Agenda

• • • • • • • • • • • • Introduction Types of broker Nature of Work Regulation for brokers Eligibility Criteria for Membership Admission Procedure for New Membership Role & function of brokers responsibility of broker Worker ethics for broker Process of order execution Ways through broker earn money Major brokerage firms in India

Introduction

• A stock broker is an intermediary who arranges to buy and sell securities on the behalf of clients (the buyer and the seller).
• According to SEBI (Stock Brokers and SubBrokers) Regulations, 1992, a stockbroker is member of a stock exchange and requires to hold a certificate of registration from SEBI in order to buy, sell or deal in securities.

Types of brokers

Broker

Full Service Broker

Discount Brokers

Advisory

Discretionary Management

Full Service Broker • Advisory
▫ Expensive

▫ Have to maintain good relationship and contact
▫ Provide financial consultant and financial advisory services ▫ Range of products to buy E.g. bonds, MF, ETF, CD, etc.

• Discretionary Management
▫ Expensive ▫ Have to maintain good relationship ▫ Take complete control over the investment ▫ Takes investment decision on behalf of customers and provide only periodical statement to the customers

Discount Brokers
▫ Low cost

▫ Only buying and selling of securities

▫ No range of services

▫ No assistance

Nature of work

• Securities sales representatives
• Securities traders • Securities brokers • Securities analysts • Broker firms

Regulation for brokers
SEBI checks out that the applicant….
1. Is eligible to be admitted as a member of a stock exchange

2. Has the necessary infrastructure like adequate office space, equipment and manpower to effectively discharge his activities

3. Has past experience in the business of buying, selling or securities

4. Could pay the amount of fees for registration in the prescribed manner

 The persons eligible to become broker are:
1. Individuals; 2. Partnership firms registered under the Indian Partnership Act, 1932; 3. Institutions, including subsidiaries of banks engaged in financial Services;

4. Body corporate including companies as defined in the Companies Act,1956.

Eligibility criteria for brokers
 Corporate & subsidiaries of banks (Rs in lakh)
Particulars Capital Capital Market Whole Sale CM CM,WDM market & Future And Debt and & Option Market WDM F&O
30 100 85 30 100 110 30 200 150 30 200 235 30 200 260

Minimum Paidup capital Net Worth Deposit with NSEIL Deposit with NSCCL Experience Education Track Record

15

15 *

NIL

15

15 *

Two year's experience in securities market Two directors should be HSC. Dealers should also have passed SEBI approved certification test. The Directors should not be defaulters on any stock exchange. They must not be debarred by SEBI for being associated with capital market as intermediaries

 Individuals & Partnership Firms(Rs in lakh)
Particulars Capital Capital market Whole sale CM & CM,WD market & future and debt WDM M & option market F&O
75
26.5

Net Worth
Deposit with NSEIL Deposit with NSCCL Experience Track Record Education

75
51.5

200
150

200
176. 5 17.5

200
201.5

17.5

17.5*

NIL

17.5 *

Two year's experience in securities market The Partners/Proprietor should not be defaulters on any stock exchange. They must not be debarred by SEBI for being associated with capital market as Intermediaries. The Partners/Proprietor should be HSC. Dealers should also have passed SEBI approved certification test.

Admission procedure for new membership

Roles & functions of broker
• Main roles broker perform
▫ Buying and selling of shares and other securities ▫ Providing advisory services ▫ Provide margin ▫ Brokering other securities

• Broker-Clients function
• Client Registration Documents

 Co-Contract documents
 Know Your Client (KYC) document  Member Constituent Agreement (MCA) document • Contract note • Unique Client Code (UCC) allotment • Segregation of Bank Accounts • Segregation of DEMAT (Beneficiary) Accounts

Responsibility of broker
• • Security Transaction Cost


Deposit and Withdrawal
Trading Platform


Customer Service
News about market

Worker ethics for broker
• • Duty of Fair Dealing Duty of Best Execution


• • •

Customer Confirmation
Restrictions on Insider Trading Duty of Loyalty Authorization for Trading

Process of order execution
Stock exchange

Broker

Investor

DMAT of investor

Pull account of broker

Ways through broker earns money

• Brokerage commissions • Margin interest charges • Service charges

Major brokerage firms in India
Broker Brokerage for Delivery 0.50% 0.03% - 0.50% 0.30% - 0.50% Brokerage for Intraday trading 0.10% 0.03% - 0.10% 0.03% - 0.15%

SBICAP Securities Sharekhan Motilal Oswal

5 paisa
Angel Broking ICICI direct Indiabulls HDFC Securities

0.25% - 0.85%
0.50% 0.75% 0.25% - 0.50% 0.50%

0.07%
0.02% - 0.03% 0.15% 0.05% - 0.10% 0.15%

UTI Securities Religare
Reliance Money Geogit Indiainfoline

0.80%
0.20% - 0.30% 0.01% 0.30% 0.50%

0.15%
0.02% - 0.03% 0.01% 0.03% 0.10%

Thank you