Broker

Broker Presented by- Vishal Narvekar

• 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

Agenda

•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 Sub-Brokers) 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.

Introduction

Broker

Full Service Broker

AdvisoryDiscretionar

y Management

Discount Brokers

Types of brokers

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

•Securities sales representatives

•Securities traders

•Securities brokers

•Securities analysts

•Broker firms

Nature of work

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

Regulation for brokers

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.

Corporate & subsidiaries of banks (Rs in lakh)Particulars Capital

marketCapital Market & Future And Option

Whole Sale Debt Market

CM andWDM

CM,WDM &F&O

Minimum Paid-up capital

30 30 30 30 30

Net Worth 100 100 200 200 200Deposit with NSEIL

85 110 150 235 260

Deposit with NSCCL

15 15 * NIL 15 15 *

Experience Two year's experience in securities marketEducation Two directors should be HSC. Dealers should also have passed SEBI approved

certification test.

Track Record The Directors should not be defaulters on any stock exchange. They must notbe debarred by SEBI for being associated with capital market asintermediaries

Eligibility criteria for brokers

Individuals & Partnership Firms(Rs in lakh)Particulars Capital

marketCapital market & future and option

Whole sale debt market

CM &WDM

CM,WDM &F&O

Net Worth 75 75 200 200 200

Deposit with NSEIL

26.5 51.5 150 176.5

201.5

Deposit with NSCCL

17.5 17.5* NIL 17.5 17.5 *

Experience Two year's experience in securities market

Track Record

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.

Education The Partners/Proprietor should be HSC. Dealers should also have passed SEBI approved certification test.

Admission procedure for new membership

•Main roles broker perform

▫Buying and selling of shares and other securities

 ▫Providing advisory services

▫Provide margin

▫Brokering other securities

Roles & functions of broker

• 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

• Security

• Transaction Cost

• Deposit and Withdrawal

• Trading Platform

• Customer Service

• News about market

Responsibility of broker

• Duty of Fair Dealing

• Duty of Best Execution

• Customer Confirmation

• Restrictions on Insider Trading

• Duty of Loyalty

• Authorization for Trading

Worker ethics for broker

Process of order execution

Investor

Broker

Stock exchange

Pull account of broker

DMAT of investor

•Brokerage commissions

•Margin interest charges

•Service charges

Ways through broker earns money

Broker Brokerage for Delivery

Brokerage for Intraday trading

SBICAP Securities 0.50% 0.10%

Sharekhan 0.03% - 0.50% 0.03% - 0.10%

Motilal Oswal 0.30% - 0.50% 0.03% - 0.15%

5 paisa 0.25% - 0.85% 0.07%

Angel Broking 0.50% 0.02% - 0.03%

ICICI direct 0.75% 0.15%

Indiabulls 0.25% - 0.50% 0.05% - 0.10%

HDFC Securities 0.50% 0.15%

UTI Securities 0.80% 0.15%

Religare 0.20% - 0.30% 0.02% - 0.03%

Reliance Money 0.01% 0.01%

Geogit 0.30% 0.03%

Indiainfoline 0.50% 0.10%

Major brokerage firms in India

Thank you