DO'S AND DON'TS
DO'S AND DON'TS FOR THE INVESTORS FOR TRADING ON THE EXCHANGE(S)
1. To deal with and through only SEBI registered intermediaries is recommended and ensure that you may check their SEBI registration certificate number from the list available on the Stock exchanges www.exchange.com and website of SEBI www.sebi.gov.in.
2. Fill the KYC form totally and cross mark the blank fields in the KYC form.
3. Read all the mandatory documents namely Rights and Obligations, Risk Disclosure Document, Policy and Procedure document of the stock broker without fail.
4. Make sure to read, understand and then sign the voluntary clauses, if there are any, agreed between you and the stock broker. Note that the clauses as agreed between you and the stock broker cannot be changed without bringing to your notice.
5. Have a clear idea about all brokerage, commissions, fees and other charges levied by the broker on you for trading and the relevant provisions/ guidelines specified by SEBI/Stock exchanges.
6. Get a copy of all the documents executed by you from the stock broker at free of cost.
7. If you want to make use of Power of Attorney (POA) in favor of the Stock broker, authorizing it to maneuver your bank, demat account, in that case go through the guidelines given by SEBI/Exchanges in this regard.
8. Provide email id in writing to the stock broker that the same may issue electronic contract notes.
9. Giving out your internet trading account's password is not recommended to anyone.
10. Payment made in cash to the stock broker is not right.
11. Make the payments by account payee cheque in favour of the stock broker. Don't issue cheques in the name of sub- broker. Make sure that you have a documentary proof of your payment/deposit of securities with the stock broker, stating date, scrip, quantity, towards which bank/ demat account such money or securities deposited and from which bank/ demat account.
12. Note that facility of Trade Verification is available on stock exchanges' websites, where details of trade as mentioned in the contract note may be verified. Where trade details on the website do not tally with the details mentioned in the contract note, immediately get in touch with the Investors Grievance Cell of the relevant Stock exchange.
13. In case you have given specific authorization for maintaining running account, payout of funds or delivery of securities (as the case may be), may not be made to you within one working day from the receipt of payout from the Exchange. Thus, the stock broker shall maintain running account for you subject to the following conditions:
a) Such authorization from you shall be dated, signed by you only and contains the clause that you may annul the same at any time.
b) The real settlement of funds and securities shall be made by the stock broker, at least one time in a calendar quarter or month, depending on your liking. While settling the account, the stock broker shall send to you a 'statement of accounts' containing an extract from the client ledger for funds and an extract from the register of securities displaying the entire receipts/deliveries of funds and securities. The statement shall also elucidate the withholding of funds and securities and the details of the pledged shares, if any.
c) Resting on the date of settlement, the stock broker may perhaps hold the necessary securities/funds towards outstanding obligations and may also hold the funds anticipated to be essential to meet up derivatives margin obligations for subsequent 5 trading days, calculated in the manner specified by the exchanges. In reverence of cash market transactions, the stock broker may hold whole pay-in obligation of funds and securities due from clients as on date of settlement and for subsequent day's business, he may hold funds/securities/margin to the amount of value of transactions executed on the day of such settlement in the cash market.
d) You need to convey any dispute arising from the statement of account or settlement so made to the observation of the stock broker in writing sooner in 7 (seven) working days from the date of receipt of funds/securities or statement, as the case may be. In case of clash, pass on the matter in writing to the Investors Grievance Cell of the relevant Stock exchanges without any postponement.
14. In case you have not opted for maintaining running account and pay-out of funds/securities is not received on the subsequent working day of the receipt of payout from the exchanges, please pass on the matter to the stock broker. In case there is dispute, make sure that you lodge a complaint in writing without delay with the Investors Grievance Cell of the applicable Stock exchange.
15. You need to register your mobile number and email id with the stock broker, in order to receive trade confirmation alerts/ details of the transactions through SMS or email, by the end of the trading day, from the stock exchanges.
16. If by any chance stock broker surrenders his membership, is expelled from membership or declared a defaulter; Stock exchanges gives a public notice inviting claims relating to only the "transactions executed on the trading system" of Stock exchange, from the investors. Ensure that you lodge a claim with the relevant Stock exchanges within the stipulated period and with the supporting documents.
17. Make yourself familiarize with the protection granted to the money and/or securities you may deposit with your stock broker, especially in the event of a default or the stock broker's insolvency or bankruptcy and the extent to which you may recover such money and/or securities may be governed by the Bye-laws and Regulations of the relevant Stock exchange where the trade was executed and the scheme of the Investors' Protection Fund in force from time to time.
18. Please do note that the details of the arbitration proceedings, penal action against the brokers and investor complaints against the stock brokers are displayed on the website of the relevant Stock exchange.
19. In case your issue/problem/grievance is not being resolved out by concerned stock broker/sub-broker then you may take up the matter with the concerned Stock exchange. If you are not satisfied with the resolution of your complaint then you can shoot up the matter to SEBI.
20. Please note that all the stock broker/sub-brokers have been mandated by SEBI to designate an e-mail ID of the grievance redressal division/compli-ance officer exclusively for the purpose of registering complaints.