SEBI has imposed additional enhanced obligations and responsibility on the "Qualified Stock Broker". State the criterion to be considered as a designate qualified stock broker and summarize enhanced obligations.

The new definition of Qualified Stock Broker (QSB) has been inserted which means a stock broker referred to in regulation 18D of the SEBI (Stock Brokers) Regulations, 1992. Further, regulation 18D of the SEBI (Stock Brokers), Regulations, 1992 states that the SEBI may designate a stock broker as a qualified stock broker having regard to its size and scale of operations, likely impact on investors and securities market, as well as governance and service standards, on the basis of the following parameters and the appropriate weightages thereon: - (a) the total number of active clients; (b) the available total assets of clients with the stock broker; (c) the trading volumes of the stock broker; (d) the end of day margin obligations of all clients of a stock broker; (e) compliance score as may be specified by the Board; (f) grievance redressal score as may be specified by the Board; and (g) the proprietary trading volumes of the stock broker. The stock broker designated as a qualified stock broker shall be required to meet enhanced obligations and discharge responsibilities to ensure: - (a) appropriate governance structure and processes; (b) appropriate risk management policy and processes; (c) scalable infrastructure and appropriate technical capacity; (d) framework for orderly winding down; (e) robust cyber security framework and processes; and (f) investor services including on line complaint redressal mechanism. SEBI has designated stock brokers, based on identified parameters, as Qualified Stock Brokers to mitigate this risk. Certain Stock Brokers in the market handle a very large number of clients, very large amount of client funds and very large trading volumes. Possible failure of such brokers has the potential to cause widespread impact on investors and reputational damage to the Indian securities market. QSBs would need to comply with enhanced risk management practices/requirements. There would also be enhanced monitoring of such QSBs by SEBI / Market Infrastructure Institutions (MIIs).