How to become a Stock Broker in India and register with SEBI / NSE/ BSE?
Regulatory Background:
SEBI Stock-Brokers And Sub-Brokers Regulations, 1992 is the primary regulatory framework for Stock Brokers. This is seconded by Bye-laws, Rules, Regulations and Circulars of respective Exchanges like NSE, BSE, MCX, NCDEX.
To become a stock broker one needs to become a member of one or more Exchanges by registering with them.
Entity Type:
A stock broker can be:
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An Individual
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A Partnership Firm
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A Limited Liability Company (LLP)
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A Company
Categories of Membership of Exchanges:
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Trading Members (TM) - As a TM, you can execute transactions in your own account or the account of your clients, but the clearing and settlement of your trades will happen through a Clearing Member
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Trading cum Self Clearing Member (TSC) - As a TSC, you can execute trades for yourself and your clients as well as clear and settle them yourself. You need not appoint a clearing member.
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Trading cum Clearing Member (TCM) - As a TCM, you can execute, clear and settle trades for yourself, your clients as well as clear and settle trades for other Trading Members.
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Professional Clearing Member (PCM) - As a PCM, you can only clear and settle trades for other Trading Members or clients. You cannot offer trading services.
Segments of Membership:
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Capital Market - Existing securities can be bought and sold among investors and traders on the Capital Market segment.
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Equity Derivatives - Derivative, both Futures and Options contracts, of securities and indices can be transacted on Equity Derivatives segment.
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Currency Derivatives - Futures contracts for US Dollars (USD), Euro (EUR), Great Britain Pound (GBP), and Japanese Yen (JPY) are traded on Currency Derivative Segment.
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Interest Rate Derivatives - Derivative contracts on interest rates can be traded on Interest Rate Derivatives segment.
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Commodity Derivatives - Derivative, both Futures and Options Contracts of commodities can be traded on the Commodity Derivatives Segment.
Types of Membership:
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Normal - A normal membership allows unrestricted business expansion by adding any number of clients. Most stock brokers avail a Normal Membership
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Alpha - An alpha membership allows transactions in proprietary (own) account of a member and up to 50 clients which are closely related to the member. This membership is suitable for members intending to carry our proprietary trading and trading for a few entities related to the member like its directors, their relatives etc.
Steps for Registration:
How can SecMark assist you?
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Advising on matters related to entity to be used for SEBI registration, Investment Management, Sponsorship, Investment team etc.
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Assistance in applying for registration with Exchanges.
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Advising on qualification and experience required for getting the licenses.
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Responding to queries of Exchanges and SEBI, Getting Certificate of Registration.
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Assistance in setting up operations.
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Designing policies, procedures and operation processes.
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Providing Technology Solutions including E-KYC, Back Office, PMLA and Surveillance Software and Compliance Software