Enhanced obligations and responsibilities for qualified stock brokers

Enhanced obligations and responsibilities for qualified stock brokers

No. SEBI/LAD-NRO/GN/2023/116.— In exercise of the powers conferred under Section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to amend the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992, namely: –

1. These regulations may be called the Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2023.
   
2. They shall come into force on the date of their publication in the Official Gazette:
   Provided that the amendments in Regulation 17, Schedule V and Schedule VI shall come into force on such date as the Board may by notification appoint in the Official Gazette.
   
3. In the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992 –
   
   I. in regulation 2, in sub-regulation (1), after clause (cb), the following new clause shall be inserted, namely, –
   “(cc) “qualified stock broker” means a stock broker referred to in regulation 18D of these regulations;”
   
   II. in Regulation 17, after sub-regulation (1), the following new sub-regulation shall be inserted, namely, –
   “(1A) A stock broker in the Execution Only Platforms segment, shall keep and maintain the books of account, records and documents as may be specified by the Board from time to time.”
   
   III. after regulation 18A , the following new regulation shall be inserted, namely, –
   
   “Enhanced obligations and responsibilities for qualified stock brokers.
   
   18D. (1) The Board may designate a stock broker as a qualified stock broker having regard to its size and scale of operations, likely impact on investors and securities market, as well as governance and service standards, on the basis of the following parameters and the appropriate weightages thereon: –
   a) the total number of active clients;
   b) the available total assets of clients with the stock broker;
   c) the trading volumes of the stock broker;
   d) the end of day margin obligations of all clients of a stock broker;
   e) compliance score as may be specified by the Board;
   f) grievance redressal score as may be specified by the Board; and
   g) the proprietary trading volumes of the stock broker.
   
   (2). The stock broker designated as a qualified stock broker shall be required to meet enhanced obligations and discharge responsibilities to ensure: –
   a) appropriate governance structure and processes;
   b) appropriate risk management policy and processes;
   c) scalable infrastructure and appropriate technical capacity;
   d) framework for orderly winding down;
   e) robust cyber security framework and processes; and
   f) investor services including online complaint redressal mechanism.”
   
   IV. in Schedule V, in Part B, in clause 3, in sub-clause (1), in the Table, after the row for the „Electronic Gold Receipt Segment‟, the following row shall be inserted, namely, –
   “
   
   
   V. in Schedule VI,
   (i) in Table 1, after the remarks “# Networth requirement for members shall be Base Networth or Variable Networth, whichever is higher.”, the following shall be inserted, namely,-
   “However, the requirement of Variable Networth shall not be applicable for Execution Only Platforms segment.”
   (ii) in Table 2, after the row for the „Electronic Gold Receipts‟ Segment, the following new row shall be inserted, namely,-
   
   
   Notification

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