• Source:JND
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SEBI: Market regulator Sebi on Tuesday allowed registered stock brokers to access the Negotiated Dealing System-Order Matching platform for trading in government securities under a separate business entity.

The move follows a notification issued by the Reserve Bank of India (RBI) on February 7 allowing Sebi-registered non-bank brokers access to the Negotiated Dealing System-Order Matching (NDS-OM).

"In order to facilitate Sebi-registered stock brokers to participate in Government Securities (G-Secs) market in the NDS-OM, it has been decided that they may do so under a Separate Business Unit (SBU) of the stock broking entity itself," the regulator said in a circular.

Sebi highlighted that matters relating to policy, eligibility, risk management, investor grievances, inspections, enforcement and claims relating to stock brokers trading on NDS-OM are governed by the regulatory framework of the concerned authority.

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The circular also stated that the business area facilitating such trading will also come under its jurisdiction.

According to the market regulator, stock brokers will be required to create a separate business unit (SBU) within their firm to ensure that its operations are distinct from their regular securities market operations.

Stockbrokers should maintain an arm's length relationship between their core securities activities and the SBU's transactions in government securities. As per the prescribed rules, the SBU will exclusively engage in activities conducted on the NDS-OM platform.

Additionally, brokers are required to prepare and maintain separate accounts for the SBU and the net worth of the business unit in the securities market is kept separate from the net worth of the stockbroker.

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The Securities and Exchange Board of India (Sebi) has mandated that brokers must have net worth standards except for SBU accounts.

The regulator also clarified that the activities of the business unit will be under the jurisdiction of another regulatory body of stock exchanges, grievance redressal mechanism and investor protection fund (IPF), and Sebi's score will not be available to investors availing the services of SBUs.

(With Inputs From PTI)