REGISTRATION OF STOCK BROKERS AND SUB BROKERS

What is Stock Exchange, Stock Broker, Sub-broker

“Stock exchange” means a stock exchange which is for the time being recognized by the Central Government or by the Board under section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
“Stock broker” means a member of a stock exchange.
“Sub-broker” means any person not being a member of the stock exchange who acts on behalf of a stock broker as an agent or otherwise for assisting the investors in buying, selling, or dealing in securities through such stockbrokers.

Source of Definition: Stock Brokers

SECURITIES AND EXCHANGE BOARD OF INDIA (STOCK-BROKERS AND SUB-BROKERS) REGULATIONS, 1992

Stock Person playing a flute to a business chart

REGISTRATION OF STOCK BROKERS Application for registration of stock broker.

An application by a stock broker for grant of a certificate shall be made in ‘Form A’ through the stock exchange or stock exchanges, as the case may be, of which he is admitted as a member.
The stock exchange shall forward the application form to the Board as early as possible but not later than thirty days from the date of its receipt.
Notwithstanding anything contained in sub-regulation (1), any application made by a stock broker prior to coming into force of these regulations containing such particulars or as near thereto as mentioned in the ‘Form A’ shall be treated as an application made in pursuance of sub-regulation (1) and dealt with accordingly :

Provided that the requirement of the payment of fees shall be the same as is referred to in sub-regulation (1) of regulation 10.

Source: Registration of Stock Broker in India

Furnishing of information, clarification, etc.

The Board may require the applicant to furnish such further information or clarifications regarding the dealings in securities and matters connected thereto to consider the application for grant of a certificate.
The applicant or its principal officer shall, if so required, appear before the Board for personal representation.

Consideration of application.

The Board shall take into account for considering the grant of a certificate all matters relating to buying, selling, or dealing in securities and in particular the following, namely, whether the stock broker—

is eligible to be admitted as a member of a stock exchange;
has the necessary infrastructure like adequate office space, equipments and man power to effectively discharge his activities;
has any past experience in the business of buying, selling or dealing in securities;
is subjected to disciplinary proceedings under the rules, regulations and byelaws of a stock exchange with respect to his business as a stock-broker involving either himself or any of his partners, directors or employees;
is a fit and proper person.]

Criteria for fit and proper person.

For the purpose of determining whether an applicant or the stock broker, subbroker, trading member and clearing member is a fit and proper person, the Board may take into account the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.

Procedure for registration.

The Board on being satisfied that the stock-broker is eligible, shall grant a certificate in ‘Form D’ to the stock-broker and send an intimation to that effect to the stock exchange or stock exchanges as the case may be. Provided that, subject to the conditions of regulation 6A, a stock broker holding a certificate of registration with respect to membership of a recognised stock exchange having nationwide trading terminals shall be eligible for trading on SME platform established by such stock exchange without obtaining a separate certificate of registration for trading on the SME platform.

Conditions of registration.

Any registration granted by the Board under regulation 6 shall be subject to the following conditions, namely—
1. The stock broker holds the membership of any stock exchange;
2. He shall abide by the rules, regulations and bye-laws of the stock exchange which are applicable to him;
3. Where the stock broker proposes to change his status or constitution, he shall obtain prior approval of the Board for continuing to act as such after the change;
4. He shall pay fees charged by the Board in the manner provided in these regulations; and
5. He shall take adequate steps for redressal of grievances, of the investors within one month of the date of receipt of the complaint and keep the Board informed about the number, nature and other particulars of the complaints received from such investors.
Nothing contained in clause (c) of sub-regulation (1) shall affect the obligation to obtain a fresh registration under section 12 of the Act in a case where it is applicable.

Source: Registration of brokers

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