Authorised Persons (APs) play an important role in expanding the reach of stock brokers by assisting clients with account opening, servicing, investor education, and execution of trades. However, because Authorised Persons interact directly with investors and often operate from branch locations, SEBI and the Stock Exchanges have prescribed strict regulatory boundaries regarding the use of trading terminals and broker infrastructure.

The objective of these restrictions is to ensure that while brokers may appoint Authorised Persons to facilitate client services, regulatory responsibility for every trade always remains with the registered stock broker. Improper control over trading terminals can expose brokers to unauthorised trading, investor complaints, market abuse, and regulatory action.

This article explains the compliance framework governing trading terminal access through Authorised Persons, the limits imposed by SEBI and the Stock Exchanges, and the operational controls brokers should establish.

Who is an Authorised Person?

An Authorised Person is an individual or entity appointed by a registered stock broker, in accordance with the applicable Stock Exchange framework, to provide specified services on behalf of the broker.

An Authorised Person generally assists with:

client acquisition;
account opening support;
investor servicing;
order collection;
client communication;
operational assistance; and
other permitted activities under the Exchange regulations.

An Authorised Person is not an independent stock broker.

Why Does SEBI Regulate Terminal Access?

Trading terminals provide direct access to the securities market.

Improper use of these terminals may result in:

unauthorised trades;
market manipulation;
misuse of client credentials;
incorrect order execution;
investor disputes;
operational failures;
regulatory violations; and
financial losses.

Accordingly, SEBI requires brokers to exercise continuous supervision over every terminal operating through their infrastructure.

Can Authorised Persons Access Broker Terminals?

Yes, subject to the regulatory framework prescribed by SEBI and the Stock Exchanges.

Where trading terminals are provided through an Authorised Person's location, the broker must ensure that:

terminal access is properly authorised;
regulatory conditions are satisfied;
client protection measures are implemented;
audit trails are preserved; and
supervision remains effective.

Providing access does not transfer regulatory responsibility from the broker to the Authorised Person.

Regulatory Responsibility Always Remains with the Broker

One of the most important principles under the regulatory framework is that every order executed through an Authorised Person ultimately remains the responsibility of the registered stock broker.

The broker continues to remain accountable for:

order execution;
client protection;
regulatory compliance;
maintenance of records;
risk management;
surveillance obligations;
grievance redressal; and
compliance with SEBI and Exchange requirements.

Delegation of operational functions does not dilute regulatory accountability.

Permitted Role of an Authorised Person

An Authorised Person may perform activities permitted under the applicable regulatory framework.

These generally include:

facilitating client onboarding;
assisting with Know Your Client (KYC) formalities;
communicating with clients;
collecting client instructions;
supporting order placement through approved systems;
providing operational assistance; and
investor servicing.

All such activities should remain within the scope permitted by the Stock Exchanges.

Activities Beyond the Permitted Scope

Authorised Persons should not undertake activities that are reserved for registered intermediaries or otherwise prohibited under the applicable regulatory framework.

Stock brokers should establish internal controls to ensure that Authorised Persons do not:

act beyond their approved authority;
misuse trading terminals;
undertake unauthorised trading;
provide misleading assurances to clients;
misuse client credentials; or
engage in activities prohibited by SEBI or the Stock Exchanges.

Periodic supervision is essential.

Client Order Handling

Orders routed through an Authorised Person should continue to follow the broker's approved order management process.

Brokers should ensure:

proper client identification;
verification of client instructions;
maintenance of order records;
time-stamped audit trails;
accurate execution; and
prompt communication of trade confirmations.

Investor protection should remain central to every stage of the order lifecycle.

Trading Terminal Controls

Trading terminals provided through Authorised Person locations should operate within a well-defined control environment.

Key controls include:

user-specific login credentials;
restricted access rights;
activity monitoring;
session management;
secure authentication;
periodic password controls;
audit logging; and
controlled physical access.

Generic or shared user credentials should never be used.

Audit Trail Requirements

Every activity performed through a trading terminal should be traceable.

Accordingly, brokers should maintain:

login records;
user identification;
order timestamps;
transaction history;
modification records;
cancellation records;
system logs; and
supervisory review records.

These records are frequently reviewed during regulatory inspections.

Supervision of Authorised Persons

Stock brokers should maintain continuous oversight over Authorised Persons through:

periodic inspections;
compliance reviews;
surveillance of trading activity;
review of client complaints;
monitoring of operational practices;
verification of documentation; and
periodic compliance training.

Supervision should be ongoing rather than reactive.

Investor Protection Measures

Brokers should ensure that clients clearly understand:

the role of the Authorised Person;
the identity of the registered stock broker;
grievance redressal mechanisms;
contact details for escalation;
investor rights; and
applicable regulatory protections.

Transparency significantly reduces the likelihood of disputes.

Responsibilities of Stock Brokers

Every stock broker appointing Authorised Persons should establish governance over:

appointment procedures;
due diligence;
terminal allocation;
user access management;
operational supervision;
technology controls;
internal audits;
documentation; and
compliance monitoring.

Senior management should periodically review the effectiveness of these controls.

Regulatory Inspections

During inspections, SEBI and the Stock Exchanges may examine:

Authorised Person agreements;
terminal allocation records;
user access controls;
audit trails;
client order records;
supervision reports;
compliance reviews;
investor complaints; and
branch inspection documentation.

Comprehensive records assist brokers in demonstrating effective governance.

Common Compliance Mistakes

Regulators frequently observe deficiencies such as:

inadequate supervision of Authorised Persons;
shared trading terminal credentials;
weak user access controls;
incomplete audit trails;
poor documentation of client instructions;
delayed review of branch operations;
inadequate compliance training; and
ineffective monitoring of trading activity.

Such deficiencies increase both regulatory and operational risk.

Best Compliance Practices

Stock brokers should implement:

board-approved Authorised Person governance policies;
robust due diligence before appointment;
user-specific terminal access controls;
maker-checker approval mechanisms;
periodic branch inspections;
automated surveillance systems;
comprehensive audit trails;
periodic compliance certifications;
regular staff and Authorised Person training; and
continuous review of SEBI and Stock Exchange circulars.

Strong governance substantially reduces the risk of unauthorised trading and regulatory observations.

Practical Compliance Takeaway

Authorised Persons are an important extension of a broker's business, but they do not function independently of the broker's regulatory responsibilities. Brokers should ensure that every trading terminal operating through an Authorised Person remains subject to effective supervision, secure access controls, proper documentation, and continuous monitoring.

Well-designed governance frameworks protect investors, strengthen operational resilience, and demonstrate regulatory compliance during inspections.

Conclusion

SEBI's framework governing trading terminal access through Authorised Persons seeks to balance operational efficiency with investor protection. While brokers may expand their market presence through Authorised Persons, they remain fully responsible for every order executed through their trading infrastructure.

Accordingly, brokers should establish strong governance over terminal allocation, user access management, order handling, audit trails, compliance monitoring, and branch supervision. Effective oversight not only reduces regulatory risk but also reinforces investor confidence in the integrity of brokerage operations.

How Anuj Desai & Associates Can Help

Anuj Desai & Associates provides specialised advisory services to Stock Brokers, Clearing Members, Depository Participants, Alternative Investment Funds (AIFs), Portfolio Managers, Investment Advisers, Research Analysts, and other SEBI-regulated intermediaries on regulatory compliance, operational governance, and securities law.

Our services include:

Advisory on SEBI and Stock Exchange regulations governing Authorised Persons and brokerage operations.
Review of Authorised Person governance frameworks and branch compliance procedures.
Assessment of trading terminal controls, user access management, and audit trail mechanisms.
Internal audits and regulatory inspection readiness assessments.
Drafting and review of Authorised Person agreements, SOPs, compliance manuals, and governance policies.
Gap analysis of operational controls, surveillance mechanisms, and investor protection frameworks.
Assistance in responding to SEBI, Stock Exchange, and Clearing Corporation observations.
End-to-end compliance support for Stock Brokers and other SEBI-regulated intermediaries.

Whether you are appointing new Authorised Persons, strengthening branch governance, implementing secure trading terminal controls, or preparing for a SEBI or Stock Exchange inspection, Anuj Desai & Associates provides practical, technically robust, and regulator-focused advisory solutions that help intermediaries maintain full compliance while building resilient and well-governed brokerage operations.

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Broker Terminal Access Through Authorised Persons — Compliance Boundaries