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The capital market regulator has directed stock exchanges to release the first list of Qualified Stock Brokers (QSBs) within 15 days.
On Monday, Sebi also issued parameters to be considered for designating a stock broker as QSB, loosely big broking outfits that are systemically important.
Initially, the total number of active clients, total assets, trading volumes and end-of-day margin obligations of all its clients will be set as parameters for designating a stock broker as QSB.
An individual score will be given to each parameter and then the total score will be calculated. To prepare the first list, the basis of parameters as on December 31, 2022 will be considered. Stock brokers with a total score at 5 or more will be identified as QSBs. These scores will be calculated on an annual basis.
Sebi has also issued enhanced obligations and responsibilities on QSB including disclosures on financial stability, audit, related party transaction, cyber security, risk management among others.
Interestingly, QSBs will also be required to carry out surveillance of client behaviour by analysing their patterns of trading and detection of unusual activity being done by such clients. These stock brokers will have to report the same to the stock exchange and take necessary measures to prevent any fraudulent activity.
“A QSB shall be required to meet enhanced obligations and discharge responsibilities to ensure appropriate governance structure, appropriate risk management policy and processes, scalable infrastructure and appropriate technical capacity, framework for orderly winding down, robust cyber security framework, and investor services including online complaint redressal mechanism,” said Sebi.
Stock exchanges will also be required to devise a comprehensive framework to carry out enhanced monitoring of such QSBs, including significant change in net-worth, financials, and any adverse findings in audit reports.
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