Introduction
A brokerage firm connects the stock exchange and the investor. Similarly, an authorised person is an agent between the brokerage firm and the investor. However, as an authorised person, you aren’t affiliated with a stock exchange. Instead, you are the agents of a broker. You are also not registered with the Securities and Exchange Board of India (SEBI).
Consequently, an authorised person does not receive brokerage. Instead, you earn commissions on transactions. You play an essential role in the investor’s life by providing them with necessary guidance regarding investment risks and other security-related issues.
Situations that demand a change in the authorised person’s affiliation
An authorised person must be certified. You cannot deal with securities if you don’t have a certificate of registration from the SEBI. You must also be affiliated with a stock broker from a recognised stock exchange. However, you may need to change your affiliation at some point, for which the SEBI has released specific guidelines.
According to these guidelines, the board must approve the application for a change. There are seven conditions in which an authorised person can need a change in affiliation.
- When a broker surrenders
- When an authorised person ceases the affiliation with one broker and starts working with another
- When the broker mergers or amalgamates or is acquired by another broker
- When a broker has to apply for a surrender as per SEBI orders because of being expelled from the stock exchange or being declared as a defaulter
- When the authorised person or the broker terminates the contract
- When the broker changes its name
- When there is a change in status or control and transfer/transmission/sales/constitution
Guidelines to apply for a change in affiliation of authorised person
The instructions to keep in mind while applying for a change in authorised person affiliation are as follows:
- You must apply for a change in affiliation to the Exchange through the broker with whom you seek an affiliation.
- You must pay a processing fee of Rs. 1,000 plus applicable service tax to the trading member with whom you want to be affiliated.
- The Exchange will verify that there is no current or pending action or complaint against you, and you have no outstanding fee against it.
- The Exchange will send your completed application and their recommendations to SEBI for further processing.
- SEBI will record the change in affiliation in their database and update the changes in your certificate as well.
- The updated certificate will be sent to the Exchange to hand over to you.
- You can work with the previous broker until SEBI approves the application. Once it is approved, the Exchange will ensure that your affiliation changes to the new broker immediately.
Which documents do you need to apply for a change in affiliation?
Here’s a list of documents to be submitted with the application form.
- Application form for registration as an authorised person with SEBI
- Letter of recommendation by the broker with whom the authorised person wants to get affiliated
- SEBI certificate of registration
- If this document is lost, you must submit a copy of the police complaint. You must also give an affidavit indemnifying SEBI of any damage because of loss/misplacement of the certificate. Use a stamp paper of appropriate value to make the affidavit.
- No objection certificate from the current broker
- A certified true copy of the agreement between the broker and the authorised person
- Letter from the authorised person requesting a change in affiliation on the letterhead of the authorised person
These documents must be submitted to SEBI by the Exchange as per requirements. The broker has to apply for a change in affiliation within 15 days.
Conclusion
An authorised person gives accurate and relevant information to the client about their stocks. These individuals must have a comprehensive knowledge of the markets. In various scenarios, an authorised person may want to change their affiliation with a broker. SEBI has outlined some rules and demands specific documents to take this change in the affiliation process ahead.
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