Do’s and Don’ts while dealing with Brokers

Do’s and Don’ts while dealing with Brokers and sub-brokers in the stock market: Stock broker means a member of a stock exchange. Sub-broker means any person not being a member of 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. The role of brokers and sub-brokers in the market is worth mentioning. In this post, we list out the dos and don’ts while we dealing with the brokers in the securities market.

Do’s while dealing with Brokers and sub-brokers:

  • Deal with the only those brokers who are registered with SEBI. The same can be ensured by checking the SEBI registration certificate of the brokers/sub-brokers. One can verify the validity of the registration certificate by cross checking the same in SEBI website.
  • Ensure that the broker is permitted to transact in the market. Review and enquire as there may exist any ban on him by SEBI barring from trading.
  • Give clear and unambiguous instructions to your broker/ sub-broker stating who will be placing orders on your behalf.
  • Before you go ahead transacting with the broker, ensure that the client registration form is signed by him

Do’s and Don’ts while dealing with Brokers

  • Read all terms and conditions and risk disclosure document carefully while entering into an agreement with the broker.
  • Ensure that you sign on all the pages of the agreement and make sure that the broker or a representative authorized signs on all the pages of the agreement. Also the agreement should be signed by the witnesses by giving their name and address.
  • Insist on contract note/confirmation memo for transactions carried out each day. Insist on receipt of bill for every settlement. In case of any discrepancies, check with the trading account history & exchange’s website.
  • Make sure that broker’s name, trade time and number, transaction price and brokerage are mentioned distinctly on the contract note.
  • In case of any disputes, ensure that written complaint is filed within a reasonable time to intermediary/ Stock Exchange/SEBI.
  • In case of disputes with sub-broker, inform the main broker about the dispute within 6 months.
  • Keep updating yourself with the rules, regulations and recent circulars issued by stock exchanges /SEBI before carrying out any transaction.
  • Track the details of securities in your portfolio by regularly reviewing your demat account.

Don’ts while dealing with Brokers and sub-brokers:

  • Don’t deal with unregistered brokers in any circumstances.
  • Don’t sign the agreement with the intermediary without understanding its terms and conditions
  • Don’t pay the brokerage more than the % approved while registering with the broker.
  • Don’t sign blank Delivery instructions slip in any circumstance.
  • Don’t execute any off market transaction or payment of funds to sub broker.

Do’s and Don’ts while dealing with Brokers

  • Don’t accept unsigned contract notes/confirmation memo
  • Don’t get carried away by unrealistic advertisements offering extremely lower brokerage rates
  • Do not share your login/trading password with any one even with the brokers
  • Don’t make decisions based on the free investments given by brokers. Make your own judgment of the same before you start dealing with it.

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