Referral Policy (Client Referral Arrangements)

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Document title	Referral Policy (Client Referral Arrangements)
Entity	Choice Equity Broking Private Limited (CEBPL)
Policy owner	Compliance Department / Principal Officer
Version	2.0
Reviewed / approved by Board	22.04.2026 (previous review: 21.04.2025)
Effective date	01.05.2026
Supersedes	“Policy on incentives and referral schemes” reviewed by the Board on 21.04.2025
Regulatory basis	SEBI (Stock Brokers) Regulations, 2026 (Code of Conduct); SEBI (Intermediaries) (Amendment) Regulations, 2024 and SEBI circulars on association with unregistered persons (finfluencers) dated 22 October 2024 and 29 January 2025; NSE and BSE circulars on incentives / referral schemes, including NSE/INSP/43824 dated 11 March 2020 (the currently applicable framework) and NSE/INSP/63425 dated 14 August 2024, which is kept in abeyance by NSE circular NSE/INSP/66284 dated 24 January 2025
Next review due	Annually, or earlier upon any SEBI / exchange circular affecting this policy

1. Purpose and Scope

This policy governs arrangements under which a person refers a prospective client to Choice Equity Broking Private Limited (“CEBPL”, “the Company”). It sets out who may act as a referring person, the strictly limited role such a person may perform, the protections afforded to the referred client, and the compliance boundaries CEBPL observes — in particular, CEBPL’s policy that only an existing client may refer a prospective client, and the prohibition on associating with unregistered persons who give investment advice or make return claims.

This policy applies across all segments and memberships held by CEBPL and binds the Compliance, Operations and Business functions and all branches and Authorised Persons. Where SEBI, an exchange or a clearing corporation prescribes a more stringent requirement, that requirement prevails.

2. Regulatory Framework

This policy is framed under, and is to be read together with, the following (as amended from time to time):

SEBI (Stock Brokers) Regulations, 2026 — including the Code of Conduct governing sharing of brokerage, account opening, inducement to trade, sales practices and order placement.
SEBI (Intermediaries) (Amendment) Regulations, 2024 and related SEBI circulars dated 22 October 2024 and 29 January 2025 — restricting association of regulated entities with unregistered persons who provide advice / recommendations or make return or performance claims (the “finfluencer” restrictions).
NSE and BSE circulars on incentives / referral schemes — including NSE/INSP/43824 dated 11 March 2020 and NSE/INSP/51770 dated 25 March 2022, under which a member frames an internal policy governing client referrals.
Current position on the Authorised Person requirement — NSE circular NSE/INSP/63425 dated 14 August 2024, which had required a person referring clients to be appointed as an Authorised Person, has been kept in abeyance by NSE circular NSE/INSP/66284 dated 24 January 2025 (the matter being under consideration by the Brokers’ Industry Standards Forum). Accordingly, a referring person is not, at present, required to be an Authorised Person, and the appointment of Authorised Persons is a separate matter governed by the applicable Authorised Person framework.

3. Definitions

Referral: the act of introducing a prospective client to CEBPL for the purpose of opening a trading and/or demat account.
Referring person: a person who refers a prospective client to CEBPL under this policy.
Referred client: the client introduced to CEBPL by a referring person.
Existing client: a person who holds an active trading and/or demat account with CEBPL and whose account is not suspended, dormant or under deregistration.
Association: any association of the nature restricted by SEBI, including any transaction involving money or money’s worth, referral of a client, or interaction of information technology systems.

4. Who May Refer Clients — Existing Clients Only

Under the framework currently in force (NSE/INSP/43824 dated 11 March 2020, following the abeyance of NSE/INSP/63425), a person referring a client to CEBPL is not required to be an Authorised Person; the appointment of Authorised Persons is a separate matter governed by the applicable Authorised Person framework.
As a matter of CEBPL policy, however, only an existing client of CEBPL may refer a prospective client. CEBPL does not accept client referrals from persons who are not existing clients of CEBPL.
A referral does not, of itself, make the referring client an agent or representative of CEBPL; the referring client remains subject to the limited role and the prohibitions set out in this policy.

5. Permitted Role of the Referring Person

The role of a referring person is strictly limited to introducing a prospective client to CEBPL. All account-opening formalities, verification and client servicing are carried out by CEBPL. The referring person does not, at any time, step beyond the limited role of referral.

6. Prohibited Activities of the Referring Person

A referring person must not:

undertake any form of selling, advisory or recommendation activity in respect of securities, or manage the portfolio of any person who is referred;
subject the referred client to any form of trade inducement; all instructions for placement of orders must be obtained from the respective clients only;
place orders on behalf of, or solicit orders from, any client;
operate any scheme of unauthorised collective investment or portfolio management, or promise indicative, guaranteed or fixed returns;
carry out in-person verification (IPV) or original-seen-and-verified (OSV) of documents; or
hold out, in any manner, as being authorised to advise, deal or transact on behalf of CEBPL or the client.

7. Restriction on Association with Unregistered Advice-Givers

CEBPL does not, directly or indirectly, associate with — including by way of a client referral, any transaction involving money or money’s worth, or interaction of information-technology systems — any person who:

provides advice or any recommendation, directly or indirectly, in respect of securities, unless that person is registered with or otherwise permitted by SEBI to do so; or
makes any claim of return or performance, expressly or impliedly, in respect of securities, unless permitted by SEBI for that purpose.

This restriction applies to referral arrangements as much as to any other form of association. Where CEBPL becomes aware that a referring person is engaged in any such prohibited activity, the arrangement is terminated. The restriction does not apply to association through a digital platform specified by SEBI for this purpose (as and when such a platform is specified), and does not restrict genuine investor education carried out within SEBI’s conditions.

8. Protection of the Referred Client

All information pertaining to a client is kept confidential and is not disclosed to the referring person or any other person, except as required under law or regulation or with the express written permission of the client.
All correspondence — including contract notes, daily margin statements, statements of account and annual global transaction statements — is sent to the respective client only, and under no circumstances to the referring person.
No obligation of any kind is cast on the referred client by reason of the referral, and there is no financial transaction between the referred client and the referring person under the arrangement.
The relationship of CEBPL is with the client directly; the referral does not create any right in the referring person over the client’s account, funds or securities.

9. Code of Conduct and Compliance

All referral arrangements are conducted in strict compliance with the Code of Conduct prescribed for stock brokers under the SEBI (Stock Brokers) Regulations, 2026, and with the relevant Byelaws, Rules, Regulations and circulars of SEBI and the exchanges concerning the sharing of brokerage, account opening, inducement to trade, sales practices and order placement, as issued from time to time.

10. Monitoring and Oversight

The Compliance Department oversees referral arrangements, verifies that a referring person is an existing client of CEBPL, and monitors that referring persons remain within their permitted role and do not engage in advisory, inducement or other prohibited activity. At onboarding and periodically thereafter, CEBPL exercises due diligence to identify whether a referring person is engaged in any activity that would attract the association restriction in Section 7. Material exceptions are escalated to senior management and reported to the Board or the relevant Board committee, and appropriate action — including termination of the arrangement — is taken.

11. Records and Retention

CEBPL maintains records of referral arrangements, the verification of the referring person’s status as an existing client, and any action taken on breach. These records are retained for the minimum period of eight years prescribed for a stock broker’s records under the SEBI (Stock Brokers) Regulations, 2026, and are produced to SEBI, the exchanges, clearing corporations, auditors and inspecting authorities on demand.

12. Roles and Responsibilities

Business function: sources referral arrangements only through existing clients of CEBPL and within this policy.
Compliance Department / Principal Officer: owns this policy, verifies the referring person’s existing-client status, monitors adherence and the association restriction, and ensures regulatory alignment.
Operations: carries out account opening, verification and client servicing, and ensures correspondence is sent to the client only.
Board of Directors: approves this policy and reviews material exceptions.

13. Policy Review

This policy is reviewed by the Board at regular intervals and not later than one year from the last review, and additionally whenever there is a change introduced by SEBI, an exchange, a clearing corporation or any statutory authority, or whenever a change is found necessary on account of business need.