Starting August 1, 2024, qualified stock brokerages (QSBs) will be required to implement specific measures to prevent and detect fraud or market abuse. Other brokerages will have staggered deadlines to comply: those with more than 50,000 active unique client codes (UCCs) must implement the measures by January 1, 2025; brokerages with 2,001 to 50,000 UCCs by April 1, 2025; and those with up to 2,000 UCCs by April 1, 2026.
In a circular issued on July 4, the Securities and Exchange Board of India (SEBI) outlined several obligations for stock brokers:
- Systems for surveillance of trading activities and internal controls
- Obligations of the stock broker and its employees
- Escalation and reporting mechanisms
- Whistle Blower Policy
The circular noted that the operational standards and implementation details will be developed by the brokers’ Industry Standards Forum (ISF) in consultation with SEBI. The phased approach is intended to provide sufficient time for all stock brokers to make necessary adjustments based on their size, ensuring smooth and effective adoption.
The early deadline for QSBs reflects their current adherence to enhanced governance and surveillance standards. Stock exchanges are instructed to notify stock brokers about these provisions and report the status of implementation to SEBI.
