SEBI simplifies process for opening accounts

Our Bureau Mumbai | Updated on August 22, 2011

Clients now need sign only one document

To simplify and rationalise the trading account opening process, stock market regulator SEBI has replaced all client-broker agreements with the “Rights and Obligations” document.

“The client will now be required to sign only on one document: the Account Opening Form. Further, in the same form, the client shall continue to put his signatures instead of saying ‘yes' or ‘tick mark' while indicating preferences for trading in different exchanges/segments, in accordance with existing requirements.”

The document would be mandatory and binding on existing and new stock brokers (including trading members) and clients.

SEBI has amended its stock broker and sub-broker regulations on August 17 to incorporate the changes.

SEBI stated in its circular on Monday that brokers have been directed to follow and provide clients with a copy of this uniform documentation.

It includes a list of documents required for opening a trading account, pro-forma know your client (KYC) in two parts.

Brokers also have to provide a document stating the Rights and Obligations of stock broker, sub-broker and client for trading on exchanges (including additional rights and obligations in case of internet / wireless technology based trading) and a Uniform Risk Disclosure Document for all segments and exchanges.

Dos and don'ts

In addition, brokers are also expected to provide a guidance note detailing the ‘do's and don'ts for trading on exchanges, tariff sheet on brokerage payable and contact details of senior officials of the brokerage for grievance handling.

The client will now be required to sign only on one document, the Account Opening

Form and has to indicate his preference using a tick mark for trading in different exchanges and segments.

For availing themselves of a running account facility clients have to execute a specific power of attorney with his broker. Stock brokers should implement this circular within 15 days.

Stock exchanges have been directed to communicate to brokers and the public through their web site, amend by-laws rules and regulations and report implementation status in their monthly report to SEBI.

Published on August 22, 2011

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