Review of norms relating to trading by members/sub brokers.
Summary
SEBI directs stock exchanges to restrict brokers and sub-brothers from dealing with multiple other brokers on the same exchange without prior permission. The circular mandates that a broker can deal with only one broker of another exchange for proprietary trading after intimating the parent exchange. Stock exchanges are required to implement these norms immediately, amend bye-laws, and report implementation status to SEBI.
Text
stock exchanges are directed to ensure the following:-
A stock broker/ sub broker of an exchange can not deal with brokers/sub brokers of the same exchange either for proprietary trading or for trading on behalf of clients, except with the prior permission of the exchange.
The stock exchanges while giving such permission, shall consider the reasons stated by the brokers/sub brokers for dealing with brokers/sub brokers of the same exchange and after carrying out due diligence allow such brokers/sub brokers to deal with only one stock broker/sub broker of the same exchange.
A stock broker/sub broker of an exchange can deal with only one broker/sub broker of another exchange for proprietary trading after intimating the names of such stock broker/sub broker to his parent stock exchange.
a sub-broker shall not be affiliated to more than one stock broker of one stock exchange.
a stock broker of an exchange can deal with only one broker of another exchange on behalf of clients after obtaining necessary registration as a sub broker.
Stock Exchanges are directed to implement the above requirement with immediate effect and take necessary disciplinary action wherever violation of the above provisions are observed.
make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately
bring the provisions of this circular to the notice of the member brokers/sub brokers affiliated to the members of the exchange and also to disseminate the same on the website.
communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report for the month of January 2004.
This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with Section 10 of the Securities Contracts (Regulation) Act 1956
Source: SecMarx — Review of norms relating to trading by members/sub brokers.. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.