TaxTMI 
TaxTMI 
Securities and Exchange Board of India (Stock Brokers) Regulations, 2026
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....lations, unless the context otherwise requires, - (a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992); (b) "certificate" means a certificate of registration issued by the Board; (c) "change in control" - (i) in case of a body corporate - (A) whose shares are listed on any recognised stock exchange, shall be construed with reference to the definition of control in terms of regulation 2(1)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (B) whose shares are not listed on any recognised stock exchange, shall be construed with reference to the definition of control as provided in Section 2(27) of the Companies Act, 2013 (18 of 2013); (ii) in a case other than that of a body corporate, shall be construed as any change in its legal formation or ownership or change in controlling interest. Explanation - For the purpose of sub-clause (ii), the expression "controlling interest" means an interest to the extent of not less than fifty percent of voting rights or interest, either directly or indirectly; (d) "cl....
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....ties Market) Regulations, 2003; (n) "professional clearing member" means a clearing member without having the trading rights in the same segment of any of the recognised stock exchange for which it is acting as a clearing member.; (o) "proprietary trading" means trading by a stockbroker in its own account, in any segment of a recognised stock exchange; (p) "proprietary trading member" means a stock broker whose trades are exclusively in the nature of proprietary trading; (q) "qualified stock broker" means a stock broker designated as such under regulation 19; (r) "regulatory sandbox" means a live testing environment where new products, processes, services, business models, etc. may be deployed on a limited set of eligible customers for a specified period of time, for furthering innovation in the securities market; (s) "Securities Contract (Regulation) Act" means Securities Contract (Regulation) Act, 1956 (42 of 1956); (t) "self-clearing member" means a clearing member who settles trades on its own account or of its clients; (u) "senior management" shall have the meaning assigned to it under the Securities and E....
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....ation 14, regulation 15(5) and regulation 19 shall mutatis mutandis apply to a clearing member and any reference to a recognised stock exchange in that case shall be taken as reference to a clearing corporation. CHAPTER II REGISTRATION OF STOCK BROKERS Application for registration. 4. (1) Any person who intends to act as a stock broker shall be required to submit an application to the Board through a recognised stock exchange either electronically or otherwise, in the form, along with the application fees as specified in Chapter IX. (2) The recognised stock exchange shall examine the eligibility of the applicant in terms of relevant Acts, Regulations (including these regulations) as well as the rules and bye-laws of the concerned recognised stock exchange. (3) After examination, the recognised stock exchange shall forward the application to the Board along with its recommendation within thirty days of receipt of the complete application with the application fees specified by Board. (4) A stock broker registered with the Board may operate in any recognised stock exchange or any segment of the recognised stock exchange subject to the approval of such recognised s....
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.... applicant has complied with the requirements specified in regulation 6, shall grant a certificate to the stock broker subject to such terms and conditions as the Board may deem fit and appropriate. (2) The Board shall send intimation to that effect to the concerned recognised stock exchange of which the applicant is a member. Procedure where certificate is refused. 8. (1) The Board may refuse the grant of certificate to the applicant after giving a reasonable opportunity of being heard and shall, within thirty days of such refusal, communicate the same along with the reasons for refusal to the applicant and to the concerned recognized stock exchange. (2) An applicant may apply to the Board for reconsideration of its decision of refusal to grant certificate within thirty days from the date of receipt of such communication. (3) The Board shall reconsider such application and communicate its decision as soon as possible in writing to the applicant and to the concerned recognized stock exchange. Payment of fees. 9. (1) Every applicant eligible for grant of a certificate as a stock broker shall pay such fees and in such manner as specified in Chapter IX. (2) The....
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....inancial sector regulator or authority. Explanation: For the purpose of this regulation, the expression "financial sector regulator" shall mean an authority or body constituted under any law for the time being in force to regulate services or transactions in the financial sector and includes the Reserve Bank of India, the Insurance Regulatory and Development Authority of India, the Pension Fund and Regulatory Development Authority, International Financial Services Centres Authority, Ministry of Corporate Affairs, Insolvency and Bankruptcy Board of India and such other authority as may be specified by the Board. Incidental advice. 13. A stock broker may provide incidental investment advice to its broking clients who might be expected to rely thereon to acquire, dispose of, retain any securities, provided it complies with Chapter III of the Securities and Exchange Board of India (Investment Advisors) Regulations, 2013. Underwriting activity. 14. (1) A stock broker is eligible to act as an underwriter. (2) A stock broker may act as an underwriter only out of its own net worth/funds as may be specified. (3) Every stock broker acting as an underwriter shall comply w....
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.... (j) Margin deposit book or margin ledger or collateral ledger; and (k) Client account opening forms in the format as may be specified. (2) A stock broker in the Execution Only Platform segment, shall keep and maintain, either physically or in electronic form, the books of account, records and documents as specified. (3) Every stock broker shall intimate the place of maintenance of books of account, records and documents to a recognized stock exchange of which it is a member. (4) Every stock broker shall furnish to a recognised stock exchange, of which it is a member, a copy of the audited balance sheet and profit and loss account within six months or a period as may be specified after the close of each accounting period. (5) Every stock broker acting as an underwriter shall also maintain the following additional documents and records - (a) details of all agreements; (b) total amount of securities of each body corporate subscribed to in pursuance of an agreement; (c) a copy of the balance sheet and profit and loss account as at the end of each accounting period and a copy of the auditor's report on the accounts for that period, fo....
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....assets and ensuring proper management of risk. (4) A stock broker shall also- (a) adhere to the audit related requirements as specified; (b) adhere to the Securities and Exchange Board of India {KYC (Know Your Client) Registration Agency} Regulations, 2011 and any circulars or guidelines issued thereunder; and (c) ensure the confidentiality of all the details of the client and shall not disclose such details to any person except as required under any law, rules, regulations or with the express written permission of the client. Cyber security and cyber resilience. (5) The stock broker shall have a robust cyber security and cyber resilience framework, as specified. Grievance Redressal Mechanism. (6) The stock broker shall ensure that it is continuously enrolled on SEBI Complaints Redress System (SCORES), the common Online Dispute Resolution Portal (ODR) or such other platform, as specified. Code of advertisement. (7) The stock broker shall adhere to the code of advertisement, as specified. Outsourcing. (8) The stock broker shall adhere to the guidelines on outsourcing of activities, as specified. Compliance. (9) A stock brok....
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....tivity not permitted under rule 8(1)(f) and rule 8(3)(f) of the Securities Contracts (Regulation) Rules, 1957; and (d) accepting cash from its clients either directly or by way of cash deposit to its bank account. CHAPTER IV INSTITUTIONAL MECHANISM FOR PREVENTION AND DETECTION OF FRAUD OR MARKET ABUSE Systems for surveillance of trading activities and internal controls. 21. The stock broker shall put in place adequate systems for surveillance of trading activities and internal control systems to ensure compliance with all the regulatory requirements as may be specified for the detection, prevention and reporting of potential fraud or market abuse by its clients, directors, senior management, key managerial personnel, employees or authorised persons. 22. The Board or recognised stock exchange may consider the nature of business, the size of its operations and the complexity of the transactions being undertaken by the stock broker while specifying the regulatory requirements. Obligations with respect to prevention and detection of fraud or market abuse. 23. (1) The stock broker shall maintain clearly documented policies and procedures r....
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.... a half-yearly basis to recognised stock exchanges. (4) Any deviation in adherence to internal controls, risk management policy, surveillance policy, policy for onboarding of clients along with the proposed corrective actions for such deviation shall be placed before the appropriate Committee, Board of Directors or such other equivalent or analogous bodies of the stock broker at regular intervals. (5) Such deviations shall also form a part of the report to be submitted by the stock broker to a recognised stock exchange in terms of sub regulation (3). (6) The stock broker may seek guidance from a recognised stock exchange on any identified suspicious activity for which it could not ascertain the violation of the applicable provision. Whistle blower policy. 25. (1) The stock broker shall establish, implement and maintain documented whistle blower policy. (2) Such policy shall provide for a confidential channel for employees and other stakeholders to raise concerns about any suspicious activity or a suspected fraudulent, unfair or unethical practices, violations of regulatory or legal requirements or governance vulnerability. ....
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....s in its custody or control and furnish the statements and information relating to the transactions in securities market to the inspecting authority within the required time. (3) The stock broker shall allow the inspecting authority reasonable access to the premises occupied by such stock broker or by any other person on its behalf. (4) The stock broker shall extend reasonable facility for examining any books, records, documents and computer data in the possession of the stock broker or any other person and also provide copies of the documents or other materials sought by the inspecting authority. (5) The inspecting authority, during the course of inspection, shall be entitled to examine or record statements of any member, director, partner, proprietor, employee, senior management and key managerial personnel of the stock broker. Submission of report to the Board. 30. The inspecting authority shall, as soon as possible, submit an inspection report to the Board. Action on inspection or investigation report. 31. The Board shall after consideration of inspection or investigation report take such action and measures as it may deem fit and appropriate including acti....
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....uthorized by it in this behalf, any books or registers; (ii) to appear before the investigating authority personally or to answer any question which is put to it by the investigating authority; (iii) to sign the notes of any examination taken down by the investigating authority; (iv) to file any return or report with the Board; or (v) to furnish any information, books or other documents within 15 days of issue of notice by the Board; (j) failure to pay penalty imposed by the adjudicating officer or failure to comply with any of her directions or orders. CHAPTER VII POWER TO RELAX STRICT ENFORCEMENT OF THE REGULATIONS Exemption from enforcement of the regulations in special cases. 34. The Board may exempt any person or class of persons from the operation of all or any of the provisions of these regulations, for a period as may be determined by Board, for furthering innovation relating to testing new products, processes, services, business models, etc., in live environment of regulatory sandbox in the securities markets subject to the applicant satisfying such conditions as may be specified by the Board. Power to relax stric....
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.... (d) If the letter or written communication is not withdrawn, it shall be available to the public together with the written response of the Board. CHAPTER VIII CODE OF CONDUCT General principles. 36. (1) Integrity: A stock broker, shall maintain high standards of integrity, promptitude and fairness in the conduct of all its business. (2) Diligence, honesty and fairness: A stock broker shall- (a) act honestly, fairly and with due skill, care and diligence and in the interest of investors while conducting its business; (b) not indulge in manipulative, fraudulent or deceptive transactions or schemes or spread rumours with a view to distorting market equilibrium or making personal gains; (c) not create false market either singly or in collusion with others or indulge in any act detrimental to the investors interest or which leads to interference with the fair and smooth functioning of the market; (d) not involve itself in business in the market beyond reasonable levels not commensurate with its financial soundness; (e) not resort to unfair means to solicit clients from other stock brokers; and (f) not neglect or f....
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....o protect the interests of its clients; (b) ensure that it and its personnel acts in an ethical manner in all its dealings with a body corporate making an issue of securities (hereinafter referred to in this chapter as "the issuer"); (c) not make any statement, either oral or written, which would misrepresent- (i) the services that the underwriter is capable of performing for its client, or has rendered to any other issuer company; (ii) its underwriting commitment; (d) avoid conflict of interest and make adequate disclosure of its interest; (e) put in place a mechanism to identify, disclose and resolve any conflict of interest situation that may arise in the conduct of its business or where any conflict of interest arises, shall take reasonable steps to resolve the same in an equitable manner; (f) not divulge to other issuer, press or any party any confidential information about its issuer company, which has come to its knowledge; (g) not deal in securities of any issuer company without making disclosure to the Board and also to the Board of directors of the issuer company; (h) ensure that any change i....
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....p;of its turnover (Rs. 10 per crore) * * All sale and purchase transactions in securities other than debt securities. Equity derivatives 0.00010 per cent of its turnover (Rs. 10 per crore) 50,000/- 50,000/- Explanation. -(A) The expression 'turnover' shall include the value of the trades executed by the stock broker on the concerned segment of the recognized stock exchange and of the trades settled on the expiration of the contracts. (B) In case of options contracts, 'turnover' shall be computed on the basis of premium traded for the option contracts and in case where the option is exercised or assigned, it shall be additionally computed on the basis of notional value of option contracts exercised or assigned. Currency derivatives 0.00010 per cent of its turnover (Rs. 10 per crore) 50,000/- 50,000/- Interest rate derivatives 0.00005 per cent of its turnover (Rs. 5 per crore) 50,000/- 50,000/- Commodity derivatives Agricultural commodity derivatives 0.00010 per cent of its turnover (Rs. 10 per crore) 0.00001 per cent of its turnover (Rs. 1 per crore) 50,000/-....
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....ised stock exchange; and (b) off-market transactions entered into by it which are reported to that recognised stock exchange. Explanation. - The Board may specify the manner in which fees shall be collected from stock brokers who report the same transactions to different stock exchanges in which they are members, under clause (b). (2) Every recognized stock exchange shall collect from every stock broker in any segment other than cash segment, the fee payable under regulation 41 in respect of turnover in the relevant segment of that recognised stock exchange in accordance with the provisions of its bye-laws. (3) Every commodity derivatives exchange shall collect from every stock broker/clearing member/self-clearing member, dealing/clearing and settling trades in commodity derivatives, the fee payable under regulation 41(1) in accordance with the provisions of its bye-laws. (4) The fee collected by a recognized stock exchange under sub-regulations (1), (2) or (3) during a calendar month shall be paid by the stock exchange to the Board by the fifth working day of the following calendar month. (5) All recognized stock exchanges shall maintain such register....
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....e Networth^# Trading Member 1 crore As specified. Self-Clearing Member 5 crore* Clearing Member 15 crore* Professional Clearing Member 50 crore * In Currency Derivative Segment, Self-Clearing Member and Clearing Member shall have minimum networth of Rs. 5 crore and Rs. 10 crore, respectively. # Networth requirement for members shall be Base Networth or Variable Networth, whichever is higher. However, the requirement of Variable Networth shall not be applicable for Execution Only Platforms segment. (2) The quantum of networth to be maintained by the stock broker/clearing member, shall be reckoned for all segments/recognised stock exchanges. Explanation 1: (a) For the purposes of this chapter, 'base networth' means paid up capital, fully, compulsorily and mandatorily convertible debentures / bonds / warrants (which are convertible within a period of 5 years from the date of issue), free reserves and other securities approved by the Board from time to time, but shall not include fixed assets, pledged securities, value of member's card, non-allowable sec....