Joining NSDL as a Broker: A Guide to Requirements and Registration Process

A Guide to Requirements and Registration Process:

Members of the stock exchanges are an important link between investors and the clearing house in the depository system. Securities bought or sold are routed through the clearing member account for settlement in the depository system. Therefore, to settle trades in dematerialised securities, a stock exchange member must open a clearing account with any DP. Therefore, to settle trades in dematerialized securities, a stock exchange member must open a clearing account with any DP.

Clearing Member Account:

Member brokers of those stock exchanges that have established electronic connectivity with NSDL need to open a Clearing Member Account, with a DP of his choice, to clear and settle trades in the demat form. This account is meant only to transfer shares to and receive shares from the Clearing Member/Clearing Corporation/ Clearing House and hence, the member broker does not have any ownership (beneficiary) rights over the shares held in such an account.

Other than the Clearing Member Account: 

The Broker can open a Margin Pledge Account, a Margin Trading Funding Account, and a Client Unpaid Securities Pledge Account through which the client can pledge securities in favour of the Broker and the Broker can provide margin to the clients.     
In the case of a Margin Pledge Account, Broker can further re-pledged securities to the Clearing Member and further re-pledged to the Clearing Corporation. 

Procedure for Opening Clearing Member Account:

• The Clearing Member will choose a DP for the purposes of opening a Clearing Member account. The choice may be based on convenience, comfort, services offered, cost, or any other reason.
• The Clearing Member will approach the DP of his choice and obtain the relevant forms.
• The DP will specify the list of documents regarding references that need to be submitted along with the account opening form.
• The Clearing Member will submit to his DP the duly filled-in account opening form & along with documents regarding references specified by the DP.
• The Clearing Member will also submit a letter from the Clearing Corporation/House regarding the allotment of CM-Id to the Clearing Member. The Clearing Member will also indicate whether he wishes to avail of the "standing instruction" facility for receiving credit of securities from the client's accounts.
• If the application form and documents are in order, then the DP will accept them and give an acknowledgment slip duly signed and stamped to the Clearing Member.
• NSDL will communicate an ID for the Clearing Member called CM-BP-Id to the DP of the applicant Clearing Member. This communication will be received by the DP in its DPM system.
• The DP will give a copy of the report listing the client details captured in the DPM database to the Clearing Member. The report will be generated by the DPM and will contain the following details:
  1. Clearing Member Name
  2. CM-BP-Id
  3. Client Id
  4. Date of opening of account in the DPM system

Procedure for Shifting Clearing Member Account

The Clearing Member may close an existing clearing account with one DP and open a new clearing account with another DP. The Clearing Member will have to submit an account closure form to its old DP and an account opening form along with other documents for shifting of the clearing account to the new DP. The existing clearing account will be closed by the old DP after balances are moved out by the Clearing Member. The Clearing Member will be assigned a new BP Id (CM-BP-Id) by NSDL and a new clearing account will be opened by the new DP.

Procedure

• The Clearing Member will submit the application for closing the clearing account to the old DP in duplicate.
• The old DP will verify that the application for closing the clearing account is duly filled and if in order issue an acknowledgement to the Clearing Member on the duplicate copy.
• The Clearing Member will submit the following documents to the new DP
  1. Application for opening a clearing account
  2. Letter from Clearing Corporation regarding allotment of CM-Id
  3. Application for shifting of clearing account in the prescribed format
  4. Acknowledgment copy of the application for closure of the account from the old DP
• The new DP will forward the copy of the account opening form along with the above mentioned documents to NSDL.
• NSDL will allot the Clearing Member a new CM-BP Id.
• The new DP will open the Clearing Member account after the new CM-BP-Id is downloaded to its DPM  and forward the copy of the account opening form along with the above-mentioned documents to NSDL.

Procedure to Open Margin Pledge Account:

The detailed procedure and document required for account opening for Trading Member (TM) and Clearing Member (CM) for processing Margin Pledge / Re-Pledge was informed to Participants vide NSDL Circular No.: NSDL/POLICY/2020/0077 dated June 1, 2020.

Procedure to Open CUSPA

Operational guidelines and account opening in respect of Client Unpaid Securities Pledgee Account (CUSPA) by Trading Members (TM) / Clearing Members (CM) was informed to Participants vide NSDL Circular No.: NSDL/POLICY/2023/0028 dated February 27, 2023