stock broker registration<\/strong><\/a> and membership of the stock exchange are valid. The necessary approvals for the relevant trading segment should also be available. Check whether the minimum net worth and deposit conditions prescribed by SEBI are being met. Keep the details of the company’s directors, ownership, and authorized signatories updated. Any major change in ownership or management should be reported to the exchange as per the prescribed rules. <\/p>\n\n\n\n2. Appoint a qualified compliance officer <\/h3>\n\n\n\n
Every brokerage firm should have a designated compliance officer. Check whether he has the prescribed NISM certification. His job is to look after SEBI rules, stock exchange circulars, and investor complaints. If there is a violation of the rules, he should be able to report it quickly. Besides, there should also be an opportunity to report the matter directly to senior management. <\/p>\n\n\n\n
3. Maintain client KYC and onboarding records <\/h3>\n\n\n\n
KYC verification is required before opening a trading account for a new customer. For this, a PAN, identity card, address proof, and other necessary documents will be required. PMLA and KYC Registration Agency rules will also have to be followed. In-Person Verification (IPV) or digital verification will have to be done as per the requirement. The correct Unique Client Code (UCC) should be given to each customer. Customer information should be updated from time to time. It is also important to keep an eye on suspicious accounts. <\/p>\n\n\n\n
4. Keep client money and securities separate <\/h3>\n\n\n\n
Client money and securities should never be mixed with the broker’s own assets. Separate bank and demat accounts should be used as per specific rules. Client money should not be used for the client’s own business or proprietary trading. Reconcile funds and securities account regularly. Keep separate records of each client’s assets. This will help to identify any irregularities quickly. <\/p>\n\n\n\n
5. Follow the rules of running account settlement <\/h3>\n\n\n\n
KYC verification is required before opening a trading account for a new customer. For this, a PAN, identity card, address proof, and other necessary documents will be required. PMLA and KYC Registration Agency rules will also have to be followed. In-Person Verification (IPV) or digital verification will have to be done as per the requirement. The correct Unique Client Code (UCC) should be given to each customer. Customer information should be updated from time to time. It is also important to keep an eye on suspicious accounts. <\/p>\n\n\n\n
6. Collect margin and monitor collateral <\/h3>\n\n\n\n
Collect the prescribed margin from clients. Submit accurate margin reports at the end of the day. Reconcile the client’s collateral with the actual holdings. Follow the approved pledge and re-pledge procedures. Take prompt action in case of margin deficiency. Also maintain records of collateral pledge invocation and release. <\/p>\n\n\n\n
7. Follow the rules of unpaid securities <\/h3>\n\n\n\n
If the client has outstanding money for the shares purchased, the CUSPA (Client Unpaid Securities Pledgee Account) rules have to be followed. A pledge should be made by sending the shares to the client’s demat account in the prescribed manner. The client should be informed about the outstanding amount of money. Have a policy for pledge of invocation and sale of shares. Also keep an eye on the five-day trading deadline. <\/p>\n\n\n\n
8. Do proper reporting of bank and demat accounts <\/h3>\n\n\n\n
Maintain an updated list of all banks and demat accounts associated with the brokerage business. Mention the correct name and use of each account. Inform the stock exchange of any new bank account opening or closure within the stipulated time. Also cross-check the account information with the exchange and depository records. <\/p>\n\n\n\n
9. Strengthen order execution and trade surveillance <\/h3>\n\n\n\n
Each customer order should be completed using the correct UCC. No one should use the trading terminal without permission. A record should be kept of the customer’s instructions and the price at which the trade was made. An unusual transaction, circular trading, front running and trades made without permission should be kept. If any suspicious incident is detected, evidence should be kept. It is also necessary to write down what investigation has been done and what action has been taken afterwards. <\/p>\n\n\n\n