation helps customers stay aware of what they are choosing.
Overall, this feels like a good first step. It encourages more responsible trading, protects customers from quick credit traps, and helps build trust in the market over the long run.
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