August 16, 2024
In a clear move to tighten control, the National Stock Exchange of India Limited (NSE) has issued new clarifications on incentives and referral schemes. Circular No. 52/2024, dated August 14, 2024, sets the tone for stricter compliance, emphasizing the importance of registering referrers as Authorised Persons (APs).
Background:
Referral schemes have long been a tool for client acquisition, but they’ve also slipped into gray areas. This new circular reinforces the need for proper registration and adherence to NSE and SEBI regulations.
NSE’s Directive:
The directive is straightforward: Anyone referring a client must be an AP with prior approval from the stock exchange. Trading Members are reminded to keep their APs within the bounds of allowed activities, ensuring full compliance with all regulations.
Impact:
These new rules are expected to push Trading Members to tighten their referral processes. The focus on proper registration is a clear push for greater transparency and investor protection.
Industry Reaction:
The financial community has reacted with a mix of understanding and concern. One broker remarked, "While safeguarding investors is vital, the additional compliance could slow down our referral strategies."
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