SEBI has issued some important guidelines for the protection of investors. SEBI has said in its circular that investors must follow these instructions, otherwise, they may suffer huge losses. Recently, SEBI has also changed many important rules. SEBI has explained these things in detail in 17 points.
Do’s and Don’ts for Investors:
- Deal/contract only with registered stockbroker – Check the registration certificate of the broker with whom you are transacting.
- Beware of Fixed/Guaranteed/Regular Returns/Capital Protection Plans. The broker or their authorized person or any of their representatives/employees is not authorized to provide fixed/guaranteed/regular returns/capital preservation on your investments or enter into any loan agreement with you to pay interest on the money owed by you. Not authorized. Please note that your insolvent/exploded broker claim will be disqualified if any such transaction is found in your account.
- Please fill all the required information in your ‘KYC’ paper by yourself and get a signed copy of your ‘KYC’ paper from the broker as per rules. Check all the terms that you have agreed and accepted.
- Make sure that your stockbroker always has your new and correct contact details like email id / mobile number. Email and mobile number is required and you will need to provide mobile number to your broker for updates in the exchange records. If you are not getting regular messages from the Exchange/Depository, then you should take up the matter with the Stock Broker/Exchange.
- Select electronic (e-mail) contract notes / financial details only if you are yourself computer savvy and have your own e-mail account and view the same daily/regularly.
- Do not ignore any email/SMS received from the exchange for the trades you have done. Verify this with the contract note/account details received from your broker. If there is any discrepancy, immediately inform your broker in writing about it and if the stockbroker does not respond, report it immediately to the Exchange/Depository.
- Check the settlement frequency of the account set by you. If you have opted for a current account, please confirm that your broker settles your account regularly and in any case once in 90 days (if you have opted for 30 days settlement) So 30 days) sends the details. Please note that in case of default by your broker, claims for a period exceeding 90 days will not be accepted by the Exchange.
- Regularly verify the Consolidated Account Statement (CAS) received from the depository and reconcile your trades/transactions.
- Confirm that the amount / security (share) has been paid to your account within 1 working day from the date of pay-out. Confirm that you receive contract notes within 24 hours of your trade.
- Trade verification facility is also available on NSE website which you can use for verification of your trade.
- Do not keep unnecessary balance with the broker. Please note that in the event of the broker being cleared of bankruptcy, the claims of those mines in which there has been no trade for 90 days will not be accepted.
- Brokers are not allowed to accept transfer of securities as margin. The security offered in the form of margin should remain in the client’s account and can be pledged to the broker. Clients are not permitted to place any security with the broker or associate of the broker or authorized person of the broker for any reason whatsoever. The broker can collect securities belonging to the clients only for depositing the security sold by the customer.
- Do not fall prey to fraudsters sending emails and SMS with the allure of trading in stocks/securities promising huge profits. Do not give your user ID and password to anyone. All your shares or balances may be void. It may also happen that a large amount of money may come out in your account.
- Be careful while giving POA (Power of Attorney) – Clearly state all the powers that the stockbroker can exercise and the time frame for which the POA is valid. It may be noted that POA is mandatory/not mandatory as per SEBI/Exchanges.
- Check the messages sent by the exchange on a weekly basis regarding the fund and security balance reported by the broker and if you find any discrepancy, report to the exchange immediately.
- Do not share password (internet account) with anyone. Doing so is like sharing your safe money.
- Please do not transfer funds for trading purposes to any authorized person or associate of the broker other than a SEBI registered stockbroker.