National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in consultation with Securities and exchange board of India (Sebi) proposed a tighter framework for authorised persons (APs) of brokerages on Friday. The proposal tightens the requirements for APs in terms of educational qualification, net worth and compliance requirements.
The new proposal mandates the APs of stock brokers who provide access to trading platform of a stock exchange as an agent to have a valid certification on securities operations and risk management from NISM (National Institute of Securities Markets). APs will also be required to have certifications on business segment for which they are registered along with certifications on anti-money laundering and combating the financing of terrorism.
Higher Financial Thresholds
Further, individual APs will be required to have a minimum net worth of Rs 5 lakh while non-individual APs will need a net worth in excess of Rs 25 lakh. The APs will also have to maintain a deposit of Rs 1 lakh with the stock broker.
The exchanges also proposed regulations specifying the responsibilities of APs. This includes restricting registration of APs to one broker for a market segment on an exchange and a restriction on the director/partner of an AP to be appointed as AP on the same exchange. In addition, APs will not be allowed to act as a dealer with any other stock broker or authorized person on the same exchange or register in the name of family (spouse/children/parents) or partnership/body corporate where they are directly involved.
For APs with access to trade terminals, the paper proposed to mandate technological controls like geo-tagging, face recognition or biometric authentication and pre order placement evidences like CCTV with time stamping of client orders for better monitoring and restriction of misuse.
To ensure compliance, APs will also be required to disclose their bank and demat accounts to the brokers during onboarding and give access of their statements to the brokers. A disclosure of details of website belonging to APs and all social media handles including those of spouse, designated director/partner and person in charge of the business used for client acquisition and posts or messages related to capital markets will be required. To enhance transparency, APs will not be allowed to receive or pay any money or securities in its own name or account.
The proposed regulations further specify the responsibilities of the stock brokers for all acts of omission and commission of its APs and their employees, making them liable for all consequences. The stock brokers will also be tasked with surprise/mystery audits and regular inspections as mandated by the exchanges.
To achieve effective supervision, the brokers have been mandated to generate offsite alerts during events like recurring client complaints, sharp, unexplained changes in client trading volume, nil or negligible business activity generated by APs etc and take suitable action post verification. Brokers must also ensure that two registered APs working under the same product or segment are not working from the same location and explain the reasons to the exchange if this happens under exceptional circumstances.
Both exchanges will receive feedback on these proposals till August 27, 2026.