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TMI BlogInspection of stock brokers by stock exchangesX X X X Extracts X X X X X X X X Extracts X X X X ..... hanges were directed to inspect books and accounts and other documents of at least 10% of the active brokers of the stock exchange in a year and institute necessary disciplinary action against brokers whose books of accounts and other documents reveal malpractice. It has now been decided that the exchanges would carry out inspection of at least 20% of the active brokers every year beginning from the financial year 2003-2004. These inspections shall invariably include the subsidiaries of other stock exchanges registered as brokers of your exchange. Exchanges are also directed to work out a transparent criteria for selection of brokers for inspection as well as formulate their inspection policy. Please note that these inspections should not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the list but also cover any additional areas where the exchanges may deem fit. Yours faithfully, S. V. MURALIDHAR RAO Encl: As above. List of illustrative violations (It may be noted that the list mentioned below is only inclusive and not exhaustive) Sl. No. Description 1. Non maintenance or improper maintenance of prescribed books of accounts. 2. Relating to Contract notes: · Non issue of contract notes. · Time stamping of contract notes not done. · The contract notes issued not bearing the correct SEBI Registration number of the broker. · Contract notes not being issued within 24 hours of trade execution. · Appropriate stamps not being affixed on the contract notes/Appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith provisions relating to spot / negotiated deals (special bargains only). 13. Instances of trades entered into by the broker, which are not permitted. 14. Instances of the broker/dealers/others connected with the broker, involved in front running. 15. Instances of fictitious transactions entered into by brokers. 16. Non submission of audit report within the prescribed time limit. 17. Instances of broker dealing with unregistered sub-brokers. 18. Instances of broker of a stock exchange acting through brokers of other exchanges for its clients without registering as a sub broker of these brokers. 19. Broker involved in business other than the securities business. 20. Non payment/ inadequate payment of SEBI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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