This framework would also apply if the depositories decide to terminate the depository member arrangement.
The Securities and Exchange Board of India (SEBI) has issued a separate protocol for expulsion from stock exchanges and clearing companies.
According to a notice released on Wednesday, the Securities and Exchange Board of India (SEBI) will not provide the stockbroker or clearing member with an opportunity for a personal hearing under this rule.
This framework would also apply if the depositories decide to terminate the depository member arrangement.
SEBI will send a notice to such stockbroker or clearing member upon receiving notification from exchanges or clearing companies regarding the expulsion of its trading or clearing member, requiring the notice to submit a written reply, along with documentary evidence, within 21 days as to why the certificate of registration issued under the rules should not be cancelled.
“While disposing of the proceedings under this law, no opportunity for a personal hearing shall be granted,” SEBI said, adding that it will issue an order within 21 days of receiving written submissions.
The regulator may enforce restrictions on the entity before passing such an order in order to protect the interests of investors or the stock market.
The agency in question must meet the following criteria: record management and retention, resolution of investor claims, conversion of client documents, accounts, or shares, provisions for maintaining the quality of operation to customers, and defaults or pending action.
The person in question will return the certificate of registration from the date of revocation and will not represent itself as a recipient of the certificate for the operation for which the certificate was issued.
In addition, the entity will have to make provisions with regard to liability incurred or assumed by it.
A copy of the order passed under this regulation will be sent to the notice and also uploaded on the website of SEBI.
The intimation of the cancellation of the certificate of registration will be sent to the stock exchanges or the clearing corporations or the depository, as the case may be.
To give effect to this, the regulator has notified the SEBI (Intermediaries) Regulations, 2021. The new rule has come into effect from May 5. In a separate announcement, SEBI announced that intermediaries would be required to pay fees only via an online payment portal, eliminating the physical mode of payment in order to promote digital payment.
