The Supreme Court, in a recent ruling, has held that, stockbrokers not only have to obtain a separate certificate of registration from SEBI for each stock exchange where he operates, at the same time, has to pay ad valorem fee prescribed, allowing appeal of the Securities and Exchange Board of India (SEBI).
The appeal was directed against the judgment and order dated 7th November, 2005 passed by the Division Bench of the High Court of Delhi that set aside the Single Bench’s findings. The Division Bench had arrived at a conclusion that a single registration with the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) is sufficient even if the stock broker has various memberships and functions from several stock exchanges and, therefore, will have to pay the fee for the initial registration with SEBI.
There were two questions before the two-judge Bench comprising Justice Ajay Rastogi and Justice B.V. Nagarathna. Firstly, whether under the Act 1992, a stock broker has to obtain a certificate of registration from SEBI for each of the stock exchanges where he operates or whether a single certificate of registration from SEBI is sufficient and the same would enable him to trade in all other stock exchanges and secondly, whether the ad valorem fee to be paid for an initial period of five years will recur with every such registration
The counsel for the petitioner, SEBI submitted that a stock broker who had been a member of the Madras, Calcutta, and Bombay Stock Exchanges, has to get himself separately registered with SEBI in respect of each of such stock exchanges, and a certificate of registration may be applicable to each of such stock exchanges and it has been wrongly claimed by the respondents that one certificate of registration is required which is applicable to multiple stock exchanges.
The Apex Court observed that, “The scheme of rules clearly postulates that a stock broker who is a member of any stock exchange, has to abide by the rules, regulations, and bye-laws of the stock exchange or the stock exchanges of which he is a member apart from other conditions, for the grant of certificate of registration”, in addition to, “If we look into Schedule III, it has been completely structured prescribing the fee to be deposited by the stock broker; not only the initial registration fee but also the fee which has to be paid by the stock broker for renewal of his registration.”
Relying on the said observations and the finding that the High Court had misinterpreted the expression “a certificate”, the Apex Court held that the stockbrokers not only have to obtain a separate certificate of registration from SEBI for each stock exchange where he operates, at the same time, has to pay ad valorem fee prescribed, allowing the appeal of the Securities and Exchange Board of India (SEBI).
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