COMPLIANCE CHECKLIST FOR SUB-BROKERS

Please note that in case of any inconsistency between the Compliance Check List as it appears below and Rules, Bye Laws, Regulations, Circulars and Notices of the Exchange / Clearing Corporation / other regulatory authorities, the latter shall prevail.

Books of accounts

  Whether sub-broker maintains the following books of accounts, records and documents relating to its business for a period of five years as per Regulation 17 (1) of SEBI  ( Stock Brokers & Sub-brokers ) Regulations, 1992.

1. Register of transactions (to be separately maintained for own and client transactions) providing for the following information.

a)   name of security

b)   value of security

c)   rates both gross and net of brokerage

d)   name of constituent

2.  Clients' ledger

3. General Ledger

4.  Journals

5. Cash book

6. Bank pass book

7.      Documents  register (client-wise, security-wise), providing for, inter alia, the following details

a.       date of receipt / delivery

b.  quantity received / delivered

c.   party from / to whom received / delivered

d.   purpose of receipt / delivery.

      Every sub-broker shall also maintain a separate register or ledger in respect of its own securities

8.  Counterfoils or duplicates or copies of sale / purchase notes issued to clients

9. Margin deposit book

10. Register of accounts of affiliated broker

11. Agreement with the affiliated trading member specifying the scope of authority and responsibilities of  

     the stock broker and the sub-broker

   Whether sub-broker maintains the following records also.

1. Contract notes received from affiliated trading member

2. Statements received from affiliated trading member

3. Records in respect of commission and brokerage collected from clients and brokerage paid to the affiliated trading member.

4. Sub-broker client agreement executed with each of the clients.

5.  Client registration form taken from each of the clients

6.      Register of complaints

   In case the sub-broker is registered with brokers of different stock exchanges, whether books of accounts are so maintained as to clearly provide the identity of the transactions with exchange-wise details

Banking operations

  Whether sub-broker keeps moneys of clients in a separate bank account (clients' bank account)

   Whether the clients' bank account is used for any transaction other than clients' dealings in securities

Dealings with clients

   Whether sub-broker makes full payment of funds and delivers securities to their clients within specified time.

   Whether sub-broker keeps such books of accounts to distinguish moneys received / paid on account of each of their clients and moneys received / paid on their  own  account.

   Whether sub-broker has misused clients' funds for own purpose or has transferred funds due to a

client  to  the account of another client

   Whether sub-broker keeps records and books of accounts, as may be necessary, to distinguish client's securities from sub-broker 's own securities

   Whether sub-broker has transferred securities due to a client to the beneficiary account of self / another     client

   Whether sub-broker maintains unique client code for all the clients

   Whether sub-broker has sent half-yearly statement of accounts of funds / securities to all the clients in accordance with Regulation 6.1.5 (d) of Part A of the Capital Market Regulations of the Exchange.

Dealings with intermediaries

  Whether the sub-broker has dealt with any other trading member / sub-broker / unregistered intermediary on behalf of its clients.

Purchase / Sale Notes

   Whether sub-broker issues purchase / sale notes to the clients for trades executed in prescribed format    with all relevant details filled in.

   Whether the purchase / sale notes are signed by sub-broker or its authorized signatory

   Whether sub-broker ensures that brokerage charged is indicated separately in the purchase / sale notes and its commission is always less than 1.5% of the purchase / sale price exclusive of statutory levies.

   Whether sub-broker ensures that there are no differences between the trade rates as per the Neat system and the rates charged to the clients.

   Whether sub-broker has transferred trades executed for one client to another client.

   Whether sub-broker has executed any off-market transactions

 

Margin requirements

   Whether sub-broker buys / sells securities on behalf of the clients only on receipt of up-front margin as prescribed by NSCCL from time to time.

   Whether sub-broker collects daily margin from its clients as prescribed by NSCCL from time to time.

 

Office Management

   Whether terminals given to sub-brokers arc operated by any persons other than approved users

   Whether trading terminals are located only in the registered sub-broker's office or has the sub-broker given / extended terminals to clients / unregistered intermediaries.

   Whether sub-broker has displayed notice boards / plates at prominently visible, painted / printed in a permanent manner in a font and colour which enables easy reading of the subject matter

   Whether sub-broker has displayed at his office a copy of the registration certificate issued by SEBI to the sub-broker.

 

Miscellaneous

           Whether sub-broker is involved in any fund based activities

 Whether sub-broker has advertised / represented himself as sub-broker of the Exchange . ( He may

    represent himself only as a sub-broker of the respective trading member)31

Whether sub-broker reconciles his accounts with the main broker as at the end of each quarter with respect to all settlements where payouts have been declared during the quarter.