Change in affiliation of Sub-brokers
Summary
This circular clarifies the procedure for sub-brokers changing their affiliation from one stock broker to another within the same exchange. It outlines specific steps and documentation requirements for scenarios involving simple affiliation changes, broker mergers or acquisitions, and broker surrender of registration. The process mandates exchange recommendations and SEBI approval before the change in affiliation takes effect. This section outlines the procedures for sub-brokers to change affiliation or surrender registration when a broker undergoes changes in control, status, or constitution. It mandates that applications be submitted through the exchange and forwarded to SEBI for approval, with specific documentation requirements including NOCs and agreements. Additional provisions address scenarios involving punitive actions by SEBI against brokers or termination of agreements between brokers and sub-brokers. The text outlines procedures for brokers to surrender sub-broker registration when the sub-broker is untraceable or fails to act after agreement termination. It specifies that sub-brokers must submit original certificates of registration to record changes in their affiliati
Text
No fresh certificate needs to be obtained under sub-regulation (1) where a sub-broker merely changes his affiliation from one stock broker to another stock broker, being a member of the same stock exchange.
The sub-broker shall submit the application for change in affiliation to the exchange through the broker with whom affiliation is being sought and exchange shall forward the application to SEBI along-with its recommendation.
The exchange shall ensure and confirm that there is no complaint(s) / action(s) is /are pending against the sub-broker seeking change in affiliation and the sub-broker has no outstanding fee against it.
SEBI shall take the change in affiliation on record and effect the changes on the sub-broker certificate. The modified certificate shall be dispatched to the exchange to be handed over to the broker / sub-broker.
The broker must ensure that all the sub-brokers affiliated to it submit the application for change in affiliation or surrender within a period of 15 days.
The application for surrender of certificate of registration of sub-broker shall be submitted to the exchange through the existing broker whereas the application for change in affiliation of sub-broker shall be submitted to the exchange through the broker with whom affiliation is being sought.
The sub-broker seeking change in affiliation shall be eligible to do business with the old broker till the application is granted approval by SEBI.
Thereafter, on grant of approval by SEBI the exchange shall ensure that affiliation of the sub-broker is changed to new broker with immediate effect.
Exchange recommendation and recommendation by the broker with whom affiliation is being sought. Certificate of registration in original for recording change in affiliation. In case of lost /misplaced certificate, an affidavit (on stamp paper of appropriate value) indemnifying SEBI from possible harm.
Sub-brokers affiliated to a broker who has undergone change in control/change in status or constitution / transfer/ sale/transmission may apply for change in affiliation to another broker or apply for surrender. The broker undergoing change must ensure that all the sub-brokers affiliated to it submit the sub-brokers’ application for change in affiliation or surrender after the issuance of prior approval to the broker and before the registration of the incoming broking entity. The application must be submitted through the exchange.
A certificate caused by loss of certificate and a copy of FIR/police complaint lodged by the sub-broker is required to be furnished. A letter from the sub-broker seeking change in affiliation addressed to SEBI is required. No Objection Certificate (NOC) from the existing affiliated broker with whom the sub-broker wishes to discontinue business is required. Certified true copy of the agreement between the broker and the sub-broker is required.
Incase the broker expires, the sub-brokers may change their affiliation within a period of six months from the date on which the broker ceases to exist or the registration will be deemed cancelled.
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Source: SecMarx — Change in affiliation of Sub-brokers. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.