SEBI Proposes Standard Trading Preference Format for Multiple Exchanges

Recently, the Securities and Exchange Board of India (SEBI) introduced a standardized format for clients to indicate their trading preferences across multiple exchanges. Currently, clients have to provide separate authorizations or letters if they wish to trade on different stock exchanges for a specific segment.

After receiving representations and consulting with stock exchanges, SEBI has decided to standardize the format of “Trading Preferences” to enable clients to access all the stock exchanges where their brokers are registered for the same segment, ensuring convenience and consistency.

As per the new mechanism, stock brokers are required to register their new clients on all active stock exchanges and obtain their trading preferences using the prescribed format.

For existing clients, brokers must offer access to all active stock exchanges for the segments already chosen by them as the default option within three months, notifying them through email or SMS.

Additionally, brokers will provide clients with the choice to opt out of this access by giving negative consent. Subsequently, brokers will activate or deactivate segments based on their clients’ preferences.

Sebi has announced that the provisions outlined in this circular will be effective from August 1, 2023.

The regulator has instructed the exchanges to oversee the implementation and compliance of this circular by conducting half-yearly internal audits and inspections of the stock brokers. The exchanges are also required to communicate the details of their monitoring activities to the regulator through their monthly development reports.