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Sub-broker


Definition

A ‘Sub-Broker’ is any person who is not a Trading Member of a Stock Exchange but who acts on behalf of a Trading Member as an agent or otherwise for assisting investors in dealing in securities through such Trading Members.

All Sub-Brokers are required to obtain a Certificate of Registration from SEBI without which they are not permitted to deal in securities. SEBI has directed that no Trading Member shall deal with a person who is acting as a Sub-Broker unless he is registered with SEBI and it shall be the responsibility of the Trading Member to ensure that his clients are not acting in the capacity of a Sub-Broker unless they are registered with SEBI as a Sub-Broker. 

It is mandatory for Trading Members to enter into an agreement with all the Sub-Brokers. The agreement lays down the rights and responsibilities of Trading Members as well as Sub-Brokers.

Additional Details available in Circular No.637, Download Reference No. NSE/MEMB/10917 dated June 30, 2008.

This circular is in replacement to the Exchange Circular reference number: NSE/MEMB/9421 dated August 31, 2007

Trading Members are requested to note the following with regards to Sub-Broker registrations:

  • Members would continue to submit the Sub-Broker registration applications electronically through ENIT (go to Sub-Broker master and click on ‘Fresh’) and ensure that the physical documents are received by the Exchange within 7 days from submission of application in ENIT (In case of non receipt of physical documents by the Exchange within 7 days from submission of application in ENIT, the Reference Request Number would be rejected in ENIT). 
  • Members would be informed through letter and bill vide FTP to make available in its Exchange Dues Account the processing fee amounting to Rs. 2,000/- plus the applicable applicable Goods & Service Tax (GST) for every Sub-Broker registration application. Alternatively, the status of the Sub-Broker registration application would be ‘Documents Received’ in ENIT.
  • In case of any deficiency in the application, the application form would be returned to the Member. In case the Member desires to re-submit the same application vide ENIT after rectifying the deficiencies, then the Member needs to go to the Sub-Broker master and click on the ‘Resubmit’ button. The Member then needs to enter the ‘ENIT Reference Request Number’ and the details of that Sub-Broker registration application would be displayed. The Member needs to check and update the details as required and then submit the same to the Exchange. In such cases of re-submission, the Exchange would not charge the Sub-Broker registration processing fee.
  • In case of applications which are complete in all respects, Members would be informed through letter in FTP asking them to make available the requisite SEBI registration fees in their Exchange Dues Account.
  • The Exchange would start collecting the SEBI registration fees by debiting the Exchange Dues Account of the Members for Sub-Broker applications which are processed and complete in all respect from the very next day of intimation to the Member. In case the SEBI registration fees is not debited from the Member’s Exchange Dues Account within 10 days from the date of intimation to the Member, then the respective Sub-Broker application would be returned to the Member. In case of re-submission of such applications, the Exchange would process the applications afresh.
  • Status of applicants for which the applicable SEBI registration fees has been collected and recognized by the SRC would be informed to the Members by way of display of ‘Date of Recognition’ through ENIT. For cases where the applicant is not recognized by SRC or the Sub-Broker registration application has been withdrawn by the Member, the Exchange would not refund the SEBI registration fee collected. However, such fees would be adjusted towards subsequent Sub-Broker registration applications by the same Member.
  • After the SRC has granted recognition, status of Sub-Broker applications uploaded by Exchange to SEBI would be informed to Members by way of display of ‘Upload Reference Number’ and ‘Upload Date’ through ENIT within 3 days of upload by Exchange to SEBI.
  • In case the Member applies for withdrawal of the Sub-Broker registration application after its recognition by SRC or for cancellation of the application after it is registered with SEBI, then the Member would need to procure the refund of the SEBI registration fees directly from SEBI.
  • On receipt of the Sub-Broker registration certificate from SEBI, the details of registration number and registration date would be made available to the Member through ENIT. The physical Sub-Broker registration certificate would be forwarded to the Member for onward dispatch to the Sub-Broker.
  • Partial or total amount collected towards SEBI registration fees would not be adjusted towards any other dues payable to the Exchange.
  • In case the Member applies afresh for SEBI registration for Sub-Broker applications returned to the Member who have been derecognized since they were unable to provide necessary clarification as sought by SEBI, within the time stipulated by SEBI, the Exchange would process such applications afresh.

Members need to attach scanned copies and send physical copies of the following documents (as of the latest date) along with the Sub-Broker registration application form:

  • Proof of address of the applicant entity (trade name) – This is mandatory and the address on the proof needs to match with that on the application. Only the latest telephone bill, electricity bill, valid ration card, valid passport, valid driving license and bank statement of the last one month from a nationalized bank is acceptable. 
     
  • Proof of experience certificate– This is mandatory only in case the qualification of Individual/Partner/Director is less than HSC. Only experience of at least two years in the capacity of employee/dealer in capital market in the name of Individual/Partner/Director is acceptable.
     
  • Documents to be submitted along with print of ENIT application
    Download Formats for application for registration of sub-broker (.doc)

  • Model agreement between stock broker and sub broker.
    Download Model stock broker and sub-broker agreement (.doc)

Trading Members wanting to withdraw the Sub-Broker application already submitted to the Exchange are requested to submit the withdrawal application

Download Application for withdrawal of Sub Broker registration application (.doc)

Members are kindly requested to take note and accordingly forward Sub-Broker annual fees, as per Schedule III of the SEBI (Brokers and Sub-Brokers) Regulations, 1992.

For further details, please refer to Circular No.606, Download Reference No. NSE/MEMB/9437dated September 4, 2007.

SEBI vide its circular dated December 20, 2007 (Ref No.MIRSD/DR1/MK/CIR-15/111600/07) has intimated to the Exchange the procedure to be followed for change in affiliation of Sub-Brokers from one Member to another Member of the Exchange.

The procedure to be followed and the set of documents required to be submitted to the Exchange.

Checklist for change in affiliation from one broker to other (.pdf)

Formats for change in affiliation (.doc)


For further details, please refer to Circular No.625, Download Reference No. NSE/MEMB/10577  dated April 10, 2008.
 

As per SEBI Circular No.439, Download Reference No. NSE/MEMB/5677 dated December 21, 2004, in case of change in status and constitution of Sub-Brokers; the Trading Members are required to apply to the Exchange for prior approval of SEBI. Upon receipt of prior approval of SEBI, Trading Members have to apply for cancellation of registration of the Sub-Broker who is undergoing change in status and/or constitution and simultaneously apply for fresh registration of the Sub-Broker.

Documents to be submitted seeking prior approval

  • Covering letter from the Trading Member on its letterhead (duly stamped and signed by the authorised signatory) seeking prior approval of the Exchange for the change in status and/or constitution of its Sub-Broker providing the following details:
    1. Confirmation that there are no complaints/arbitration/disciplinary proceeding / investigation/inquiry pending against the Sub-Broker with the Exchange,
    2. Confirmation that there is no outstanding fee payable to SEBI for any of their Sub-Brokers on any Stock Exchange,
    3. Granting of approval by the Trading Member for the change in status/constitution of the specified registered Sub-Broker from one form to another (Proprietorship, Partnership, Corporate and Reconstitution of Partnership)
  • Letter from Sub-Broker (duly signed and stamped) to the Trading Member applying for change in status and/or constitution, as the case may be, providing the following details:
    1. Reason for change in status/constitution
    2. Confirmation that they have no pending dues payable to the Exchange and SEBI,
    3. Confirmation that there are no complaints/arbitration/disciplinary proceeding /investigation/inquiry pending against the Sub-Broker with the Exchange,
    4. Undertaking that they would be jointly/severally liable for all liabilities/obligations (including monetary penalties) for violations, if any, of the provisions of the SEBI Act, 1992 and the SEBI (Stock Brokers and Sub-Brokers) Rules and Regulations, 1992 that have taken place before the change in status and constitution
    5. Details of current and proposed list of directors/partners and shareholding pattern/sharing ratio of the Sub-Broker.

Documents to be submitted upon receipt of prior approval:

  • Covering letter from the Trading Member on its letterhead (duly stamped and signed by the authorised signatory) with subject line ‘Change in Status and/or Constitution of Sub-Broker, ___________ (Name of the Sub-Broker) applying for cancellation and fresh registration of Sub-Broker
  • Application for cancellation of Sub-Broker registration as per Circular No.428, Download Reference No. NSE/MEMB/5548 dated October 26, 2004.
  • Application for fresh registration of Sub-Broker registration as per Circular No.637, Download Reference No. NSE/MEMB/10917 dated June 30, 2008.

The documentary requirements relating to surrender of SEBI registration of Sub-Brokers are given below

Cancellation of sub-broker (.pdf)

Formats for cancellation of sub-broker registration (.doc)

Download FAQs for Cancellation of Sub-broker (.pdf)

The documentary requirements relating to conversion of sub-broker to Authorised Person is given below

Conversion of sub-broker to Authorized Person (.pdf)

Formats for Conversion of sub-broker to Authorized Person (.doc)

Updated on: 02/01/2020
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