Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2003. - S.O. No.1095(E) - SEBI/LE/17901/2003 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 23rd September, 2003 S.O.1095(E).-- 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 makes the following regulations to amend the Securities and Exchange Board of India (Stock Brokers And Sub-Brokers) Regulations, 1992, namely:- 1. (i) These regulations may be called the Securities and Exchange Board of India(Stock Brokers And Sub-Brokers) (Amendment) Regulations, 2003. (ii) They shall come into force on the date of their publication in the Official Gazette. 2. In Securities and Exchange Board of India (Stock Brokers And Sub-Brokers) Regulations, 1992 - (i) In regulation 11, (a) in sub-regulation (5), after clause (ii), following sub-clauses shall be inserted, namely :- (iii) The applicant has the necessary infrastructure like adequate office space, equipment and manpower to effectively discharge his activities. (iv) The applicant shall be a person recognized by the stock exchange as a sub-broker affiliated to a member broker of the stock exchange. (b) For the existing sub-regulation (6), the following sub-regulation shall be substituted, namely : - (6) The stock exchange shall forward the application in Form B of such applicant alongwith the recommendation letter in Form C issued by the stock broker with whom he is affiliated and also the recognition letter in Form CA issued by the stock exchange to the Board within 30 days from the date of the receipt of the application . (ii) In regulation 15, (a) in sub-regulation (1), after clause (c), the following clauses shall be inserted, namely: - (d) comply with the rules, regulations and bye-laws of the stock exchange. (e) not be affiliated to more than one stock broker of one stock exchange. (b). In sub-regulation (2), after the words clauses (h), (i), (j) , the word and bracket (k) shall be omitted. (iii) After regulation 15, the following regulation shall be inserted, namely :- 15A Director not to act as sub-broker No director of a stock broker shall act as a sub broker to the same stock broker. (iv) In regulation 17, in sub-regulation (1), (a) the existing clause (g) shall be substituted with the following, namely :- (g) 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. (b). after clause (m), the following clause (n) shall be inserted, namely :- (n) 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 . (v) After regulation 18A, the following shall be inserted, namely :- 18B 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. (vi) In Schedule I, (a) in Form B , after the words This is to certify that ______ is a and before the words sub-broker affiliated to _____ member broker of this exchange. , the word recognized shall be inserted. (b) after Form C , the following Form CA shall be inserted, namely : - 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 (vii) In Schedule II, (a) Under the head Code of Conduct for Stock-Brokers , (i) in clause (B), in sub-clause (2), after the words his client , and before the words a contract note , the following words or client of the sub-broker, as the case may be shall be inserted, (ii) After clause (C) a new clause (D) shall be inserted as under:- 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. (b) Under the head Code of Conduct for Sub-Brokers , in clause (B), in sub-clause (1), the following words shall be omitted, namely :- and make payment in respect of securities sold and arrange for prompt delivery of securities purchased by clients . (c). In clause (B), the existing entire sub-clause (2) shall be substituted with the following, namely : - (2) A sub-broker shall render necessary assistance to his client in obtaining the contract note from the stock broker . (d) In clause (B), in sub-clause (6), the following words shall be omitted, namely :- and shall issue appropriate purchase / sale note . (e) In clause (C), the existing sub-clause (4) shall be substituted with the following, namely : - (4) Agreement between sub-broker, client of the sub-broker and main broker : A sub-broker shall enter into a tripartite agreement with his client arid with the main stock broker specifying the scope of rights and obligations of the stock broker, sub-broker and such client of the sub-broker. [F. No. SEBI/LE/17901/2003] GYANENDRA NATH BAJPAI, Chairman Footnote: 1. Securities and Exchange Board of India (Stock Brokers And Sub-Brokers) Regulations, 1992, the principal Regulations, was published in the Gazette of India on October 23, 1992 vide GSR No. 780 (E). 2. It was subsequently amended on : (a) November 28, 1995 by the SEBI (Payment of Fees) (Amendment) Regulations, 1995 vide S.O. No. 939 (E). (b) January 5, 1998 by SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 1998 vide S.O. No. 13 (E) (c) January 21, 1996 by SEBI (Stock Brokers and Sub-Brokers) (Second Amendment) Regulations, 1998 vide S.O. No. 75 (E). (d) December 16, 1998 by SEBI (Stock Brokers and Sub-Brokers) (Third Amendment) Regulations, 1998 vide S.O. No. 1078 (E). (e) July 6, 1999 by SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 1999 vide S.O. No. 541 (E). (f) March 14, 2000 by SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2000 vide S.O. No. 234 (E). (g) March 28, 2000 by SEBI (Appeal to Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide S.O. No. 278 (E). (h) August 30, 2000 by SEBI (Stock Brokers and Sub-Brokers) (Second Amendment) Regulations, 2000 vide S.O. No. 787 (E). (i) May 29, 2001 by SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide S.O. No. 476(E). (j) November 15, 2001 by SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2001 vide S.O. No. 1128 (E). (k) February 20, 2002 by SEBI (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2002 vide S.O. No. 220 (E). (l) September 27, 2002 by SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No. 1045 (E).