Uniform membership structure across segments
Summary
This circular mandates the unification of membership structures across equity cash and derivatives segments effective April 1, 2019. It requires existing sub-brokers to migrate to Authorised Persons or Trading Members by the same date. Stock Exchanges and Clearing Corporations are directed to amend bye-laws and monitor compliance with these new uniform standards.
Text
In cash segment, all the Stock Brokers are trading cum self-clearing members whereas in derivatives segment, membership structure is that of Trading Member (TM) and / or Clearing Member (CM).
SEBI Board in its meeting held on June 21, 2018 decided that sub-brokers as an intermediary shall cease to exist with effect from April 01, 2019. All existing sub-brokers would migrate to become Authorised Persons (APs) or Trading Members if the sub- brokers meet the eligibility criteria prescribed under Stock Exchange bye-laws and SEBI Regulations and by complying with these Regulations.
SEBI has implemented the mechanism of single registration, whereby a registered TM / CM can operate in any segment of the recognised Stock Exchange / Clearing Corporation under the single registration number granted by SEBI.
The membership structure as Trading Member (TM), Self-clearing Member (SCM), Clearing Member (CM) and Professional Clearing Member (PCM) as prevalent in equity derivatives segment shall be implemented in cash segment with effect from April 01, 2019.
The existing Stock Brokers in cash segment of a Stock Exchange who are already registered as SCM / CM in derivatives segment shall automatically become SCM / CM, as the case may be, in cash segment with effect from April 01, 2019.
The existing Stock Brokers in cash segment of a Stock Exchange who are not registered as SCM / CM in derivatives segment shall continue as SCM in cash segment with effect from April 01, 2019.
Existing Stock Brokers in cash segment shall meet with the net-worth requirement as per formula prescribed by Dr. L.C. Gupta Committee as applicable to SCM / CM in equity derivatives segment on or before September 30, 2019.
Existing Stock Brokers in cash segment who fail to meet the net-worth requirement for SCM / CM on or before September 30, 2019 shall continue to trade as Trading Member in cash segment provided that they shall tie up with a CM / PCM for clearing and settlement of their trades on or before September 30, 2019.
The existing PCMs in derivatives segment shall become PCMs in cash segment with effect from April 01, 2019. However, the existing Custodian Clearing Member in cash segment shall continue to act as Custodian Clearing Member in cash segment only.
The Stock Exchanges and Clearing Corporations are directed to: a) bring the provisions of this circular to the notice of their members, and also disseminate the same on their websites; b) make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision in co-ordination with one another, as considered necessary; c) monitor the compliance of this circular; d) communicate to SEBI, the status of the implementation of the provisions of this circular.
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 interest of investors in securities and to promote the development of and to regulate the securities market.
Source: SecMarx — Uniform membership structure across segments. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.