Commission Broker

A large number of members devote themselves to the execution of orders received from the non-member customers. They buy and sell securities for earning commission. They act as agents for their customers and earn commission for their services. The charges or commission should not exceed the official scale of brokerage. The investing public are not permitted to buy or sell securities directly from the stock exchange but through a broker. Thus, a broker is a commission agent who transacts business in securities on behalf of the non-members. He is an independent dealer in securities. He buys and sells securities in his own name. He renders very useful services to the people who want to buy or sell securities.

Under the SEBI Act, the Central Government issued a notification on August 20, 1992, laying down rules relating to stock brokers and sub-brokers. A sub-broker is a person who acts on behalf of a stock broker as an agent or otherwise for assisting the investors in buying and selling or dealing in securities through such brokers. The rules stipulate that registration with SEBI is necessary for acting as a broker or a sub-broker.

A stock broker is expected to maintain high standards of integrity, promptness and fairness in the conduct of his business. He is expected to exercise due skill, care and diligence and to comply with statutory requirements. He should not indulge in manipulation and malpractices.