The Securities and Exchange Board of India (SEBI) on June 13, 2023, issued a Regulatory framework for Execution Only Platforms for facilitating transactions in direct plans of schemes of Mutual Funds
This Circular aims to protect the interest of investors in securities and to promote the development and to regulate the securities market
This circular shall come into force with effect from September 01, 2023
The following has been stated namely: -
• It states that a comprehensive framework for Execution Only Platforms (EOPs) has been attached as Annexure
• It states that the Stock Exchanges shall enact an appropriate framework for the EOP segment wherein the following requirements shall not be applicable for Category 2 EOP namely: -
(i) Trading rules applicable to equity, equity derivative, and other segments
(ii) Investor Protection Fund.
(iii) Rules applicable for clearing and settlement of trades relating to equity, equity derivative, and other segments.
(iv) Pooling of client’s funds by Trading Member.
(v) Membership and other related requirements as a Self-Clearing Member (SCM) or requirement of Trading Member –Clearing Member agreement.
(vi) Risk management framework and settlement-related policies are applicable for equity, equity derivative, and other segments where the Clearing Corporation provides novation and guarantee for settlement of trades.
(vii) issuance of contract notes and issuance of funds &securities statements.
• The Stock Exchanges desirous of providing an EOP segment are directed to perform the following functions namely: -
a) make necessary arrangements to their relevant bye-laws, rules, and regulations for the implementation of the directions in this circular and provide the status of implementation regarding the same to SEBI every month.
b) monitor the operations carried out by EOPs who have obtained membership under the EOP segment.
• The AMFI is directed to perform the following functions namely: -
a) make necessary amendments for the implementation of the directions in this circular and provide the status of implementation regarding the same to SEBI on a monthly basis
b) issue necessary guidelines for Category 1 EOP before the date of this circular coming into force.
c) monitor the operations carried out by EOPs registered with AMFI
• This circular is available at www.sebi.gov.in under the link “Legal ->Circulars
[Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/86]
