Stock Broker Registration

[Securities and Exchange Board of India (Stock Brokers) Regulations, 1992]

Stock broker is title to do trading i.e. sale or purchase in recognized stock exchange on its or on behalf of its client. The platform where trading happens is termed as “Recognized Stock Exchange”. Stock broker is required to take Membership of Recognized Stock Exchange then after only being trading member, stock broker can do trading. The recognized stock exchange in India as on 23rd March, 2021 are as follows:-

List of Stock Exchange:

• BSE Ltd
• Calcutta Stock Exchange Ltd
• India International Exchange (India INX)
• Indian Commodity Exchange Limited
• Metropolitan Stock Exchange of India Ltd 
• Multi Commodity Exchange of India Ltd
• National Commodity & Derivatives Exchange Ltd
• National Stock Exchange of India Ltd
• NSE IFSC Ltd

Specialized and License to deal only on “Commodity Derivative”

Other Stock Exchanges are Licensed to Deal on the Following Segments:-

• Equity 
• Equity Derivative
• Currency Derivative (including interest rate futures)
• Commodity Derivative
• Debt

Stock broker further need clearing rights too either being clearing member or self-clearing member to do trading clearing and settlements.

Broker itself can be clearing member or can do agreement with separate one to do activities of Clearing which means a person having clearing and settlement rights in any recognized clearing corporation.

No separate registration shall be required for stock broker registered with Board to act as clearing member. However it required approval of clearing corporation of which it is admitted as a member to do services of clearing member. An application for grant of a certificate of registration as clearing member shall be submitted to Board in Form AD of schedule I through the clearing corporation of which it is admitted as member. Further clearing corporation shall forward the application form to the Board as early as possible, but not later than 30 days from the date of its receipt.

List of Clearing Corporation in India:

• India International Clearing Corporation (IFSC) Limited
• Indian Clearing Corporation Ltd
• Metropolitan Clearing Corporation of India Ltd
• Multi Commodity Exchange Clearing Corporation Ltd
• National Commodity Clearing Ltd
• National Securities Clearing Corporation Ltd
• NSE IFSC Clearing Corporation Limited 

Terminology to Note:

• Self-clearing member is a member of a clearing corporation which is also registered stock broker and clears and settles trades on its own account or on account of its clients only
• Small investor means any investor buying or selling securities on a cash transaction for a market value not exceeding INR 50,000/- in aggregate on any day as shown in a contract note issued by the Stock Broker.
• As per definition given in regulation stock broker is defined as person having trading rights in any recognized stock exchange and includes a trading member.

Application for registration as a stock broker shall be submitted to the Board in specified form i.e. “Form A” of Schedule I through the Stock Exchange of which he is admitted as a member. Stock exchange shall forward the application form to the Board as early as possible, but not later than 30 days from the date of its receipt.

Pre-Requisite:

Before placing an application for the registration of Stock Broker, kindly be clear and concise on the following matters:

• Basic & necessary infrastructure like adequate office space, equipment and man power to effectively discharge activities
• Has past experience in the business of trading or dealing in securities 
• Fir and proper criteria qualified 
• Satisfies the minimum net-worth and deposit requirements 
• Has been subjected to disciplinary proceedings under rules, and bye-laws of a stock exchange 
• Board upon scrutiny of submitted information, documents and data of applicant may further require, or the concerned stock exchange, to furnish further information or clarification regarding the trading, settling or dealing in securities matter
• Applicant, or its principal officer shall, if so required, appear before the Board for personal representation.

Payment of Fees:

Every applicant qualify for grant of a certificate of registration as a stockbroker shall pay fees as listed below:-

After expiry of 5 financial year from the date of initial registration as Stock Broker, it shall pay sum of INR 5,000/- for every block of 5 financial year commencing from the sixth financial year after the date of grant of initial registration to keep its registration in force.

Fees to be remitted based on certified “Annual Turnover” of Stock Broker from qualified auditor on or before the first day of October of Financial Year to which such payment relates via direct bank transfer or Demand Draft in favor of “The Securities and Exchange Board of India” at Mumbai. “Annual Turnover” means the aggregate of the sale and purchase price of securities received and receivable by the stock broker on its account as well as on account of its client in respect of sale and purchase or dealing in securities during any financial year.

• Name of applicant, trade name, name of stock exchange, address of applicant and contact details
• Form of Organization – Sole Proprietorship, Partnership, Corporate
• PAN Card of Applicant
• Certificate of Incorporation/Registration Certificate
• Memorandum of Association and Articles of Association or Deed
• Audited/Un-audited Financial Statement of Applicant
• Net-worth certificate 
• KYC i.e. PAN and Aadhar Card of Proprietor/Director or partner
• Educational Qualification and Experience in derivatives trading or securities market of Proprietor/Director or partner
• Details of sales personnel or approved user who has passed any certification program
• MOU/Contract Agreement copy with clearing member if applicant want to clear and settle trades through clearing member
• Recommendation of Stock exchange

With above listed documents, data and information applicant can put file for scrutiny to get the registration as stock broker. In addition to this, further undertaking and declaration, profile and business plan to be separately drafted to convince the board of easy and convenient approval on registration of Stock Broker.