• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

K.R. Srivats

New Delhi , Sept. 25

THE Securities and Exchange Board of India (SEBI) has barred directors of stock broking companies from doubling up as sub-brokers to the same broking outfit. The capital market regulator has ruled that a director of a stock broker cannot act as a sub-broker to the same stock broker.

The move of SEBI is aimed at addressing the problem of "conflict of interest", informed sources said. SEBI has also barred stock brokers from dealing with unregistered sub-brokers. "The stock broker should not deal with any person as a sub-broker unless such person has been granted certificate of registration by the board," says the latest amendments to the SEBI regulations on stockbrokers and sub-brokers.

A sub-broker should not be "affiliated to more than one stock broker of one stock exchange". He would now have to keep and maintain margin deposit book and would also need to comply with the rules, regulations and bylaws of the exchange.

Further, the code of conduct have been modified to stipulate that a sub-broker would have to enter into a tripartite agreement with his client and with the main stock broker specifying the scope of rights and obligations of the broker, sub-broker and such client of the sub-broker. A sub-broker would also have to render necessary assistance to his client in obtaining the contract note from the stock broker. The eligibility criteria for registration as a sub-broker have also been modified. An applicant would need to have the necessary infrastructure like adequate office space, equipment and manpower to adequately discharge the activities.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Volatile movement

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line