Investor Charter For Stock Brokers

Investor Charter – Stock Brokers

VISION

To follow highest standards of ethics and compliances while facilitating the trading by clients in securities in a fair and transparent manner, so as to contribute in creation of wealth for investors.

MISSION
  1. To provide high quality and dependable service through innovation, capacity enhancement and use of technology.
  2. To establish and maintain a relationship of trust and ethics with the investors.
  3. To observe highest standard of compliances and transparency.
  4. To always keep ‘protection of investors’ interest’ as goal while providing service.
  5. To ensure confidentiality of information shared by investors unless such information is required to be provided in furtherance of discharging legal obligations or investors have provided specific consent to share such information.

Services provided to Investors by stockbrokers include

  1. Execution of trades on behalf of investors.
  2. Issuance of Contract Notes.
  3. Issuance of intimations regarding margin due payments.
  4. Facilitate execution of early pay-in obligation instructions.
  5. Periodic Settlement of client’s funds.
  6. Issuance of retention statement of funds at the time of settlement.
  7. Risk management systems to mitigate operational and market risk.
  8. Facilitate client profile changes in the system as instructed by the client.
  9. Information sharing with the client w.r.t. relevant Market Infrastructure Institutions (MII) circulars.
  10. Provide a copy of Rights & Obligations document to the client.
  11. Communicating Most Important Terms and Conditions (MITC) to the client.
  12. Redressal of Investor’s grievances.

Rights of Investors

  1. Ask for and receive information from a firm about the work history and background of the person handling your account, as well as information about the firm itself (including website providing mandatory information).
  2. Receive complete information about the risks, obligations, and costs of any investment before investing.
  3. Receive a copy of all completed account forms and rights & obligation document.
  4. Receive a copy of ‘Most Important Terms & Conditions’ (MITC).
  5. Receive account statements that are accurate and understandable.
  6. Understand the terms and conditions of transactions you undertake.
  7. Access your funds in a prescribed manner and receive information about any restrictions or limitations on access.
  8. Receive complete information about maintenance or service charges, transaction or redemption fees, and penalties in form of tariff sheet.
  9. Discuss your grievances with compliance officer / compliance team / dedicated grievance redressal team of the firm and receive prompt attention to and fair consideration of your concerns.
  10. Close your zero balance accounts online with minimal documentation.
  11. Get the copies of all policies (including Most Important Terms and Conditions) of the broker related to dealings of your account.
  12. Not be discriminated against in terms of services offered to equivalent clients.
  13. Get only those advertisement materials from the broker which adhere to Code of Advertisement norms in place.
  14. In case of broker defaults, be compensated from the Exchange Investor Protection Fund as per the norms in place.
  15. Trade in derivatives after submission of relevant financial documents to the broker subject to brokers’ adequate due diligence.
  16. Get warnings on the trading systems while placing orders in securities where surveillance measures are in place.
  17. Get access to products and services in a suitable manner even if differently abled.
  18. Get access to educational materials of the MIIs and brokers.
  19. Get access to all the exchanges of a particular segment you wish to deal with unless opted out specifically as per Broker norms.
  20. Deal with one or more stockbrokers of your choice without any compulsion of minimum business.
  21. Have access to the escalation matrix for communication with the broker.
  22. Not be bound by any clause prescribed by the Brokers which are contravening the Regulatory provisions.

Various activities of Stock Brokers with timelines

Sr. No.

Activities

Expected Timelines
1. KYC entered into KRA System and CKYCR 3 working days of account opening
2. Client Onboarding Immediate, but not later than one week
3. Order execution Immediate on receipt of order, but not later than the same day
4. Allocation of Unique Client Code Before trading
5. Copy of duly completed Client Registration Documents to clients 7 days from the date of upload of Unique Client Code to the Exchange by the trading member
6. Issuance of contract notes 24 hours of execution of trades
7. Collection of upfront margin from client Before initiation of trade
8. Issuance of intimations regarding other margin due payments At the end of the T day
9. Settlement of client funds First Friday/Saturday of the month / quarter as per Exchange pre- announced schedule
10. 'Statement of Accounts' for Funds, Securities and Commodities Monthly basis
11. Issuance of retention statement of funds/commodities 5 days from the date of settlement
12. Issuance of Annual Global Statement 30 days from the end of the financial year
13. Investor grievances redressal 21 calendar days from the receipt of the complaint

DOs and DON’Ts for Investors

DOs DON'Ts
Read all documents and conditions being agreed before signing the account opening form. Do not deal with an unregistered stock broker.
Receive a copy of KYC, copy of account opening documents, and Unique Client Code. Do not forget to strike off blanks in your account opening and KYC.
Read the product/operational framework/timelines related to various Trading and Clearing & Settlement processes. Do not submit an incomplete account opening and KYC form.
Receive all information about brokerage, fees, and other charges levied. Do not forget to inform any change in information linked to trading account and obtain confirmation of updation in the system.
Register your mobile number and email ID in your trading, demat, and bank accounts to get regular alerts on your transactions. Do not transfer funds, for the purposes of trading to anyone other than a stock broker. No payment should be made in name of employee of stock broker.
If executed, receive a copy of Demat Debit and Pledge Instruction (DDPI) However, DDPI is not a mandatory requirement as per SEBI / Stock Exchanges. Before granting DDPI, carefully examine the scope and implications of powers being granted. Do not ignore any emails / SMSs received with regards to trades done, from the Stock Exchange and raise a concern, if discrepancy is observed.
Receive contract notes for trades executed, showing transaction price, brokerage, GST and STT/CTT etc. as applicable, separately, within 24 hours of execution of trades. Do not opt for digital contracts, if not familiar with computers.
Receive funds and securities/ commodities on time, as prescribed by SEBI or exchange from time to time. Do not share trading password.
Verify details of trades, contract notes and statement of account and approach relevant authority for any discrepancies. Verify trade details on the Exchange websites from the trade verification facility provided by the Exchanges. Do not fall prey to fixed / guaranteed returns schemes.
Receive statement of accounts periodically. If opted for running account settlement, account has to be settled by the stock broker as per the option given by the client (Monthly or Quarterly). Do not fall prey to fraudsters sending emails and SMSs luring to trade in stocks / securities promising huge profits.
In case of any grievances, approach stock broker or Stock Exchange or SEBI for getting the same resolved within prescribed timelines. Do not follow herd mentality for investments. Seek expert and professional advice for your investments
Retain documents for trading activity as it helps in resolving disputes, if they arise. Do not follow herd mentality for investments. Seek expert and professional advice for your investments

Additionally, Investors may refer to Dos and Don’ts issued by MIIs on their respective websites from time to time.

Grievance Redressal Mechanism

The process of investor grievance redressal is as follows:

Sr. No.

Type of Activity

Timelines for activity
1. Investor complaint/Grievances

Investor can lodge complaint/grievance against stock broker in the following ways:

Mode of filing the complaint with stock broker

Investor can approach the Stock Broker at the designated Investor Grievance e-mail ID of the stock broker. The Stock Broker will strive to redress the grievance immediately, but not later than 21 days of the receipt of the grievance.

Mode of filing the complaint with stock exchanges

  1. SCORES 2.0 (a web based centralized grievance redressal system of SEBI) (https://scores.sebi.gov.in)

    2. Two level review for complaint/grievance against stock broker:

    • First review done by Designated body/Exchange
    • Second review done by SEBI
  2. Emails to designated email IDs of Exchange
2. Online Dispute Resolution (ODR) platform for online Conciliation and Arbitration If the Investor is not satisfied with the resolution provided by the Market Participants, then the Investor has the option to file the complaint/ grievance on SMARTODR platform for its resolution through online conciliation or arbitration.
3. Steps to be followed in ODR for Review, Conciliation and Arbitration

1. Investor to approach Market Participant for redressal of complaint

2. If investor is not satisfied with response of Market Participant, he/she has either of the following 2 options:

  1. May escalate the complaint on SEBI SCORES portal.
  2. May also file a complaint on SMARTODR portal for its resolution through online conciliation and arbitration.

3. Upon receipt of complaint on SMARTODR portal, the relevant MII will review the matter and endeavor to resolve the matter between the Market Participant and investor within 21 days.

4. If the matter could not be amicably resolved, then the matter shall be referred for conciliation.

5. During the conciliation process, the conciliator will endeavor for amicable settlement of the dispute within 21 days, which may be extended with 10 days by the conciliator with consent of the parties to dispute.

6. If the conciliation is unsuccessful, then the investor may request to refer the matter for arbitration.

7. The arbitration process to be concluded by arbitrator(s) within 30 days, which is extendable by 30 days with consent of the parties to dispute.

Handling of Investor’s claims / complaints in case of default of a Trading Member / Clearing Member (TM/CM)

Default of TM/CM

Following steps are carried out by Stock Exchange for benefit of investor, in case stock broker defaults:

  • Circular is issued to inform about declaration of Stock Broker as Defaulter.
  • Information of defaulter stock broker is disseminated on Stock Exchange website.
  • Public Notice is issued informing declaration of a stock broker as defaulter and inviting claims within specified period.
  • Intimation to clients of defaulter stock brokers via emails and SMS for facilitating lodging of claims within the specified period.

Following information is available on Stock Exchange website for information of investors:

  • Norms for eligibility of claims for compensation from IPF.
  • Claim form for lodging claim against defaulter stock broker.
  • FAQ on processing of investors’ claims against Defaulter stock broker.
  • Provision to check online status of client’s claim.
  • Standard Operating Procedure (SOP) for handling of Claims of Investors in the Cases of Default by Brokers.
  • Claim processing policy against Defaulter/Expelled members.
  • List of Defaulter/Expelled members and public notice issued.
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- Attention Investors -
1.Prevent Unauthorized Transactions in your trading account. 1.1. Update your Mobile Number/Email Id with your stockbroker. 1.2. Receive information of your transactions directly from the Exchanges on your Mobile/Email ID at the end of the day. - Issued in the interest of Investors
2.Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 01, 2020. 2.1. Update your email id and mobile number with your stock broker / depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge. 2.2. Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month. -Issued in the interest of Investors.

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