Stop brokers from advertising their services, Sebi tells bourses

Our Markets Bureau

Mumbai, Oct 31: In its first major move to curb the menace of proliferated extended stock trading terminals by registered stock brokers, The Securities and Exchange Board of India (Sebi) has for the first time asked all the stock exchanges (SEs) to stop their registered brokers and sub-brokers from seeking new clientele through advertisements of their stock market-related activities.
What is more, the regulator has also asked the SEs to amend their bye-laws accordingly and take action against brokers who mis-utilise, or let mis-utilisation of their trading terminals for unregistered sub-broking activity. It has also asked SEs to amend their bye-laws suitably to prohibit member-brokers from dealing with sub-brokers not registered with Sebi.

Hoping to get a larger chunk of business from speculators and investors across the country, a large number of Sebi-registered brokers and sub-brokers have spread their reach using unregistered sub-brokers to other centres, including mini-metros. The highly efficient and fast changing technology has helped these brokers and sub-brokers to extend their services and SE registered trading terminals to centres far and wide, leading to not just a rise in volumes on the SEs, but also the menace of unregistered sub-brokers. The NSE has around 3,094 VSAT terminals spread over 380 metros and mini-metros, while The Stock Exchange, Mumbai (BSE) has around 8,000 trading work stations (TWS) spread over 450 centres across the country.

Sebi in a communication sent to all the SEs last week said, “It has been noticed that certain brokers and sub-brokers are advertising about their business in prohibition of some of the provisions of Sebi Regulations, 1992.