CIRCULAR
SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/132 August 01, 2023
To
All Recognized Stock Exchanges
Stock Brokers through Recognized Stock Exchanges
Dear Sir / Madam,
Subject: Trading Preferences by Clients – Applicability for commodity
derivatives
1. SEBI, vide circular no. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/95 dated
June 21, 2023, prescribed a revised format of “Trading Preferences” to be
provided by clients to their respective stock brokers with the intent of allowing
such clients access to all the exchanges for the same segment.
2. SEBI, vide its circular no. SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/92 dated
September 23, 2016 (incorporated under SEBI Master Circular for Stock Brokers
dated May 17, 2023), prescribed the account opening process for members of
commodity derivatives exchanges, as per the FMC circular no.
FMC/COMPL/IV/KRA-05/11/14 dated February 26, 2015. Commodity derivatives
exchanges have represented that the format as prescribed at Para 5 of SEBI
circular no. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/95 dated June 21, 2023
may not be made applicable to exclusive members of the commodity derivatives
exchanges.
3. In view of the fact that in case of commodity derivatives exchanges, overlap of
traded commodities between them is low at this point of time, it is hereby clarified
that the aforesaid format of “Trading Preferences” as specified in SEBI circular
dated June 21, 2023, shall not be made applicable to members registered
exclusively with commodity derivatives exchanges. Such members shall use the
format as prescribed by the erstwhile Forward Markets Commission (FMC) vide
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its circular no. FMC/COMPL/IV/KRA-05/11/14 dated February 26, 2015, which is
as under:
“D. TRADING PREFERENCE
Note: Please sign in the relevant boxes against the Exchange with which you wish to
trade. The Exchange not chosen should be struck off by the client.
Sr. Name of the National Date of Consent for Signature of the
No. Commodity Exchanges # trading on concerned Client
Exchange
1
2
3
4
5
6
# At the time of printing the form, the Member must specify the names of the
Exchanges where the Member has membership.
[In case of allowing a client for trading on any other Exchange at a later date,
which is not selected now, a separate consent letter is required to be obtained
by the Member from client and to be kept as enclosure with this document]”
4. Further, with reference to para 6 of the SEBI circular dated June 21, 2023, it is
also clarified that opting out facility should be provided to new as well as existing
clients, and negative consent should be obtained separately from clients in
writing. Stock brokers shall be mandated to maintain records of such written
negative consent provided by the clients for at least five years.
5. All other provisions specified in SEBI circular dated June 21, 2023, shall continue
to remain applicable.
6. Stock Exchanges are directed to:
6.1. bring the provisions of this circular to the notice of stock brokers and also
disseminate the same on their websites;
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6.2. make amendments to the relevant bye-laws, rules and regulations for the
implementation of the above provisions;
6.3. monitor the implementation and compliance of this circular through half
yearly internal audit and inspection of the stock brokers; and
6.4. communicate to SEBI, the status of the implementation of the provisions of
this circular in their monthly development report.
7. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992, to protect the interests of
investors in securities and to promote the development of, and to regulate, the
securities market.
8. This circular is available on SEBI website at www.sebi.gov.in under the category
"Circulars".
Yours faithfully,
Aradhana Verma
General Manager
Tel. No.: +91-022 26449633
Email: aradhanad@sebi.gov.in
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