NSE proposes tighter oversight of authorised persons, stricter eligibility norms

The National Stock Exchange (NSE) has proposed a major revision to the regulatory framework governing authorized persons (APs). The key changes aim to enhance investor protection and curb market misconduct. The draft raises the minimum eligibility criteria for APs, including age, educational qualifications, market experience, and adherence to SEBI’s fit-and-proper standards.

APs must hold a specified number of certifications, such as NISM designations. Additionally, the proposal introduces stringent financial requirements, with individual APs needing a minimum net worth of ₹5 lakh and non-individual APs requiring at least ₹25 lakh. A security deposit of ₹1 lakh with the stockbroker is also mandatory.

To ensure transparency, APs will be required to disclose their bank and demat accounts, authorizing brokers to access this information. They must also provide details of digital platforms used for client acquisition or market-related communications. Brokers are tasked with scrutinizing these digital footprints and documenting the process. The exchanges have opened a 27-day window for public feedback on the proposals.

Key regulatory measures include surprise audits, off-site surveillance alerts, mandatory annual compliance training, and regular client verification calls. The draft also suggests geo-tagging, biometric or facial recognition authentication, and the maintenance of tamper-proof records of client order placement. All comments must be submitted in English, as full sentences, and without abusive or personal language.

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