Sub-Broker Registration Must, Says Report

The sagging investor confidence level can only be improved when all intermediaries in the capital market are regulated. This has been emphasised in the report presented by Price Waterhouse to the Securities and Exchange Board of India (Sebi) in October last year on registration and regulation of retail capital market intermediaries.

Registration of these intermediaries will be the first step towards their regulation. It would be impossible to regulate their activities, without knowing about these intermediaries.

The report moots a self-regulatory organisation of sub-brokers which sets up its own criteria for membership and starts creating a framework that regulates its members and improves professional standards of the industry.

 

There are different ways with which intermediaries can be made a part of the industry.

nA sub-broker could agree to represent a broker firm trading through one of the regional exchanges, as several thousand have already done. Regulations already exist to cover this arrangement.

nA sub-broker could register through a new self-regulatory organisation (SRO) of persons and firms that do business in the securities marketplace but are not registered with an exchange. The new SRO would provide its members with the power and standing they now lack. Moreover, it would be empowered by Sebi to create regulations and discipline members who violated them. By doing so, it would provide a way of reducing sub-broker abuses without adding to the supervisory responsibilities of members of the regional exchanges or the NSE.

The person with the securities for sale is treated as the