Deputy General Manager

Market Intermediaries Regulation

& Supervision Department-(DR-1) 

MIRSD-DR 1/MK/Cir- 15/111600/07

December 20 , 2007

To

The Executive Director/Managing Director All Stock Exchanges

Dear Sir / Madam,

Subject: Change in affiliation of Sub-brokers

Regulation 11(2) of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 stipulates that: “No fresh certificate needs to be obtained under sub-regulation (1) where a sub-broker merely changes his affiliation from one stock broker to another stock broker, being a member of the same stock exchange.”

Though no fresh certificate needs to be obtained for change in affiliation, such a change may require approval from the Board.

This circular intends to clarify the procedure to be adopted in case of change in affiliation by the sub-broker. The procedure to be followed and the documents to be submitted for seeking approval for change in affiliation by the sub-brokers is specified in the table given below:

S.No Scenarios

(A)

Remarks
(B)
Procedure                and

Documents        to      be

submitted       by      the
applicant.

(C)

A sub-broker intends • The           sub-broker      shall – Procedure:
(i) to                 discontinue submit the application for
business      with      one change in affiliation to the (a)     Application        for
broker       and      start exchange            through     the change in affiliation to
business with another broker              with        whom be     submitted    to    the
broker    by    changing affiliation is being sought exchange    through    the
affiliation. and         exchange        shall
forward the application toSEBI        along-with       its
recommendation.
broker       with      whom

affiliation       is      being
sought.

S.No Scenarios

(A)

Remarks
(B)
Procedure                and

Documents        to      be

submitted       by      the
applicant.

(C)

Procedure Continued:
·         Sub-brokers affiliated to a (e)       The      sub-broker

seeking        change      in

affiliation        shall      be

(iii) A broker applies for broker who has applied for eligible to do business
surrender. surrender     of registration
may apply for change inaffiliation            to      another

broker       or     apply      for
surrender.

with the old broker till the       application       is

granted      approval    by

SEBI.    Thereafter,    on
grant of approval by

·         The broker must ensure

that all the sub-brokers affiliated to it submit the application for change in affiliation or surrender at the time broker applies for surrender. The application must be submitted through the exchange.

SEBI      the     exchange

shall          ensure       that

affiliation of the       sub‑

broker is       changed to

new        broker        with
immediate effect.

–     Documents    to    be

submitted :
·    The application for surrender of certificate of registration of sub-broker shall be submitted to the exchange        through  the

existing broker whereas the application for change in affiliation of sub-broker shall be submitted to the exchange through broker with whom affiliation is

being          sought.   Exchange

shall          forward         the
application for surrender /

change     in    affiliation   to
SEBI for approval

(a)         Exchange recom-
-mendation and recommendation by the broker with whom affiliation is being sought.(b)                  Certificate of registration in original for recording change in affiliation.      In            case    of

lost                /misplaced
certificate, an affidavit

(on      stamp    paper    of

appropriate            value)

indemnifying          SEBI

from      possible     harm

S.No Scenarios

(A)

Remarks
(B)
Procedure                and

Documents        to      be

submitted       by      the
applicant.

(C)

caused       by     loss     of
(iv) A broker undergoes ·         Sub-brokers affiliated to a certificate and      a copy
change in control or broker who has undergone of           FIR!         police
change in status and change in control!change complaint      lodged    by
constitution    /    sale   / in status or constitution ! the         sub-broker       is
transfer                        / transfer!                             sale! required           to         be
transmission transmission , may apply for change in affiliation to another broker or apply for surrender

·    The broker undergoing change must ensure that all the sub-brokers affiliated to it submit the sub-brokers’ application for change in affiliation or surrender after the issuance of prior approval to the broker and before the registration of the incoming broking entity. The application must be submitted through the exchange.

furnished.

Documents continued

(c)      Letter from the sub-broker seeking change in affiliation addressed to SEBI.

(d)               No Objection Certificate (NOC) from the      existing           affiliated

broker with whom the sub-broker wishes to discontinue business.

(e)     Certified true copy

of the agreement between the broker and the sub-broker.

·         Incase the broker expires,

the             sub-brokers      may

change           their     affiliation

within a period of six months from the date on which the broker ceases to

exist     or   the   registration
will be deemed cancelled.

·      The application for surrender of certificate of registration      of            sub‑

broker(s)           shall         be
submitted to the exchange

S.No Scenarios

(A)

Remarks
(B)
Procedure                and

Documents        to      be

submitted       by      the
applicant.

(C)

through             the       existing

broker         whereas        the
application for change in

affiliation    of   sub-broker
shall be submitted to the

exchange            through     the

broker         with        whom
affiliation is being sought.

The         exchange       shall
forward the application forsurrender          /    change     in

affiliation     to    SEBI   for
approval

(v) ·         Sub-brokers affiliated to a
SEBI    takes    punitive broker            against      whom
action      against      the punitive action has been
broker                     like taken,          may     apply     for
cancellation                  / change          in    affiliation   to
debarred               from another broker or apply
securities    market   or for          surrender    The    sub‑
the     broker              is brokers          must    apply    for
declared    a   defaulter change          in   affiliation   or
or       expelled      from surrender            through     the
exchange. exchange within a period of one (1) month from the date of the SEBI order.
·         The application for surrender of certificate of registration    of            sub‑

broker(s)           shall         be
submitted to the exchange

through             the       existing

broker         whereas        the
application for change in

affiliation    of   sub-broker
shall be submitted to the

exchange            through     the

S.No Scenarios

(A)

Remarks
(B)
Procedure                and

Documents        to      be

submitted       by      the
applicant.

(C)

broker         with        whom
affiliation is being sought.
The         exchange       shall
forward the application forsurrender          /    change     in

affiliation     to    SEBI   for
approval

(vi) The    broker    or    the ·         In case the broker or the
sub-broker terminates sub-broker terminates the
the agreement. agreement, the sub-broker may apply for change in affiliation or surrender registration.
·         In    case    the    sub-broker

intends               change         in

affiliation and broker does not issue NOC, the sub-broker may apply for change in affiliation after completion of one month

from the date of termination of agreement with the proof of request to the broker for NOC.

·         In case the sub-broker terminates the agreement, the sub-broker       shall

submit         an application to
the exchange for surrender

of            certificate          of
registration as sub-broker

and          enclose     proof     of

service of notice for termination of agreement with the broker.

·         In case the sub-broker is
S.No Scenarios

(A)

Remarks
(B)
Procedure                and

Documents        to      be

submitted       by      the
applicant.

(C)

not traceable or does not either apply for change in affiliation      or     surrender

after termination of agreement by the broker, the broker may submit an

application for surrender of registration along with proof of service of notice to the sub-broker after a period of one month from the date of termination of agreement.

(vii) Broker undergoes        a • The sub-brokers may only
change in name. submit        certificate       of
registration in original forthe         change in affiliating

broker’s       name     to     be
recorded on certificate.

The exchange shall provide to SEBI only its recommendation and the certificate of the sub-broker seeking change in affiliation / copy of police complaint or FIR as attachments if the certificate is misplaced or lost along with an affidavit (on stamp paper of appropriate value) indemnifying SEBI from any possible harm due to loss of certificate. The other documents mentioned above may be retained by exchange at its end. The exchange shall provide these documents to SEBI as and when required.

Yours faithfully,

sebi press_logo Circular

More Under SEBI

Posted Under

Category : SEBI (2758)
Type : Circulars (7537) Notifications/Circulars (30585)
Tags : SEBI notifications (2122)

Leave a Reply

Your email address will not be published. Required fields are marked *