Selecting a Broker/ Sub - Broker

Deal only with a SEBI registered Broker / Sub - broker after due diligence. Details of the BSE Brokers can be obtained from the Member's List published by BSE and from the website :
 

Entering into an Agreement

Enter into Broker / Sub - broker - Client Agreement. This agreement is mandatory for all investors for registering as a client of a BSE Trading Member. Ensure the following before entering into an agreement:
 
Carefully read and understand the terms and conditions of the agreement before executing the same on a valid stamp paper of the requisite value.
 
Agreement 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 and addresses.
 
Please note that Regulatory Authorities have not stipulated for execution of any document other than Broker/ Sub - Broker / Client Agreement. 
 

Transacting

Specify to the Broker / Sub - broker, the exchange through which your trade is to be executed and maintain separate account for each exchange.

Obtain a valid Contract Note from the Broker / Sub-broker within 24 hours of the execution of the trade.

 
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 BSE. It establishes a legally enforceable relationship between the Trading Member and his Client in respect of settlement of trades executed on BSE as stated in the Contract Note.
 
Contract Notes are made in duplicate, and the Trading Member and Client, both keep one copy each. The Client is expected to sign on the duplicate copy of the Contract Note, confirming receipt of the original.

Contract Note - Form 'A' - Contract Note issued where Member is acting for constituents as brokers/ agents.

Contract Note - Form 'B' - Contract Note issued by Members dealing with constituents as principals.
 

Ensure that the Contract Note contains:
 
SEBI registration number of the Trading Member/ Sub - broker
 
Details of trade such as, Order no, trade no., trade time, quantity, price, brokerage, settlement number, details of other levies.
 
Trade price should be shown separately from the brokerage charged.
 
As stipulated by SEBI, the maximum brokerage that can be charged is 2.5% of the contract price. This maximum brokerage is inclusive of the brokerage charged by the sub-broker (Sub-brokerage cannot exceed 1.5% of the contract price.) Any additional charges that a Trading Member can charge are Service Tax on the brokerage, any penalties arising on behalf of client and Securities Transaction Tax (STT).
 
The brokerage, service tax and STT are 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. 
 

Settlement

Ensure delivery of securities /payment of money to the broker immediately upon getting the Contract Note for sale / purchase but in any case, before the prescribed pay-in-day.
 

Member should pay the money or securities to the investor within 24 hours of the payout.
 

For delivery of shares from demat account, give the Depository Participant (D P) 'Delivery out' instructions to transfer the same from the beneficiary account to the pool account of broker through whom shares and securities have been sold.
 
The following details to be given to the DP: details of the pool a/c of broker to which the shares are to be transferred, details of scrip, quantity etc. As per the requirement of depositories the 'Delivery out' Instruction should be given atleast 48 hours prior to the cut-off time for the prescribed securities pay-in.
 

For receiving shares in your demat account, give the Depository Participant (D P) 'Delivery in' instructions to accept shares in beneficiary account from the pool account of broker through whom shares have been purchased.
 

If physical deliveries are received check the deliveries received as per Good/Bad delivery guidelines issued by SEBI.
 

Bad delivery cases should be sorted out through BSE mechanism immediately.
 

Ensure that all registration of physical shares for ownership by transfer should be executed by a valid, duly completed and stamped transfer deed.
 

Rights of Investors
 

To receive all benefits/ material information declared for the investors by the Company.
 

Prompt services from the Company such as transfers, Sub-divisions and consolidation of holdings in the Company.
 

As an equity holder have a right to subscribe to further issue of capital by the Company.
 

Brokerage not to exceed 2.5% of the contract price. 
 

Receipt of the Contract Note from the broker in the specified format showing transaction price, brokerage, Service Tax and STT, separately.
 

Expect delivery of shares purchased/value of shares sold within 24 hours from pay-out.
 

Approach concerned RegionalArbitration Centres of BSE , by confirming geographical jurisdiction .
 

The Complaint against trading members of the Exchange or Applications for Arbitration should be filed at the concerned Regional Arbitration Centre referred to in column 1 below covering that State or Union Territory of India, referred to in Column 2 below, within which the most recent address / registered office address of the constituent, as duly communicated in writing to the trading member in accordance with law, is located. Provided in respect of a non-resident Indian Constituent, the Seat of Arbitration shall be Regional Arbitration Centrewhich covers the States and Union Territories given in Column 2, in which lies the address or the Registered Office address, as the case may be, of the trading member, depending upon corporate or non-corporate membership of the trading member. The hearings shall be held in the concerned Regional Arbitration Centre in which the Applicant had duly filed the Application for Arbitration.
 

JURISDICTION OF COURTS

The Courts in Mumbai shall have exclusive jurisdiction in respect of all proceedings to which the Exchange is a party, and in respect of all other proceedings, the Courts having jurisdiction over the area in which the respective Regional Arbitration Centre is situated, shall have jurisdiction.
 

General DO's and DON'Ts for Investors
 
More and more investors are investing / trading in the stock markets than ever before. It is therefore imperative for the investors to follow some DOs and DON'Ts while dealing in the stock market.
 
Given below are some general DOs and DON'Ts for investors:

DOs:-
 

Collect photocopies of all documents executed for registration as a client, immediately on its execution. Ensure that the documents or forms for registration as Client, are fully filled in.
 

Before placing an order with the market intermediaries, please check about the credentials of the companies, its management, fundamentals and recent announcements made by them and various other disclosures made under various regulations. The sources of information are the websites of Exchanges and companies, databases of data vendor, business magazines etc.
 

Adopt trading / investment strategies commensurate with your risk-bearing capacity as all investments carry some risk, the degree of which varies according to the investment strategy adopted.
 

Carry out due diligence before registering as client with any intermediary. Carefully read and understand the contents stated in the Risk Disclosure Document, which forms part of the investor registration requirement for dealing through brokers.
 

Always keep copies of all investment documentation (e.g. application forms, acknowledgements slips, contract notes).
 

Always keep copies of documents you are sending to companies, Trading Member, Registrar and Transfer Agent, etc.
 

Send important documents by a reliable mode (preferably through registered post) to ensure delivery.
 

Ensure that you have money before you buy.
 

Ensure that you are holding securities before you sell.
 

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.
 

Mention clearly whether you want to transact in physical mode or in demat mode.
 

Lodge your complaint or Arbitration Application against the Trading Member, at the concerned Regional Arbitration Centre, by confirming geographical jurisdiction. Please use for the purpose, your address as intimated to your Trading Member by following due process of law. The details of geographical jurisdiction of each Regional Arbitration Centre are also available on the Contract Note. 
The period consumed in redressal of complaint thru IGRC services will not be considered while measuring period of ‘limitation’ in filing arbitration application provided the complaint and / or arbitration application is / are filed at the concerned Regional Arbitration Centre.
 

Lodge your complaint against a company listed on BSE, at the concerned Regional Arbitration Centre, by confirming geographical jurisdiction. Please use your address for deciding the geographical jurisdiction. This will enable to process the complaint expeditiously.
 

DONTs :-
 

Don’t file your grievance/s and / or arbitration application against trading member, in the Regional Arbitration Centre having no geographical jurisdiction.over the matter.Please use for the purpose, your address as intimated to your Trading Member by following due process of law
 
The Exchange redresses investors’ complaints thru arbitration and IGRC mechanism, which are quasi-judicial in nature. The period consumed in redressal of complaint thru IGRC will not be considered while measuring period of ‘limitation’ in filing arbitration application provided the complaint is filed at the concerned Regional Arbitration Centre.
 

Don’t file your grievance /s against companies listed on BSE, in the Regional Arbitration Centre having no geographical jurisdiction over the matter, for its expeditious redressal.Please use your address for deciding the geographical jurisdiction. 
 

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.