Nithin Kamath cheers rule change allowing brokers to invest more in startups

Brokers can now invest their own money — without needing approvals from stock exchanges — as long as client funds or securities aren’t involved. The change comes after a key clarification from the Finance Ministry and the National Stock Exchange (NSE) on the Securities Contracts (Regulation) Rules (SCRR), 1957.

Zerodha CEO & Co-Founder Nithin Kamath called the move “huge” for Rainmatter, the company’s fintech investment arm.

“Finally, after clarification of SCRA rules by @FinMinIndia and NSE, brokers can now invest their own funds without exchange approvals or restrictions,” Kamath posted on X.

“We can now allocate more capital to support Indian startups directly from the brokerage entity.”

A circular issued by the NSE noted that the Department of Economic Affairs had inserted a new proviso to Rule 8(1)(f) and Rule 8(3)(f) of the SCRR through a gazette notification dated May 19, 2025.

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The updated language reads: “Provided further that investments made by a member shall not be construed as business except when such investments involve client funds or client securities or relate to arrangements which are in the nature of creating a financial liability on the broker.”

This clears a long-standing grey area that had earlier made it tricky for brokers to directly invest via their own entities. Until now, such moves typically needed approvals from exchanges and were viewed as ‘business activity’ under the SCRR.