SEBI Stock Broker Regulations - Part-3

SCHEDULE I – FORMS
FORM A
SECURITIES AND EXCHANGE BOARD OF INDIA
(Stock Brokers And Sub-Brokers) Regulations, 1992
(Regulation 3)
APPLICATION FORM FOR REGISTRATION AS STOCK BROKERS WITH
SECURITIES AND EXCHANGE BOARD OF INDIA
NAME OF THE STOCK EXCHANGE:
1. Name of Member with Code No.
2. Address of Member
3. Trade name of Member
4. Form of Organisation - Sole proprietorship, partnership, corporate body, financial
institution. Please give names of proprietor / partners / directors.
5. Educational Qualifications
6. Date of admission to membership
7. Whether member of more than one Stock Exchange?
If so, please give name(s) of the Stock Exchange(s) with Code Number(s).
8. Indicate Fax, Telex and Phone number(s) of office and residence.
9. In the case of members admitted on any Stock Exchange after February 21, 1992 the
copy of the information given to the Stock Exchange at the time of admission.
I declare that the information given in this form is true to the best of my knowledge and
belief.
Dated: Signature
Recommendation of the Stock Exchange
This is to certify that _________________ is a member of this Exchange and is
recommended for registration with the Securities and Exchange Board of India.
Signature
Name
Designation
50FORM AA
SECURITIES AND EXCHANGE BOARD OF INDIA
(STOCK BROKERS AND SUB-BROKERS) REGULATIONS, 1992
(REGULATION 16A)
APPLICATION FORM FOR REGISTRATION AS A TRADING AND / OR A
CLEARING MEMBER 51[and / or a self clearing member] WITH THE SECURITIES
AND EXCHANGE BOARD OF INDIA
1. Name of the Derivatives Exchange / Segment / Clearing Corporation / Clearing House
of which the applicant is the member. Please furnish the tenure of membership.
2. Name of the Member with Code No.
3. Whether the applicant is to act as a Trading member and/or a Clearing member 52[and /
or a self clearing member]
4. If the applicant is to act as a Trading member, the applicant is required to furnish the
name and details of the clearing member 53[or self clearing member] through whom he
intend to clear and settle his trade.
5. Address of the Member
6. Trade Name of Member
7. Form of Organisation: sole proprietorship / partnership / corporate body / financial
institution. (Please give names of proprietor/ partners/directors)
8. Please furnish a copy of the Memorandum and Articles of Association or the
Partnership Deed, as the case may be.
9. Educational Qualifications of proprietor/partners /directors, etc.
10. Whether the applicant or its sales personnel or approved user has passed any
certification programme? If so, please specify the detail.
50 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2000, w.e.f. 14-3-
2000.
51 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2001, w.e.f15-11-
2001.
52 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2001, w.e.f15-11-
2001.
53 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2001, w.e.f. 15-11-
2001.
11. The experience of the applicant or their two directors or partners in derivatives
trading or securities market, if so, please give details.
12. Date of admission to membership to the derivatives exchange or derivatives segment /
clearing corporation / clearing house.
13. Whether a member of more than one exchange or derivatives segment or clearing
corporation or clearing house of any segment? If So, please give name (s) of the clearing
corporation / clearing house, or any stock exchange(s) with code number(s)?
14. Networth of the applicant. Please furnish details along with necessary documents in
support thereof.
15. Whether the applicant or its director or partners, any time convicted of any economic
offence ? If so, please furnish the details?
16. Whether the applicant or its directors or partners, declared insolvent / bankrupt or
declared defaulter by any exchange? If so, please furnish details?
17. Whether the applicant or its directors or partners anytime subjected to any
proceedings or penalty by the Board under SEBI Act or any of the regulations framed
under the SEBI Act? If so, please furnish the details.
18. Indicate fax, telex and phone number(s)
19. Whether the application is accompanied by a requisite fee as per Schedule IV of the
Regulations as applicable to the applicant.
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 derivatives exchange / derivatives segment, clearing corporation
/ house.
This is to certify that __________________________ is a member of this Derivatives
Exchange / Derivatives Segment or Clearing Corporation or Clearing House and is
recommended for registration with the Securities and Exchange Board of India.
Signature
Name
Designation
FORM B
SECURITIES AND EXCHANGE BOARD OF INDIA
(Stock Brokers and Sub-Brokers) Regulations, 1992
(Regulation 11)
APPLICATION FORM FOR REGISTRATION AS A SUB-BROKER WITH
SECURITIES AND EXCHANGE BOARD OF INDIA
1. Name of applicant sub-broker:
2. Trader name of sub-broker, firm, corporate body.
3. Form of organisation – sole proprietorship, partnership, corporate body. Please give
names of proprietor, all partners, directors etc.
4. Educational qualifications of proprietor, partners, directors etc.
Name Status Qualifications
5. Name of the member-broker and Stock Exchange to which applicant is affiliated.
6. Date of acquiring sub-brokership
7. Infrastructural arrangements - indicate fax, telex, phones, number of offices and
residential numbers. Also indicate the number of employees.
Office Address
Phone No
Telex No
Fax No
Residential phone nos. of proprietor, partners, directors etc.
8. Number of branch offices and their location with phone, telex and fax numbers.
I certify that the information given in this application form is true to the best of my/our
knowledge and belief.
Recommendation letter from the stock broker to whom I/we am/are affiliated and two
references, including one from the banker as required are enclosed.
Signature___________________
Date_______________________
_______________________________________________________________________
Recommendation of the Stock Exchange.
This is to certify that ________________________________ is a 54[recognized] subbroker
affiliated to_________________________________ member-broker of this
Exchange.
The application is recommended/not recommended for registration by the Board.
AUTHORISED SIGNATORY
Signature
__________________________ Stock Exchange.

__________________________ Stock Exchange.
FORM C
SECURITIES AND EXCHANGE BOARD OF INDIA
(STOCK BROKERS & SUB-BROKERS) REGULATIONS, 1992
RECOMMENDATION LETTER TO BE GIVEN BY THE MEMBER
WITH WHOM THE SUB-BROKER IS AFFILIATED
To,
The ____________________________________ Stock Exchange
Dear Sirs,
I/We understand that___________________________ son of_______ aged_______
Years, residing at_____________________________ and attached to me
at_________________________ for carrying on the shares and securities business as a
sub- broker.
I/We confirm that ______________________ is transacting business through me for a
period from ______________ and he is a fit and proper person to be registered as a subbroker.
54 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2003, w.e.f. 23-9-
2003.
I/We also confirm that he is known to me/us for well over_____ years and he has got
good financial background, moral character and integrity. He has been transacting
business frequently and was meeting the market commitments as and when they arise.
I/We hereby recommend his application for granting registration for carrying on shares
and securities business as sub-broker. I/We also wish to state that whatever the
information that has been submitted is true to the best of my/our knowledge and if at a
later date if any material information comes to my/our knowledge subsequent to the
submission of this application, I/We undertake to keep informed about the same.
I/We member/s of ___________________________Exchange hereby agree to
recommend the above mentioned applicant.
Yours faithfully,
Signature of Member (s).
55[FORM CA]
Securities and Exchange Board of India
(Stock Brokers and Sub Brokers) Regulations, 1992.
Recognition letter to be issued by the Stock Exchange
To,
The Securities and Exchange Board of India,
Mumbai.
Dear Sir,
This is to certify that ___________ has been recognized as a sub-broker by this Exchange
being a sub-broker affiliated to member broker ___________ of this Exchange.
Place : Authorized Signatory
Date : For and on behalf of ___________Exchange]
55 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2003, w.e.f. 23-9-
2003.
FORM D
SECURITIES AND EXCHANGE BOARD OF INDIA
(Stock Brokers and Sub-Brokers) Regulations, 1992
(Regulation 6)
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_____________________________
a member of the _________________________________________ Stock Exchange(s)
as a Stock Broker for carrying on the activities of buying, selling or dealing in securities
and carrying on such other activities as are permitted by such Stock Exchange(s) subject
to conditions prescribed in the rules and in accordance with the regulations.
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
56 [FORM DA
SECURITIES AND EXCHANGE BOARD OF INDIA
(STOCK BROKERS AND SUB BROKERS) REGULATIONS, 1992
(Regulation 16 D)
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
__________________________________ a member of the __________________
derivatives exchange / derivatives segment / clearing corporation / clearing house as
trading / clearing member 57[or self-clearing member] for carrying on the activities of
dealing in derivatives / clearing & settlement of derivatives trades and for carrying on
56 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2000, w.e.f. 14-3-
2000.
57 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2001, w.e.f. 15-11-
2001.
such other activities as are permitted by such exchange(s) / segment(s) / clearing
corporation / clearing house subject to the conditions prescribed 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 E
SECURITIES AND EXCHANGE BOARD OF INDIA
(Stock Brokers and Sub-Brokers) Regulations, 1992
(Regulation 12)
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 Sub-
Broker subject to the Rules and in accordance with the regulations.
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 AND SUB-BROKERS) REGULATIONS, 1992
CODE OF CONDUCT FOR STOCK BROKERS
(Regulation 7)
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 stock-broker
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
58[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, wherever he feels it is appropriate to do so.
59[(7A) 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.
58 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2000, w.e.f. 13-9-
2003.
59 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2001, w.e.f. 29-5-
2001.
(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 competent 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 willfully deliver documents which constitute bad delivery and shall cooperate
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 cooperation
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.
60[D (1) A stock broker shall enter into an agreement as specified by the Board with his
client.
(2) A stock broker shall also enter into an agreement as specified by the Board with the
client of the sub-broker.]
60 Inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2003, w.e.f. 23-9-
2003.
SECURITIES AND EXCHANGE BOARD OF INDIA
(STOCK BROKERS & SUB-BROKERS) Regulations, 1992
CODE OF CONDUCT FOR SUB-BROKERS
(Regulation 15)
A. GENERAL
(1) INTEGRITY: A sub-broker, shall maintain high standards of integrity, promptitude
and fairness in the conduct of all investment business.
(2) EXERCISE OF DUE SKILL AND CARE: A sub-broker, shall act with due skill, care
and diligence in the conduct of all investment business.
B. DUTY TO THE INVESTOR
(1) EXECUTION OF ORDERS: A sub-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. A sub-broker shall promptly inform his client
about the execution or non-execution of an order 61[******]
62 [(2) A sub-broker shall render necessary assistance to his client in obtaining the
contract note from the stock broker]
(3) BREACH OF TRUST: A sub-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 sub-broker shall not encourage sales or purchases of securities with the sole object
of generating brokerage or commission.
(b)A sub-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
61 Words ‘and make payment in respect of securities sold and arrange for prompt delivery of securities
purchased by clients” inserted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations,
2003, w.e.f. 23-9-2003.
62 Substituted by the SEBI (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2003, w.e.f. 23-9-
2003 for the words, “
(2) A. Issue of purchase or sale notes:
(a) A sub-broker shall issue promptly to his clients purchase or sale notes for all the transactions entered
into by him with his clients.
(b) A sub-broker shall issue promptly to his clients scrip wise split purchase or sale notes and similarly bills
and receipts showing the brokerage separately in respect of all transactions in the specified form.
(c) A sub-broker shall only split the contract notes client-wise and scrip wise originally issued to him by the
affiliated broker into different denominations.
(d) A sub-broker shall not match the purchase and sale orders of his clients and each such order must
invariably be routed through a member-broker of the stock exchange with whom he is affiliated.”
business in particular securities and enabling himself to earn brokerage or commission
thereby.
(c)A sub-broker shall not charge from his clients a commission exceeding one and onehalf
of one percent of the value mentioned in the respective sale or purchase notes.
(5) BUSINESS OF DEFAULTING CLIENTS: A sub-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 and is in default with another broker
or sub-broker.
(6) FAIRNESS TO CLIENTS: A sub-broker, when dealing with a client, shall disclose
that he is acting as an agent 63[******] ensuring 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 sub-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 sub-broker
should seek such information from clients, wherever they feel it is appropriate to do so.
64[7A – Investment Advice in publicly accessible media –
(a) A sub-broker or any of his employees shall not render, directly and 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 his long or short
position in the said security has been made, while rendering such advice.
(b) In case, an employee of the sub-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 SUB-BROKER: A sub-broker should have adequately trained
staff and arrangements to render fair, prompt and competent se