Sebi issues norms to simplify broker registration process

Simplifying the procedural requirements for stock brokers, market regulator Sebi today decided to introduce a common registration certificate for different market segments.

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The new norms would do away with the current system that require stock brokers to get separate registration certificates from the Securities and Exchange Board of India (Sebi) for every market segment they trade in, like equity, equity derivatives and currency derivatives.

"The existing practice of obtaining multiple registrations for operating in different segments of a stock exchange/clearing corporation has been done away with and instead a single registration per stock exchange/clearing corporation shall be required," Sebi said in a circular.

"For operating in multiple segments, approval will be required from the stock exchange or clearing corporation," it added. At present, separate registrations are also needed for each category like trading member, trading-cum self-clearing member and a professional clearing member.

Issuing the new guidelines, Sebi said that a new entity seeking to register as a stock broker in any segment(s) of a stock exchange, then it is require to apply to the regulator through the respective exchange in the manner prescribed by Sebi in any one segment.

The entity would be issued a certificate with a unique registration number for each bourse irrespective of number of segments. In a case, where an entity is already registered with Sebi in any segment of the exchange, then for operating in another platform of that exchange, the entity does not require to apply with the regulator instead can approach the concerned bourse for approval.

The exchange would grant approval for any additional segment to the stock broker, self-clearing member or clearing member, as the case may be, after exercising due diligence and on being satisfied about the compliance of all relevant eligibility requirements. Also, the exchange needs to ensure that applicant, its directors, proprietor, partners and associates satisfy 'Fit and Proper Criteria' set by Sebi and whether any past actions had been initiated against them.

The bourse may carry out inspection about the applicant, wherever considered appropriate. The exchange has to see whether the applicant has taken corrective steps to rectify the irregularities observed in the past. They also need to recover all pending dues. Sebi also said that the exchange needs to communicate to the regulator regarding the status of the implementation of the provisions of this circular through monthly development report.