India: SEBI issues circular for prevention of unauthorized trading by stock brokers

January 30, 2018


In exercise of the powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market, the Securities and Exchange Board of India (herein after referred to as SEBI) vide circular No. CIR/HO/MIRSD/MIRSD2/CIR/P/2018/09 dated January 11, 2018, had issued directions for the Prevention of Unauthorized Trading by Stock Brokers.

Prior to the above circular, SEBI had earlier issued guidelines for the same vide circular No. CIR/HO/MIRSD/MIRSD2/CIR/P/2017/108, dated September 26, 2017, and also issued subsequent clarification vide CIRCULAR No. CIR/HO/MIRSD/MIRSD2/CIR/P/2017/124, dated November 30, 2017.

With regards to the above two circulars, SEBI received representations from BSE brokers Forum and Association of National Exchange members of India, expressing difficulties faced by Stock Brokers in the implementation of the said circulars and sought extension for the implementation of the same.

Therefore, in view of the above, SEBI has decided to make the said circulars effective from April 01, 2018. To this effect, other provisions shall remain unchanged and no further extension shall be granted for the implementation of the said circulars.

Thereby, the Stock Exchanges are directed to –

  • Bring the provisions of this circular to the notice of the Stock Brokers and also disseminate the same on their websites.
  • Make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above directions in co-ordination with one another to achieve uniformity in approach.
  • Communicate to SEBI, the status of the implementation of the provisions of this circular in their Monthly Development Reports.
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