Qualified Stock Broker. – SEBI prescribes qualifying parameters and responsibilities
SEBI vide notification No. SEBI/LAD-NRO/GN/2023/116 has amended the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992 by notifying the Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2023 defining a Qualified Stock Broker.
The amendment authorises SEBI to designate a stock broker as a qualified stock broker having regard to its size and scale of operations, likely impact on investors and securities market, as well as governance and service standards.
The parameters and the appropriate weightages thereon to be considered by the Board while designating a qualified stock broker are as under:
(a) the total number of active clients;
(b) the available total assets of clients with the stock broker;
(c) the trading volumes of the stock broker;
(d) the end of day margin obligations of all clients of a stock broker;
(e) compliance score as may be specified by the Board;
(f) grievance redressal score as may be specified by the Board; and
(g) the proprietary trading volumes of the stock broker.
Further it has been provided that the stock broker designated as a qualified stock broker shall be required to meet enhanced obligations and discharge responsibilities to ensure the following objectives:
(a) appropriate governance structure and processes;
(b) appropriate risk management policy and processes;
(c) scalable infrastructure and appropriate technical capacity;
(d) framework for orderly winding down;
(e) robust cyber security framework and processes; and
(f) investor services including online complaint redressal mechanism.
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