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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market

A SEBI-registered stock broker wants to operate on the cash segment of a recognised exchange. Which requirement applies to it under the Indian regulatory framework?

A stock broker must be registered with SEBI and be a member of the exchange. If it is not itself a clearing member, it must route settlement through a clearing member. RBI or depository approval alone does not permit broking activity.

  1. AIt must hold a SEBI registration and be a member of the exchange, with a separate clearing arrangement if it is not a clearing memberCorrect
  2. BIt needs registration with the RBI only
  3. CIt needs approval from the depository only
  4. DIt needs no registration if it trades only for clients known personally

Explanation

A broker needs SEBI registration and exchange membership to trade for clients. If it is not a clearing member, it must settle through a clearing member. RBI or depository approval alone does not authorise broking, and personal acquaintance with clients gives no exemption.

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