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Stock exchanges step up vigil as brokers cross-sell financial products

Posted By: Jaydatt Chaudhary Posted On: Oct 08, 2025Share Article

The Indian stock broking ecosystem is under regulatory scrutiny as trading platforms expand into ancillary financial services like credit, wealth management and insurance. According to three people in the know, the Bombay Stock Exchange and the National Stock Exchange are keeping a tight vigil on brokers ensuring they are not offering easy credit to retail traders for the latter to trade with borrowed money.

"Exchanges are keeping a close eye on violations, conducting system audits, they are often sending notices asking brokers to stop doing things which they feel can encourage traders to take personal loans and use those funds for trading," said a top executive at one of the largest broking platforms in India.

Industry insiders further added that the vigil is not restricted only to offering loans, but also to so-called dark patterns on broking applications. The union government defines 'dark patterns' as those using design and choice architecture to deceive, coerce, or influence consumers into making choices that are not in their best interest.

While this is being called out on ecommerce platforms, industry insiders are aware of such patterns evolving around stock brokers as well.

"Creating a false urgency to trade, pushing funding products, upselling high risk products are some of the dark patterns being seen in the ecosystem," the executive quoted above said.

Expansion in services

This comes at a time when most of the large brokers have taken a non-banking finance licence and ventured into unsecured personal loans. ET has reported last year that tech-first brokers like Groww, Angel One were all scaling up their personal loan offerings in a bid to diversify their revenue channels beyond core broking commissions.

In its updated draft red herring prospectus Groww said that in FY25 the company had disbursed ₹1,260 crore through its own NBFC. Groww runs the credit business through a subsidiary entity named Groww Creditserv Technology. Angel One distributed ₹700 crore till March 2025, as per disclosures in its first quarter FY26 presentations. Zerodha also offers credit products like loans against securities and others through Zerodha Capital.

"Sebi is actually encouraging products like loans against securities, but personal loans should not be diverted into trading and platforms should not encourage such products to their users as well," said another chief executive at a broking platform.

Loans against securities is a regulated product with pre-defined margins and lower interest rates, in addition to collateral in terms of shares, personal loans are unsecured and can pose a systemic risk to the entire ecosystem if defaults shoot up.

Source: EconomicTimes
Related Posts: angel one,brokers,loans,Bombay Stock Exchange,National Stock Exchange,credit,financial services,stock exchanges,Groww

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