Posts Tagged ‘Stock Brokers’


CIRCULAR, CIR/MIRSD/2/2013, dated January 24, 2013

SEBI Registered Intermediaries:

1. Stock Brokers through Recognized Stock Exchanges

2. Depository Participants (DPs) through Depositories

3. Mutual Funds (MFs)

4. Association of Mutual Funds in India (AMFI)

5. Portfolio Managers (PMs)

6. KYC Registration Agencies (KRAs)

7. Alternate Investment Funds (AIFs)

8. Collective Investment Schemes (CIS)

9. Investment Advisers (IAs)

1. SEBI Master Circular No. CIR/ISD/AML/3/2010 dated December 31, 2010 has mandated all registered intermediaries to obtain, as part of their Client Due Diligence policy, sufficient information from their clients in order to identify and verify the identity of persons who beneficially own or control the securities account. The beneficial owner has been defined in the circular as the natural person or persons who ultimately own, control or influence a client and/or persons on whose behalf a transaction is being conducted, and includes a person who exercises ultimate effective control over a legal person or arrangement.

2. SEBI has also prescribed uniform Know Your Client (KYC) requirements for the securities markets vide circular nos. CIR/MIRSD/16/2011 dated August 22, 2011 and MIRSD/SE/Cir-21/2011 dated October 5, 2011. The SEBI KYC Registration Agency (KRA) Regulations, 2011 have been notified and guidelines have been issued under these regulations from time to time.

3. Further, the Prevention of Money Laundering Rules, 2005 also require that every banking company, financial institution and intermediary, as the case may be, shall identify the beneficial owner and take all reasonable steps to verify his identity. The Government of India in consultation with the regulators has now specified a uniform approach to be followed towards determination of beneficial ownership. Accordingly, the intermediaries shall comply with the following guidelines.

A. For clients other than individuals or trusts:

4. Where the client is a person other than an individual or trust, viz., company, partnership or unincorporated association/body of individuals, the intermediary shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the following information:

a. The identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control through ownership or who ultimately has a controlling ownership interest.

Explanation: Controlling ownership interest means ownership of/entitlement to:

i. more than 25% of shares or capital or profits of the juridical person, where the juridical person is a company;

ii. more than 15% of the capital or profits of the juridical person, where the juridical person is a partnership; or

iii. more than 15% of the property or capital or profits of the juridical person, where the juridical person is an unincorporated association or body of individuals.

b. In cases where there exists doubt under clause 4 (a) above as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity of the natural person exercising control over the juridical person through other means.

Explanation: Control through other means can be exercised through voting rights, agreement, arrangements or in any other manner.

c. Where no natural person is identified under clauses 4 (a) or 4 (b) above, the identity of the relevant natural person who holds the position of senior managing official.

B. For client which is a trust:

5. Where the client is a trust, the intermediary shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the identity of the settler of the trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.

C. Exemption in case of listed companies:

6. Where the client or the owner of the controlling interest is a company listed on a stock exchange, or is a majority-owned subsidiary of such a company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.

D. Applicability for foreign investors:

7. Intermediaries dealing with foreign investors’ viz., Foreign Institutional Investors, Sub Accounts and Qualified Foreign Investors, may be guided by the clarifications issued vide SEBI circular CIR/MIRSD/11/2012 dated September 5, 2012, for the purpose of identification of beneficial ownership of the client.

E. Implementation:

8. The provisions of this circular shall come into force with immediate effect. Intermediaries are directed to review their Know Your Client (KYC) and Anti-Money Laundering (AML) policies accordingly.

9. The Stock Exchanges and Depositories are directed to:

a. bring the provisions of this circular to the notice of the Stock Brokers and Depository Participants, as the case may be, and also disseminate the same on their websites;

b. make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision in co-ordination with one another, as considered necessary;

c. monitor the compliance of this circular through half-yearly internal audits and inspections; and

d. communicate to SEBI, the status of the implementation of the provisions of this circular.

10. In case of mutual funds, compliance of this circular shall be monitored by the Boards of the Asset Management Companies and the Trustees and in case of other intermediaries, by their Board of Directors.

11. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.

Click here to download the above Circular in PDF Format.

Source: Securities and Exchange Board of India.

Advertisements

Application Supported by Blocked Amount (ASBA) Facility

CIR/CFD/DIL/ 4 /2013 dated January 23, 2013

To

To All Stock Exchanges

To All Registered Merchant Bankers

To All Registered Registrars to an Issue

To All Registered Bankers to an Issue

To All Registered Stock Brokers

1. SEBI, vide Circular No. CIR/CFD/DIL/8/2010 dated October 12, 2010, enabled the syndicate /sub-syndicate members to procure ASBA forms (hereinafter referred as “Syndicate ASBA”) from the investors, upload the relevant details in the bidding platform and forward the forms to the SCSBs for signature verification, blocking of funds, etc., and thereafter, for forwarding the forms to the registrar to the issue.

2. Pursuant to the above, SEBI, vide Circular No. CIR/CFD/DIL/1/2011 date April 29, 2011, enabled the ASBA facility through syndicate / sub syndicate members from 12 bidding centers and advised all the SCSBs which are providing ASBA facility in any of these 12 centers, to name atleast one branch where syndicate / sub-syndicate members can submit the ASBA forms.

3. Further, SEBI, vide Circular No. CIR/CFD/14/2012 dated October 04, 2012 introduced an additional mechanism for investors to submit application forms in public issues using the stock broker (“broker”) network of Stock Exchanges, who may not be syndicate members in an issue. The said Circular envisages enabling the facility to submit the application forms in more than 1000 locations which are part of the nationwide broker network of the Stock Exchanges, by March 1, 2013.

4. In partial modification of the Circular No. CIR/CFD/DIL/1/2011 date April 29, 2011 and in order to facilitate syndicate / sub-syndicate members/ non-syndicate members to accept ASBA forms from investors in the locations:

a. All the SCSBs having a branch in the location of broker centers of stock exchanges, notified in terms of clause 6 of Circular dated October 4, 2012, are required to name at least one branch before March 1, 2012, where syndicate / sub-syndicate members/ non-syndicate members can submit the ASBA forms.

b. The Stock Exchanges shall ensure that the details of the locations of their broker centers, be disclosed on their websites and are regularly updated in terms of Circular dated October 4, 2012.

5. Merchant Bankers shall ensure that appropriate disclosures are made in the offer document in this regard.

6. All intermediaries are directed to comply with the instructions contained in this circular.

7. This circular shall be applicable for Red Herring Prospectus/ Prospectus / Letter of Offer filed with Registrar of Companies/ Stock Exchanges, as the case may be, on or after March 1, 2013.

8. This circular is issued in exercise of the powers conferred under Section 11 read with Section 11A of the Securities and Exchange Board of India Act, 1992.

9. This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework” and “Circulars”.

Click here to download the complete text of the above Circular in PDF Format.

Source: Securities and Exchange Board of India.


CIRCULAR, CIR/MIRSD/01 /2013, dated January 04, 2013

1. All Recognized Stock Exchanges

2. Stock Brokers through Recognized Stock Exchanges

3. Depository Participants through Depositories

4. Mutual funds

5. Association of Mutual Funds in India

6. Portfolio Managers

7. KYC Registration Agencies (KRAs)

8. Alternative Investment Funds (AIFs)

9. Collective Investment Schemes (CIS)


1. Please refer to SEBI circular no CIR/MIRSD/16/2011 dated August 22, 2011; MIRSD/SE/Cir-21/2011 dated October 5, 2011 and CIR/MIRSD/11/2012 dated September 05, 2012.

2. With a view to bring about operational flexibility and in order to ease the PAN verification process, the intermediaries may verify the PAN of their clients online at the Income Tax website without insisting on the original PAN card, provided that the client has presented a document for Proof of Identity other than the PAN card.

3. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Click here to download the complete text of the above Circular in PDF Format.

Source: Securities and Exchange Board of India.


CIRCULAR, CIR/MRD/DRMNP/ 36 /2012, dated December 19, 2012 

To

All stock exchanges

1. SEBI vide circular no SMD/SED/RCG/270/96 dated January 19, 1996 and circular no MRD/DoP/SE/Cir-07/2005 dated February 23, 2005 had prescribed the requirement of Base Minimum Capital (BMC) for stock brokers trading on stock exchange. BMC is the deposit given by the member of the exchange against which no exposure for trades is allowed.

2. The BMC deposit requirement was prescribed to be commensurate with the risks, other than market risk, that the broker may bring to the system. Over the years the market structure has undergone significant structural changes. The various technological changes and the increased speeds of trading have brought to fore the greater quantum of risks arising during the course of execution of transactions. In light of this, based on deliberations at various forums, it has been decided to realign the BMC requirements with the risk profiles of the stock brokers / trading members in cash / derivative segment of the stock exchange.

3. Accordingly, the requirement of BMC would be implemented in the following manner –

a. It shall be enhanced for members holding registration as “stock-broker” in cash segment.

b. BMC shall be introduced for members holding registration as “trading member” in any derivative segment.

c. Stock brokers / trading members shall maintain the prescribed BMC based on their profiles –

Categories

BMC Deposit
Only Proprietary trading without Algorithmic trading (Algo) Rs. 10 Lacs
Trading only on behalf of Client (without

proprietary trading) and without Algo

Rs. 15 Lacs
Proprietary trading and trading on behalf of

Client without Algo

Rs. 25 Lacs
All Trading Members/Brokers with Algo Rs. 50 Lacs

Explanation: The profiling of members may be explained with the following example – A scenario may arise, wherein, a member has registration as a “stock broker” as well as a “trading member” and is engaged as a principal doing proprietary trading on cash segment and is also engaged as an agent and transacting only on behalf of the clients in the derivatives segment. Further, the member may not have availed facility for algorithmic trading. In such a case, the profile of such a member shall be assessed as “Proprietary trading and trading on behalf of client without Algo”. The applicable BMC deposit for such a member shall be Rs. 25 Lacs.

d. This BMC deposit requirement stipulated in the table at 3 (c) above, is applicable to all stock brokers / trading members of exchanges having nation-wide trading terminals.

e. For stock brokers / trading members of exchanges not having nation-wide trading terminals, the deposit requirement shall be 40% of the above said BMC deposit requirements.

f. The BMC deposit shall be maintained for meeting contingencies in any segment of the exchange. For members having registration for more than one segment of the same exchange, the BMC deposit requirement shall not be additive for such number of segments and shall be the highest applicable BMC deposit, across various segment.

g. No exposure shall be granted against such BMC deposit. The Stock Exchanges shall be permitted to prescribe suitable deposit requirements, over and above the SEBI prescribed norms, based on their perception and evaluation of risks involved.

h. Minimum 50% of the deposit shall be in the form of cash and cash equivalents. The existing guidelines on collateral composition shall continue to remain applicable.

4. The SEBI circulars specified at para 1 above, stand modified suitably. All other relevant provisions shall continue to remain applicable.

5. The provisions of this circular shall be implemented by March 31, 2013

6. Stock exchanges are directed to:

(i) make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.

(ii) bring the provisions of this circular to the notice of the stock brokers /trading members of the stock exchange and also to disseminate the same on the website.

(iii) communicate to SEBI, the status of implementation of the provisions of this circular in the Monthly Development Report.

7. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

8. This Circular is available on SEBI website at www.sebi.gov.in.

Click here to download the complete text of the above Circular in PDF Format.

Source: Securities and Exchange Board of India.


Oversight of Members (Stock Brokers/Trading Members/Clearing Members of any segment of Stock Exchanges/Clearing Corporations)

CIRCULAR, CIR/MIRSD/13/2012, dated December 07, 2012

To

All Recognized Stock Exchanges


1. Please refer to SEBI Circular no. MIRSD/Master Cir-04/2010 dated March 17, 2010 on the captioned subject.

2. It has been decided, in consultation with Stock Exchanges and the associations of stock brokers, to modify the provisions of Para 2 & 3, Part I of the above mentioned Circular as below:

a. Para 2, Part I: The Stock Exchange or the Clearing Corporation, as the case may be, shall, in consultation with SEBI, formulate a policy for annual inspection of their members in various segments and follow up action thereon. The policy shall also cover various kinds of risks posed to the investors and market at large on account of the activities/business conduct of their members.

b. Para 3, Part I: The Stock Exchange or the Clearing Corporation, as the case may be, shall conduct inspection of their members in various segments in terms of the above policy and in case of members who hold multiple memberships of the exchanges, the Stock Exchanges shall establish an information sharing mechanism with one another on the important outcome of inspection in order to improve the effectiveness of supervision.

3. The other provisions specified in SEBI Circular no. MIRSD/Master Cir-04/2010 dated March 17, 2010 shall remain applicable.

4. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

5. This circular is available on SEBI website at www.sebi.gov.in.

Click here to download the complete text of the above Circular in PDF Format.

Source: Securities and Exchange Board of India.