Measures to instill trust in securities market – Expanding the framework of Qualified Stock Brokers (QSBs) to more stock brokers
Summary
This circular expands the Qualified Stock Broker (QSB) framework by adding compliance, grievance redressal, and proprietary trading volume parameters. It establishes a new procedure for identifying QSBs based on percentage calculations of these seven parameters and sets specific thresholds for designation. The document also outlines voluntary designation options, staggered applicability dates, and directs stock exchanges to amend their rules accordingly.
Text
SEBI previously mandated four parameters for designating QSBs: active clients, client assets, trading volumes (excluding proprietary), and end-of-day margin obligations.
The QSB framework is extended to include three additional parameters: compliance score, grievance redressal score, and proprietary trading volumes.
Designation considers seven parameters: active clients, client assets, non-proprietary trading volumes, client margin obligations, proprietary trading volumes, compliance score, and grievance redressal score.
Percentage for each parameter is calculated by dividing the individual broker's value by the aggregate value across all brokers and multiplying by 100.
Stock brokers with a total sum of individual percentages for parameters 4.1.1 to 4.1.5 greater than or equal to 6.25 shall be identified as QSBs.
Up to five stockbrokers with an individual compliance score equal to or more than 2% shall be considered as QSBs.
Up to five stockbrokers with an individual grievance redressal score equal to or more than 5% shall be considered as QSBs.
Values are calculated annually using data as of December 31st, and the revised list is released jointly by stock exchanges in consultation with SEBI.
QSBs removed from the list must continue complying with enhanced obligations for an additional period of 3 financial years or as specified by MIIs.
Stock brokers who do not qualify via standard parameters may voluntarily get designated as QSBs to strengthen compliance culture.
Voluntarily designated QSBs must abide by all enhanced obligations and responsibilities stated in para 18.5 and 18.6 of the master circular.
Provisions come into force in a risk-based, staggered manner to ensure smooth adoption based on the size of the QSBs.
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Source: SecMarx — Measures to instill trust in securities market – Expanding the framework of Qualified Stock Brokers (QSBs) to more stock brokers. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.