13


Safeguards For Investors

 


The Stock Exchange Mumbai is one of the oldest stock exchanges in Asia which was founded in 1875. The Exchange not only provides an efficient market but also upholds the interests of the investors and ensures redressal of their grievances, whether against the companies or its member-brokers. It strives to educate and enlighten the investors by making available to them the necessary information transparently and promptly. Protecting the interest of investors dealing in securities is one of the main objectives of the Exchange. In pursuit of this objective the Bombay Stock Exchange (BSE) has issued the general safeguards that the investors have to follow while dealing in securities.

  • While Selecting The Broker/ Sub-broker

  • Enter Into An Agreement

  • While Transacting

  • Ensuring Settlement

  • General Do's And Don'ts For Investors






    WHILE SELECTING THE BROKER/ SUB-BROKER

    • Deal with only SEBI registered Broker / Sub-broker after due diligence. Details of List of Brokers can be procured from the Member's List published by the Exchange and from the website : www.bseindia.com
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    ENTER INTO AN AGREEMENT.
    • Enter into Broker / Sub-broker - Client Agreement.
    • File a Client registration form with Broker / Sub - broker - Annexure A
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    WHILE TRANSACTING.
    • Specify to the Broker / Sub-broker, Exchange through which your trade is to be executed and maintain separate account per Exchange.
    • Obtain a valid Contract Note (from Broker) / Confirmation Memo (from Sub-broker) within 24 hours of the execution of the trade.
      • Contract Note - Form 'A' - Contract Note issued where Member is acting for constituents as brokers and agents.- Annexure B
      • Contract Note - Form 'B' - Contract note issued by Members dealing with constituents as Principals. - Annexure C
      • Confirmation Memo - Form 'C' - Confirmation Memo issued by Sub-brokers acting for clients / constituents as Sub-brokers. - Annexure D
    • Ensure that the Contract Note / Confirmation Memo contains Order no., trade no., trade time, quantity, price, brokerage and it is signed by authorised persons.
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    ENSURING SETTLEMENT.
    • Ensure delivery of shares in respect of purchase and receipt of payment on sale of shares within two working days of pay-out.
    • Exchange issues Press Release immediately after pay-out.
    • Preferably opt for buying and selling demat shares.
    • Open demat account.
    • Have shares transferred from the brokers pool account to your account immediately after the pay-out.
    • If physical deliveries are received - check the deliveries received as per Good/Bad delivery guidelines issued by SEBI.
    • All registration of shares for ownership of physical shares should be executed by a valid, duly completed and stamped transfer deed.
    • Bad delivery cases should be sorted out through Exchange machinery immediately.
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    GENERAL DO'S AND DON'T'S FOR INVESTORS
    • Don't deal with unregistered intermediaries, as this would expose you to counter party risk.
    • Give clear and unambiguous instructions to your Broker / Sub-broker.
    • Keep a record of all instructions issued to the Broker / Sub-broker.
    • Confirm with your Broker / Sub-broker whether delivery is in physical or demat form before selling shares.
    • Don't fall prey to promises of unrealistic high returns.
    • Don't indulge in speculative trading, go by fundamentals.
    • Trade within your predetermined limits.
    • Use the investor Grievance Redressal system of the Exchanges to redress your grievances if any.
    • Understand the working of the Investor Service Cell for complaint against listed companies / Brokers.
    • The Customer Protection Fund of Exchange compensates upto Rs.10 Lakhs per investor against possible Broker default.
    • You can trade on your own through Internet based trading by registering with a Broker.
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