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Securities and Exchange Board of India (Stock Brokers) Regulations, 1992

[Securities and Exchange Board of India (Stock Brokers) Regulations, 1992][1]

[23th October, 1992]

In exercise of the powers conferred by Section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby [2][* * *] makes the following regulations, namely:

CHAPTER I PRELIMINARY

Regulation - 1. Short title and commencement.

(1) These regulations may be called the Securities and Exchange Board of India (Stock Brokers [3][* * *]) Regulations, 1992.

(2) These regulations shall come into force on the date of their publication in the Official Gazette.

Regulation - 2. Definitions.

[4][(1) In these regulations, unless the context otherwise requires]:

[5][(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(aa) “certificate” means a certificate of registration issued by the Board;

(ab) [6][* * *]

[[7][(ac) “change in control”

(i) in case of a body corporate.

(A) if its shares are listed on any recognised stock exchange, shall be construed with reference to the definition of control in terms of regulations framed under clause (h) of sub-section (2) of Section 11 of the Act;

(B) in any other case, shall be construed as change in the controlling interest in the body corporate;

Explanation: For the purpose of para (B) of this sub-clause, the expression “controlling interest” means an interest, whether direct or indirect, to the extent of at least fifty-one percent of voting rights in the body corporate;

(ii) in a case other than that of a body corporate, shall be construed as any change in its legal formation or ownership.]

[8][(ad) “clearing corporation” shall mean a clearing corporation as defined in clause (d) of sub-regulation (1) of Regulation 2 of the [9][Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018];]

[10][(ae) “clearing member”means a person having clearing and settlement rights in any recognised clearing corporation and shall include any person having clearing and settlement rights on a commodity derivatives exchange:

Provided that such a clearing member in commodity derivatives exchange shall be required to become a member of a recognised clearing corporation from such date as may be specified by the Board.]

(aaa) [11][* * *]

(b) “form” means a form specified in Schedule I;

(c) “inspecting authority” means one or more persons appointed by the Board to exercise powers conferred under Chapter V of these regulations;

[12][(ca) “professional clearing member” means a member having clearing and settlement rights in any recognized clearing corporation, but not having trading rights in any recognized stock exchange.]

[13][[14][(cb)] “proprietary trading member” means a stock broker who trades in the debt segment of the recognised stock exchange, exclusively on its own account or as permitted by its sectoral regulator;]

(d) “regulations” means Securities and Exchange Board of India (Stock Brokers [15][* * *]) Regulations, 1992;

(e) [16][* * *]

(f) “Securities Contract (Regulation) Act” means Securities Contract (Regulation) Act, 1956 (42 of 1956)

[17][(fa) “self-clearing member” means a member of a clearing corporation who is also a stock broker and clears and settles trades on its own account or on account of its clients only and includes any person having clearing and settlement rights on a commodity derivatives exchange:

Provided that such person who clears and settles trades in commodity derivatives, shall be required to become a member of a recognised clearing corporation, from such date as may be specified by the Board.]

(g) “small investor” means any investor buying or selling securities on a cash transaction for a market value not exceeding rupees fifty thousand in aggregate on any day as shown in a contract note issued by the stock broker;

[18][(ga) “stock exchange” means a stock exchange which is for the time being recognised by the Central Government or by the Board under Section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);]

[19][(gb) “stock broker” means a person having trading rights in any recognised stock exchange and includes a trading member;]

(gc) [20][* * *]]

(gd) [21][* * *]

(h) [22][* * *]

[23][(i) “Underwriter” means a person who engages in the business of underwriting of an issue of securities of a body corporate;

(j) “Underwriting” means an agreement to subscribe to or procure subscription for securities, issued or offered for sale, remaining unsubscribed;

(k) “issue” means an offer of sale or purchase of securities by any body corporate, or by any other person or group of persons on its or his or their behalf, as the case may be, to or from the public, or the holders of securities of such body corporate or person or group of persons through a merchant banker;]

[24][(2) Words and expressions used and not defined in these regulations but defined in the Act, the [25][Companies Act, 2013], the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 or any rules or regulations made thereunder shall have the same meanings respectively assigned to them in those Acts, rules or regulations made thereunder or any statutory modification or re-enactment thereto, as the case may be.]

[26][CHAPTER II REGISTRATION OF STOCK BROKERS

Regulation - 3. Application for registration.

(1) [27][No person shall act as a stock broker, unless he obtains a certificate of registration from the Board:

Provided that no separate registration shall be required for a clearing member registered with the Board to act as a stock broker in a stock exchange of which he is admitted as a member, subject to grant of approval by the concerned stock exchange.

Explanation. For the purpose of this sub-regulation, it is clarified that no separate registration shall be required for a stock broker registered with the Board to operate in more than one stock exchange, of which he is admitted as a member, subject to grant of approval by the concerned stock exchange.]

(2) An application for grant of a certificate of registration as a stock broker shall be submitted to the Board in Form A of Schedule I through the stock exchange [28][*]of which he is admitted as a member.

(3) The stock exchange [29][*] shall forward the application form to the Board as early as possible, but not later than thirty days from the date of its receipt.

(4) [30][Every stock broker holding a valid certificate of registration shall be entitled to act as an underwriter.]

Regulation - 4. Furnishing of information, clarification.

(1) The Board may require the applicant, or the concerned stock exchange, to furnish further information or clarifications, regarding the trading, settling or dealing in securities and matter connected thereto, to consider the application for grant of a certificate.

(2) The applicant or, its principal officer shall, if so required, appear before the Board for personal representation.

Regulation - 5. Consideration of application for grant of registration.

The Board shall take into account for considering the grant of a certificate, all matters relating to trading, settling or dealing in securities and in particular the following, namely, whether the applicant,

(a) is eligible to be admitted as a member of a stock exchange;

(b) has the necessary infrastructure like adequate office space, equipment and man power to effectively discharge his activities;

(d) has been subjected to disciplinary proceedings under the rules, and bye-laws of a stock exchange, or enforcement action under securities laws, with respect to his business as a stockbroker involving either himself or any of his partners, directors or employees;

(e) is a fit and proper person based on the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008;

(f) has any financial liability which is due and payable in terms of the Act, the Securities Contracts (Regulation) Act, 1956 or rules and regulations thereunder;

(g) has obtained certification in terms of SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007 or as may be specified by the Board;

(h) satisfies the minimum networth and deposit requirements as specified in Schedule VI, for the segment for which membership or approval is sought.

Regulation - 6. Procedure for registration.

The Board may, after consideration of the application under Regulation 3 and on being satisfied that the applicant has complied with the conditions laid down in Regulation 5 grant a certificate of registration in Form D to the stock-broker, and send intimation to that effect to the stock exchange(s) of which it is a member.

Regulation - 7. Procedure where registration is not granted.

(1) Where an application under Regulation 3, does not fulfill the requirements mentioned in Regulation 5, the Board may reject the application after giving a reasonable opportunity of being heard.

(2) The refusal to grant the registration certificate shall be communicated by the Board within thirty days of such refusal to the applicant and to the concerned stock exchange stating therein the grounds on which the application has been rejected.

(3) An applicant whose application has been rejected by the Board under sub-regulation (2), may apply within a period of thirty days from the date of receipt of such intimation, to the board for reconsideration of its decision.

(4) The Board shall reconsider an application made under sub-regulation (3) and communicate its decision as soon as possible in writing to the applicant and to the concerned stock exchange.

Regulation - 8. Payment of fees.

Every applicant eligible for grant of a certificate of registration as a stock broker shall pay such fees and in such manner as specified in Schedule III or Schedule V as the case maybe:

Provided that the Board may on sufficient cause being shown permit the stock-broker to pay such fees at any time before the expiry of six months from the date on which such fees become due.

Regulation - 9. Conditions of registration.

Any registration granted by the Board under Regulation 6 shall be subject to the following conditions, namely,

(a) the stock broker holds the membership of any stock exchange;

(b) he shall abide by the rules, regulations and bye-laws of the stock exchange which are applicable to him;

(c) where the stock broker proposes change in control, he shall obtain prior approval of the Board for continuing to act as such after the change;

(d) he shall pay fees charged by the Board in the manner provided in these regulations;

(e) he shall take adequate steps for redressal of grievances, of the investors within one month of the date of receipt of the complaint and inform the Board as and when required by the Board;

(f) he shall at all times abide by the Code of Conduct as specified in Schedule II; and

(g) he shall at all times maintain the minimum networth as specified in Schedule VI.

its own net worth/funds as may be prescribed from time to time.]

(h) [31][Every stock broker who act as an underwriter shall enter into a valid agreement with the body corporate on whose behalf it is acting as underwriter and shall abide by the regulations made under the Act in respect of the activities carried on by it as underwriter;

(i) Every Stock Broker shall be entitled to act as an underwriter only out of its own net worth/funds as may be prescribed from time to time.]

Regulation - [10. Approval for operation in other stock exchange(s) or segment(s) of stock exchange.

(1) A stock broker registered with the Board, who desires to operate in any other stock exchange or any other segment(s) of the stock exchange of which it holds a membership, shall apply to the concerned stock exchange, in the manner specified by the Board.

(2) A clearing member registered with the Board, who desires to operate in any stock exchange or any segment(s) of the stock exchange, shall apply to the concerned stock exchange in the manner specified by the Board.

(3) On receipt of an application under sub-regulation (1) or sub-regulation (2), the stock exchange shall, on being satisfied with the compliance of provisions of the regulations and other relevant eligibility requirements specified by the Board, grant approval to operate in that stock exchange or segment(s) thereof and shall inform the Board about such grant of approval.][32]

[33][CHAPTER II-A REGISTRATION OF CLEARING MEMBERS

Regulation - 10-A. Application for registration.

[34][(1) No person shall act as a clearing member, unless he obtains a certificate of registration from the Board:

Provided that no separate registration shall be required for a stock broker registered with the Board to act as a clearing member in a clearing corporation of which he is admitted as a member, subject to grant of approval by the concerned clearing corporation.

Explanation. For the purpose of this sub-regulation, it is clarified that no separate registration shall be required for a clearing member registered with the Board to operate in more than one clearing corporation, of which he is admitted as a member, subject to grant of approval by the concerned clearing corporation.]

(2) An application for grant of a certificate of registration as clearing member shall be submitted to the Board in Form AD of Schedule I through the clearing corporation [35][*] of which he is admitted as a member.

(3) The Clearing Corporation [36][*] shall forward the application form to the Board as early as possible, but not later than thirty days from the date of its receipt.

Regulation - 10-B. Applicability of Chapter II.

The provisions of Chapter II shall be applicable mutatis mutandis to registration of a clearing member, except as otherwise provided.”

Regulation - 10-C. Payment of fees.

Every applicant eligible for grant of a certificate of registration as a clearing member shall pay such fees and in such manner as specified in Schedule III or Schedule V as the case maybe:

Provided that the Board may on sufficient cause being shown permit the clearing member to pay such fees at any time before the expiry of six months from the date on which such fees become due.

Regulation - [10-D. Approval for operation in other clearing corporation(s) or segment(s) of clearing corporation.

(1) A clearing member registered with the Board, who desires to operate in any other clearing corporation or any other segment(s) of the clearing corporation of which it holds a membership, shall apply to the concerned clearing corporation in the manner specified by the Board.

(2) A stock broker registered with the Board, who desires to operate in any clearing corporation or any segment(s) of the clearing corporation, shall apply to the concerned clearing corporation in the manner specified by the Board.

(3) On receipt of an application under sub-regulation (1) or sub-regulation (2), the clearing corporation shall, on being satisfied with the compliance of provisions of the regulations and other relevant eligibility requirements specified by the Board, grant approval to operate in that clearing corporation or segment(s) thereof, and shall inform the Board about such grant of approval.][37]

Regulation - [10-E. Clearing Corporation for commodity derivatives.

For the purpose of this Chapter and in respect of clearing and settlement of trades in commodity derivatives, the word “clearing corporation” wherever appearing, shall refer to a commodity derivatives exchange till such time a separate clearing corporation is established to undertake the activity of clearing and settlement of trades in commodity derivatives.

Regulation - 10-F. Application of Chapters IV, V & VI.

The provisions of Chapters IV, V and VI of these regulations shall mutatis mutandis apply to a clearing member and self-clearing member.][38]

CHAPTER III

Regulation -11.

[39][* * *]

CHAPTER IIIA

Regulation -12.

[40][* * *]

CHAPTER III B

Regulation -13.

[41][* * *]

CHAPTER IIIC

Regulation -14.

[42][* * *]

Regulation -15.

[43][* * *]

Regulation -16.

[44][* * *]

CHAPTER IV GENERAL OBLIGATIONS AND RESPONSIBILITIES

Regulation - 17. To maintain proper books of account, records, etc.

(1) Every Stock Broker shall keep and maintain the following books of account, records and documents, namely:

(a) Register of transactions (Sauda Book);

(b) Clients ledger;

(d) Journals;

(e) Cash book;

(f) Bank pass book;

(g) [45][Documents register containing, inter alia, particulars of securities received and delivered in physical form and the statement of account and other records relating to receipt and delivery of securities provided by the depository participants in respect of dematerialized securities;]

(h) Member's contract books showing details of all contracts entered into by him with other members of the same exchange or counterfoils or duplicates of memos of confirmation issued to such other members;

(i) Counterfoils or duplicates of contract notes issued to clients;

(j) Written consent of clients in respect of contracts entered into as principals;

(k) Margin deposit book;

(l) [46][* * *]

(m) [47][* * *]

(n) [48][Client account opening form in the format as may be specified by the Board.]

(2) Every stock broker shall intimate to the Board the place where the books of account, records and documents are maintained.

(3) Without prejudice to sub-regulation (1), every stock broker shall, after the close of each accounting period furnish to the Board if so required as soon as possible but not later than six months from the close of the said period a copy of the audited balance sheet and profit and loss account as at the end of the said accounting period:

Provided that, if it is not possible to furnish the above documents within the time specified, the Stock Broker shall keep the Board informed of the same together with the reasons for the delay and the period of time by which such documents would be furnished.

(4) [49][(1) Subject to the provisions of any other law, every Stock Broker acting as an underwriter shall keep and maintain the following books of account and documents, namely:

(a) In relation to an underwriter being a body corporate

(i) a copy of the balance sheet and profit and loss account as at the end of each accounting period;

(ii) a copy of the auditor's report on the accounts for that period;

(b) In relation to an underwriter not being a body corporate

(i) records in respect of all sums of money received and expended by them and the matters in respect of which the receipt and expenditure take place; and

(ii) their assets and liabilities.

(2) Every Stock Broker acting as an underwriter shall also maintain the following records with respect to

(a) details of all agreements

(b) total amount of securities of each body corporate subscribed to in pursuance of an agreement

(5) Agreement with clients

Every stock broker acting as an underwriter shall enter into an agreement with each body corporate on whose behalf it is acting as underwriter and the said agreement shall, amongst other things, provide for the following, namely:

(a) the period for which the agreement shall be in force;

(b) the allocation of duties and responsibilities between the underwriter and the client.

(d) the period, within which the underwriter has to subscribe to the issue after being intimated by or on behalf of such body corporate;

(e) the amount of commission or brokerage payable to the underwriter;

(f) details of arrangements, if any, made by the underwriter for fulfilling the underwriting obligations.

(6) General responsibilities of a Stock Broker as an underwriter

(a) Every Stock Broker acting as an underwriter shall not derive any direct or indirect benefit from underwriting the issue other than the commission or brokerage payable under an agreement for underwriting.

(b) The total underwriting obligations under all the agreements shall not exceed twenty times of the net worth.

(c) Every Stock Broker acting as an underwriter, in the event of being called upon to subscribe for securities of a body corporate pursuant to an agreement shall subscribe to such securities within 45 days of the receipt of such intimation from such body corporate.]

Regulation - 18. Maintenance of books of account and records.

Every stock broker shall preserve the books of account and other records maintained under Regulation 17 for a minimum period of five years.

Regulation - [18-A. Appointment of compliance officer.

(1) Every stock broker shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued by the Board or the Central Government and for redressal of investors' grievances.

(2) The compliance officer shall immediately and independently report to the Board any non-compliance observed by him.][50]

Regulation - 18-B. Stock Broker not to deal with unregistered Sub-broker.

[51][* * *]

Regulation - 18-C. Restriction on activities.

[52][* * *]

CHAPTER V PROCEDURE FOR INSPECTION

Regulation - 19. Board's right to inspect.

(1) Where it appears to the Board so to do, it may appoint one or more persons as inspecting authority to undertake inspection of the books of account, other records and documents of the stock brokers for any of the purposes specified in sub-regulation (2).

(2) The purposes referred to in sub-regulation (1) shall be as follows, namely:

(a) to ensure that the books of account and other books are being maintained in the manner required;

(b) that the provisions of the Act, rules, regulations and the provisions of the Securities Contracts (Regulation) Act, and the rules made thereunder are being complied with;

Regulation - 20. Procedure for inspection.

(1) Before undertaking any inspection under Regulation 19, the Board shall give a reasonable notice to the stock broker for that purpose.

(2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors or in public interest no such notice should be given, it may by an order in writing direct that the inspection of the affairs of the stock broker be taken up without such notice.

(3) On being empowered by the Board, the inspecting authority shall undertake the inspection and the stock-broker against whom an inspection is being carried out shall be bound to discharge his obligations as provided under Regulation 21.

Regulation - 21. Obligations of stock-broker on inspection by the Board.

(1) It shall be the duty of every director, proprietor, partner, officer and employee of the stock-broker, who is being inspected, to produce to the inspecting authority such books, accounts and other documents in his custody or control and furnish him with the statements and information relating to the transactions in securities market within such time as the said officer may require.

(2) The stock-broker shall allow the inspecting authority to have reasonable access to the premises occupied by such stock-broker or by any other person on his behalf and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the stock-broker or any other person and also provide copies of documents or other materials which, in the opinion of the inspecting authority are relevant.

(3) The inspecting authority, in the course of inspection, shall be entitled to examine or record statements of any member, director, partner, proprietor and employee of the stockbroker.

(4) It shall be the duty of every director, proprietor, partner, officer and employee of the stock broker to give to the inspecting authority all assistance in connection with the inspection, which the stock broker may reasonably be expected to give.

Regulation - 22. Submission of report to the Board.

The inspecting authority shall, as soon as may be possible, submit an inspection report to the Board.

Regulation - 23. Action on inspection or investigation report.

[53][The Board shall after consideration of inspection or investigation report take such action as it may deem fit and appropriate including action under [54][Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008], Chapter VIA of the Act or Section 24 of the Act.]

Regulation - 24. Appointment of auditor.

Notwithstanding anything contained above, the Board may appoint a qualified auditor to investigate into the books of account or the affairs of the stock-broker:

Provided that, the auditor so appointed shall have the same powers of the inspecting authority as mentioned in Regulation 19 and the obligations of the stockbroker in Regulation 21 shall be applicable to the investigation under this regulation.

CHAPTER VI PROCEDURE FOR ACTION IN CASE OF DEFAULT

Regulation - [25. Liability for contravention of the Act, rules or the regulations.

A stock broker [55][* * *] who contravenes any of the provisions of the Act, rules or regulations framed thereunder shall be liable for any one or more of the following actions

(i) Monetary penalty under Chapter VIA of the Act.

(ii) Penalties as specified under [56][Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008] including suspension or cancellation of certificate of registration as a stock broker [57][* * *],

(iii) Prosecution under Section 24 of the Act.][58]

Regulation - 26. Liability for monetary penalty.

A stock broker [59][* * *] shall be liable for monetary penalty in respect of the following violations, namely

(i) Failure to file any return or report with the Board.

(ii) Failure to furnish any information, books or other documents within 15 days of issue of notice by the Board.

(iii) Failure to maintain books of account or records as per the Act, rules or regulations framed thereunder.

(iv) Failure to redress the grievances of investors within 30 days of receipts of notice from the Board.

(v) Failure to issue contract notes in the form and manner specified by the Stock Exchange of which such broker is a member.

(vi) Failure to deliver any security or make payment of the amount due to the investor within 48 hours of the settlement of trade unless the client has agreed in writing otherwise.

(vii) Charging of brokerage which is in excess of brokerage specified in the regulations or the bye-laws of the stock exchange.

(viii) Dealing in securities of a body corporate listed on any stock exchange on his own behalf or on behalf of any other person on the basis of any unpublished price sensitive information.

(ix) Procuring or communicating any unpublished price sensitive information except as required in the ordinary course of business or under any law.

(x) Counselling any person to deal in securities of any body corporate on the basis of unpublished price sensitive information.

(xi) Indulging in fraudulent and unfair trade practices relating to securities.

(xii) [60][Failure to maintain client account opening form.]

(xiii) Failure to segregate his own funds or securities from the client's funds or securities or using the securities or funds of the client for his own purpose or for purpose of any other client.

(xiv) [61][* * *]

(xv) Failure to comply with directions issued by the Board under the Act or the regulations framed thereunder.

(xvi) Failure to exercise due skill, care and diligence.

(xvii) [62][Failure to obtain prior approval of the Board in case of change in control of the stock broker.]

(xviii) Failure to satisfy the net worth or capital adequacy norms, if any, specified by the Board.

(xix) Extending use of trading terminal to any unauthorized person or place.

(xx) Violations for which no separate penalty has been provided under these regulations.

Regulation - 27. Liability for action under the [63][Securities and Exchange Board of India (Intermediaries) Regulations, 2008].

A stock broker [64][* * *] shall be liable for any action as specified in [65][Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008] including suspension or cancellation of his certificate of registration as a stock broker [66][* * *] [67][* * *], if he

(i) ceases to be a member of a stock exchange; or

(ii) has been declared defaulter by a stock exchange and not re-admitted as a member within a period of six months; or

(iii) surrenders his certificate of registration to the Board; or

(iv) has been found to be not a fit and proper person by the Board under these or any other regulations; or

(v) has been declared insolvent or order for winding up has been passed in the case of a broker [68][* * *] being a company registered under the [69][Companies Act, 2013]; or

(vi) or any of the partners or any whole-time director in case a broker [70][* * *] is a company registered under the [71][Companies Act, 2013] has been convicted by a court of competent jurisdiction for an offence involving moral turpitude; or

(vii) fails to pay fee as per Schedule III of these regulations; or

(viii) fails to comply with the rules, regulations and bye-laws of the stock exchange of which he is a member; or

(ix) fails to co-operate with the inspecting or investigating authority; or

(x) fails to abide by any award of the Ombudsman or decision of the Board under the Securities and Exchange Board of India (Ombudsman) Regulations, 2003; or

(xi) fails to pay the penalty imposed by the Adjudicating Officer; or

(xii) indulges in market manipulation of securities or index; or

(xiii) indulges in insider trading in violation of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992; or

(xiv) violates Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003; or

(xv) commits violation of any of the provisions for which monetary penalty or other penalties could be imposed; or

(xvi) fails to comply with the circulars issued by the Board; or

(xvii) commits violations specified in Regulation 26 which in the opinion of the Board are of a grievous nature.

Regulation - 28. Liability for prosecution.

A stock broker [72][* * *] shall be liable for prosecution under Section 24 of the Act for any of the following violations, namely:

(i) Dealing in securities without obtaining certificate of registration from the Board as a stock broker [73][* * *].

(ii) Dealing in securities or providing trading floor or assisting in trading outside the recognized stock exchange in violation of provisions of the Securities Contracts (Regulation) Act, 1956 or rules made or notifications issued thereunder.

(iii) Market manipulation of securities or index.

(iv) Indulging in insider trading in violation of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

(v) Violating the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

(vi) Failure without reasonable cause.

(a) to produce to the investigating authority or any person authorized by him in this behalf, any books, registers,

(b) to appear before the investigating authority personally or to answer any question which is put to him by the investigating authority; or

(vii) Failure to pay penalty imposed by the adjudicating officer or failure to comply with any of his directions or orders.]

(viii) [74][* * *]

[75][CHAPTER VI-A POWER TO RELAX STRICT ENFORCEMENT OF THE REGULATIONS

Regulation - 28-A. Exemption from enforcement of the regulations in special cases.

(1) The Board may, exempt any person or class of persons from the operation of all or any of the provisions of these regulations for a period as may be specified but not exceeding twelve months, for furthering innovation [76][* * *] relating to testing new products, processes, services, business models, etc. in live environment of regulatory sandbox in the securities markets.

(2) Any exemption granted by the Board under sub-regulation (1) shall be subject to the applicant satisfying such conditions as may be specified by the Board including conditions to be complied with on a continuous basis.

Explanation. For the purposes of these regulations, “regulatory sandbox” means a live testing environment where new products, processes, services, business models, etc. may be deployed on a limited set of eligible customers for a specified period of time, for furthering innovation in the securities market, subject to such conditions as may be specified by the Board.]

[77][CHAPTER VII MISCELLANEOUS

Regulation - 29. Power to remove difficulties.

In order to remove any difficulties in the interpretation or application of the provisions of these regulations, the Board shall have the power to issue directions through guidance notes or circulars.

Regulation - 30. Power to specify procedures, etc. and issue clarifications.

For the purposes of implementation of these regulations and matters incidental thereto, the Board may specify norms, procedures, processes, manners or guidelines as specified in these regulations, by way of circulars to recognised stock exchange(s) and recognised clearing corporation(s).]

SCHEDULE I

FORMS

[78][FORM A

[79][Regulation 3]

Application Form for Registration as Stock Broker with Securities and Exchange Board of India

Table 1:

Sl. No.	Particulars	Details
1	Name of Member with Code No.
2	Trade name of Member
3	Name of the Stock Exchange/segment of which the applicant is the member
4	Date of admission to exchange/segment
5	Address of Member
6	Fax Number(s), Phone Number(s) of office and residence and email address
7	Form of OrganizationSole proprietorship, partnership, corporate body, financial
8	Net worth along with supporting document
[80][9	PAN of the applicant]

Table 2: Details of proprietor/partners/directors

Sl. No.

Names

Age

PAN

Educational Qualifications

Experience in derivatives trading

or securities market, as applicable

[81][* * * *]

Table 4: Details of sales personnel or approved user who has passed any certification programme

Sl. No.	Name	Date of test	Percentage	Certificate No.

Other details:

(1) Please furnish a copy of the memorandum and articles of association or the partnership deed, as the case may be.

(2) [82][****]

(3) If the applicant intends to clear and settle his trades through a clearing member, the applicant is required to furnish the name and details of the clearing member along with a copy of MoU/agreement/contract with them for the same.

(4) Whether the application is accompanied by a requisite fee as per Schedule V of the Regulations as applicable to the applicant.

Undertaking

(5) Whether the applicant or its director or partners, any time convicted of any economic offence? If so, furnish the details.

(6) Whether the applicant or its directors or partners, declared insolvent or declared defaulter by any exchange? If so, furnish details.

(7) Whether the applicant or its directors or partners at any time subjected to any proceedings or penalty by the Board under SEBI Act or any of the regulations framed under the SEBI Act? If so, furnish the details.

(8) Whether any disciplinary action has been initiated/taken or penalty has been imposed by SEBI/stock exchange(s)/clearing corporation(s) or any other regulatory authority? If yes, furnish details. Also provide the details of corrective steps taken thereon

Declaration:

I declare that the information given in this form is true and in the event of any information furnished is false, misleading or suppression of facts, my certificate of registration is liable to be cancelled by SEBI without assigning any reasons whatsoever.

Dated ……………………Signature

RECOMMENDATION OF THE STOCK

EXCHANGE

This is to certify that …………………………. is a member of this Stock Exchange and is recommended for registration with the Securities and Exchange Board of India.

Signature:

Name:

Designation:]

FORM AA

[83][* * *]

FORM AB

[84][* * *]

FORM AC

[85][* * *]

[86][FORM AD

[Regulation 10-A]

Application Form for Registration as Clearing Member with Securities and Exchange Board of India

Table 1:

Sl. No.	Particulars	Details
1.	Name of Member with Code
2.	Trade name of Member
3.	Name of the Clearing Corporation of which the applicant is the member
4.	Date of admission to Clearing Corporation
5.	Address of Member
6.	Fax Number(s), Phone Number(s) of office and residence and email address
7.	Form of OrganizationSole proprietorship, partnership, corporate body, financial institution [87][,others (please specify)]
8.	Net worth along with supporting document
[88][9	PAN of the applicant]

Table 2: Details of proprietor/partners/directors

Sl. No

Names

Age

PAN

Educational

Qualifications

Experience in derivatives trading

or securities market, as applicable

[89][* * *]

Other details:

(1) Please furnish a copy of the memorandum and articles of association or the partnership deed, as the case may be.

(2) Whether the application is accompanied by a requisite fee as per Schedule V of the Regulations as applicable to the applicant.

Undertakings

(3) Whether the applicant or its director or partners, any time convicted of any economic offence? If so, furnish the details.

(4) Whether the applicant or its directors or partners, declared insolvent or declared defaulter by any exchange? If so, furnish details.

(5) Whether the applicant or its directors or partners at any time subjected to any proceedings or penalty by the Board under SEBI Act or any of the regulations framed under the SEBI Act? If so, furnish the details.

(6) Whether any disciplinary action has been initiated/taken or penalty has been imposed by SEBI/stock exchange(s)/clearing corporation(s) or any other regulatory authority? If yes, furnish details. Also provide the details of corrective steps taken thereon.

Declaration:

Dated ……………… Signature

RECOMMENDATION OF THE CLEARING CORPORATION

This is to certify that …………………………. is a member of this Clearing Corporation and is recommended for registration with the Securities and Exchange Board of India.

Signature:

Name:

Designation:]

FORM B

[90][* * *]

FORM C

[91][* * *]

FORM CA

[92][* * *]

[93][FORM D

[Regulations 6 and 10-B]

CERTIFICATE OF REGISTRATION

In exercise of the powers conferred by sub-section (1) of Section 12 of the Securities and Exchange Board of India Act, 1992, read with the rules and regulations made thereunder, the Board hereby grants a certificate of registration to …………………………………………………… as a stock broker/proprietary trading member/clearing member for carrying on the activities of buying, selling or dealing in securities/clearing and settlement of trades and for carrying on such other activities as are permitted by stock exchange(s)/clearing corporation(s), subject to the conditions specified therefor, from time to time, by the Board.

Registration number allotted is as under: ……………………………………………………

This certificate shall be valid till it is suspended or cancelled in accordance with the Regulations.

Date:

By order

For and on behalf of Securities and Exchange Board of India]

FORM DA

[94][* * *]

FORM DB

[95][* * *]

FORM DC

[96][* * *]

FORM E

Securities and Exchange Board of India (Stock Brokers [97][* * *])

Regulations, 1992

[Regulation 12]

Certificate of Registration

Registration number allotted is as under:

………………………………………………………………………………………………………………

…………………

This certificate shall be valid till it is suspended or cancelled in accordance with the regulations.

Date: ……………By Order

For and on behalf of Securities and Exchange Board of India

SCHEDULE II

Securities and Exchange Board of India (Stock Brokers [98][* * *])

Regulations, 1992

CODE OF CONDUCT FOR STOCK BROKERS

[Regulation 9]

A. General.

(1) Integrity: A stock-broker, shall maintain high standards of integrity, promptitude and fairness in the conduct of all his business.

(2) Exercise of due skill and care: A stock-broker shall act with due skill, care and diligence in the conduct of all his business.

(3) Manipulation: A stock-broker shall not indulge in manipulative, fraudulent or deceptive transactions or schemes or spread rumours with a view to distorting market equilibrium or making personal gains.

(4) Malpractices: A stock-broker shall not create false market either singly or in concert with others or indulge in any act detrimental to the investors interest or which leads to interference with the fair and smooth functioning of the market. A stockbroker shall not involve himself in excessive speculative business in the market beyond reasonable levels not commensurate with his financial soundness.

(5) Compliance with statutory requirements: A stock-broker shall abide by all the provisions of the Act and the rules, regulations issued by the Government, the Board and the Stock Exchange from time to time as may be applicable to him.

B. Duty to the Investor

(1) Execution of Orders: A stock-broker, in his dealings with the clients and the general investing public, shall faithfully execute the orders for buying and selling of securities at the best available market price and not refuse to deal with a Small Investor merely on the ground of the volume of business involved. A stock-broker shall promptly inform his client about the execution or non-execution of an order, and make prompt payment in respect of securities sold and arrange for prompt delivery of securities purchased by clients.

(2) Issue of Contract Note: A stock-broker shall issue without delay to his client [99][or client of the sub-broker, as the case may be] a contract note for all transactions in the form specified by the stock exchange.

(3) Breach of Trust: A stock-broker shall not disclose or discuss with any other person or make improper use of the details of personal investments and other information of a confidential nature of the client which he comes to know in his business relationship.

(4) Business and Commission:

(a) A stock-broker shall not encourage sales or purchases of securities with the sole object of generating brokerage or commission.

(b) A stock-broker shall not furnish false or misleading quotations or give any other false or misleading advice or information to the clients with a view of inducing him to do business in particular securities and enabling himself to earn brokerage or commission thereby.

(5) Business of Defaulting Clients: A stock-broker shall not deal or transact business knowingly, directly or indirectly or execute an order for a client who has failed to carry out his commitments in relation to securities with another stock-broker.

(6) Fairness to Clients: A stock-broker, when dealing with a client, shall disclose whether he is acting as a principal or as an agent and shall ensure at the same time, that no conflict of interest arises between him and the client. In the event of a conflict of interest, he shall inform the client accordingly and shall not seek to gain a direct or indirect personal advantage from the situation and shall not consider clients' interest inferior to his own.

(7) Investment Advice: A stock-broker shall not make a recommendation to any client who might be expected to rely thereon to acquire, dispose of, retain any securities unless he has reasonable grounds for believing that the recommendation is suitable for such a client upon the basis of the facts, if disclosed by such a client as to his own security holdings, financial situation and objectives of such investment.

The stock-broker should seek such information from clients, whenever he feels it is appropriate to do so.

[100][(7-A) Investment advice in publicly accessible media

(a) A stock broker or any of his employees shall not render, directly or indirectly, any investment advice about any security in the publicly accessible media, whether real-time or non-real-time, unless a disclosure of his interest including the interest of his dependent family members and the employer including their long or short position in the said security has been made, while rendering such advice.

(b) In case an employee of the stock broker is rendering such advice, he shall also disclose the interest of his dependent family members and the employer including their long or short position in the said security, while rendering such advice.]

(8) Competence of Stock-Broker: A stock-broker should have adequately trained staff and arrangements to render fair, prompt and competence services to his clients.

C. Stock-Brokers vis-a-vis Other Stock-Brokers

(1) Conduct of Dealings: A stock-broker shall co-operate with the other contracting party in comparing unmatched transactions. A stock-broker shall not knowingly and wilfully deliver documents which constitute bad delivery and shall co-operate with other contracting party for prompt replacement of documents which are declared as bad delivery.

(2) Protection of Clients Interests: A stock-broker shall extend fullest co-operation to other stock-brokers in protecting the interests of his clients regarding their rights to dividends, bonus shares, right shares and any other right related to such securities.

(3) Transactions with Stock-Brokers: A stock-broker shall carry out his transactions with other stock-brokers and shall comply with his obligations in completing the settlement of transactions with them.

(4) Advertisement and Publicity: A stock-broker shall not advertise his business publicly unless permitted by the stock exchange.

(5) Inducement of Clients: A stock-broker shall not resort to unfair means of inducing clients from other stock-brokers.

(6) False or Misleading Returns: A stock-broker shall not neglect or fail or refuse to submit the required returns and not make any false or misleading statement on any returns required to be submitted to the Board and the stock exchange.

(7) [101][* * *]

D. [102][* * *]

E. [103][Duty as an underwriter

In addition to duties specified above, the Stock Broker while acting as an Underwriter shall comply with following:

(1) A Stock Broker shall make all efforts to protect the interests of its clients.

(2) A Stock Broker shall ensure that it and its personnel will act in an ethical manner in all its dealings with a body corporate making an issue of securities (hereinafter referred to in the Schedule as “the issuer”).

(3) A Stock Broker shall not make any statement, either oral or written, which would misrepresent

(a) the services that the underwriter is capable of performing for its client, or has rendered to any other issuer company;

(b) his underwriting commitment.

(4) A Stock Broker shall avoid conflict of interest and make adequate disclosure of its interest.

(5) A Stock Broker shall put in place a mechanism to resolve any conflict of interest situation that may arise in the conduct of its business or where any conflict of interest arises, shall take reasonable steps to resolve the same in an equitable manner.

(6) A Stock Broker shall make appropriate disclosure to the client of its possible source or potential areas of conflict of duties and interest while acting as underwriter which would impair its ability to render fair, objective and unbiased services.

(7) A Stock Broker shall not divulge to other issuer, press or any party any confidential information about its issuer company, which has come to its knowledge and deal in securities of any issuer company without making disclosure to the Board and also to the Board of directors of the issuer company.

(8) A Stock Broker shall ensure that any change in registration status/any penal action taken by board or any material change in financials which may adversely affect the interests of clients/investors is promptly informed to the clients and any business remaining outstanding is transferred to another registered person in accordance with any instructions of the affected clients/investors.

(9) (a) A Stock Broker or any of its employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, whether real-time or non-real-time, unless a disclosure of its interest including its long or short position in the said security has been made, while rendering such advice.

(b) In case, an employee of a Stock Broker is rendering such advice, the Stock Broker shall ensure that he shall disclose its interest, the interest of dependent family members and that of the employer including their long or short position in the said security, while rendering such advice.

(10) A Stock Broker or any of its directors, partners or manager having the management of the whole or substantially the whole of affairs of the business, shall not either through its account or their respective accounts or through their associates or family members, relatives or friends indulge in any insider trading.

(11) A Stock Broker acting as an underwriter shall not indulge in any unfair competition, which is likely to be harmful to the interest of other entities acting as underwriters carrying on the business of underwriting or likely to place such other underwriters in a dis advantageous position in relation to the underwriter while competing for, or carrying out any assignment.

(12) An underwriter shall not be party to or instrumental for

(a) creation of false market;

(b) price rigging or manipulation; or

(c) passing of unpublished price sensitive information in respect of securities which are listed or proposed to be listed in any stock exchange to any person or intermediary.]

[104][* * *]

SCHEDULE III

Securities and Exchange Board of India (Stock Brokers [105][* * *])

Regulations, 1992

[Regulation 10]

I. Fees to be paid by the Stock Broker.

(1) Every stock broker shall subject to paragraphs 2 and 3 of this Schedule pay registration fees in the manner set out below:

(a) where the annual turnover does not exceed rupees one crore during any financial year, a sum of rupees five thousand for each financial year;

(b) where the annual turnover of the stock-broker exceeds rupees one crore during any financial year, a sum of rupees five thousand plus one hundredth of one per cent of the turnover in excess of rupees one crore for each financial year;

[106][(bb) Notwithstanding anything contained in clause (b) it is clarified that the fee shall be recoverable as computed as under:

(i) in respect of jobbing transactions that is to say all transactions which are squared off during the same day which have not been undertaken by the broker on behalf of clients, the fees shall be computed at the rate of one two hundredth of one per cent in respect of the sale side of such transactions;

(ii) in respect of transactions in Government securities, the bonds issued by any Public Sector Undertaking and the units traded in a similar manner, the fee payable shall be computed at the rate of one thousandth of one per cent of the turnover;

(iii) in case of carry forward, renewal or badla transactions the fees shall be computed at the rate of one hundredth of one per cent of the turnover and the reverse off setting transactions shall not be counted as part of the turnover;

(iv) if brokers are carrying out transactions in securities without reporting them to the stock exchange, those transactions shall be taken into account for the purpose of turnover and the fees shall be computed at the rate of one hundredth of one per cent of the turnover;

(v) the trade put through on other stock exchanges shall be included in the turnover of that exchange if market for that security does not exist on the exchange of which he is a member and the fees shall be computed at the rate of one hundredth of one per cent of the turnover;

(vi) activity such as underwriting and collection of deposits shall not be taken into account for the purpose of calculating the turnover;]

(c) after the expiry of five financial years from the date of initial registration as a stockbroker, he shall pay a sum of rupees five thousand for [107][every] block of five financial years commencing from the sixth financial year after the date of grant of initial registration to keep his registration in force.

(2) Fees referred to in clauses (a) and (b) of paragraph 1 above shall be paid

(a) in respect of the financial year 1992-93 within one month of the commencement of these regulations;

(b) in respect of the financial year beginning on the 1st day of April, 1993 and the following financial years, on or before the first day of October of the financial year to which such payment relates, and such fees shall be computed with reference to the annual turnover relating to the preceding financial year.

(3) Every remittance of fees referred to in clauses (a) and (b) of paragraph 1, shall be accompanied by a certificate as to the authenticity of turnover on the basis of which fees have been computed duly signed by the stock exchange of which the stock broker is a member or by a qualified auditor or as defined in Section 226 of the Companies Act, 1956.

Explanation. For the purpose of paragraphs 1, 2 and 3, “annual turnover” means the aggregate of the sale and purchase prices of securities received and receivable by the stock broker on his own account as well as on account of his clients in respect of sale and purchase or dealing in securities during any financial year.

(4) [108][Where a corporate entity has been formed by converting the individual or partnership membership card of the exchange, such corporate entity shall be exempted from payment of fee for the period for which the erstwhile individual or partnership member, as the case may be, has already paid the fees subject to the condition that the erstwhile individual or partner shall be the whole-time director of the corporate member so converted and such director will continue to hold a minimum of 40 per cent shares of the paid-up equity capital of the corporate entity for a period of at least three years from the date of such conversion.]

[109][Explanation: It is clarified that the conversion of individual or partnership membership card of the exchange into corporate entity shall be deemed to be in continuation of the old entity and no fee shall be collected again from the converted corporate entity for the period for which the erstwhile entity has paid the fee as per the regulations.]

[110][4-A. Where a stock exchange has formed a subsidiary company, which has become a stock broker of another stock exchange, then the turnover of the stock broker who is buying, selling or dealing in securities, through the subsidiary company as a sub-broker, shall be excluded from the turnover of the subsidiary company, only if the stock broker has paid five years turnover based fees plus fee for a block of five years in accordance with the regulations, on the concerned stock exchange which has formed the subsidiary company.]

(5) [111][If a stock broker fails to remit fees in accordance with Paragraphs 1 and 2, he shall be liable to pay interest at 15% per annum for each month of delay or part thereof:

Provided that the liability to pay interest as aforesaid may be in addition to any other action which the Board may take as deemed fit against the stock broker under the Act, or the Regulations:

Provided further that if the liability of the stock broker on account of payment of interest works out to be Rs. 100 or less the same may be waived off by the Board taking into consideration the administrative cost involved in recovering the said amount.]

II. [112][* * *]

III. Manner of Fees to be paid.

[113][The fees specified above shall be paid on or before the 1st day of October each year payable [114][by way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI or] by draft in favour of “The Securities and Exchange Board of India” at [115][Mumbai], or at the respective regional office.]

IV. [116][Non-applicability to stock brokers governed by Schedule V.

The provisions of this Schedule shall not apply to stock brokers to whom Schedule V applies, from the time when it becomes so applicable.]

SCHEDULE III-A[117]

SCHEDULED IV[118]

SCHEDULE IV-A[119]

SCHEDULE IV-B[120]

[121][SCHEDULE V

PAYMENT OF FEES BY STOCK BROKERS/CLEARING MEMBERS/SELF-CLEARING MEMBERS

[Regulation 10(1)]

PART A

APPLICABILITY

(1) This Schedule shall apply to stock brokers in cash segment from the following points of time:

(a) All stock brokers who are granted registration by the Board on or after the first day of October, 2006 upon grant of such registration;

(b) All stock brokers who were granted registration by the Board on or after the first day of April, 2006, but before the first day of October, 2006 from the first day of October, 2006;

(c) All stock brokers who have not completed five financial years from the date of grant of registration by the Board, as on the thirty first day of March, 2006 upon completion of ten financial years from the date of grant of registration by the Board;

(d) All stock brokers who have completed five financial years from the date of grant of registration by the Board, as on the thirty first day of March, 2006 upon completion of the current block of five financial years, within the meaning of item I(1)(c) of Schedule III;

(e) All stock brokers falling under sub-clause (c) or (d), who opt in accordance with clause 2 of this Schedule from such date as may be specified by the Board.

[122][1-A. This Schedule shall apply to every stock broker who deals in commodity derivatives and every clearing member/self-clearing member who clears and settles trades in commodity derivatives, from the date of grant of registration:

Provided that for a person dealing in commodity derivatives as a commodity derivatives broker, clearing and settling trades as a commodity derivatives clearing member or self-clearing member, immediately before the transfer and vesting of rights and assets of the Forward Markets Commission with the Securities and Exchange Board of India, this Schedule shall apply, upon grant of registration by the Board, the computation of fee being with effect from the date of notification of transfer and vesting of rights and assets of the Forward Markets Commission with the Securities and Exchange Board of India.]

[123][1-B. This schedule shall apply to every stock broker who deals in electronic gold receipt segment and every clearing member/self-clearing member who clears and settles trades in electronic gold receipt segment, from the date of grant of registration.]

(2) Stock brokers falling under sub-clause (c) or (d) of clause 1 may opt to pay fees in accordance with this Schedule before completion of the relevant time periods mentioned in those sub-clauses, by exercising an option in writing to that effect and communicating it to the Board, in such manner and within such time as may be specified by the Board.

PART B

CHARGE OF FEES

(3) (1) On and from the applicability of this Schedule, every stock broker/clearing member/self clearing member shall pay to the Board in accordance with Part C, a fee in respect of the securities transactions including off-market transactions undertaken by them, at the rates mentioned below:

[124][Table

Segment	Rate/Amount (in Rs.)			Remarks
Segment	Stock Broker	Clearing member	Self-clearing member	Remarks
Cash	0.00010 per cent of his turnover (Rs. 10 per crore)	*	*	All sale and purchase transactions in securities other than debt securities.
Equity derivatives	0.00010 per cent of his turnover (Rs. 10 per crore)	50,000/	50,000/	Explanation.(A) The expression ‘turnover’ shall include the value of the trades executed by the stock broker on the concerned segment of the recognized stock exchange and of the trades settled on the expiration of the contracts.
Equity derivatives	0.00010 per cent of his turnover (Rs. 10 per crore)	50,000/	50,000/	(B) In case of options contracts, ‘turnover’ shall be computed on the basis of premium traded for the option contracts and in case where the option is exercised or assigned, it shall be additionally computed on the basis of notional value of option contracts exercised or assigned.
Currency derivatives	0.00010 per cent of his turnover (Rs. 10 per crore)	50,000/	50,000/
Interest rate derivatives	0.00005 per cent of his turnover (Rs. 5 per crore)	50,000/	50,000/
Commodity derivatives	0.00010 per cent of his turnover (Rs. 10 per crore)	50,000/	50,000/	Explanation. (A) The expression ‘turnover’ shall include the value of the trades executed by the stock broker on the concerned recognized stock exchange and of the trades settled on the expiration of the contracts. (B) In case of options contracts, ‘turnover’ shall be computed on the basis of premium traded for the option contracts and in case where the option is exercised or assigned, it shall be additionally computed on the basis of notional value of option contracts exercised or assigned.
Agricultural commodity derivatives	0.00001 per cent of his turnover (Rs. 1 per crore)
Debt	0.00002 per cent of his turnover (Rs. 2 per crore) Explanation For the purpose of this clause, the expression ‘turnover’ shall include the aggregate value of the trades executed, including both sale and purchase transactions, by the stock broker including the proprietary trading member on the debts segment of the recognized stock exchange	50,000/	50,000/	The fee shall not be applicable for clearing member or self-clearing member in case the said clearing member or self-clearing member is already a clearing member or self-clearing member in any other segment and is paying fee, as specified in this Part, for such segment.
[125][Electronic Gold Receipt Segment	0.00010 per cent of turnover (Rs. 10 per crore)	*	*	All sale and purchase transactions in Electronic Gold Receipt.
* As may be specified by the Board from time to time.]

[126][(1-A) Every stock broker in cash segment, equity derivatives segment, currency derivatives segment, interest rate derivatives segment and commodity derivatives segment (other than agri commodity derivative) liable to pay fees as a percentage of their turnover as specified at subclause 1 shall, for the period June 01, 2020 to March 31, 2021, pay only 50% (fifty percent) of fees as calculated therein, including for off-market transactions undertaken by them.]

(2) A clearing member/self-clearing member shall pay a fee of Rs. 50,000 every year till his registration is in force, in the manner specified below:

(a) for the first financial year along with the application for registration;

(b) for the subsequent financial years before 1st June of that financial year.

(4) Nothing in clause 3 shall affect the liability of any stock broker to pay fees under Schedule III, which accrued before this Schedule became applicable to him and such fees shall be paid as per the relevant provisions of Schedule III as if they had not ceased to be applicable to him.

[127][4-A. The non-refundable fee payable along with an application for registration under sub-regulation (4) of Regulation 3 or sub-regulation (4) of Regulation 10-A shall be a sum of fifty thousand rupees:

Provided that the non-refundable fee payable along with an application for registration, by a person dealing, clearing and settling trades, on a national commodity derivatives exchange or regional commodity derivatives exchange, immediately before the transfer and vesting of rights and assets of the Forward Markets Commission with the Securities and Exchange Board of India, shall be a sum of twenty-five thousand rupees or five thousand rupees, respectively.]

[128][4-B. The fee specified in clause 4-A shall be payable by the applicant by way of direct credit in the bank account through online payment using SEBI payment gateway.]

PART C

MANNER OF PAYMENT AND

RECOVERY

(5) (1) Every recognized stock exchange shall collect from every stock broker in cash segment, the fee payable under clause 3 in respect of

(a) securities transactions entered into by him in that stock exchange; and

(b) off-market transactions entered into by him which are reported to that stock exchange, in accordance with the provisions of its bye-laws.

Explanation. The Board may specify the manner in which fees shall be collected from stock brokers who report the same transactions to different stock exchanges in which they are members, under clause (b).

(2) Every recognized stock exchange shall collect from every stock broker in any segment other than cash segment, the fee payable under clause 3 in respect of turnover in the relevant segment of that stock exchange in accordance with the provisions of its bye-laws.

[129][(2a) Every commodity derivatives exchange shall collect from every stock broker/clearing member/self-clearing member, dealing/clearing and settling trades in commodity derivatives, the fee payable under sub-clause (1) of clause 3 in accordance with the provisions of its bye-laws.]

(3) The fee collected by a recognized stock exchange under [130][sub-clauses (1), (2) or (2a)] of this clause during a calendar month shall be paid by the stock exchange to the Board by the fifth working day of the following calendar month.

(4) All recognized stock exchanges shall maintain such registers and furnish such returns or information to the Board in respect of the fee collected under this Schedule, as may be specified by the Board.

(5) Without prejudice to sub-clause (4), a recognized stock exchange shall also be liable to furnish such information or explanations to the Board as may be required by it in respect of fee collected or liable to be collected under this Schedule.

(6) [131][A stock broker who also acts as a clearing member/self-clearing member shall pay the annual fee separately, as applicable to each category as specified in clause 3, by way of direct credit in the bank account through online payment using SEBI payment gateway.]

(7) (1) Nothing contained in clause 5 shall affect the primary liability of a stock broker/clearing member/self-clearing member to pay the fees under clause 3 or shall preclude the Board from recovering any such fee remaining unpaid by any stock broker/clearing member/self-clearing member directly from him.

(2) Where due to the stock broker's/clearing member's/self-clearing member's default any fee which was liable to be paid on his behalf under clause 5 remains unpaid or is paid belatedly, he shall, without prejudice to any other action that may be taken under the Act, rules or regulations, pay an interest of 15 per cent per annum for every month of delay or part thereof to the Board.

(3) Every stock broker/clearing member/self-clearing member shall be liable to furnish such information or explanations to the Board as may be required by it in respect of fee paid or payable under this Schedule.

(8) The financial year shall mean the year commencing from 1st April and ending on 31st March of the following year.

(9) For the purposes of this Part, the obligations cast on recognised stock exchanges and stock brokers shall, mutatis mutandis, apply to recognised clearing corporations and clearing members/self-clearing members also.]

[132][SCHEDULE VI

NETWORTH AND DEPOSIT REQUIREMENTS FOR STOCK

BROKERS/CLEARING MEMBERS/SELF- CLEARING MEMBERS

[Regulation 5(h), 9(g)]

APPLICABILITY, MANNER OF PAYMENT AND RECOVERY

[133][1. The stock broker shall have such net-worth and shall deposit with the stock exchange such sum as may be specified by the Board/stock exchange from time to time.]

2. The clearing member/self-clearing member shall have the minimum networth and shall deposit the minimum sum specified hereunder or a higher amount with the clearing corporation promoted by the respective stock exchange in the manner specified from time to time.

[134][3. The quantum of net-worth and deposit to be maintained by the trading member/self-clearing member/clearing member/professional clearing member, dealing/clearing and settling trades in securities, shall be as specified in Table 1 and Table 2 of this Schedule.]

4. The quantum of deposit to be maintained by the stock broker/clearing member shall be separately calculated segment wise.

[135][5. The quantum of net-worth to be maintained by the stock broker/clearing member, as specified in Table 1 of this Schedule, shall be reckoned for all segments/stock exchanges.]

[136][6. (1) Where the trading member/self-clearing member deposits the fund with the clearing member/professional clearing member/clearing corporation, the maintenance of variable net-worth would not be required by that trading member/self-clearing member to the extent of client's funds deposited with clearing member/professional clearing member/clearing corporation.

(2) Where the trading member deposits the client's funds with clearing member/professional clearing member, the computation of variable net-worth at the level of clearing member/professional clearing member shall also include the funds of the clients of trading member deposited with the clearing member/professional clearing member.

(3) Where the self-clearing member/clearing member/professional clearing member deposits the client's funds with the clearing corporation, the same shall be excluded while calculating the variable net-worth at the level of the self-clearing member/clearing member/professional clearing member:

Provided that the cash/Fixed Deposit Receipts/Bank Guarantee accepted by trading member/self-clearing member/clearing member/professional clearing member shall be included while calculating the variable net-worth:

Provided further that the cash/Fixed Deposit Receipts/Bank Guarantee of clients deposited by trading member with clearing member/professional clearing member and by self-clearing member/clearing member/professional clearing member with the clearing corporation shall be excluded while calculating the variable net-worth.]

[137][[138][7.] Every Stock Broker shall be entitled to act as an underwriter only out of its own net worth/funds as may be prescribed from time to time.]

[139][TABLE 1

NET-WORTH FOR MEMBERS DEALING IN SECURITIES

Type of Member	Base Networt {within 1 year of the date of notification of the Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2022} (in Rs.)	Base Networt {within 2 years of the date of notification of the Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2022} (in Rs.)	Variable Net-Worth {within 1 year of the date of notification of the Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2022} #
Trading Member	-	1 crore	10% of average daily cash balance of clients retained with the member across segments/exchanges in the previous 6 months.
Self-Clearing Member	3 crore*	5 crore
Clearing Member	10 crore*	15 crore
Professional Clearing Member	25 crore	50 crore

In Currency Derivative Segment, Self-Clearing Member and Clearing Member shall have minimum net-worth of Rs. 5 crore and Rs. 10 crore, respectively.

Net-Worth requirement for members shall be Base Net-Worth or Variable Net-Worth, whichever is higher.

TABLE 2

DEPOSIT FOR MEMBERS DEALING IN SECURITIES

Segment		Trading member (in Rs.)	Clearing member (in Rs.)	Self-clearing member (in Rs.)
Cash		*	*	*
Equity Derivatives		*	50 Lakh	50 Lakh
Currency Derivatives		*	50 Lakh	50 Lakh
Debt		*	*	*
Commodity	NCDE	Nil	50 Lakh	50 Lakh
Derivatives	RCDE	Nil	*	*
Electronic Gold Receipts		*	1 crore	1 crore

NCDE: National Commodity Derivatives Exchanges

RCDE: Regional Commodity Derivatives Exchanges

As may be specified by the Board from time to time.]

[140][Explanation 1: For the purposes of this Schedule, ‘base net-worth’ shall mean paid up capital, fully, compulsorily and mandatorily convertible debentures/bonds/warrants which are convertible within a period of 5 years from the date of issue, free reserves and other securities approved by the Board from time to time, but shall not include fixed assets, pledged securities, value of member's card, non-allowable securities (unlisted securities), bad deliveries, any debts and advances (except trade debtors of less than 3 months), prepaid expenses, losses, intangible assets and 30% value of marketable securities:

Provided that in case of securities pledged to clearing corporation, the post haircut value of shares owned by the Trading Member/Clearing Member, as may be specified by the Board from time to time, shall be considered for computation of the net-worth:

Provided further that the deposit requirement specified for the debt segment shall not be applicable when a clearing member clears and settles all the trades only on gross basis for both securities and funds, without using settlement or trade guarantee fund:

Provided further that where the stock broker, clearing member or self-clearing member in the debt segment, is also regulated by a sectoral regulator other than the Board, the net-worth shall be computed in the manner as specified by such sectoral regulator or as specified by the Board, whichever is higher.

Explanation 2: For the purposes of this Schedule, free reserves shall include Profit and Loss, General Reserve, Securities Premium, Preference Share Redemption Reserve and Capital Redemption Reserve, but shall not include reserves created by revaluation of assets.]

[1] Vide Noti. No. S.O. 780(E), Extra., Part II, S. 3(ii), dated 23-10-1992, published in the Gazette of India, dated 23-10-1992.

[2] Words “with the previous approval of the Central Government” omitted by the SEBI (Stock Brokers and Sub-brokers) (Third Amdt.) Regulations, 1998, w.e.f. 16-12-1998.

[3] The words “and sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[4] Renumbered as 2(1) by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013

[5] Ins. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2006, w.e.f. 07-09- 2006.

[6] Omitted by the SEBI(Change in Conditions of Registration of Certain Intermediaries)(Amendment) Regulations, 2011, w.e.f. 19-04-2011. Prior to omission, clause (ab) read as under:

“change of status or constitution” in relation to a stock broker or a sub-broker means any change in its status or constitution of whatsoever nature and

includes (i) in case of a body

corporate

(A) amalgamation, demerger, consolidation or any other kind of corporate restructuring falling within the scope of Section 391 of the Companies Act, 1956 (1 of 1956) or the corresponding provision of any other law for

the time being in force;

(B) change in its managing director, whole-time director or director appointed in compliance with clause (v) of sub-rule (4-A) of Rule 8 of the Securities Contracts (Regulation) Rules, 1957; and

(ii) any change between the following legal forms - individual, partnership firm, Hindu

undivided family, private company, public company, unlimited company or statutory corporation and other similar changes;

(iii) in case of a partnership firm any change in partners not amounting to dissolution of the firm

[7] Subs. by the SEBI (Change in Conditions of Registration of Certain Intermediaries)(Amendment) Regulations, 2011, w.e.f. 19-04-2011. Prior to substitution, clause (ac) read as under:

“change in control”, in relation to a stock broker or a sub-broker being a body means

(i) if its shares are listed on any recognised stock exchange, change in control within the meaning of Regulation 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997;

(ii) in any other case, change in the controlling interest in the body corporate;

Explanation: For the purpose of sub-clause (ii), the expression “controlling interest” means an interest, whether direct or indirect, to the extent of at least fifty-one per cent of voting rights in the body corporate;”

[8] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013. w.e.f. 27-09-2013 Prior to substitution clause (ad) read as:

“clearing corporation or clearing house” means the clearing corporation or clearing house of a recognised stock exchange to clear and settle trades in securities;

[9] Subs. for “Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012” by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021).

[10] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2015 w.e.f. 28-09-2015. Earlier clause (ae) was subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013. w.e.f. 27-09-2013. Prior to the substitution, clause (ae) read as:

“clearing member” shall mean a clearing member as defined in clause (e) of sub-regulation (1) of Regulation 2 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012;

[11] Omitted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-09-2002.

[12] Ins. by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022).

[13] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27-09-2013. Prior to substitution clause (ca) read as:

“(ca) proprietary trading member” means a member of debt segment of a stock exchange which trades only on its own account or as permitted by its sectorial regulator;”

[14] Renumbered by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022).

[15] The words “and sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[16] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2006, w.e.f. 07-09-2006. Prior to omission, it read as under:

‘(e) “rules” means Securities and Exchange Board of India(Stock Brokers and Sub-brokers) Rules, 1992;

[17] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2015 w.e.f. 28-09-2015. Earlier clause (fa) was subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013. w.e.f. 27.09.2013. Prior to the substitution, clause (fa) read as:

“(fa) “self-clearing member” means a member of a clearing corporation who is also a stock broker and clears and settles trades on its own account or on account of its clients only;”

[18] Ins. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2006, w.e.f. 07-09- 2006.

[19] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27-09- 2013. Prior to substitution clause (gb) read as:

(gb) “stock broker” means a member of a stock exchange;

[20] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019). Prior to omission it read as:

“(gc) sub-broker” means any person not being a member of stock exchange who acts on behalf of a stock broker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such stock brokers;”

[21] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27-09-2013

[22] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27-09-2013

[23] Ins. by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021).

[24] Ins. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27-09-2013

[25] Subs. for “Companies Act, 1956” by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021).

[26] Chapter II subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27-09-2013

[27] Subs. by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08-10- 2014. Prior to the substitution, the sub-regulation read as follows:

‘No person shall act as a stock broker, unless he seeks a certificate of registration from the Board for each stock exchange in which he seeks to operate:

Provided that no separate registration shall be required for a clearing member registered with the Board to operate as a stock broker in the stock exchange which has promoted the clearing corporation of which he is a clearing member.’

[28] ‘(s)’ omitted by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08-10- 2014

[29] ‘(s)’ omitted by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08-10- 2014

[30] Ins. by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021)..

[31] Ins. by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021)..

[32] Subs. by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08-10-2014. Prior to substitution the Regulation read as follows:

‘10. Approval for operation in segments of stock exchange.(1) Approval for operating in segments of a stock exchange shall be granted by the concerned stock exchange.

(2) A stock broker registered with the Board, who desires to operate in any segment(s) of the stock exchange of which it holds a membership, shall apply to the concerned stock exchange, in the manner specified by the Board.

(3) A clearing member registered with the Board, who desires to operate in any segment(s) of the stock exchange which has promoted the clearing corporation, of which he is a member, shall apply to the concerned stock exchange in the manner specified by the Board.

(4) On receipt of an application under sub-regulation (2) or sub-regulation (3), the stock exchange shall, on being satisfied with the compliance of provision of the regulations and other relevant eligibility requirements specified by the Board, grant approval for operation in any segment(s) and shall inform the Board about such grant of approval.’

[33] Chapter II-A ins. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013

[34] Subs. by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 8.10.2014. Prior to substitution the sub-regulation read as follows:

‘(1) Any person who desires to act as a clearing member, shall seek a certificate of registration from the Board for each clearing corporation in which he seeks to operate:

Provided that no separate registration shall be required for a stock broker registered with the Board to operate as a clearing member in the clearing corporation which is promoted by the stock exchange of which he is a member.’

[35] ‘(s)’ omitted by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014

[36] ‘(s)’ omitted by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014

[37] Subs. by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014. Prior to substitution the regulation read as follows:

‘10-D. Approval for operation in segments of clearing corporation.(1) Approval for operating in any segments of a clearing corporation shall be granted by the concerned clearing corporation.

(2) A clearing member registered with the Board, who desires to operate in any segment(s) of the clearing corporation of which it holds a membership, shall apply to the concerned clearing corporation in the manner specified by the Board.

(3) A stock broker registered with the Board, who desires to operate in any segment(s) of the clearing corporation promoted by the stock exchange of which he is a member, shall apply to the concerned clearing corporation in the manner specified by the Board.

(4) On receipt of an application under sub-regulation (2) or sub-regulation (3), the clearing corporation shall, on being satisfied with the compliance of provision of the regulations and other relevant eligibility requirements specified by the Board, grant approval for operation in any segment(s), and shall inform the Board about such grant of approval.’

[38] Ins. by the SEBI (Stock Brokers and Sub-brokers)(Amendment) Regulations, 2015, w.e.f. 28-09-2015.

[39] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[40] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.9.2013.

[41] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.9.2013.

[42] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013.

[43] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013.

[44] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013.

[45] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2003, w.e.f. 23-09- 2003. Prior to substitution, it read as under:

“Documents register should include particulars of shares and securities received and delivered”

[46] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019). Prior to its omission it read as:

“(l) Registers of accounts of sub-brokers;”

[47] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019). Prior to omission it read as:

“(m) An agreement with a sub-broker specifying the scope of authority, and responsibilities of the Stock Broker and such Sub-broker;”

[48] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2011, w.e.f. 17-08- 2011.

Prior to the substation, it read as under:

“An agreement with the sub-broker and with the client of the sub-broker to establish privity of contract between the stock broker and the client of the sub-broker.”

[49] Ins. by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021).

[50] Ins. by the SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001, w.e.f. 29-05- 2001.

[51] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019). Prior to omission it read as:

“18-B. Stock Broker not to deal with unregistered Sub-broker.The stock broker shall not deal with any person as a sub-broker unless such person has been granted certificate of registration by the Board under sub-regulation (1) of Regulation 12.”

[52] Omitted by the (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2017 (w.e.f. 13-7-2017). Prior to the same, Regulation 18-C, ins. by the SEBI (Stock Brokers and Sub-brokers)(Amendment) Regulations, 2015, w.e.f. 28-09-2015, read as follows:

“18-C. Restriction on activities.(1) A stock broker carrying on the activity of buying, selling or dealing in securities, other than commodity derivatives, shall not undertake the activity of buying, selling or dealing in commodity derivatives, unless permitted by the Board.

(2) A stock broker carrying on the activity of buying, selling or dealing in commodity derivatives, shall not undertake the activity of buying, selling or dealing in securities other than commodity derivatives, unless permitted by the Board”.

[53] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2003, w.e.f. 20-11- 2003. Earlier it was subs. by the SEBI(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002. w.e.f. 27-09-2002.

[54] Subs. by the SEBI (Intermediaries) Regulations, 2008, w.e.f. 26-05-2008.

[55] The words “or a sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[56] Subs. by the SEBI (Intermediaries) Regulations, 2008, w.e.f. 26-05-2008.

[57] The words “or a sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[58] Regulations 25 to 28 subs. for Regulation 25 by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2003, w.e.f. 20-11-2003.

[59] The words “or a sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[60] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2011, w.e.f. 17-08- 2011.

Prior to the substation, it read as under:

“(xii) Execution of trade without entering into agreement with the client under the Act, rules or regulations framed there under or failure to maintain client registration form or commission of any irregularities in maintaining the client agreement.”

[61] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019). Prior to omission it read as:

“(xiv) Acting as an unregistered sub-broker or dealing with unregistered sub-brokers.”

[62] Subs. by the SEBI(Change in Conditions of Registration of Certain Intermediaries)(Amendment) Regulations, 2011, w.e.f. 19-04-2011. Prior to substitution, it read as under:

“Failure to seek prior permission of the Board in case of any change in its status and constitution.”

[63] Subs. for “Enquiry Proceeding Regulations” by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021)..

[64] The words “or a sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[65] Subs. for “SEBI(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002” by the SEBI (Intermediaries) Regulations, 2008, w.e.f. 26-05-2008.

[66] The words “or sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[67] The words and symbol “, as the case may be” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[68] The words “or sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[69] Subs. for “Companies Act, 1956” by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021).

[70] The words “or sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[71] Subs. for “Companies Act, 1956” by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021).

[72] The words “or a sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[73] The words “or a sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[74] Regulations 26 to 32 had been omitted by the SEBI(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w.e.f. 27-09-2002. Earlier Regulations 27 to 29 were amended by the SEBI(Stock Brokers and Sub-brokers)(Amendment) Regulations, 1999, w.e.f. 06-07-1999 and Regulations 32 was amended by the SEBI (Appeal to Securities Appellate Tribunal) (Amendment)Regulations, w.e.f. 28-03- 2000.

[75] Ins. by the SEBI (Regulatory Sandbox) (Amendment) Regulation, w.e.f. 17-04-2020.

[76] The words “in technological aspects” omitted by Noti. No. SEBI/LAD-NRO/GN/2021/30, dated 3-8-2021 (w.e.f. 3-8-2021).

[77] Chapter VII ins. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013

[78] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013

[79] Ins. by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014.

[80] Ins. by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014

[81] Table 3omitted by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014.

[82] Omitted by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014

[83] Omitted by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014

[84] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013

[85] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013

[86] Form AD ins. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013

[87] Ins. by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014

[88] Ins. by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014

[89] Table 3 omitted by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014

[90] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[91] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[92] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[93] Subs. by the SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 w.e.f. 08.10.2014.

[94] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013

[95] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013

[96] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013

[97] The words “and sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[98] The words “and sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[99] Ins. by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2000, w.e.f. 23-09-2003

[100] Ins. by the SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001, w.e.f. 29-05-2001.

[101] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[102] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2011, w.e.f. 17- 08-2011. Prior to the omission, it read as under:

“D. (1) A stock broker, shall enter into an agreement as specified by the Board with his client.

[103] Ins. by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021).

[104] Code of conduct for sub-brokers, omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[105] The words “and sub-broker” omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[106] Ins. by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2002, w.e.f. 20-02-2002.

[107] Subs. for “a” by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2002, w.e.f. 20-02-2002.

[108] Ins. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 1998, w.e.f. 21-01-1998.

[109] Ins. by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2002, w.e.f. 20-02-2002.

[110] Ins. by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2000, w.e.f. 30-08-2000.

[111] Ins. by the SEBI (Stock Brokers and Sub-brokers) (Third Amdt.) Regulations, 1998, w.e.f. 16-12-1998.

[112] Omitted by Noti. No. SEBI/LAD-NRO/GN/2018/27, dt. 30-7-2018 (w.e.f. 1-4-2019).

[113] Subs. by the SEBI (Payment of Fees) (Amendment) Regulations, 1995, w.e.f. 28-11-1995

[114] Ins. by the SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017, w.e.f. 6-3- 2017

[115] Subs. for the word “Bombay” by the SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017, w.e.f. 6-3-2017

[116] Subs. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013. Prior to substitution Clause IV read as- IV. Non-applicability to stock brokers governed by Schedule IIIA.

The provisions of this Schedule shall not apply to stock brokers to whom Schedule III-A applies, from the time when it becomes so applicable.]

[117] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013.

[118] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013.

[119] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013.

[120] Omitted by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013.

[121] Schedule V ins. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27.09.2013.

[122] Ins. by the SEBI (Stock Brokers and Sub-brokers)(Amendment) Regulations, 2015, w.e.f. 28-09-2015.

[123] Ins. by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022).

[124] Subs. by the SEBI (Payment of Fees)(Amendment) Regulations, 2019 w.e.f. 01-04-2019. Prior to the substitution, the Table ins. by the SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017, w.e.f. 01-04-2017, read as follows:

Segment	Rate/Amount (in Rs.)			Remarks
Segment	Stock Broker	Clearing member	Self-clearing member	Remarks
Cash	0.00015 per cent of the price at which the securities are purchased or sold (Rs. 15 per crore)	*	*	All sale and purchase transactions in securities other than debt securities.
Equity derivatives	0.00015 per cent of his turnover (Rs. 15 per crore)	50,000/	50,000/	Explanation.(A) The expression ‘turnover’ shall include the value of the trades executed by the stock broker on the concerned segment of the recognized stock exchange and of the trades settled on the expiration of the contracts. (B) In case of options contracts, ‘turnover’ shall be computed on the basis of premium traded for the option contracts and in case where the option is exercised or assigned, it shall be additionally computed on the basis of notional value of option contracts exercised or assigned.
Currency derivatives	0.00015 per cent of his turnover (Rs. 15 per crore)	50,000/	50,000/
Interest rate derivatives	0.00005 per cent of his turnover (Rs. 5 per crore)	50,000/	50,000/
Commodity derivatives	0.00015 per cent of his turnover (Rs. 15 per crore)	50,000/-	50,000/-	Explanation. (A) The expression ‘turnover’ shall include the value of the trades executed by the stock broker on the concerned recognized stock exchange and of the trades settled on the expiration of the contracts. (B) In case of options contracts, ‘turnover’ shall be computed on the basis of premium traded for the option contracts and in case where the option is exercised or assigned, it shall be additionally computed on the basis of notional value of option contracts exercised or assigned.
Debt	0.00002 per cent of his turnover f 2 per crore) Explanation. For the purpose of this clause, the expression ‘turnover’ shall include the aggregate value of the trades executed, including both sale and purchase transactions, by the stock broker including the proprietary trading member on the debts segment of the recognized stock exchange.	50,000/-	50,000/-	The fee shall not be applicable for clearing member or self-clearing member in case the said clearing member or self-clearing member is already a clearing member or self-clearing member in any other segment and is paying fee, as specified in this Part, for such segment.

[125] Ins. by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022).

[126] Ins. by the SEBI (Payment of Fees) (Amendment) Regulations, 2020 w.e.f. June 01, 2020

[127] Clause 4A subs. by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2015, w.e.f. 28-9-2015. Prior to its substitution, Clause 4A, as ins. by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f. 23-5-2014, read as under:

“4A. The non-refundable fee payable along with an application for registration under sub- regulation (4) of Regulation 3 or sub-regulation (4) of Regulation 10-A shall be a sum of fifty thousand rupees.”

[128] Subs. by Noti. No. SEBI/LAD-NRO/GN/2021/23, dated 5-5-2021 (w.e.f. 5-5-2021).

[129] Ins. by the SEBI (Stock Brokers and Sub-brokers)(Amendment) Regulations, 2015, w.e.f. 28-09-2015.

[130] Subs. by the SEBI (Stock Brokers and Sub-brokers)(Amendment) Regulations, 2015 for the words “sub-clause (1) or (2)” w.e.f. 28-09-2015.

[131] Subs. by Noti. No. SEBI/LAD-NRO/GN/2021/23, dated 5-5-2021 (w.e.f. 5-5-2021).

[132] Schedule VI ins. by the SEBI (Stock Brokers and Sub-brokers) (Second Amdt.) Regulations, 2013 w.e.f. 27-09-2013.

[133] Subs. by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022). Prior to substitution it read as:

“1. The stock broker shall have a net-worth and shall deposit with the stock exchange a sum as may be specified by the Board/Stock Exchange for the relevant segment from time to time.”

[134] Subs. by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022). Prior to substitution it read as:

“3. The quantum of networth and deposit to be maintained by

(a) the stock broker/clearing member, dealing/clearing and settling trades in securities, other than commodity derivatives, shall be as specified in Table 1 of this Schedule;

(b) the stock broker/clearing member, dealing/clearing and settling trades in commodity derivatives, shall be as specified in Table 2 of this Schedule: Provided that a person dealing in commodity derivatives as a commodity derivatives broker, clearing and settling trades as a commodity derivatives clearing member or self-clearing member, immediately before the transfer and vesting of rights and assets of the Forward Markets Commission with the Securities and Exchange Board of India, shall maintain the networth and deposit as specified by the commodity derivatives exchange, of which it holds membership:

Provided further that within a period of one year from the date of transfer and vesting of rights and assets of the Forward Markets Commission with the Securities and Exchange Board of India, such persons shall satisfy the networth and deposit as specified in Table 2 of this Schedule.”

[135] Subs. by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022). Prior to substitution it read as:

“5. The quantum of networth to be maintained by the stock broker/clearing member shall be collectively reckoned for all segments. It therefore means that if a stock broker/clearing member has a networth which is higher, then he may not be required to maintain separate networth for the other segments requiring lower networth.”

[136] Ins. by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022).

[137] Ins. by Noti. No. SEBI/LAD-NRO/GN/2021/14, dt. 30-3-2021 (w.e.f. 30-3-2021).

[138] Renumbered by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022).

[139] Subs. by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022).

[140] Subs. by Noti. No. SEBI/LAD-NRO/GN/2022/73, dated 23-2-2022 (w.e.f. 23-2-2022).

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