REGISTRATION OF SUB BROKERS
Summary
This section of the document outlines SEBI's directive to stock exchanges regarding the enforcement of sub-broker registration through bad delivery protocols. It details specific revisions to the model agreement between member brokers and sub-brokers, including mandatory disclosures and client database maintenance. The text concludes with the commencement of a formal legal agreement template defining the scope of authority and affiliations. This section defines the conditions under which a broker is deemed to have an interest in a sub-broker and specifies the meaning of 'relative'. It outlines the procedures for withdrawing consent, including notification duties and the surrender of SEBI registration certificates. The text further mandates separate accounting, code of conduct adherence, and specific obligations regarding client fund management and contract note issuance. Paragraphs 17 through 20 establish dispute resolution mechanisms, termination rights, and post-termination liabilities between brokers and sub-brokers. The text includes individual and non-individual client registration application forms requiring detailed personal and financial information. A Sub-Broker - Client A
Text
transfer deed bearing rubber stamps on the reverse thereof other than those of clearing members... SEBI registered sub-brokers and remisiers... shall be treated as bad delivery in stock exchanges. This shall apply to all transfer deeds dated June 1, 1997 and thereafter.
you are requested to keep sufficient Stocks of Form ‘B’(application form for registration as Sub-broker) and Form’C’(recommendation letter...),for free distribution amongst applicants.
The registered sub-broker can transact only through the member broker who had recommended his application for registration by signing form C. If the Sub-broker is desirous of doing business with more than one broker, he will have to obtain separate registration in each case.
It will be mandatory for the sub-broker to disclose the name of all other sub-brokers/brokers where he is having direct or indirect interest.
It shall be the responsibility of the broker to report the default if any of his sub-broker to all other brokers with whom sub-broker is affiliated.
The earlier stipulation of keeping the deposits received from sub-brokers with the stock exchange has now been removed.
The agreement can be terminated by giving the notice in writing of not less than 6 months by either party.
Sub-brokers are obligated to enter into agreements and maintain the database of their clients / investors on the pattern of format forwarded to the stock exchanges... It is clarified that the sub-broker already registered with SEBI have to maintain database of their client/investor.
the sub-broker shall within the scope of the authority given under these presents, be entitled to act as a ‘Sub-Broker’... between the said member broker and the investors for assisting the latter in buying, selling or dealing in securities through the said member.
The member broker agrees that he shall not, except with the previous consent of the sub-broker, commit on the latter's behalf transactions in securities in excess of the amount mutually agreed upon in writing...
The Sub Broker has declared that he/it is also presently affiliated as Sub-Broker with the Broker(s) detailed hereunder...
The Sub-broker has also declared that he/it has direct/indirect interest in the broker (s)/Sub-broker(s) detailed hereunder...
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Source: SecMarx — REGISTRATION OF SUB BROKERS. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.