To instill trust in the securities market, the Securities and Exchange Board of India (SEBI) has expanded the framework for designating qualified stock brokers (QSBs). QSBs handle a large volume of clients and trading and have a significant influence over the market.
Grievance redressal and the compliance scores and the proprietary trading volumes of a broker will now also be considered for designating the entity as a QSB, SEBI said in a March 11 circular, as it expanded the framework to more brokers.
Earlier an entity would be designated as a QSB based on the total number of active clients, available total assets of clients with the stock broker, trading volumes of the stock broker (excluding the proprietary trading
volume of the stock broker), and the end of day margin obligations of all clients of a stock broker (excluding the proprietary margin obligation of the stock broker in all segments).
Now these three parameters, too, have been added to this list.
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For each stock broker, the percentage of a particular parameter compared to aggregate of the respective parameter summed across all stock brokers will be calculated.
For example, percentage of count of active clients for a particular broker will be calculated by dividing the individual count of active clients by total number of active clients of all the stock brokers and the value will be multiplied by 100.
Stock brokers with a total sum of individual percent of the parameters that deal with number of clients, trading volumes, client assets, margin requirements and proprietary trading volumes greater than or equal to six point two five (6.25) will be identified as QSBs.
All stockbrokers (subject to a maximum of five) shall be considered as QSBs, if their individual compliance score is equal to or more than 2 percent.
All stockbrokers (subject to a maximum of five) shall be considered as QSBs, if their individual grievance redressal score is equal to or more than 5 percent.
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