The Securities and Exchange Board of India (SEBI) on March 08, 2024, issued a circular regarding the Measures to instill trust in securities market - Expanding the framework of Qualified Stock Brokers (QSBs) to more stock brokers.
In order to further strengthen the compliance and monitoring requirements of the stock brokers through mandating enhanced obligations and responsibilities on stockbrokers, SEBI, vide circular no. SEBI/HO/MIRSD-POD-1/P/CIR/2023/24 dated February 06, 2023 and para 18 of Master Circular for Stock Brokers dated May 17, 2023 inter-alia stated that the following four parameters shall be considered for designating a stockbroker as QSB, on an annual basis:
• the total number of active clients of the stock broker;
• the available total assets of clients with the stock broker;
• the trading volumes of the stock broker (excluding the proprietary trading volume of the stock broker);
• the end of day margin obligations of all clients of a stock broker (excluding the proprietary margin obligation of the stock broker in all segments)
Based on the aforementioned parameters, the first list of QSBs was issued by stock exchanges on March 03, 2023.
To further protect the interest of investors and for building trust in securities market, it has been decided to extend the framework of QSBs to more stockbrokers. Henceforth, the revised list of QSBs shall be calculated by considering the following parameters, in addition to above mentioned four parameters:
• compliance score of the stock broker
• grievance redressal score of the stock broker and
• the proprietary trading volumes of the stock broker.
The revised framework with regard to the parameters for designating a stockbroker as QSB and procedure for identifying a stock broker as QSB has also been provided in this circular.
[Circular No. SEBI/HO/MIRSD/MIRSD-POD-1/P/CIR/2024/14]
