Stock Broker Compliance

Intoduction

A Stock Broker License is a licensed practitioner who serves as an agent for the buying or selling of shares or securities in the secondary market on behalf of their clients and investors. Stock Brokers have allowed an individual who has the right to perform these functions as a result of registration with the authorities. No individual may perform these functions unregistered.

Stock Broker License As per Securities Contracts (Regulations) Rules, 1957, a stockbroker is a person having trading rights in any of the recognized stock exchange and includes a trading member

Compliances which a registered stock broker need to follow

As per SEBI stockbroker and sub-broker rule, 1992 books of account should be maintained:

➲ Under regulation 17 following books are to be maintained by a stockbroker:

1. Transaction register (Sauda book)
2. Ledger per client
3. General ledger
4. Journals
5. Cashbook
6. Bank passbook
7. List of documents containing, inter alia, the descriptions of securities obtained and delivered in physical form and the statement of account and other information relating to the receipt and delivery of securities issued by the depository participants in respect of dematerialisation securities;
8. Members 'contract books providing specifics of all contracts signed by him with other members of the same counterfoil exchange or duplicates of confirmatory memos given to that other member;
9. Written approval of customers on contracts signed as principal
10. Deposit margin book
11. Sub-account broker register

• Without prejudice to sub-regulation (1), every stockbroker shall, at the end of each accounting period, provide the SEBI with a copy of the audited balance sheet and profit and loss report, if requested as soon as possible but not later than six months from the end of that year, as at the end of that accounting year

➲ As per securities contracts regulation rule 1957, stockbroker need to maintain:

Rule-15

Every member of the recognised stock exchange shall maintain and preserve the following  books of accounts and documents for a period of five years:

• Transaction register
• Client’s ledger
• General ledger
• Journals
• Cashbook
• Bank pass-book
• Full particular of shares and securities received and delivered
• The audit report to be submitted by members should be in format suggested by securities contract (regulation)act 1956