The SEBI (Stock Brokers) Regulation, 1992 governs the functioning and registration of stock brokers, ensuring their compliance with various standards for maintaining market integrity and protecting investor interests. Below are the key points from the regulation:
1. Registration of Stock Brokers:
- Stock brokers must be registered with SEBI before they can act in the market.
- Deposit and Net Worth Criteria: SEBI specifies minimum deposit and net worth requirements for brokers to maintain financial stability and security in the market.
- Fees: Stock brokers must pay the prescribed fees to SEBI when granted a registration certificate.
2. Code of Conduct for Stock Brokers:
As per Schedule II, Regulation 7 of the SEBI (Stock Broker) Regulations, the stock brokers must adhere to the following code of conduct:
- Integrity and Fairness: Stock brokers are required to maintain high standards of integrity, promptness, and fairness in all their dealings.
- Skill and Diligence: Stock brokers should act with due skill, care, and diligence while performing their duties.
- Avoid Manipulation: Stock brokers must not engage in manipulative, fraudulent, or deceptive transactions or schemes, nor should they spread rumors to distort market prices or gain personal advantage.
- No False Market Creation: They must not create a false market, either individually or with others, which interferes with the market’s smooth functioning or harms investor interests.
3. Investor Duties:
- Order Execution: Stock brokers are required to execute client orders for buying and selling securities at the best available market price.
- Contract Notes: Upon each transaction, brokers must issue a contract note to their clients immediately, following the format specified by the exchanges.
4. Record Keeping:
- Books of Accounts and Records: Stock brokers must maintain various books of accounts, records, and documents as prescribed by SEBI to ensure transparency and accountability.
SEBI (Stock Brokers) Regulation: Summary Table
| Regulation Aspect | Details |
|---|---|
| Registration | Stock brokers must be registered with SEBI. |
| Minimum Deposit and Net Worth Criteria | Specific criteria to ensure financial stability. |
| Fees | Brokers must pay fees to SEBI for registration. |
| Code of Conduct | Brokers must adhere to integrity, fairness, and transparency. |
| Investor Duties | Execute orders at the best market price. |
| Contract Notes | Must issue contract notes for each transaction. |
| Record Keeping | Maintain prescribed books of accounts and records. |
Visual Chart: SEBI Stock Broker Regulation Compliance
| Compliance Requirement | Details |
|---|---|
| Registration with SEBI | Must be registered before trading |
| Net Worth & Deposit Criteria | Minimum financial stability needed |
| Code of Conduct | Integrity, fairness, no manipulation |
| Investor Order Execution | Best market price execution |
| Contract Note Issuance | Immediate after every transaction |
| Record Keeping | Maintain books and records |
This regulation ensures that stock brokers operate transparently and ethically, prioritizing investor protection and maintaining a fair trading environment. If you need further help or clarification regarding the SEBI (Stock Brokers) Regulation, 1992, feel free to reach out through email or comment below.