Tough terms for broker-client ties

The Securities and Exchange Board of India (Sebi) has proposed a new, stricter policy for improving the sales practices of stock brokers. The proposed policy has put a slew of obligations on the brokers with respect to their non-institutional clients, or retail investors.

Sebi wants to strengthen the know your client (KYC) norms for retail investors. It wants retail investors to know more about the brokers with whom they are entering into a trading relationship.Sebi also wants brokers to know more about their clients,their financial standings and, based on these details, the broker should hand the clients investment advice.

The capital market regulator has proposed this policy following the suggestions it received.In a discussion paper posted on its website on Monday, Sebi said the matter was discussed with the stock exchanges (SEs). There is a need,it said,to enhance the regulatory framework and also to create a sense of awareness among investors.

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To read the ePaper, visit: http://epaper.financialexpress.com