India’s broking industry is undergoing a structural shift as tighter SEBI regulations and the proposed hike in securities transaction tax (STT) begin to reshape trading behaviour and revenue models. Industry experts believe these changes mark a clear inflection point, separating diversified, future-ready brokers from those still dependent on transaction-led income.
According to a recent Crisil analysis, broking firms with strong non-broking revenue streams are far better positioned to absorb the impact of regulatory tightening and slowing market activity.
Trading Volumes Decline as Regulatory Pressure Mounts
Market-wide data reflects the scale of the slowdown. Average daily turnover (ADTO) across capital market segments fell by nearly 25 percent in the second half of FY25. The decline was driven by stricter regulatory norms in the derivatives segment and weaker overall trading sentiment.
As a result, industry-wide revenues dropped around 6 percent year-on-year in the first half of FY26, highlighting the vulnerability of brokers heavily reliant on transaction volumes.
Diversified Brokers Prove More Resilient
Crisil’s study of 25 broking firms across FY25 and H1 FY26 shows a clear trend. Firms with higher exposure to non-broking income streams such as wealth management, distribution fees, investment banking, and interest income from margin trading were significantly more insulated from the slowdown.
In contrast, traditional brokers and proprietary trading firms that depend largely on transaction-linked revenues faced sharper earnings pressure as volumes moderated.
This divergence underscores a fundamental shift in how sustainable broking businesses are being built in India.
Industry Experts Call It a Structural Inflection Point
Market participants believe the current phase represents more than a cyclical downturn. Dale Vaz, co-founder and chief executive of digital broking platform Sahi, said the sharp fall in trading volumes reflects a permanent change in the operating environment.
He attributed the decline to the combined impact of SEBI’s recent curbs on derivatives trading and the proposed STT increase outlined in the Union Budget 2026–27. According to Vaz, these measures are forcing brokers to rethink growth strategies beyond high-frequency trading.
Digital-First Platforms Find New Growth Avenues
Despite the tougher environment, digital-first platforms are finding opportunities to gain market share. Vaz said Sahi’s technology-led approach and differentiated user experience have continued to drive strong client acquisition and double-digit month-on-month revenue growth since launch.
In January 2026, Sahi ranked third nationally on the NSE in net new client additions, placing it among the fastest-growing broking platforms in the country.
Looking ahead, the company is expanding beyond options trading into underpenetrated segments such as commodities, margin trading facilities, corporate bonds, international equities, and sovereign gold bonds. The focus, Vaz said, is to make these products as simple and intuitive for retail investors as equity trading.
Larger Brokers Accelerate Revenue Diversification
A similar transformation is underway among established broking firms. Amit Majumdar, group chief strategy officer at Angel One, said the company’s expansion beyond equity broking is driven by evolving customer needs rather than just revenue diversification.
As digitally acquired users mature from active trading to long-term investing, demand naturally extends to wealth management, credit products, and broader financial solutions.
This shift is increasingly visible in Angel One’s revenue mix. In Q3 FY26, broking income accounted for around 58 percent of total revenues, down from 64.7 percent a year earlier. Meanwhile, interest income rose to 33 percent from 27.6 percent, and distribution income nearly doubled to 4.3 percent.
Future Winners Will Be Defined by Business Model Strength
Crisil noted that many broking firms are now recalibrating their business models in response to regulatory tightening. However, the ability to build scalable, diversified, and recurring income streams will be the key differentiator.
As regulatory scrutiny in the derivatives market intensifies, brokers that rely solely on trading volumes may struggle, while those offering a broader financial ecosystem are likely to emerge stronger.
Final Takeaway
The combination of an STT hike and SEBI’s regulatory curbs has accelerated a long-anticipated transformation in India’s broking industry. The era of transaction-only business models is fading, giving way to diversified platforms focused on wealth, credit, and long-term investing solutions. For broking firms, adaptability is no longer optional it is essential for survival and sustained growth.
