CIRCULAR
SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/03 January 12, 2024
To,
All recognized Stock Exchanges and Clearing Corporations
Dear Sir/Madam,
Ease of doing business- Changes in reporting
1. SEBI has taken various measures to safeguard investors’ collateral lying with the
stock brokers. Clause 15 of SEBI master circular on stock brokers (“master circular”)
dated May 17, 2023 safeguards against misutilisation of clients’ funds. Clause 42
safeguards against the use of one clients’ collateral for another. Stock Exchanges
and Clearing Corporations draw various reports from the stock brokers for this
purpose.
2. SEBI received representations from various stakeholders citing inefficiencies due to
duplication of monitoring mechanisms and difficulties in uploading data to
exchanges. In order to address the issue, SEBI advised the industry associations to
consult with MIIs under the aegis of Broker’s Industry Standards Forum (ISF) and
submit a proposal to SEBI. The ISF has recommended that some of the reports can
be discontinued.
3. These recommendations have been considered by SEBI and as the changes in
reports shall continue to allow the stock exchanges and clearing corporations to
retain the supervision over client collateral, in order to bring in efficiencies in
reporting and a step towards ease of doing business, certain reports are being
discontinued. Based on the above decision the following clauses of the master
circular stand modified:-
3.1. Clause 15.5.2 stands deleted.
3.2. Clause 15.5.3 stands modified whereby G principle is reiterated as follows:
15.5.3 Stock exchanges shall put in place a mechanism for monitoring of
clients’ funds (‘G’ principle) lying with the stock brokers on the principle
enumerated below:
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G Principle: The total available funds i.e. cash and cash equivalent with
the stock broker and with the clearing corporation/clearing member
should always be equal to or greater than clients’ funds as per the
ledger balance.
3.3. Table 5, 6 and Table 7 stands deleted.
4. The provisions of this circular shall come into force with immediate effect.
5. The stock exchanges are directed to:
a. bring the provisions of this circular to the notice of stock brokers, and also
disseminate the same on their websites;
b. jointly issue the following within 15 days from the date of issuance of this
circular
i. operational guidelines in consultation with relevant stakeholders; and
ii. an SOP for monitoring the implementation of provisions of this circular
c. make amendments to the relevant bye-laws, rules and regulations for the
implementation of the above provisions; and
d. communicate to SEBI, the status of the implementation of the provisions of
this circular in their monthly development report.
6. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992 read with Regulation 30 of SEBI
(Stock Brokers) Regulations, 1992 and Regulation 51 of Securities Contracts
(Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, to
protect the interests of investors in securities and to promote the development of,
and to regulate the securities markets.
Yours faithfully,
Aradhana Verma
General Manager
Tel.No: 022 26449633
aradhanad@sebi.gov.in
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