Market Access through Authorised Persons
Summary
This circular permits SEBI-registered stock brokers to provide market access through authorized persons, subject to a specific regulatory framework. Stock exchanges are required to amend their bye-laws and rules to implement this framework for appointing and regulating these agents. The document outlines eligibility criteria, appointment procedures, conditions of engagement, and the respective obligations of stock brokers and exchanges.
Text
It has been decided to allow SEBI registered stock brokers (including trading members) of stock exchanges to provide access to clients through authorised persons.
The stock exchanges are advised to make necessary amendments to the bye-laws, rules and regulations to implement the framework for market access through authorized persons.
This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Any person - individual, partnership firm, LLP or body corporate – who is appointed as such by a stock broker (including trading member) and who provides access to trading platform of a stock exchange as an agent of the stock broker.
A stock broker may appoint one or more authorised person(s) after obtaining specific prior approval from the stock exchange concerned for each such person.
An individual is eligible to be appointed as authorised person if he: is a citizen of India; is not less than 18 years of age; has not been convicted of any offence involving fraud or dishonesty; has good reputation and character; has passed at least 10th standard or equivalent examination... and has the certification... and undertakes to continue to have valid certification thereafter.
A partnership firm, LLP or a body corporate is eligible to be appointed as authorised person if all the partners or directors comply with the requirements contained in clause 4.1 above and the object clause... contains a clause permitting the person to deal in securities business.
The stock broker shall be responsible for all acts of omission and commission of the authorized person.
The authorized person shall not receive or pay any money or securities in its own name or account. All receipts and payments of securities and funds shall be in the name or account of stock broker.
The authorised person shall receive his remuneration - fees, charges, commission, salary, etc. - for his services only from the stock broker and he shall not charge any amount from the clients.
A person shall not be appointed as authorized person by more than one stock broker on the same stock exchange.
Approval given to an authorised person may be withdrawn by the stock exchange: on receipt of a request... or on being satisfied that the continuation of authorised person is detrimental to the interest of investors or securities market...
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Source: SecMarx — Market Access through Authorised Persons. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.