I keep saying this: for any regulated business, the biggest risk is regulatory risk. Today’s IRDAI draft on insurance commissions is a good reminder.

Broking is no different. A change in rules around retail F&O trading, how brokers can earn on client float, MTF requirements, or any of several other areas can change the economics of the business almost overnight.

So when valuing regulated businesses, you can’t just extrapolate current revenues and profits into the future. One regulation change can alter the economics, and the stock price along with it.

Pretty much everything in fintech comes with this risk 😬

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