uTrade AlgosAccording to SEBI regulations and stock exchange guidelines, an Authorised Person (AP) can only be affiliated with one stock broker for a specific segment of the market. This restriction is designed to maintain operational clarity and prevent potential conflicts of interest in the securities market.
An AP could, theoretically, be affiliated with different brokers for different market segments (e.g., one broker for equity trading and another for commodity trading). However, within a single segment (like equity derivatives), the AP must be exclusive to one trading member.
Preventing Conflicts of Interest:
The primary reason for this restriction is to avoid conflicts of interest. If an AP were affiliated with multiple brokers within the same segment, they could potentially prioritise one broker’s clients over another or engage in practices that are detrimental to one or more of the brokers.
This also prevents the sharing of client information between competing brokers, which would be a huge violation of privacy.
Operational Clarity and Accountability:
Limiting affiliation ensures clear lines of responsibility and accountability. If issues arise, it’s easier to trace them back to the relevant broker and AP. It simplifies regulatory oversight.
Maintaining Market Integrity:
By preventing multiple affiliations, regulators aim to maintain a level playing field and prevent market manipulation.
It reduces the chance of insider trading and other unethical practices.
Registration and Compliance:
The registration process for APs involves disclosing their affiliation with a specific trading member. Any change in affiliation requires proper notification and approval from the stock exchange.
This ensures that the exchanges are aware of the relationship between the AP and the trading member.
In essence, the “one AP, one broker per segment” rule is a fundamental principle designed to safeguard the integrity and fairness of the securities market.