what is stockbroker|articlecg

 Meaning of stockbrokers

If you make your career in the field of stockbrokers. In this article, we will give you complete information about becoming a stockbroker.

 what is stockbroker   In common parlance, stock brokers refer to a person who does the work of buying and selling or dealing in shares, who is given some remuneration for the performance of such work. In this way, those who search for shares and securities buyers and deal in securities on behalf of the principal, such persons are called stock brokers. At present stock brokers perform the functions of buying and selling of securities on behalf of their principal. It is an important component of the capital market through which many transactions are carried out. In fact, it is an authorized person of the stock exchange who deals in securities on behalf of a principal for a reasonable commission. Usually, deals are done through brokers only. The brokers of the buyer and the seller work together to get the deal done in return for a commission. It is a member of a recognized stock exchange that buys and sells shares for its clients. Also, it is mandatory for brokers to register with SEBI.

how to Become a stock broker

Stock brokers are required to get registered under SEBI, for which it is necessary to follow the following procedures and conditions-

i) Should be a member of a stock exchange.

(ii) Should comply with the regulations of the stock exchange of which it is a member.

(iii) The brokers shall not change the organization form of the firm without the prior approval of SEBI.

(iv) The prescribed fee (separately mentioned) will be paid for registration.

 (v) Adequate arrangements for the redressal of investor grievances will have to be made.

The above-mentioned conditions will be followed and the Registration Home will be sent by filling Form D and in case of any error, it can be returned to SEBI for correction within 30 days and can be amended and sent back to SEBI and if necessary SEBI can be registered. may also refuse

what degree do you need to be a stockbroker

Stock brokers should have the following qualifications-

(i) be a citizen of India.

 (ii) He should not be an insolvent or a defaulter to the Exchange.

(iii) he has not been convicted or declared a criminal. (iv) has not entered into an agreement with the creditors to settle the lesser liability.

 (v) Must have passed minimum (10+2) examination i.e. Higher Secondary.

 (vi) Brokers should not be engaged in any other business. Thus uniformly a stock exchange should be qualified and the selection of brokers will be done by the members of the stock exchange.

Apart from the above qualification, experience, profession of the applicant, financial status and track record etc. will also be taken care of and on the basis of stock exchange membership it is necessary to deposit the following amount with the stock exchange of which it is a member-

(A) ₹ 5 lahks per member for the Bombay and Kolkata Stock Exchanges.

(B) ₹ 3.5 lakh per member for Delhi, and Ahmedabad stock exchanges.

(C) ₹ 2 lahks per member for other stock exchanges. 25% of the above amount will be deposited in cash, 25% in a three-year bank deposit receipt, and the rest in securities. Apart from this, additional capital can be sought if required, which will be calculated by deducting the minimum base capital from 8% of the sum of some of its outstanding business.

Stock brokers get membership only after completing the above procedures. and executes tasks following the stock code of conduct

What is the SEBI code of conduct?

(I) General Duties- It is mandatory for the brokers to observe the following code of conduct. This is the general code of conduct through which the brokers perform their functions-

 (1) Every stockbroker shall observe high standards of honesty, integrity and prompt execution in his dealings.

(2) Every stock broker shall perform his duties with utmost efficiency, tact and care.

(3) Every broker shall not make any mistake, error or omission in the filing of the required form and shall not knowingly furnish any false or misleading information (SEBI) to SEBI or the stock exchanges.

 (4) Every stock broker shall not commit any fraud, misrepresentation and malpractices nor shall he indulge in any such act.

(5) Always follow the necessary statutory rules. (6) To remove the difficulties of the investors and to redress their grievances.

What are the duties of stockbroker to investors?

II) DUTIES TO THE INVESTORS- The following are the duties of the stock brokers towards the investors-

(1) Trading and commission- Stock brokers will not deal in securities only for getting a commission but will also take care of the interests of their investors or clients.

(2) No investment advice - Stock brokers while dealing with their clients shall clarify the position of their agent principals and shall not recommend them to hold, sell or buy any security but may do so at the request of the investor or the client.

(3) Honesty towards the client - The stockbroker will behave completely honestly towards his client, will not do any such deal which will harm his client.

(4) Execution of orders - Every stockbroker shall execute the buy/sell orders of the client in good faith at the best available market price. Will not dissuade an investor from trading on account of small volume. Will not delay payment and delivery in compliance of the order.

(5) Issue of contract note - Contract note should be issued to his customer immediately for each transaction.

(6) No breach of trust – Every stockbroker will not give information about the investment of the investor to anyone. Will keep confidential the information received about the client which is received in the course of its business. There is a fiduciary relationship between the client and the brokers.

(7) Return of excess amount - If the broker deals on behalf of his client and receives more amount in the contract, then the excess amount should be returned to his investor.

Duties towards other stock brokers

III) Duties towards other stock brokers - Stock brokers have duties towards their other associate or fellow stock brokers as well which are as follows-

(1) Mutual dealings - Every stockbroker will cooperate with each other to clear the pending trades

(2) Protection of client's interest- Partner or associate stock brokers will cooperate fully for the protection of the interest of the client, they will have to settle the dividend, rights, bonus etc. received immediately.

 (3) Transactions with associate or fellow brokers: To fulfill their responsibilities and duties by fully cooperating in the settlement of deals with fellow brokers.

(4) Restrictions on advertisement and publicity- Stock exchanges in India cannot do advertisement and publicity to make their clients.

(5) Not to attract the client by misrepresentation - Stockbrokers shall not attract investors by making misrepresentation nor instigate any investor from other stock brokers nor insist on breaking the deal with other brokers.

WHAT IS  THE REGULATION OF TRANSACTIONS BETWEEN THE CLIENT AND THE BROKERS

 Every broker shall deposit the money received from his client in a bank separate from his personal funds and shall use the same only when buying securities on behalf of the client, as well as if the client has purchased any securities. If you have been entrusted with the sale, then it should not be mixed with your personal securities. Each broker shall receive 20% margin money for entering into buy transactions for his client and shall deliver the securities to his client within two working days after the payout day and shall receive 20% margin money from his clients while entering into sell securities transactions. or sell the securities after receiving them with a valid transfer process. Day In will pay the sales amount to the client within the working day itself. The condition of 20% margin money is not applicable in the case of Mutual Funds (MFs), Foreign Institutional Investors (FII) and Foreign Direct Investment (FDI) and each broker reserves the right to deduct statutory charges from the client's deposit.

What Is The Difference Between A Broker And A Sub Broker?

When the stockbroker appoints any other person to assist him, to whom he pays the proper commission and executes the tasks as per the orders of the stockbroker and the main broker is responsible for all the tasks of the sub-brokers. Sub-brokers, therefore, means any person who is not a member of a stock exchange and for the purpose of assisting or on behalf of a stockbroker, or as his agent, buys and sells securities through such stock brokers. does from

Registration of sub-brokers Sub-brokers are required to submit Form 'D' to SEBI in which the following information should be given-

 (1) Recommendation by a recognized stock broker to appoint a sub-broker in Form 'C'.

(2) A sub-broker shall be recommended by any two persons of whom one shall be the bank.,

(3) The application of the concerned stock broker will be sent to SEBI through the stock exchange.

(4) The stock exchange shall verify and verify the particulars in the application and certify the fulfillment of the qualifications.

(5) SEBI may ask for additional information, form and information to satisfy itself about the qualifications and formalities and on being satisfied, will issue Form E certificate, the information of which will be given to the concerned stock exchange and broker. In case of rejection, it can be submitted to SEBI for reconsideration within 30 days. SEBI will take a quick decision and inform the parties.

Qualifications of a Sub-Broker - A Sub-Broker should have the following qualifications-

(1) Age should be minimum 21 years.

(2) He must not have been involved in or convicted of any criminal act

(3) Must have passed minimum (10+2) examination.

(4) The applicant should be physically fit.

Registration fee - at the rate of ₹ 1,000 per year for the initial 5 years and at the rate of ₹ 500 per year thereafter for the years till the registration is in effect.

           Code of Conduct for Sub-brokers

The code of conduct for sub-brokers is as follows-

(I) General Duty

(1) To maintain honesty and integrity - A sub-broker shall maintain a high standard of honesty, truthfulness, promptness and propriety in the conduct of all its business, whether related to buying and selling or other similar dealings. Needed

(2) To act with care and caution - A sub-broker shall, in the conduct of all his business, act with due care, caution and prudence. While doing any buying and selling and transaction, he will take special care that every transaction is done with utmost care.

3) Not to indulge in malpractices - A sub-broker should not indulge in any malpractices and should not do any work in the interest of the investor.

 (II) Duty towards investors

(1) Settlement of trades - Every sub-broker shall deal in the sale and purchase of securities in good faith at the best available market price. Will not refuse due to small quantity deal. Will give prompt payment and delivery to its customer.

(2) No breach of trust - Every sub-broker shall not disclose, directly or indirectly, any information received in respect of his client to anyone for misuse.

(3) Integrity towards the client- Every sub-broker shall clarify the position of his agent or principal while dealing with his client and no conflict of vested interest should arise between the clients.

(4) No investment advice - The sub-broker shall not advise any of his clients to buy or sell securities but may give advice on the request of the client.

(5) Trading and commission - For the purpose of obtaining brokerage commission, a sub-broker shall not unnecessarily increase dealing in securities and shall not give any false or misleading information to his client.

(III) DUTIES TO YOUR PRINCIPAL OR MAIN BROKERS

(1) Cooperation in settlement of trades - Every sub-broker shall cooperate in settlement of trades of his principal।

Should cooperate. Thus helping in checking the unfinished business of your principal.

(2) Investor interest protection- Every sub-broker shall cooperate in the settlement of their dividend, bonus and rights to protect the interest of the client of his broker.

(3) Transactions with the broker-sub-broker his dealings not through anyone other than the broker

Will do and he will fulfill his responsibility.

(4) Adherence to the agreement- The sub-broker should abide by the agreement entered into with his prime broker and should not act outside the agreement.

(5) No advertisement and publicity - The sub-broker shall not advertise and advertise in his own name which causes any loss to the prime broker or the principal.

 (IV) Duty towards regulatory body

(1) General Conduct- Every sub-broker shall not do any service work which is against the rules of the stock exchange and is an improper act.

(2) No misleading information - Any such information should be given correct information when asked by Stock Exchange and SEBI. False or misleading information should not be given.

(3) No malpractices - Every sub-broker shall not make any artificial market, quote, either singly or in association with others, which is not against the public interest of the investors of the market.

(4) Fair Business Practices - No sub-broker shall indulge in fraudulent acts of fraud, spreading of rumors etc. scheduled acts which may upset the balance of the market.

(5) No error in giving information - Every sub-broker shall make available to SEBI and the Stock Exchange all such books, records and information as may be called for in this regard. ,

           Obligations of sub-brokers

If any sub-broker violates the rules of SEBI then the following liability arises- (A) Monetary Penalty- Monetary penalty is imposed for violating the following actions-

 (i) Failure to file a report or return to SEBI.

(ii) Failure to provide information, records, or books within 15 days of being called for by SEBI.

(iii) Non-redressal of investor's complaint within 30 days from the date of receipt of communication            from SEBI.

(iv) Non-delivery of security or principal payment within 48 hours of settlement.

(v) Dealing in securities without agreement with the client.

(B) Proceedings of investigation- In case of the following violations, action can be taken to cancel the registration-

(i) has been declared guilty of unethical conduct.

(ii) for default in depositing fees or charges.

(iii) Guilty of non-payment of fine fixed by the Magistrate.

(iv) guilty of fraudulent and unfair trade practices.

(v) If the sub-broker becomes insolvent.