Brokers ppt

8/9/2019 Brokers ppt

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A stock broker is a member of a stockexchange, who buys, sells or deals insecurities.

A certicate of registration from SEBI, ismandatory to act as a broker.

SEBI is empowered to impose conditionswhile granting the erticate.


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!ne should be "# years of age $e%she should be an Indian citi&en $e%she should be neither be bankrupt nor

compounded with creditors $e%she should not be con'icted for fraud or

dishonesty $e%she should not be connected with any

other business connected with a company $e%she should not be a defaulter of any

other stock exchange


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$e will ha'e to abide by its rules,regulations and bye laws,

(ay the prescribed fee)ake ade*uate steps for redressal of

in'estor grie'ances within one month of thereceipt of the complaint

+eep SEBI informed about the number,nature and other particulars of suchcomplaints.


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$as to apply through the stock exchange ofwhich he is a member.

)he application must be forwarded by theexchange to SEBI within - days from thedate of receipt.

)he exchange should also include astatement to the eect that no

complaints%arbitration cases are pendingagainst the applicant.


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SEBI checks whether or not he is eligibleto be member of a stock exchange

$as the necessary infrastructure including

manpower to discharge his acti'ities $as past experience in the business of

buying, selling or dealing in securities /hether there are any disciplinary

proceedings against him by the stockexchange.


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0s 1--- plus -.---# per cent of histurno'er in excess of 0s # rore.


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0egistered stock brokers ha'e to abide by acode of conduct.

A. General

B. Duty to the investor C. Stock-brokers vis-a-vis other stock-brokers


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Integrity:A stock2broker, shall maintain high standards of integrity,promptitude and fairness in the conduct of all his business.

Exercise O Due Skill An! Care3 A stock2broker, shall actwith due skill, care and diligence in the conduct of all his

business. "ani#ulation:

A stock2broker shall not indulge in manipulati'e, fraudulentor decepti'e transactions or schemes or spread rumourswith a 'iew to distorting market e*uilibrium or making

personal gains.


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"al#ractices:A stock2broker shall not create false market either singly orin concert with others or indulge in any act detrimental tothe in'estors interest or which leads to interference withthe fair and smooth functioning of the market.

Co%#liance &ith Statutory 'e(uire%ents:A stock2broker shall abide by all the pro'isions of the Actand the rules, regulations issued by the 4o'ernment, theBoard and the stock exchange from time to time as may beapplicable to him.


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Execution O Or!ers:A stock2broker, in his dealings with the clients and thegeneral in'esting public, shall faithfully execute the ordersfor buying and selling of securities at the best a'ailablemarket price.

Issue O Contract )ote:A stock2broker shall issue without delay to his client acontract note for all transactions in the form specied bythe stock exchange.

Do not co%%it Breach O *rust: A stock2broker shall not

disclose or discuss with any other person or make improperuse of the details of personal in'estments and otherinformation of a condential nature of the client which hecomes to know in his business relationship.


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Business An! Co%%ission: A stock2broker shall not encourage sales or purchases of

securities with the sole ob5ect of generating brokerage orcommission.

A stock2broker shall not furnish false or misleading *uotations or

gi'e any other false or misleading ad'ice or information to theclients with a 'iew of inducing him to do business in particularsecurities and enabling himself to earn brokerage orcommission thereby.

Business O Deaulting Client:A stock2broker shall not deal or transact business

knowingly, directly or indirectly or execute an order for aclient who has failed to carry out his commitments inrelation to securities with another stock2broker.


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+airness *o Clients:A stock2broker, when dealing with a client, shall disclosewhether he is acting as a principal or as an agent and shallensure at the same time, that no con6ict of interest arisesbetween him and the client.

Invest%ent A!vice:A stock2broker shall not make a recommendation to anyclient who might be expected to rely thereon to ac*uire,dispose of, retain any securities unless he has reasonablegrounds for belie'ing that the recommendation is suitable

for such a client upon the basis of the facts, if disclosed bysuch a client as to his own security holdings, nancialsituation and ob5ecti'es of such in'estment.


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Con!uct O Dealings: A stock2broker shall co2operate with theother contracting party in comparing unmatched transactions. Astock2broker shall not knowingly and wilfully deli'er documentswhich constitute bad deli'ery and shall co2operate with othercontracting party for prompt replacement of documents which aredeclared as bad deli'ery.

,rotection O Clients Interests:A stock2broker shall extend fullest co2operation to other stock2brokers in protecting the interests of his clients regarding theirrights to di'idends, bonus shares, right shares and any other rightrelated to such securities.

*ransactions &ith Stock-Brokers:A stock2broker shall carry out his transactions with other stock2brokers and shall comply with his obligations in completing thesettlement of transactions with them.


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A!vertise%ent An! ,ublicity:A stock2broker shall not ad'ertise his business publicly unlesspermitted by the stock exchange.

In!uce%ent O Clients:A stock2broker shall not resort to unfair means of inducing clientsfrom other stock2 brokers.

+alse Or "islea!ing 'eturnsA stock2broker shall not neglect or fail or refuse to submit there*uired returns and not make any false or misleading statementon any returns re*uired to be submitted to the Board and thestock exchange.


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E'ery stock broker should appoint acompliance o7cer to monitor thecompliance of SEBI regulations etc.

$e 8the compliance o7cer9 shouldimmediately and independently report anynon2compliance obser'ed by him to theSEBI.


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A stock broker should not deal with anyperson as a sub broker unless he has

obtained a certicate of registration fromthe SEBI.


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SEBI is empowered to inspect the books ofaccounts and documents of the stockbroker.

A stock broker or sub broker whocontra'enes any of the pro'isions of SEBIAct, rules or 0egulations is liable for penalty.


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#. Base :inimum apital". Additional%!ptional apital


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An absolute minimum of 0s #- lakhs shouldbe maintained as deposit with the stockexchange by member brokers.

)he maximum deposit ranges up to 0s 1-lakh depending upon the scale of business


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All brokers must keep their own money andmoney of the clients in separate accounts.

Brokers ha'e to make payment to theirclients % deli'er the securities purchasedwithin two working days of payout unlessthe client desires otherwise.


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)hey can buy securities for clients only onreceipt of "- per cent margin on the price ofthe securities proposed to be purchased.

)he broker must issue the contract note forpurchase%sale of securities to a client within"; hours of the execution of the contract.


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A sub broker acts on behalf of a stockbroker as an agent or otherwise forassisting in'estors in buying, selling ordealing in securities through such brokers,

but is not a member of the stock exchange. Sub Brokers wanting to do Business with

more than one broker need to be separatelyregistered with the SEBI for each broker.


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A foreign Broker can operate only on behalfof 0egistered


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SEBI checks out that the applicant=.

1. Is eligible to be admitted as a member of a stock exchange

2. Has the necessary infrastructure like adequate office space,equipment and manpower to effectiely discharge his actiities

!. Has past experience in the business of buying, selling or securities

". #ould pay the amount of fees for registration in the prescribedmanner


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)he persons eligible to become broker are3

#. Indi'iduals>

". (artnership rms registered under the Indian(artnership Act, #?">

. Institutions, including subsidiaries of banksengaged in nancial Ser'ices>

;. Body corporate including companies as denedin the ompanies Act,#?1@.


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+)C*IO)S O+ B'OE'S

Client 'egistration Obtaining "argin %oney

Execution o or!ers

Issue o Contract note

ni(ue Client Co!e /CC0 allot%ent ,ay%ent1!elivery o securities

Charging o brokerage an! other charges

"aintenance o bank accounts

'ecei#t o interest2 !ivi!en!2 rights2 etc. Settle%ent o !is#utes


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)rading and Settlement

(rocedure in Stock:arket


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Company (Like

ITC Ltd)

Primary Market

Issue Shares

in IPOCollect

Capital From

Investors

Investor

s

Invest Money

Get Share

Certificate

Stock Exchange

(Like NSE)

Listed in

StockEchan!e

Brokers

(Memers)

"rokers

eecute orders

for their Clientin Stock

Echan!e

Investor sell

stock holdin!

to !et #ackmoney

B!yers

"uy stock

from presento$ner

"eg!#ated By SEBI

$

% &

'


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Brokers ppt