SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 23rd February, 2022
SECURITIES AND EXCHANGE BOARD OF INDIA (STOCK BROKERS) (AMENDMENT)
REGULATIONS, 2022
No. SEBI/LAD-NRO/GN/2022/73.—In exercise of the powers conferred under Section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992, namely:-
1. These regulations may be called the Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2022.
2. They shall come into force on the date of their publication in the Official Gazette.
3. In the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992-
I. In regulation 2, in sub-regulation (1), clause (ca) shall be renumbered as (cb) and before the clause so renumbered, the following new clause shall be inserted, namely, –
“(ca) “professional clearing member” means a member having clearing and settlement rights in any recognized clearing corporation, but not having trading rights in any recognized stock exchange.”
II. In Schedule V,
(i) in Part A, after clause 1A, the following clause shall be inserted, namely, –
“1B. This schedule shall apply to every stock broker who deals in electronic gold receipt segment and every clearing member / self-clearing member who clears and settles trades in electronic gold receipt segment, from the date of grant of registration.”
(ii) in Part B, in clause 3, in sub-clause (1), in the table, after the row for the „Debt’ Segment, the following new row shall be inserted, namely, –
“
| Segment | Rate/Amount (in ₹) | Remarks | ||
| Stock broker | Clearing member | Self-clearing member | ||
| Electronic Gold Receipt Segment | 0.00010 percent of turnover (₹ 10 per crore) | * | * | All sale and purchase
transactions in Electronic Gold Receipt. |
*As may be specified by the Board from time to time”
III. In Schedule VI,
(i) Clause 1 shall be substituted with the following, namely, –
“1. The stock broker shall have such networth and shall deposit with the stock exchange such sum as may be specified by the Board/ stock exchange from time to time.”
(ii) Clause 3 shall be substituted with the following, namely, –
“3. The quantum of networth and deposit to be maintained by the trading member/ self-clearing member/ clearing member/ professional clearing member, dealing/clearing and settling trades in securities, shall be as specified in Table 1 and Table 2 of this Schedule.”
(iii) Clause 5 shall be substituted with the following, namely, –
“5. The quantum of networth to be maintained by the stock broker/clearing member, as specified in Table 1 of this Schedule, shall be reckoned for all segments/stock exchanges.”
(iv) Clause 6 shall be renumbered as Clause 7 and before the clause so renumbered, the following new clause shall be inserted, namely, –
“6. (1) Where the trading member/ self-clearing member deposits the fund with the clearing member/ professional clearing member/ clearing corporation, the maintenance of variable networth would not be required by that trading member/ self-clearing member to the extent of client’s funds deposited with clearing member/ professional clearing member/ clearing corporation.
(2) Where the trading member deposits the client’s funds with clearing member/ professional clearing member, the computation of variable networth at the level of clearing member/ professional clearing member shall also include the funds of the clients of trading member deposited with the clearing member/ professional clearing member.
(3) Where the self-clearing member/ clearing member/ professional clearing member deposits the client’s funds with the clearing corporation, the same shall be excluded while calculating the variable networth at the level of the self-clearing member/ clearing member/ professional clearing member:
Provided that the cash / Fixed Deposit Receipts/ Bank Guarantee accepted by trading member/ self-clearing member/ clearing member/ professional clearing member shall be included while calculating the variable networth:
Provided further that the cash / Fixed Deposit Receipts/ Bank Guarantee of clients deposited by trading member with clearing member/ professional clearing member and by self-clearing member/ clearing member/ professional clearing member with the clearing corporation shall be excluded while calculating the variable networth.”
(v) After clause 7, Table 1 and Table 2 shall be substituted with the following, namely, –
“TABLE 1
NETWORTH FOR MEMBERS DEALING IN SECURITIES
| Type of Member | Base Networt {within 1 year of the date of notification of the Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2022} (in ₹) |
Base Networt {within 2 years of the date of notification of the Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2022} (in ₹) |
Variable Networth {within 1 year of the date of notification of the Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2022} # |
| Trading Member | – | 1 crore | 10% of average daily cash balance of clients retained with the member across segments/ exchanges in the previous 6 months. |
| Self-Clearing Member |
3 crore* | 5 crore | |
| Clearing Member | 10 crore* | 15 crore | |
| Professional Clearing Member | 25 crore | 50 crore |
* In Currency Derivative Segment, Self-Clearing Member and Clearing Member shall have minimum networth of Rs. 5 crore and Rs. 10 crore, respectively.
# Networth requirement for members shall be Base Networth or Variable Networth, whichever is higher.
TABLE 2
DEPOSIT FOR MEMBERS DEALING IN SECURITIES
| Segment | Trading member (in ₹) |
Clearing member (in ₹) | Self-clearing member (in ₹) | |
| Cash | * | * | * | |
| Equity Derivatives | * | 50 Lakh | 50 Lakh | |
| Currency Derivatives | * | 50 Lakh | 50 Lakh | |
| Debt | * | * | * | |
| Commodity Derivatives | NCDE | Nil | 50 Lakh | 50 Lakh |
| RCDE | Nil | * | * | |
| Electronic Gold Receipts | * | 1 crore | 1 crore | |
NCDE: National Commodity Derivatives Exchanges
RCDE: Regional Commodity Derivatives Exchanges
*As may be specified by the Board from time to time.”
(vi) after Table 2, the Explanation clause shall be substituted with the following, namely, –
“Explanation 1:
For the purposes of this Schedule, ‘base networth’ shall mean paid up capital, fully, compulsorily and mandatorily convertible debentures / bonds / warrants which are convertible within a period of 5 years from the date of issue, free reserves and other securities approved by the Board from time to time, but shall not include fixed assets, pledged securities, value of member‟s card, non-allowable securities (unlisted securities), bad deliveries, any debts and advances (except trade debtors of less than 3 months), prepaid expenses, losses, intangible assets and 30% value of marketable securities:
Provided that in case of securities pledged to clearing corporation, the post haircut value of shares owned by the Trading Member / Clearing Member, as may be specified by the Board from time to time, shall be considered for computation of the networth:
Provided further that the deposit requirement specified for the debt segment shall not be applicable when a clearing member clears and settles all the trades only on gross basis for both securities and funds, without using settlement or trade guarantee fund:
Provided further that where the stock broker, clearing member or self-clearing member in the debt segment, is also regulated by a sectoral regulator other than the Board, the networth shall be computed in the manner as specified by such sectoral regulator or as specified by the Board, whichever is higher.
Explanation 2: For the purposes of this Schedule, free reserves shall include Profit and Loss, General Reserve, Securities Premium, Preference Share Redemption Reserve and Capital Redemption Reserve, but shall not include reserves created by revaluation of assets.”
AJAY TYAGI, Chairman
[ADVT.-III/4/Exty./659/2021-22]
Footnotes:
1. Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992, the Principal Regulations, was published in the Gazette of India on October 23, 1992 vide S.O. No. 780 (E).
2. The Principal Regulations were subsequently amended on:
(a) November 28, 1995 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 1995 vide S.O. No. 939 (E).
(b) January 5, 1998 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 1998 vide S.O. No. 13 (E).
(c) January 21, 1998 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Second Amendment) Regulations, 1998 vide S.O. No. 75 (E).
(d) December 16, 1998 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Third Amendment) Regulations, 1998 vide S.O. No. 1078 (E).
(e) July 6, 1999 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 1999 vide S.O. No. 541 (E).
(f) March 14, 2000 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2000 vide S.O. No. 234 (E).
(g) March 28, 2000 by the Securities and Exchange Board of India (Appeal to Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide S.O. No. 278 (E).
(h) August 30, 2000 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Second Amendment) Regulations, 2000 vide S.O. No. 787 (E).
(i) May 29, 2001 by the Securities and Exchange Board of India (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide S.O. No. 476(E).
(j) November 15, 2001 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2001 vide S.O. No. 1128 (E).
(k) February 20, 2002 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2002 vide S.O. No. 220 (E).
(l) September 27, 2002 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No. 1045 (E).
(m) September 23, 2003 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2003 vide S.O. No. 1095 (E).
(n) November 20, 2003 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Second Amendment) Regulations, 2003 vide F. No. SEBI /LAD /20795/2003.
(o) March 10, 2004 by the Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004 vide S.O. No. 398(E).
(q) September 7, 2006 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Second Amendment) Regulations, 2006 vide S.O. No. 1447 (E).
(r) September 25, 2006 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Third Amendment) Regulations, 2006 vide S.O. No. 1600(E).
(v) November 19, 2009 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2009 vide Notification No. LADNRO/ GN/2009-10/21/183853.
(x) April 6, 2011 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2011 vide Notification No. F. No. LAD – NRO/ GN/ 2011 – 12/01/11486.
(y) April 19, 2011 by the Securities and Exchange Board of India (Change in Conditions of Registration of Certain Intermediaries) (Amendment)Regulations, 2011 vide Notification No. LAD/NRO/GN/2011-12/03/12650.
(ab) September 27, 2013 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Second Amendment) Regulations, 2013 vide Notification No. No. LADNRO/GN/2013-14/25/24775.
(ac) May 23, 2014 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2014 vide Notification No. LAD-NRO/GN/2014-15/03/1089.
(ad) October 8, 2014 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2014 vide Notification No. LAD-NRO/GN/2014-15/15/1671.
(af) March 6, 2017 by the Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017 vide Notification No. LAD-NRO/GN/2016- 17/037 read with March 29, 2017 by the Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017 vide Notification No. LAD-NRO/GN/2016- 17/038
(ag) July 13, 2017 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2017 vide Notification No. LAD-NRO/GN/2017-18/005.
(al) May 08, 2020 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2020 vide Notification no. SEBI/LAD-NRO/GN/2020/011.
