HC seeks client registration agreement copy

NEW DELHI: The Delhi High Court has sought a copy of the client registration agreement while hearing a petition seeking quashing of SEBI's circular mandating all investors to sign an agreement with brokers before investing in capital markets.

Justice B D Ahmed directed the petitioner M L Sharma to place the copy of proforma agreement by July 27, the next date of hearing.

Sharma, an advocate, had challenged SEBI's circular issued on August 26, 2004, prohibiting investors to deal in any stock exchange in any trading segment without having client registration.

He had sought quashing of the circular that made it mandatory for signing written contract for client registration in BSE, NSE and other stock exchanges for shares trading.

Contending that SEBI had no jurisdiction to issue such a direction, he said such circular which came into effect from January 1, is not a part of any law, bye-law or rules of the market regulator.

Without having such client registration, no investor can buy and sell any securities in any stock exchange segment and cannot hold any securities in their demat account, he said.

Sharma further contended that an investor was bound to sign a new agreement when he changed his broker.

On this Justice Ahmed remarked: "It is very strange and a very cumbersome job."

The circular has been made out for benefit of brokers and against the interest of the investors. The circular is out of jurisdiction and unconstitutional, Sharma said.