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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Market Participants in the Securities Market

A trading member wants to offer trading facility to clients through a sub-broker-like intermediary under the present SEBI framework. Which description matches the current regulatory position for such intermediaries?

Since SEBI discontinued the sub-broker category, such intermediaries operate as authorised persons. They are approved by the exchange and work on behalf of a stock broker, who stays responsible for their activities. They are not separately registered sub-brokers, depository intermediaries or clearing members.

  1. AThey must be registered with SEBI as sub-brokers, as before
  2. BThey operate as authorised persons approved by the exchange and linked to the stock brokerCorrect
  3. CThey need only a registration with the depository
  4. DThey are treated as clearing members of the clearing corporation

Explanation

SEBI discontinued the sub-broker registration category from 2018. Existing sub-brokers had to become trading members or move to the authorised person route. Authorised persons are approved by the exchange and act on behalf of the stock broker, who remains responsible for their acts.

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