Sebi Format For Client Registration

The Securities and Exchange Board of India (Sebi) has developed a uniform format for client registration and client agreement, as a part of its effort to popularise the `know your client' concept. The regulator has directed all stock exchanges to implement the format with immediate effect and complete the registration before May 31.

Sebi has informed all the stock exchanges and send them three formats -- one each for individual client registration, non-individual client registration and member-client agreement applications. In the case of individual client registration form, the client has been asked to affix his signed passport-size photograph apart from producing copies of passport, driving licence, ration card, voters identity card or a copy of their income tax return. It may be recalled that the National Stock Exchange (NSE) has been insisting for photographs of its clients to be affixed before the member enters into an agreement.

 

The member client agreement takes the consent of both the member and the client and assumes that both will continue to improve on the services provided.

The agreement presumes that the member will satisfy himself about the genuineness and financial soundness of the client and of the investment objectives relevant to the services provided.

It further assumes that the member has taken steps and shall take steps to make the client aware of the exact nature of the member's liability for business to be conducted, including any limitations on that liability and the capacity in which it acts. The two parties have also agreed to the following terms and conditions for the agreement:

* In the event of death or insolvency of the client, the member may close out the transaction of the client and the client himself. In such a case the client or his legal representative shall be liable for any losses which may result therefrom.

* The pact entered into between the member and the client shall stand terminated by mutual consent of the parties by giving at least one month written notice.