Types of Broker

1. Introductory(Trading) Broker

Trading Broker (TB) is a Business Associate of COMEN who has the right to execute transactions in the trading system of the exchange and the right to have contracts in its own name. The TB can also act as a Broker. As a Broker, he can deal on behalf of the clients. All the trades have to be executed only through the Trading facilities provided by the Exchange. TB will settle the transactions through Clearing Brokers (Trading & Clearing Brokers or Institutional Clearing Brokers). TB cum Broker is required to maintain a separate account for client transactions and is required to maintain the margin deposit and money belonging to clients in segregated accounts. TBs are responsible for all the transactions of their clients. TB will clear their Trades through Clearing Brokers (TCBs or CBs). A TB will be allowed to have clearing relationship with only one TCB or CB at any point of time. The obligations of the TBs are monitored by the associated TCB or CB. If the limits are breached by a TB, they will not be allowed to do further trading unless the limits are reset on receipt of additional deposits.
To provide continuous liquidity in the market, the TBs will be acting as Jobbers in the Market. However, there are no special privileges or obligations attached to this function of TBs. TBs will compete in the market place along with customers' orders to improve the price discovery in the market. TBs will make use of the Order Based Trading System of the exchange to provide continuous stream of order flows in the market.

Trading cum Clearing Broker (TCB) is a Broker of COMEN who has the right to execute transactions in the trading system of the exchange like a TB. TCB also a right to clear the transactions in contracts executed in COMEN either on its own behalf or on behalf of other TBs. TCBs will be responsible to COMEN for all the obligations (margins, settlement obligations etc) of TBs on whose behalf they have agreed to clear the trades. COMEN will debit the banking account of the TCBs for all the obligations of the TBs who are clearing through TCBs. TCBs will enter into Clearing Agreements with their constituent Trading Brokers. They will also take the required Caution Deposit from the TBs. They will be allowed to set the limits for trading by TBs. TCBs are required to maintain segregated accounts of the all the monies belonging to TBs on behalf of whom they are clearing the trades. If the clearing limits of TCBs are breached, all the trading Brokers attached to them will be stopped from further trading until the limits are reset on receipt of additional deposits.

The number of TCBs will be limited compared to that of TBs in COMEN. TCBs will be located in major towns and have banking accounts with the Designated Clearing Banks who have interface with COMEN.

CB is a Broker of COMEN who has the right to clear transactions done in COMEN that are executed in the trading system of the exchange by TBs and their clients who are Registered Non Brokers with COMEN. A CB does not have the right to have contracts executed in the trading system of COMEN. CBs are professional clearers in the market providing clearing services to the institutional clients. Registered Non-Brokers of COMEN who have executed transaction through any TBs can request their CBs to settle the trade. CBs therefore can have independent clearing relationship with Registered Non Brokers exclusive of the trading relationship of Registered Non Brokers with any TBs. If the clearing limits of CBs are breached, all the trading Brokers attached to them will be stopped from further trading until the limits are reset on receipt of additional deposits. Financial Institutions, Commercial Banks and Corporate Houses who do not have trading interests, but are desirous of providing clearing services to their clients will become CBs in COMEN. COMEN proposes to have a maximum of only 20 CBs. TCBs will be located in major towns and are expected to have banking accounts with the Designated Clearing Banks who have interface with COMEN.

CBs will be responsible to COMEN for all the obligations (margins, settlement obligations etc) of TBs and Registered Non-Brokers on whose behalf they have agreed to clear the trades. COMEN will debit the banking account of the CBs for all the obligations of the TBs and the Registered Non-Brokers who are clearing through TCBs. CBs will enter into Clearing Agreements with their constituent TBs and Registered Non-Brokers. They will also take the required Caution Deposit from the TBs and Registered Non-Brokers. They will be allowed to set the limits for trading by TBs. CBs will also confirm the transaction done on behalf of the Registered Non-Brokers once the trade is reported to them by COMEN. CBs are required to maintain segregated accounts of the all the monies belonging to TBs and Registered Non-Brokers on behalf of whom they are clearing the trades.

Sub-Broker is a registered Broker of the COMEN who has the right to execute transaction in the trading system of the exchange only through a TB/TCB. Sub Broker enters transactions in COMEN through Brokers. Sub Brokers introduce the clients to the Brokers. Sub-Brokers do not have the right to have contracts in their own name. Sub-Brokers will settle the transactions of clients introduced by them, through Brokers, who in turn settle through Clearing Brokers (TCBs or CBs). Sub-Brokers will enter into an agreement with the TB who would provide trading limits to them. Sub-Brokers are also required to obtain registration from COMEN.