Stock_Brokers_Apr17_2020
1 (1) These regulations may be called the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992.
1 (2) These regulations shall come into force on the date of their publication in the Official Gazette.
2 2. (1) In these regulations, unless the context otherwise requires]: 5[(a) Act means the Securities and Exchange Board of India Act, 1992 (15 of 1992);(aa) certificate means a certificate of registration issued by the Board;(ab) .brokers) (Third Amdt.) Regulations, 1998 .
3 (1) 22[ No person shall act as a stock broker, unless he obtains a certificate of registration from the Board: Provided that no separate registration shall be required for a clearing member registered with the Board to act as a stock broker in a stock exchange of which he is admitted as a member, subject to grant of approval by the concerned stock exchange . registration shall be required for a stock broker registered with the Board to operate in more than one stock exchange , of which he is admitted as a member, subject to grant of approval by the concerned stock exchange .]
3 (2) An application for grant of a certificate of registration as a stock broker shall be submitted to the Board in Form A of Schedule I through the stock exchange23[*]of which he is admitted as a member.
3 (3) The stock exchange 24[*] shall forward the application form to the Board as early as possible, but not later than thirty days from the date of its receipt.
4 (1) The Board may require the applicant, or the concerned stock exchange, to furnish further information or clarifications, regarding the trading, settling or dealing in securities and matter connected thereto, to consider the application for grant of a certificate.
4 (2) The applicant or, its principal officer shall, if so required, appear before the Board for personal representation. 27-09-2013

i.sebi (stock brokers and sub-brokers) (amendment) regulations, 2006the sebi (stock brokers and sub- brokers) regulations, 1992 were further amended by the captioned amendment regulations on august 01, 2006 vide s.o. no. 1235 (e). this amendment substituted paragraph ii of schedule iii of the principal regulations and provided for a new fee structure the amendment, the sub-brokers are required to pay fees, as given below:for sub-brokers. after a)for existing sub-brokers registered prior to august 01, 2006 : a sum of rs. 10,000 for the block of five financial years commencing from april 01, 2007, and a sum of rs. 5,000 for every subsequent block of five financial years.b)new for granted registration on or after august 01, 2006 :sub-brokers  a sum of rs. 10,000 for the block of five financial years commencing from the financial year in which registration was granted, and a sum of rs. 5,000 for every subsequent block of five financial years.the above fees have to be paid withinthe time specified by sebi.102

5 The Board shall take into account for considering the grant of a certificate, all matters relating to trading, settling or dealing in securities and in particular the following, namely, whether the applicant,-(a) is eligible to be admitted as a member of a stock exchange;(b) has the necessary infrastructure like adequate office space, equipment and man power toeffectively discharge his activities;(c) has any past experience in the business of trading or dealing in securities, as the case maybe;(d) has been subjected to disciplinary proceedings under the rules , and bye-laws of a stockexchange, or enforcement action under securities laws, with respect to his business as a stock-broker involving either himself or any of his partners, directors or employees;(e) is a fit and proper person based on the criteria specified in Schedule II of the Securitiesand Exchange Board of India (Intermediaries) Regulations, 2008;(f) has any financial liability which is due and payable in terms of the Act, the SecuritiesContracts (Regulation) Act, 1956 or rules and regulations thereunder;(g) has obtained certification in terms of SEBI (Certification of Associated Persons in theSecurities Markets) Regulations, 2007 or as may be specified by the Board;(h) satisfies the minimum networth and deposit requirements as specified in Schedule VI , forthe segment for which membership or approval is sought.
6 The Board may, after consideration of the application under regulation 3 and on being satisfied that the applicant has complied with the conditions laid down in regulation 5 grant a certificate of registration in Form D to the stock-broker, and send intimation to that effect to the stock exchange(s) of which it is a member .
7 (1) Where an application under regulation 3, does not fulfill the requirements mentioned in regulation 5, the Board may reject the application after giving a reasonable opportunity of being heard.
7 (2) The refusal to grant the registration certificate shall be communicated by the Board within thirty days of such refusal to the applicant and to the concerned stock exchange stating therein the grounds on which the application has been rejected .
7 (3) An applicant whose application has been rejected by the Board under sub-regulation (2), may apply within a period of thirty days from the date of receipt of such intimation, to the board for reconsideration of its decision.
7 (4) The Board shall reconsider an application made under sub-regulation (3) and communicate its decision as soon as possible in writing to the applicant and to the concerned stock exchange.

commission with sebi vide the finance act, 2015. the erstwhile commodity exchanges which were deemed to be recognised stock exchanges under the securities contracts (regulation) act, 1956 were given extended time to comply with the provisions of secc regulations (which deal with ownership and management issues of stock exchanges). the amended regulations mandate that commodity derivatives shall exchanges guarantee settlement of trades including good delivery. further clearing and settlement of trades on commodity derivatives exchanges are permitted to be continued in the extant manner for a period of three years from the commencement of the amended regulations and till such time certain obligations on clearing corporations under the secc regulations will apply vis-a-vis commodity derivatives exchanges. sebi(stock brokers (amendment) regulations, september 08, 2015 the sebi (stock brokers and sub- brokers) (amendment) regulations, 2015 were notified to amend the sebi (stock brokers and sub-brokers) regulations, 1992 (stock brokers regulations) in the context of the merger of forward markets commission with sebi vide the finance act, 2015. in terms of the amended regulations, erstwhile commodity brokers are required to comply with the provisions of the stock brokers regulations applicable to registered stock brokers and clearing members. further, a stock brokers carrying on activity of dealing in securities other than commodity derivatives is not allowed to undertake the activity of dealing in commodity derivatives and vice versa, unless permitted by the board. also, the fees, networth and deposit requirements applicable to commodity brokers and clearing members were also laid down vide these amended regulations.and sub-brokers) 2015 w.e.f.

8 Every applicant eligible for grant of a certificate of registration as a stock broker shall pay such fees and in such manner as specified in Schedule III or Schedule V as the case maybe: Provided that the Board may on sufficient cause being shown permit the stock-broker to pay such fees at any time before the expiry of six months from the date on which such fees become due.
9 Any registration granted by the Board under regulation 6 shall be subject to the following conditions, namely,-(a) the stock broker holds the membership of any stock exchange;(b) he shall abide by the rules, regulations and bye-laws of the stock exchange which areapplicable to him;(c) where the stock broker proposes change in control, he shall obtain prior approval of theBoard for continuing to act as such after the change;(d) he shall pay fees charged by the Board in the manner provided in these regulations;(e ) he shall take adequate steps for redressal of grievances, of the investors within one monthof the date of receipt of the complaint and inform the Board as and when required by theBoard;(f) he shall at all times abide by the Code of Conduct as specified in Schedule II; and(g) he shall at all times maintain the minimum networth as specified in Schedule VI.25[Approval for operation in other stock exchange(s) or segment(s) of stock exchange.
10 (1) A stock broker registered with the Board, who desires to operate in any other stock exchange or any other segment(s) of the stock exchange of which it holds a membership, shall apply to the concerned stock exchange, in the manner specified by the Board.
10 (2) A clearing member registered with the Board, who desires to operate in any stock exchange or any segment(s) of the stock exchange, shall apply to the concerned stock exchange in the manner specified by the Board.
10 (3) On receipt of an application under sub-regulation (1) or sub-regulation (2), the stock exchange shall, on being satisfied with the compliance of provisions of the regulations and other relevant eligibility requirements specified by the Board, grant approval to operate in that stock exchange or segment(s) thereof and shall inform the Board about such grant of
10A (1) No person shall act as a clearing member, unless he obtains a certificate of registration from the Board: Provided that no separate registration shall be required for a stock broker registered with the Board to act as a clearing member in a clearing corporation of which he is admitted as a member, subject to grant of approval by the concerned clearing corporation.
10A (2) A stock broker registered with the Board , who desires to operate in any segment(s) of the stock exchange ofwhich it holds a membership, shall apply to the concerned stock exchange, in the manner specified by the Board .
10A (3) A clearing member registered with the Board, who desires to operate in any segment(s) of the stockexchange which has promoted the clearing corporation, of which he is a member, shall apply to the concernedstock exchange in the manner specified by the Board.
10A (4) On receipt of an application under sub-regulation (2) or sub-regulation (3), the stock exchange shall, onbeing satisfied with the compliance of provision of the regulations and other relevant eligibility requirementsspecified by the Board, grant approval for operation in any segment(s) and shall inform the Board about such
8 10.2014.Prior to substitution the sub-regulation read as follows: (1) Any person who desires to act as a clearing member, shall seek a certificate of registration from the Board for each clearing corporation in which he seeks to operate: Provided that no separate registration shall be required for a stock broker registered with the Board to operate as a clearing member in the clearing corporation which is promoted by the stock exchange of which he is amember. registration shall be required for a clearing member registered with the Board to operate inmore than one clearing corporation , of which he is admitted as a member, subject to grant ofapproval by the concerned clearing corporation .
8 (2) An application for grant of a certificate of registration as clearing member shall besubmitted to the Board in Form AD of Schedule I through the clearing corporation28[*] ofwhich he is admitted as a member.
8 (3) The Clearing Corporation29[*] shall forward the application form to the Board as early aspossible, but not later than thirty days from the date of its receipt.
10B The provisions of Chapter II shall be applicable mutatis mutandis to registration of a clearing member, except as otherwise provided."
10C Every applicant eligible for grant of a certificate of registration as a clearing member shall pay such fees and in such manner as specified in Schedule III or Schedule V as the case maybe: Provided that the Board may on sufficient cause being shown permit the clearing member to pay such fees at any time before the expiry of six months from the date on which such fees become due. 30[ Approval for operation in other clearing corporation(s) or segment(s) of clearing
10D (1) A clearing member registered with the Board , who desires to operate in any other clearing corporation or any other segment(s) of the clearing corporation of which it holds a membership, shall apply to the concerned clearing corporation in the manner specified by the Board .
10D (2) A stock broker registered with the Board, who desires to operate in any clearing corporation or any segment(s) of the clearing corporation, shall apply to the concerned clearing corporation in the manner specified by the Board.
10D (3) On receipt of an application under sub-regulation (1) or sub-regulation (2), the clearing corporation shall, on being satisfied with the compliance of provisions of the regulations and other relevant eligibility requirements specified by the Board, grant approval to operate in that clearing corporation or segment(s) thereof, and shall inform the Board about such grant of approval.]
10E For the purpose of this Chapter and in respect of clearing and settlement of trades in commodity derivatives, the word clearing corporation wherever appearing, shall refer to a commodity derivatives exchange till such time a separate clearing corporation is established to undertake the activity of clearing and settlement of trades in commodity derivatives.
10F The provisions of Chapters IV, V and VI of these regulations shall mutatis mutandis apply to a clearing member and self-clearing member.] Chapter III Chapter IIIA Chapter III B Chapter IIIC (4) On receipt of an application under sub-regulation (2) or sub-regulation (3) , the clearing corporation shall, onbeing satisfied with the compliance of provision of the regulations and other relevant eligibility requirementsspecified by the Board, grant approval for operation in any segment(s), and shall inform the Board about suchgrant of approval.
17 (1) Every Stock Broker shall keep and maintain the following books of account, records and documents, namely: (a) Register of transactions (Sauda Book);(b) Clients ledger;(c) General ledger;(d) Journals;(e) Cash book;(f) Bank pass book;36[(g) Documents register containing, inter alia, particulars of securities received anddelivered in physical form and the statement of account and other records relating to receiptand delivery of securities provided by the depository participants in respect of dematerializedsecurities;](h) Member s contract books showing details of all contracts entered into by him with othermembers of the same exchange or counterfoils or duplicates of memos of confirmation issuedto such other members;(i) Counterfoils or duplicates of contract notes issued to clients;(j) Written consent of clients in respect of contracts entered into as principals;(k) Margin deposit book;(l) 37[****](m) 38[****]39[(n) Client account opening form in the format as may be specified by the Board.]
18 Every stock broker shall preserve the books of account and other records maintained under regulation 17 for a minimum period of five years.
18A (1)Every stock broker shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued by the Board or the Central Government and for redressal of investors grievances.
18A (2)The compliance officer shall immediately and independently report to the Board any non- compliance observed by him. An agreement with the sub-broker and with the client of the sub-broker to establish privity of contract between
18B The stock broker shall not deal with any person as a sub-broker unless such person has been granted certificate of registration by the Board under sub-regulation (1) of Regulation 12.
18C (1) A stock broker carrying on the activity of buying, selling or dealing in securities, other than commodity derivatives, shall not undertake the activity of buying, selling or dealing in commodity derivatives, unless permitted by the Board.
18C (2) A stock broker carrying on the activity of buying, selling or dealing in commodity derivatives, shall not undertake the activity of buying, selling or dealing in securities other than commodity derivatives, unless
19 (1) Where it appears to the Board so to do, it may appoint one or more persons as inspecting authority to undertake inspection of the books of account, other records and documents of the stock brokers for any of the purposes specified in sub-regulation (2).
19 (2) The purposes referred to in sub-regulation (1) shall be as follows, namely : (a) to ensure that the books of account and other books are being maintained in the mannerrequired;(b) that the provisions of the Act, rules, regulations and the provisions of the SecuritiesContracts (Regulation) Act, and the rules made thereunder are being complied with;
20 (1) Before undertaking any inspection under regulation 19, the Board shall give a reasonable notice to the stock broker for that purpose.
20 (2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors or in public interest no such notice should be given, it may by an order in writing direct that the inspection of the affairs of the stock broker be taken up without such notice.
20 (3) On being empowered by the Board , the inspecting authority shall undertake the inspection and the stock-broker against whom an inspection is being carried out shall be bound to discharge his obligations as provided under regulation 21.
21 (1) It shall be the duty of every director, proprietor, partner, officer and employee of the stock-broker, who is being inspected, to produce to the inspecting authority such books, accounts and other documents in his custody or control and furnish him with the statements and information relating to the transactions in securities market within such time as the said officer may require.
21 (2) The stock-broker shall allow the inspecting authority to have reasonable access to the premises occupied by such stock-broker or by any other person on his behalf and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the stock-broker or any other person and also provide copies of documents or other materials which, in the opinion of the inspecting authority are relevant.
21 (3) The inspecting authority, in the course of inspection, shall be entitled to examine or record statements of any member, director, partner, proprietor and employee of the stock-broker.
21 (4) It shall be the duty of every director, proprietor, partner, officer and employee of the stock broker to give to the inspecting authority all assistance in connection with the inspection,
22 The inspecting authority shall, as soon as may be possible, submit an inspection report to the Board.
23 The Board shall after consideration of inspection or investigation report take such action as it may deem fit and appropriate including action under 44[ Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008], Chapter VIA of the Act or section 24 of the Act.]
24 Notwithstanding anything contained above, the Board may appoint a qualified auditor to investigate into the books of account or the affairs of the stock-broker: 43 Substituted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2003, Penalty) Regulations, 2002.. Provided that, the auditor so appointed shall have the same powers of the inspecting authority as mentioned in regulation 19 and the obligations of the stockbroker in regulation
25 A stock broker who contravenes any of the provisions of the Act, rules or regulations framed thereunder shall be liable for any one or more of the following actions (i) Monetary penalty under Chapter VIA of the Act.(ii) Penalties as specified under 47[Chapter V of the Securities and Exchange Board of India(Intermediaries) Regulations, 2008] including suspension or cancellation of certificate ofregistration as a stock broker ,(iii) Prosecution under section 24 of the Act.
26 A stock broker shall be liable for monetary penalty in respect of the following violations, namely (i) Failure to file any return or report with the Board.(ii) Failure to furnish any information, books or other documents within 15 days of issue ofnotice by the Board.(iii) Failure to maintain books of account or records as per the Act, rules or regulations framed thereunder.(iv) Failure to redress the grievances of investor s within 30 days of receipts of notice from theBoard.(v) Failure to issue contract notes in the form and manner specified by the Stock Exchange ofwhich such broker is a member.(Amendment) Regulations, 2003, .2018 .(vi) Failure to deliver any security or make payment of the amount due to the investor within48 hours of the settlement of trade unless the client has agreed in writing otherwise.(vii) Charging of brokerage which is in excess of brokerage specified in the regulations or thebye-laws of the stock exchange.(viii) Dealing in securities of a body corporate listed on any stock exchange on his ownbehalf or on behalf of any other person on the basis of any unpublished price sensitiveinformation.(ix) Procuring or communicating any unpublished price sensitive information except asrequired in the ordinary course of business or under any law.(x) Counselling any person to deal in securities of any body corporate on the basis ofunpublished price sensitive information.(xi) Indulging in fraudulent and unfair trade practices relating to securities.50[(xii) Failure to maintain client account opening form.](xiii) Failure to segregate his own funds or securities from the client s funds or securities orusing the securities or funds of the client for his own purpose or for purpose of any other client .(xiv) (xv) Failure to comply with directions issued by the Board under the Act or the regulations framed thereunder.(xvi) Failure to exercise due skill, care and diligence.52[(xvii) Failure to obtain prior approval of the Board in case of change in control of the stockbroker.](xviii) Failure to satisfy the net worth or capital adequacy norms, if any, specified by theBoard.(xix) Extending use of trading terminal to any unauthorized person or place.
27 A stock broker shall be liable for any action as specified in 54[Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008] including suspension or cancellation of his certificate of registration as a stock broker , if he (i) ceases to be a member of a stock exchange; or(ii) has been declared defaulter by a stock exchange and not re-admitted as a member within aperiod of six months; or(iii) surrenders his certificate of registration to the Board; or(iv) has been found to be not a fit and proper person by the Board under these or any otherregulations; or(v) has been declared insolvent or order for winding up has been passed in the case of abroker being a company registered under the Companies Act, 1956; or(vi) or any of the partners or any whole-time director in case a broker is a companyregistered under the Companies Act, 1956 has been convicted by a court of competentjurisdiction for an offence involving moral turpitude; or(vii) fails to pay fee as per Schedule III of these regulations; or(viii) fails to comply with the rules , regulations and bye-laws of the stock exchange of whichhe is a member; or(ix) fails to co-operate with the inspecting or investigating authority; by the SEBI (Intermediaries) Regulations, 2008, . .Amdt.) Regulations, 2018 .(x) fails to abide by any award of the Ombudsman or decision of the Board under theSecurities and Exchange Board of India (Ombudsman) Regulations, 2003; or(xi) fails to pay the penalty imposed by the Adjudicating Officer; or(xii ) indulges in market manipulation of securities or index; or(xiii) indulges in insider trading in violation of the Securities and Exchange Board of India(Prohibition of Insider Trading) Regulations, 1992; or(xiv) violates Securities and Exchange Board of India (Prohibition of Fraudulent and UnfairTrade Practices relating to Securities Market) Regulations, 2003; or(xv) commits violation of any of the provisions for which monetary penalty or other penaltiescould be imposed; or(xvi) fails to comply with the circulars issued by the Board; or(xvii) commits violations specified in regulation 26 which in the opinion of the Board are of agrievous nature.
28 A stock broker shall be liable for prosecution under section 24 of the Act for any of the following violations, namely : (i) Dealing in securities without obtaining certificate of registration from the Board as a stockbroker .(ii) Dealing in securities or providing trading floor or assisting in trading outside therecognized stock exchange in violation of provisions of the Securities Contracts(Regulation) Act, 1956 or rules made or notifications issued thereunder.(iii) Market manipulation of securities or index.(iv) Indulging in insider trading in violation of Securities and Exchange Board of India(Prohibition of Insider Trading) Regulations, 1992.(v) Violating the Securities and Exchange Board of India (Prohibition of Fraudulentand Unfair Trade Practices relating to Securities Market) Regulations, 2003.(vi) Failure without reasonable cause (a) to produce to the investigating authority or any person authorized by him in thisbehalf, any books, registers,2018 .(b) to appear before the investigating authority personally or to answer any questionwhich is put to him by the investigating authority; or(c) to sign the notes of any examination taken down by the investigating authority.(vii) Failure to pay penalty imposed by the adjudicating officer or failure to comply
28A (1) The Board may, exempt any person or class of persons from the operation of all or any of the provisions of these regulations for a period as may be specified but not exceeding twelve months, for furthering innovation in technological aspects relating to testing new products, processes, services, business models, etc. in live environment of regulatory sandbox in the securities markets .
28A (2) Any exemption granted by the Board under sub-regulation (1) shall be subject to the applicant satisfying such conditions as may be specified by the Board including conditions to be complied with on a continuous basis. testing environment where new products, processes, services, business models, etc. may be deployed on a limited set of eligible customers for a specified period of time, for furthering innovation in the securities market, subject to such conditions as may be specified by the
29 In order to remove any difficulties in the interpretation or application of the provisions of these regulations , the Board shall have the power to issue directions through guidance notes or circulars.
30 For the purposes of implementation of these regulations and matters incidental thereto, the Board may specify norms, procedures, processes, manners or guidelines as specified in these regulations, by way of circulars to recognised stock exchange(s) and recognised