Stockbroker is a member of the stock exchange and the sub broker acts on his behalf as an agent for assisting the investors in buying, selling or dealing in securities through such brokers.
Registration with the SEBI is necessary for acting as a broker or a sub-broker.
Conditions for grant of certificate to stockbroker:
a. The stockbroker must hold the membership of a stock exchange.
ADVERTISEMENTS:
b. He shall abide by the rules and regulations and bye-laws of the stock exchange of which he is a member.
c. The broker shall obtain prior permission from the SEBI, to continue trading in securities in case of any change in the status and constitution.
d. He shall pay the amount of fees for registration.
e. Adequate steps must be taken by the broker for redressed of grievances of the investors within one month of the date of receipt of complaints and keep the SEBI informed about the number, nature and other particulars of the complaints received from such investors.
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Duty of Stockbrokers:
ADVERTISEMENTS:
A stockbroker shall execute orders at the best available market price and not refuse to deal with small investors. He should promptly inform his clients about the execution or non-execution of an order and make payment for sale and delivery of the securities purchase. A contract note should be issued promptly. The stockbroker is expected to maintain confidentiality about his client investments.
A stockbroker should cooperate, with the other brokers in comparing unmatched transactions, replacing documents declaring bad delivery, protection of client’s interests, and settlement of transaction. A stockbroker should not neglect or bail or refuse to submit the required returns to the SEBI and stock exchange and not make false or misleading statements on any such returns.