SEBI has issued a circular regarding trading preferences by clients, introducing a standardized format for accessing multiple stock exchanges for the same segment. The circular aims to streamline the process and ensure clients can trade on all stock exchanges where their stock broker is registered.
Analysis: The circular addresses the existing requirement for clients to provide separate authorization or letters to trade on different stock exchanges for the same segment. It highlights the need for standardization and simplification in the format of “Trading Preferences” to facilitate seamless access to multiple stock exchanges.
Under the modified format, clients are required to sign in the relevant boxes for the exchanges they wish to trade on. The segment not chosen should be struck off. The circular specifies the stock exchanges and segments available for selection, including Cash/Mutual Fund, F&O, Currency, Debt, and Commodity Derivatives.
Stock brokers are mandated to register new clients on all active stock exchanges after obtaining their trading preferences as per the standardized format. For existing clients, stock brokers must offer them access to all active stock exchanges for the segments they have already opted for, as a default mode. Clients have the option to opt out of such access by providing negative consent. Stock brokers are responsible for activating or deactivating segments based on client preferences. The circular also extends its provisions to clients registered in accordance with a previous SEBI circular on trading access.
Conclusion: SEBI’s circular on standardized trading preferences for clients aims to streamline the process and ensure clients can access all active stock exchanges for the segments they choose. By implementing a standardized format, stock brokers can register new clients on all stock exchanges and offer existing clients access to multiple exchanges as a default mode. The circular enhances convenience and flexibility for clients while ensuring compliance with SEBI regulations.
Securities and Exchange Board of India
Circular No. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/95 Dated: June 21, 2023
To
All Recognized Stock Exchanges
Stock Brokers through Recognized Stock Exchanges
Dear Sir/Madam,
Subject – Trading Preferences by Clients
1. SEBI, vide Annexure – 3 of the circular no. CIR/MIRSD/16/2011 dated August 22, 2011 (now rescinded due to issuance of Master Circular for Stock Brokers dated May 17, 2023), prescribed trading account related details, which clients would need to provide while opening a trading account with a stock broker.
2. Vide, Para C of the aforementioned Annexure, the format of Trading Preferences has been prescribed as under:
C. TRADING PREFERENCES
*Please sign in the relevant boxes where you wish to trade. The segment not chosen should be struck off by the client.
| Exchanges | Segments | ||||
| Name of the Exchange -1 | Cash F&O |
Currency Derivative
Name of other Segment(s), if any |
|||
| Name of the Exchange -2 | Name of the Segment(s) -1, 2… | ||||
# If, in future, the client wants to trade on any new segment/new exchange, separate authorization/letter should be taken from the client by the stock broker.
3. Thus, currently, clients need to give separate authorization / letter in case they want to trade on different stock exchange for the same segment or on different segment.
4. Based on the representations received and in consultation with Stock Exchanges, it has been decided to standardize the format of “Trading Preferences” in order to ensure that clients are permitted to access all the stock exchanges in which the stock brokers are registered for the same segment.
5. Accordingly, Para C of Annexure – 8 of “Master Circular for Stock Brokers” with reference SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/71 dated May 17, 2023, stands modified as under:
|
C. TRADING PREFERENCES |
|||||
| Please sign in the relevant boxes where you wish to trade. Please strike off the segment not chosen by you. | |||||
| Exchanges | NSE, BSE & MSEI | MCX, NCDEX, BSE & NSE | |||
| All
Segments |
Cash / Mutual Fund |
F&O | Currency | Debt | Commodity Derivatives |
| If you do not wish to trade in any of segments / Mutual Fund, please mention here | |||||
6. All stock brokers are mandated to register their new clients on all the active stock exchanges after obtaining the trading preferences as per the aforementioned format. For existing clients, the stock brokers are mandated to offer them access on all the active stock exchanges for the segments already opted by them, as a default mode, within three months from the effective date of the circular and inform their respective clients through email / SMS. Clients shall be given a choice to opt out of such access by providing negative consent in this regard. Further, the stock brokers shall activate / deactivate the segments based on the preference of the clients.
7. The aforementioned provisions shall also be applicable to the clients registered in accordance with SEBI Circular No. SEBI/HO/MIRSD/DOP/CIR/P/2020/73 dated April 24, 2020.
8. Stock Exchanges are directed to:
8.1. bring the provisions of this circular to the notice of stock brokers and also disseminate the same on their websites;
8.2. make amendments to the relevant bye-laws, rules and regulations for the implementation of the above provisions;
8.3. monitor the implementation and compliance of this circular through half yearly internal audit and inspection of the stock brokers; and
8.4. communicate to SEBI, the status of the implementation of the provisions of this circular in their monthly development report.
9. Applicability: The provisions of this circular shall come into force with effect from August 01, 2023.
10. 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.
11. This circular is available on SEBI website at sebi.gov.in under the category “Circulars”.
Yours faithfully,
Aradhana Verma
General Manager
Tel. No.: +91-022 26449633
Email: aradhanad@sebi.gov.in
