Market Regulator Mandates Brokers to Inform Most Important Terms and Conditions to Clients
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- Last Updated on 16 November, 2023
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Circular- SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/180, Dated 13.11.2023
SEBI with an objective to bring into focus the critical aspects of the broker-client relationship and for ease of understanding of the clients mandates brokers to inform a standard Most Important Terms and Conditions (MITC) to the clients. Further, this MITC must be acknowledged by the client.
On May 17, 2023 SEBI had prescribed the uniform documents i.e. account opening form, rights & obligations, risk disclosure requirements, guidance note, policies and procedures and tariff sheet for formalizing the broker-client relationship, as per clause 20 of “Master Circular on Stock brokers”. A copy of these documents are required to be provided by the brokers to the clients free of charge.
Further the form, nature of communication, documentation and detailed standards for implementation of MITC must be published on or before 01.01.2024, by the Brokers’ Industry Standards Forum (ISF), under the agencies of stock exchanges, in consultation with SEBI.
The client would also be required to give acknowledgement of Most Important Terms and Conditions (MITC)”.
Also for on boarding of new clients, the date of the implementation and compliance by the market participants shall be April 01, 2024 while for existing clients, the MITC must be informed to clients via email or any other suitable mode of communication by June 01, 2024.
The stock exchanges are directed to bring the provisions of this circular to the notice of stock brokers and disseminate the same on their websites, make amendments to the relevant bye-laws, rules and regulations for the implementation of the above provisions, publish the implementation standards on their websites and communicate to the public the status of the implementation of the provisions of this circular in their monthly development report.
The purpose of this circular is to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.
Click Here To Read The Full Circular
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