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1. |
While
Selecting the
Broker /
Sub-broker |
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Deal with only
SEBI registered
Broker /
Sub-broker after
due diligence.
Details of List
of Brokers’ can
be procured from
the Members’
List published
by the Exchanges
and from their
websites.
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2. |
Enter into an
Agreement |
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Fill in a Client
registration
form with Broker
/ Sub - broker |
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Each and every
prospective
client should
read and
understand the
Risk Disclosure
Document
specified by the
Exchange and
before entering
into trading in
the Equities
(Cash) or the
Derivatives
Segment. The
Trading Member
should obtain a
signed copy of
the same from
all the clients. |
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Enter into
Broker /
Sub-broker-Client
Agreement. This
agreement is
mandatory for
all investors
for registering
as a client of a
Trading
Member. The
Client should
ensure the
following before
entering into
and agreement:- |
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Carefully read
and understand
the terms and
conditions of
the agreement,
before executing
the same on a
valid stamp
paper of the
requisite value. |
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Agreement has to
be signed on all
the pages by the
client and the
Member or their
representative
who has the
authority to
sign the
agreement.
Agreement has
also to be
signed by the
witnesses by
giving their
names an
addresses.
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3. |
While
Transacting |
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Specify to the
Broker /
Sub-broker, the
Exchange through
which your trade
is to be
executed and
maintain
separate account
per Exchange. |
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Obtain a valid
Contract Note
issued by
Trading Member
of the Exchange
within 24 hours
of the execution
of the trade. |
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Contract note is
a confirmation
of trade(s) done
on a particular
day for and on
behalf of a
client in a
format
prescribed by
the Exchange. It
establishes a
legally
enforceable
relationship
between the
Trading Member
and Client in
respect of
settlement of
trades executed
on the Exchange
as stated in the
Contract note. |
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Contract notes
are made in
duplicate, and
the Trading
Member and
Client both keep
one copy each.
The Client/s are
expected to sign
on the duplicate
copy of the
contract note
for having
received the
original. |
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a. |
Contract
Note-cum-Bill -
Form ‘A’ & “AA”
- Contract Note
issued where
Trading Member
is acting for
constituents as
broker and
agent. |
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b. |
Contract Note -
Form ‘B’ -
Contract note
issued by
Trading Member
dealing with
constituents as
Principals.
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Ensure that the
Contract Note
contains:
SEBI
registration
number of the
Trading Member
Details of trade
such as order
no., trade no.,
trade time,
quantity, price,
brokerage,
settlement
number, details
of other levies.
The trade price
should be shown
separately from
the brokerage
charged. The
maximum
brokerage that
can be charged
is Rs.0.25 per
share/ debenture
or 2.5% of the
contract price
per
share/debenture
whichever is
higher. Any
additional
charges that the
Trading Member
can charge are
Securities
Transaction tax,
Service tax on
brokerage, Stamp
duty, etc. as
may be
applicable from
time to time.
The brokerage
and service tax
are required to
be indicated
separately in
the contract
note.
Signature of
authorised
representative.
Arbitration
clause stating
that the trade
is subject to
the jurisdiction
of Mumbai must
be present on
the face of the
Contract note.
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Sub-brokers
‘Sub-broker’means
any person not
being a Trading
Member of the
Stock Exchange
who acts on
behalf of a
stock broker as
an agent or
otherwise for
assisting the
investors in
buying, selling
or dealing in
securities
through such
stock brokers.
No sub-broker
can buy, sell,
deal in
securities
unless he holds
a certificate
granted by SEBI
under the
Regulations.
SEBI has stated
that the Trading
Member of the
Exchange is
responsible for
the acts, deeds
and things of
the sub brokers
affiliated to
it.
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4. |
Ensuring
Settlement |
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Ensure delivery
of securities
/payment of
money to the
Trading Member
immediately upon
getting the
contract note
for sale /
purchase but in
any case, before
the prescribed
pay-in-day.
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The Trading
Member should
pay the money or
securities to
the Investor
within 24 hours
of the payout.
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Open demat
account.
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Preferably opt
for buying and
selling demat
shares.
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For delivery of
shares from
Demat a/c, give
the Depository
Participant (DP)
‘Delivery out’
instructions to
transfer the
same from the
beneficiary
account to the
pool account of
Trading Member
through whom
shares and
securities have
been sold.
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The following
details to be
given to the DP:
Details of the
pool a/c of
Trading Member
to whom the
shares are to be
transferred,
details of
scrip, quantity
etc. As per the
requirements of
depositories the
Delivery out
Instruction
should be given
atleast 48 hours
prior to the
cut-off time for
the prescribed
securities
pay-in.
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For receiving
shares in your
Demat a/c, give
the Depository
Participant (DP)
‘Delivery in’
instructions to
accept shares in
beneficiary
account from the
pool account of
Trading Member
through whom
shares have been
purchased.
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If physical
deliveries are
received - check
the deliveries
received as per
Good/Bad
delivery
guidelines
issued by SEBI.
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Bad delivery
cases should be
sorted out
through Exchange
machinery
immediately.
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The investor
should tally the
account with the
Trading Member
atleast once in
6 months.
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The Investors
may verify their
trades done on
Exchange through
Trade
Confirmation
System at
the Exchanges
websites
if they have a
Contract note
for the
concerned trade.
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All registration
of shares for
ownership of
physical shares
should be
executed by a
valid, duly
completed and
stamped transfer
deed.
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Rights of
Investors
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1. |
To receive all
benefits/
material
information
declared for the
Investors by the
Company. |
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2. |
Prompt Services
from the Company
such as
transfers,
Sub-divisions
and
consolidation of
holdings in the
Company. |
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3. |
Equity holders
have a right to
subscribe to
further issue of
Capital by the
Company. |
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4. |
Receipt of the
Contract note
from the broker
in the specified
format showing
transaction
price and
brokerage
separately. |
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5. |
Investors can
expect delivery
of shares
purchased/value
of shares sold
within one
working day
(excluding
Saturday, Sunday
and Bank
Holidays) after
the Pay-out of
the settlement,
unless a client
has requested
otherwise. |
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6. |
Access to the
Exchange
arbitration
facilities in
case of dispute
with Trading
Members :- |
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7. |
For complaint
against listed
Companies /
Trading Members
contact the
Exchange.
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General Do’s
and Don’ts for
Investors
Do’s
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1. |
Always deal with
the
intermediaries
registered with
SEBI. |
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2. |
Always keep
copies of all
investment
documentation
(e.g.
application
forms,
acknowledgment
slips, contract
notes). |
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3. |
Always keep
copies of
documents you
are sending to
companies etc. |
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4. |
Send important
documents by a
reliable
mode/registered
post to ensure
delivery. |
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5. |
Ensure that you
receive contract
note at the end
of the day /
account
statements for
every
transaction. |
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6. |
Ensure that you
have money
before you buy. |
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7. |
Ensure that you
are holding
securities
before you sell. |
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8. |
Follow up
diligently and
promptly e.g. if
you do not
receive the
required
documentation
within a
reasonable time
contact the
concerned person
i.e. the Trading
Member, company
etc.
immediately. |
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9. |
Give clear and
unambiguous
instructions to
your
broker/agent/depository
participant. |
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10. |
Mention clearly
whether you want
to transact in
physical mode or
demat. |
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11. |
Investors should
take informed
investment
decisions
without being
influenced by
misleading
recommendations
given in the
public media
such as
newspapers,
electronic
media, websites
etc. Verify the
tall claims made
in such
advertisements. |
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Don’ts
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1. |
Don’t deal with
unregistered
Trading Members
/ sub-brokers,
intermediaries. |
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2. |
Don’t forgo
taking due
documents of
transactions, in
good faith even
from people whom
you know. |
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3. |
Don’t fall prey
to promises of
unrealistic high
returns. |
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4. |
Don’t get misled
by companies
showing
approvals/registrations
from Government
agencies as the
approvals could
be for certain
other purposes
and not for the
securities you
are buying. |
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5. |
Don’t transact
based on rumours
generally called
‘tips’. |
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6. |
Don’t forget to
take note of
risks involved
in the
investment. |
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7. |
Don’t get misled
by guarantees of
repayment of
your investments
through
post-dated
cheques. |
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8. |
Don’t hesitate
to approach
concerned
persons and then
the appropriate
Authorities. |
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9. |
Don’t get swayed
by promises of
high returns. |
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