Code of Conduct For Brokers and Sub-Brokers
Code of Conduct For Brokers and Sub-Brokers
Code of Conduct For Brokers and Sub-Brokers
Who is a Sub-broker?
Sub-broker means any person not being a member of a stock exchange who
is registered with SEBI as Sub-broker and who acts on behalf of a stockbroker an agent or otherwise for assisting the investors in buying, selling or
dealing in securities through such stock-brokers.
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2.
(2)
As per regulation 16(h) of Securities and Stock Exchange Board of India (Stock
Brokers and Sub- brokers) Regulation, 1992
(1)
The code of conduct specified for the stock brokers as stipulated in Schedule
II, shall be applicable mutatis mutandis to the trading member, and such
members shall at all times abide by the same.
(2)
The trading member shall abide by the code of conduct as specified in the
Rules, Bye-laws and Regulations of the derivatives exchange or derivatives
segment of the exchange.
(3)
The trading members shall obtain details of the prospective clients in know
your client format as specified by the Board before executing an order on
behalf of such client.
(4)
(5)
3.
The trading shall deposit margin or any other deposit and shall maintain
position or exposure limit as specified by the Board or the concerned
exchange or segment or clearing corporation or clearing house from time to
time.
B.
General:
(1)
Integrity: A stock-broker, shall maintain high standards of integrity,
promptitude and fairness in the conduct of all his business.
(2)
Exercise of due skill and care: A stock-broker shall act with due
skill, care and diligence in the conduct of all his business.
(3)
(4)
(5)
(3)
(4)
(5)
(6)
(7)
(7A)
(b)
(8)
C.
(2)
(3)
(4)
(5)
(6)
(1)
(2)
D.
Page 6 of 25
B.
General:
(1)
(2)
Exercise of due Skill and Care: A sub-broker shall act with due skill,
care and diligence in the conduct of all investment business.
(2)
(3)
(4)
(b)
(c)
(5)
(6)
(7)
(7A)
(b)
(8)
C.
Protection of Clients Interests: A sub-broker shall extend fullest cooperation to his stock-broker in protecting the interests of their
clients regarding their rights to dividends, right or bonus shares, or
any other rights relatable to such securities.
Page 8 of 25
D.
(3)
Transactions with Brokers: A sub-broker shall not fail to carry out his
stock broking transactions with his broker nor shall he fail to meet his
business liabilities or show negligence in completing the settlement of
transactions with them.
(4)
(5)
(6)
(3)
(4)
(5)
Statutory Compliances
As part of the statutory compliance required under SEBI (Stock Brokers and Sub-brokers)
Regulations, 1992, Rules, Regulations and Bye-laws of ISE, all Trading Members are
required to submit the following documents as per the prescribed formats:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
:
:
:
Rs.4 lakh
Rs.8 lakh
Rs.10 lakh
Page 10 of 25
CHECKLIST
(To be forwarded along with the covering letter
enclosing the statutory documents)
: 20__ - __
Sr.
No.
Document Title
Details of Proprietor/Partners/Directors
Shareholding Pattern
Turnover Certificate
10
11
12
Enclosed
(Yes/No//NA)
Page 11 of 25
(Annex-A)
NETWORTH CERTIFICATE
(For Individual/Partnership Firms/Corporates)
This is to certify that the Networth of _________________________(TRADE NAME/FIRM
NAME/COMPANY NAME) as on March 31st/September 30th, 20__ as per the statement of
computation of even date annexed to this report is Rs._______/- (in figures) [Rupees
__________________________ only (in words)].
___________________________ (TRADE NAME/FIRM NAME/COMPANY NAME) is also a member
of ______________________________ [name(s) of the stock exchange], wherein the Networth
requirement(s) is/are as given below:
S. No.
Place:
STAMP OF AUDITOR
Name of Partner
Chartered Accountant
Membership Number
Page 12 of 25
(Annex-B)
STATEMENT OF COMPUTATION OF NETWORTH OF __________________ (TRADE NAME/
FIRM NAME/ COMPANY NAME) AS ON MARCH 31, 20__/ SEPTEMBER 30, 20__
Particulars
1.
2.
3.
4.
Capital (Paid-up)
Free Reserves (excluding revaluation reserve)
Market Value of securities forming part of the
Balance Sheet
Less: Book Value of these securities
SUB-TOTAL (Items 1+2+3)
Rs.
Rs.
*****
*****
*****
*****
*****
*****
Less:
5.
6.
7.
Miscellaneous Expenditure
Deferred Expenditure
Accumulated Losses
*****
*****
*****
8.
*****
9.
*****
19.
20.
NETWORTH [A (-) B]
11.
12.
13.
14.
15.
16.
17.
18.
*****
*****
*****
*****
*****
*****
*****
*****
*****
*****
*****
*****
Page 13 of 25
Notes:
i
ii
iii
iv
v
vi
vii
viii
ix
x
xi
xii
xiii
xiv
xv
Page 14 of 25
(Annex-C)
TO WHOMSOEVER IT MAY CONCERN
This is to inform you that we have appointed Shri/ Ms. _____________________ as the
Compliance Officer in terms of Regulation 18A of the SEBI (Stock Brokers and Sub
brokers) Regulations, 1992 with effect from _______________________ (date).
Additional information as required by you is provided below:
Name of the
Compliance
Officer
Fathers
Name
Residential Address/
Telephone No(s)/
Mobile No.
Qualification
(s)
Previous
employment
(name of the
organisation)
We undertake to intimate and update the Exchange as and when there is any change in the
aforesaid information.
Thanking you,
Yours faithfully,
For ____________________________ (Name of Trading Member)
Proprietor/Partner/Director
Countersigned by the Compliance Officer
Name
Notes:
(1)
(2)
(3)
In case of an Individual Dealer Compliance Officer can be the individual himself or any employee.
In case of a Partnership Firm/Corporate Dealer Compliance Officer can be any Partner/Director or
employee of the Trading Member.
Only one Compliance Officer can be appointed.
Page 15 of 25
(Annex-D)
DETAILS OF PROPRIETOR/PARTNERS/DIRECTORS
AS ON _____________________________
Sr.
No.
Name
Designation
PAN No.
Experience
(in years)
Qualification
Shareholding
% of total
Date
of
Birth
Residence
Address/ Tel.
No./ Mobile No.
Fathers
Name
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(9)
(8)
Directorships/
Controlling
Shareholding in
other companies
(10)
1
2
3
4
5
1. _____________________________________________
2. _____________________________________________
NOTES:
(1) Columns (2) & (5) are not application in case of Proprietors
(2) Designation Please specify whether the Director is a Managing Director or Whole-time Director or Executive Director or Non-Executive Director
or Executive Chairman or Non-Executive Chairman
(3) Experience Please enter no. of years experience in securities market
(4) Designated Directors Mention the name of Designated Directors as approved by the Screening Committee of ISE.
Date:
Place:
Authorised Signatory/Partner(s)/Director(s)
Date:
Name of Partner/Proprietor
Chartered Accountant
Membership Number
Page 16 of 25
(Annex-E)
Details of other Stock Exchange memberships
held by the Traders/Dealer in same name
or in the name of holding company, subsidiary company, promoters, directors &
partners
as on _____________________________
Sr.
No
Name
Relation
Stock
Exchange
Name
SEBI
Registration
No.
SEBI
Registration
Date
Remarks
1
2
3
4
5
Date:
Place:
Authorised Signatory / Partner(s) / Director(s)
NOTES:
(1) If not a member of any Stock Exchange, please mention Not Applicable in the first row
(2) Relation - Provide details, for example, Self (for membership in the name of the
company, firm), Partner, Chairman, Whole time director, holding subsidiary.
Page 17 of 25
(Annex-F)
Auditors Report
The auditor should submit his report in the following format:We have audited the attached balance sheet of M/s ..as at
.. and the profit and loss account for the year ended on that date annexed
thereto and report that ;
a.
We have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purpose of our audit.
b.
In our opinion, proper books of account and records as specified in rule 15 of the
Securities Contracts (Regulation) Rules, 1957, have been kept so far as appeared
from our examination of such books.
c.
The stock broker has complied with the requirements of stock exchange so far as
they relate to maintenance of accounts and was regular in submitting the required
accounting information to the stock exchange.
d.
The balance sheet and the profit and loss account referred to in this report are in
agreement with the books of account.
e.
In our opinion and to the best of our information and according to the explanation
given to us, the said balance sheet and the profit and loss account read together with
the notes thereon give a true and fair view insofar as it relates to the balance sheet,
of the state of affairs of M/s ., and insofar as it related to the
profit and loss account, of the profit of M/s .. for the year
ended on that date.
Date:
For,
Chartered Accountants
Place:
Membership No.
Note:
Note: Kindly enclose Balance sheet and profit & loss account duly certified by the C.A. in
original for the year ended 31st March / 30th September 200__.
Page 18 of 25
(Annex-G)
Shareholding Pattern (For Corporates)
Shareholding Pattern of _____________________ (name of Dealer/Trader)
as on _______________________________
EQUITY / PREFERENCE
equity/preference shares)
Sr. No.
Name
(Please
indicate
Number of
shares held
and
use
Face value
per share
separate
sheets
Amount Paid up
(Rs. in lakh)
for
% of
total
1
2
3
4
5
6
7
8
Others
TOTAL
100.00
NOTES:
1. In case of all corporate shareholders of the Trading Member, the details of their
shareholding shall also be furnished in the same format as given above
2. In case of HUF, give names of Karta and co-parceners.
3. Persons holding 2% or more of the paid up capital should be shown separately and
not clubbed in others.
Date:
Place:
Authorized Signatory / Partner(s) / Director(s)
CERTIFICATE
This is to certify that the shareholding in _____________________________(Trade Name of Trading
Member) as given above, based on my/ our scrutiny of the books of accounts, records and
documents is true and correct to the best of my/our knowledge and as per information
provided to my/our satisfaction.
Place:
For (Name of Accounting Firm)
Date:
Name of Partner/Proprietor
Chartered Accountant
Membership Number
Page 19 of 25
(Annex-H)
Details of Dominant Group (For Corporates)
Dominant Group of _____________________ (name of Dealer/Trader)
as on ______________________________
EQUITY / PREFERENCE
equity/preference shares)
Sr.
No.
Name of
dominant
shareholder
(Please
indicate
and
use
separate
Total
Amt
paid up
sheets
% of Total
Self
for
% of
Total
Relatives
A1
A2
2
B
B1
B2
TOTAL
Notes:
(1) Relation Please mention the relationship of the person supporting the dominant
shareholder.
(2) For each person mentioned in the relation column, submit the undertaking as per
the prescribed format.
Date:
Place:
Authorised Signatory/Partner(s)/Director(s)
CERTIFICATE
This is to certify that the shareholding in _____________________________(Trade Name of Trading
Member), based on my/ our scrutiny of the books of accounts, records and documents is
true and correct to the best of my/our knowledge and as per information provided to
my/our satisfaction.
Place:
Date:
Name of Partner/Proprietor
Chartered Accountant
Membership Number
Page 20 of 25
(Annex-I)
UNDERTAKING FROM SPOUSE OF DOMINANT SHAREHOLDER
I, Mr. / Ms. / Mrs. ________________________________, son/wife of Mr. ______________________, resident
of ______________________________ am the absolute owner of ______ (no.) of shares of Rs. ___ each,
Rs. ______ per share paid up, which constitutes _________ % of the total paid up capital of M/s
_______________________________________ as on this date.
I state that I shall irrevocably and unconditionally support Mr. / Mrs. ________________ in
respect of my shareholding, a shareholder in the above mentioned company. I further state
that I have no objection to my above mentioned shareholding being clubbed with the
shareholding of Mr. / Mrs. ______________________, who is my husband / wife (strike off what is
not applicable) for the purpose of determining the dominant shareholder of the said
company.
This support is irrevocable and I also undertake to give prior information to the National
Stock Exchange of India Limited and the member with whom the said company is affiliated
as an Authorised Person before selling or otherwise transferring any part or whole of my
above mentioned shareholding.
WITNESS BY:
Signature :
Name :
Address :
SIGNATURE
Name :
Place :
Date :
Date
:
CERTIFICATE
Page 21 of 25
(Annex-J)
AUDITORS CERTIFICATE FOR REPORTING TURNOVER
Members Name
______________________________________
______________________________________
______________________________________
______________________________________
TURNOVER TABLE
Financial
Year
Jobbing
turnover (sale
side), if any
Jobbing
turnover
(purchase
side), if any
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Rs. crore
Rs. crore
Rs. crore
Rs. crore
Rs. crore
Rs. crore
Other
turnover
(two-side)
Total turnover
(8)
(9)
(10)=(2)+
(3)+(4)+(5)+
(6)
(7)+(8)+ (9)
Rs. crore
Rs. crore
Rs. crore
2005-06
2006-07
2007-08
2008-09
2009-10
*Carry forward turnover shall include carry forward, renewal, badla, ALBM and BLESS transactions.
Page 22 of 25
(Annex-K)
FEES COMPUTATION TABLE
Financial Fees on Fees on PSU Fees on Other Fees on Carry-forward Fees on OffYear
Jobbing bonds/ Govt. debt market turnover less offmarket
turnover, securities
turnover, if setting entries(if turnover, if
if any turnover, if any
any
included), if any
any
(1)
(2)
(3)
(4)
(5)
(6)
Rs.
Rs.
Rs.
Rs.
Rs.
Fees
payable
(7)
(1)+(2)+(3)+
(4)+(5)+
(6)+(7)
Rs.
Rs.
2005-06
2006-07
2007-08
2008-09
2009-10
Total Fees Payable Rs.
Less Fees Paid Rs
Balance Fees Payable Rs.
Interest Payable Rs.
Interest Paid Rs.
Balance Interest Rs.
Certification by Auditor should also include the following confirmation: That the break up into various components of the total turnover is in conformity with Schedule III of SEBI(Stock Brokers and Sub-Brokers)
Regulations 1992 as amended on February 20, 2002 and, further, jobbing transactions reported, are in conformity with Paragraph (1), clause
(bb) of Schedule III of SEBI(Stock Brokers and Sub-Brokers) Regulations 1992 as amended on February 20, 2002, i.e. transactions that are
reported as jobbing have been squared off during the same day and that such transactions have not been undertaken by the broker on behalf of
clients.
#
The turnover shown under PSU bonds/Government Securities category is in conformity with circular dated September 30, 2002 issued
by SEBI on bonds issued by Public Sector Undertaking eligible for concessional rate of fees.
Page 23 of 25
(Annex-L)
Sr.
No.
Name of Partner
Sharing pattern in
Profits & Losses*
(%)
1
2
3
TOTAL
100.00
Date:
Place:
Authorised Signatory/Partner(s)/Director(s)
CERTIFICATE
This is to certify that the capital and sharing pattern in ___________________________ (Trade
Name of Trading Member) as given above, based on my/ our scrutiny of the books of
accounts, records and documents are true and correct to the best of my/our knowledge
and as per information provided to my/our satisfaction.
Place:
For (Name of Accounting Firm)
Date:
Name of Partner/Proprietor
Chartered Accountant
Membership Number
Page 24 of 25
(Annex-M)
Sr.
No.
1
TOTAL
Date:
Place:
Authorised Signatory/Partner(s)/Director(s)
CERTIFICATE
This is to certify that the sharing pattern in _____________________________(Trade Name of
Trading Member) as given above, based on my/ our scrutiny of the books of accounts,
records and documents is true and correct to the best of my/our knowledge and as per
information provided to my/our satisfaction.
Place:
For (Name of Accounting Firm)
Date:
Name of Partner/Proprietor
Chartered Accountant
Membership Number
Page 25 of 25