Dos And Don’ts While Investing In Stocks Or Saving Schemes Through Brokers

Investing is a way to grow your wealth over time. By investing in stocks, mutual funds, or other savings schemes, an investor sees the potential to earn returns that can help him or her achieve financial goals.

Investing can also help you save for future goals such as buying a home, paying for college, or starting a business. By investing in assets that have the potential to earn returns, you can grow your savings over time.

Some people invest in properties such as dividend-paying stocks or rental properties to generate passive income.

Since investing is a task that requires a thorough understanding of planning, many people take the help of an agent or broker to streamline the process. However, there are certain things that an investor should keep in mind before associating with any broker.

Read also: How to file a complaint against Mutual Fund?

Securities and Exchange Board India Do’s and Don’ts have also been listed while dealing with brokers and sub-brokers.

Did

• Deal only with SEBI registered intermediaries.
• Make sure that the intermediary has a valid registration certificate.
• Make sure that the intermediary is allowed to transact in the market.
• State clearly who will place the order on your behalf
• Insist on the client registration form to be signed by the intermediary before commencing operations.
• Enter into an agreement with your broker or sub-broker clearly stating the terms and conditions.
• Make sure you read the Agreement and Risk Disclosure Document carefully before signing.
• Make sure you sign all pages of the agreement and make sure the broker or representative authorized to sign signs all pages of the agreement. Also the agreement should be signed by the witnesses giving their name and address.
• Insist on a valid contract note/confirmation memo for trades done every day within 24 hours of the transaction.
• Sign the duplicate contract note / confirmation memo, which will be retained with the broker after receipt of the original.
• Insist on one bill for every settlement.
• Ensure that the name of the broker, time and number of trades, price of the transaction and brokerage are clearly indicated on the contract note.
• Insist on periodic statement of accounts.
• Issue cheques/drafts in the name of the intermediary only.
• Ensure receipt of payment/delivery within 48 hours of payment.
• In case of disputes, file a written complaint with the arbitrator/stock exchange/SEBI within a reasonable time.
• In case of sub-broker disputes, inform the main broker about the dispute within 6 months.
• Please familiarize yourself with the rules, regulations and circulars issued by the Stock Exchange/SEBI before entering into any transaction.
• Give clear and unambiguous instructions to the broker/sub-broker.
• Maintain a record of all instructions issued to the broker/sub-broker.
• Monitor your portfolio regularly in your Demat account.

what not to do

• Do not deal with unregistered intermediaries.
• Do not pay more than the accepted brokerage to the intermediary.
• Don’t make deals for others.
• Do not neglect to place a written order for a higher price quoted over the phone.
• Do not sign a blank Delivery Instruction Slip while meeting the security pay-in obligation.
• Do not accept unsigned/duplicate contract note/confirmation memo.
• Do not accept the contract note/confirmation memorandum signed by any unauthorized person.
• Do not delay in payment/delivery of securities to the broker/sub-broker.
• If there is any advertisement, do not get misled by it.
• Don’t get carried away by market rumors or get involved in shady dealings.

National Savings Institute has listed do’s and don’ts for investors while investing through Agent National Savings Schemes. In case one decides to avail the services of authorized agents, the following is advice;

• Establish the identity of authorized agents by checking the authorization certificate of the authorized agent and the validity date of the agency
• Fill the application form yourself. However, agent’s help/guidance can be obtained
• Always insist for an authorized receipt duly completed by the agent while handing over money/instruments and documents to the agent for account opening or deposit. These receipt books are supplied by the government to the agents (Authorized Agent Receipt Book and ASLAAS – 5 cards for MPBKY agents)
• Preserve the counterfoil of the cards ASLAAS 5 till the maturity of the account
• If any agent refuses or avoids issue of receipt book/ASLAAS card, ignore him and report the matter to the postal/district authorities.
• Ensure receipt of passbook from the agent within 10 days from the date of investment. In case the passbook is not received from the agent within 10 days from the date of investment, file a complaint with any appointing authority; Regional Director, National Savings Institute; The concerned postmaster.
• Compulsorily verify the correctness of the amount, date, stamp, signature etc. mentioned in the passbook from the concerned post office from time to time.
• Do not give cash to any unauthorized person or issue a check in favor of the agent.
• For investments above Rs.10,000; Issue only account payee checks drawn in favor of the concerned postmaster.
• Do not fill/sign the Withdrawal Form before maturity.

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