SEBI amends framework on market access through authorized persons

The Securities and Exchange Board of India (“SEBI”), vide its circular dated July 23, 2010, has eased the certification requirements for authorized persons of stock brokers. Authorised persons of stock brokers provide access to the trading platform of a stock exchange as agents of the stock broker. This circular is further to SEBI’s earlier circular dated November 06, 2009, wherein SEBI had prescribed the framework to govern market access through authorized persons of stock brokers (“Framework”).

Clause 4.1(f) of the Framework stipulated that in order to be eligible to be an authorized person, an individual required the certification, as applicable to approved user / sales personnel of the respective segment. Such certification was required to be validly maintained thereafter. In the new circular, SEBI has deleted Clause 4.1(f) of the Framework and has accordingly done away with the certification requirement. Instead, a new a new clause Clause 4.4 has been added to the Framework, which reads as follows:

“The approved users and/or sales personnel of Authorised Persons shall have the necessary certification of the respective segments at all points of time.”

The amended Framework ensures that the certification requirements are now in line with those applicable to stock brokers and sub-brokers.