SEBI’s Circular on Uniform Membership Structure across Segments

Jan 15, 2019 | by Avantis RegTech Legal Research Team

On January 11, 2019, the Securities and Exchange Board of India (SEBI), to implement uniform membership structure across segments and to facilitate ease of doing business, has changed the membership structure across the equity cash segments and derivatives segments. In 2001, after the introduction of derivatives, the Stoke Brokers in both the segments became Trading member (TM) / Clearing Member (CM). Now onwards under the cash segment, all the Stock Brokers are trading cum self-clearing members and under derivatives segment, membership structure is TM and / or CM.

SEBI in its meeting on June 21, 2018 decided that all the existing sub-brokers will become Authorised Persons (AP) or Trading Members only if they meet the criteria as prescribed in SEBI regulations and Stock Exchange bye-laws. From April 01, 2019, all the sub-brokers as an intermediary will not exist anymore. The membership structure as trading member, self-clearing member(SCM), clearing member (CM) and professional clearing member (PCM) in cash segment and will come into effect from April 01, 2019.

A registered TM / CM can operate with a single registration number granted by SEBI in any recognised Stock Exchange or Clearing Corporation. The registered Stock Brokers in cash segment as SCM or CM will automatically carry same status from April 01, 2019 and the Stock Brokers not registered will continue as SCM subject to the condition that the networth requirement for SCM / CM in equity derivatives segment is fulfilled before September 30, 2019. The PCM would be treated same in both the segments.

[Circular No. SEBI/HO/MIRSD/DOP/CIR/P/2019/14]




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