**Executive Summary:**
SEBI circular dated June 21, 2023, standardizes the format for trading preferences to allow clients access to all stock exchanges where brokers are registered for the same segment. It modifies the Master Circular for Stock Brokers, mandating brokers to register new clients on all active exchanges and provide existing clients with default access to all active exchanges within three months from August 1, 2023, with an opt-out option. Stock Exchanges are required to implement and monitor compliance.
**Key Points / Main Content:**
* **Standardization of Trading Preferences:**
* The format of Trading Preferences is standardized to ensure clients can access all stock exchanges where brokers are registered for the same segment.
* Para C of Annexure 8 of Master Circular for Stock Brokers dated May 17, 2023, is modified to reflect this change.
* **New Client Registration:**
* Stockbrokers must register new clients on all active stock exchanges based on the standardized trading preferences format.
* **Existing Client Access:**
* Stockbrokers must provide existing clients with default access to all active stock exchanges for segments already opted for within three months from August 1, 2023.
* Clients must be informed via email/SMS and given the option to opt-out.
* Brokers must activate/deactivate segments based on client preferences.
* **Applicability:**
* Provisions also apply to clients registered under SEBI Circular No. SEBI/HO/MIRSD/DOP/CIR/P/2020/73 dated April 24, 2020.
* **Stock Exchange Responsibilities:**
* Notify stock brokers and disseminate information on their websites.
* Amend byelaws, rules, and regulations for implementation.
* Monitor implementation and compliance through internal audits and inspections.
* Report implementation status to SEBI in monthly development reports.
* **Effective Date:**
* The circular is effective from August 1, 2023.
**Impact Analysis:**
* **Stock Brokers:**
* *Impact:* Required to modify client onboarding and access procedures to align with the standardized trading preferences format and provide existing clients with default access to all active exchanges.
* *Action Required:* Update client registration processes, inform existing clients of new access provisions and opt-out options, and ensure compliance with the circular.
* **Stock Exchanges:**
* *Impact:* Responsible for implementing and monitoring the provisions of the circular, including amending rules and regulations and overseeing broker compliance.
* *Action Required:* Disseminate information to stock brokers, amend relevant byelaws, monitor implementation through audits and inspections, and report progress to SEBI.
* **Clients:**
* *Impact:* Clients will have access to all stock exchanges their broker is registered with for chosen segments, unless they opt-out.
* *Action Required:* Review communication from brokers regarding default access and exercise the opt-out option if desired, and specify trading preferences.
* **SEBI:**
* *Impact:* Responsible for overseeing the implementation and compliance of the circular to protect investors and regulate the securities market.
* *Action Required:* Monitor the implementation and compliance of this circular through monthly development reports from Stock Exchanges.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): The regulatory body issuing the circular, responsible for regulating the securities market in India.
Stock Exchanges: Refers to all recognized stock exchanges in India, which are addressees of the circular.
Stock Brokers: Entities regulated by SEBI and members of stock exchanges, who are required to implement the changes outlined in the circular.
Master Circular for Stock Brokers: A key regulatory document that the current circular modifies, specifically referring to Master Circular No. SEBI/HO/MIRSD/MIRSD_PoD-1/P/CIR/2023/71 dated May 17, 2023.
NSE: National Stock Exchange of India, a prominent stock exchange in India.
BSE: Bombay Stock Exchange, another major stock exchange in India.
MSEI: Metropolitan Stock Exchange of India, another stock exchange in India.
MCX: Multi Commodity Exchange of India, a commodity derivatives exchange.
CIRCULAR
SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/95 June 21, 2023
To
All Recognized Stock Exchanges
Stock Brokers through Recognized Stock Exchanges
Dear Sir/Madam,
Subject – Trading Preferences by Clients
1. SEBI, vide Annexure – 3 of the circular no. CIR/MIRSD/16/2011 dated August
22, 2011(now rescinded due to issuance of Master Circular for Stock Brokers
dated May 17, 2023), prescribed trading account related details, which clients
would need to provide while opening a trading account with a stock broker.
2. Vide, Para C of the aforementioned Annexure, the format of Trading Preferences
has been prescribed as under:
C. TRADING PREFERENCES
*Please sign in the relevant boxes where you wish to trade. The segment not chosen
should be struck off by the client.
Exchanges Segments
Cash Currency
Name of the Derivative
Exchange -1
F&O
Name of other
Segment(s), if any
Name of the
Name of the
Segment(s) -1,
Exchange -2
2...
# If, in future, the client wants to trade on any new segment/new exchange, separate
authorization/letter should be taken from the client by the stock broker.
3. Thus, currently, clients need to give separate authorization / letter in case they
want to trade on different stock exchange for the same segment or on different
segment.
Page 1 of 34. Based on the representations received and in consultation with Stock
Exchanges, it has been decided to standardize the format of “Trading
Preferences” in order to ensure that clients are permitted to access all the stock
exchanges in which the stock brokers are registered for the same segment.
5. Accordingly, Para C of Annexure – 8 of “Master Circular for Stock Brokers” with
reference no. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/71 dated May 17,
2023, stands modified as under:
C. TRADING PREFERENCES
Please sign in the relevant boxes where you wish to trade. Please strike off the
segment not chosen by you.
Exchanges NSE, BSE & MSEI MCX,
NCDEX,
BSE & NSE
All Cash / F&O Currency Debt Commodity
Segments Mutual Derivatives
Fund
If you do not wish to trade in any of segments / Mutual Fund, please mention here
____________________.
6. All stock brokers are mandated to register their new clients on all the active stock
exchanges after obtaining the trading preferences as per the aforementioned
format. For existing clients, the stock brokers are mandated to offer them access
on all the active stock exchanges for the segments already opted by them, as a
default mode, within three months from the effective date of the circular and
inform their respective clients through email / SMS. Clients shall be given a
choice to opt out of such access by providing negative consent in this regard.
Further, the stock brokers shall activate / deactivate the segments based on the
preference of the clients.
7. The aforementioned provisions shall also be applicable to the clients registered
in accordance with SEBI Circular No. SEBI/HO/MIRSD/DOP/CIR/P/2020/73
dated April 24, 2020.
Page 2 of 38. Stock Exchanges are directed to:
8.1. bring the provisions of this circular to the notice of stock brokers and also
disseminate the same on their websites;
8.2. make amendments to the relevant bye-laws, rules and regulations for the
implementation of the above provisions;
8.3. monitor the implementation and compliance of this circular through half
yearly internal audit and inspection of the stock brokers; and
8.4. communicate to SEBI, the status of the implementation of the provisions of
this circular in their monthly development report.
9. Applicability: The provisions of this circular shall come into force with effect from
August 01, 2023.
10. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992, to protect the interests of
investors in securities and to promote the development of, and to regulate, the
securities market.
11. This circular is available on SEBI website at www.sebi.gov.in under the category
"Circulars".
Yours faithfully,
Aradhana Verma
General Manager
Tel. No.: +91-022 26449633
Email: aradhanad@sebi.gov.in
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