Publishing Investor Charter and disclosure of Investor Complaints by Stock Brokers on their websites

RELEVANT EXTRACT 

1)In order to facilitate investor awareness about various activities which an investor  deals with such as opening of account, KYC and in person verification, complaint  resolution, issuance of contract notes and various statements, process for  dematerialization/rematerialization etc., SEBI, in consultation with the market  participants, has prepared an Investor Charter for Stock Brokers inter-alia detailing  the services provided to Investors, Rights of Investors, various activities of Stock  Brokers with timelines, DOs and DON’Ts for Investors and Grievance Redressal  Mechanism which is placed at Annexure ‘A’.

2)In this regard, Stock Exchanges are directed to advise Stock Brokers to bring the  Investor Charter for Stock Brokers to the notice of their clients (existing as well as  new clients) through disclosing the Investor Charter on their respective websites,  making them available at prominent places in the office, provide a copy of Investor  Charter as a part of account opening kit to the clients, through e-mails/ letters etc.

3)Additionally, in order to bring about transparency in the Investor Grievance Redressal  Mechanism, it has been decided that all the Stock Brokers shall disclose on their  respective websites, the data on complaints received against them or against issues  dealt by them and redressal thereof, latest by 7th of succeeding month, as per the  format enclosed at Annexure ‘B’ to this circular.

4)These disclosure requirements are in addition to those already mandated by SEBI.  The provisions of this circular shall come into effect from January 01, 2022.

5)Stock Exchanges are hereby directed to bring the provisions of this circular to the  notice of the Stock Brokers.

6)This circular is issued in exercise of powers conferred under Section 11(1) of the  Securities and Exchange Board of India Act, 1992, to protect the interests of investors  in securities and to promote the development of, and to regulate the securities  markets.

Annexure-A

Investor Charter – Stock Brokers

VISION

To follow highest standards of ethics and compliances while facilitating the trading by clients  in securities in a fair and transparent manner, so as to contribute in creation of wealth for  investors.

MISSION

To provide high quality and dependable service through innovation, capacity  enhancement and use of technology.

To establish and maintain a relationship of trust and ethics with the investors.  To observe highest standard of compliances and transparency.

To always keep ‘protection of investors’ interest’ as goal while providing service.

Services provided to Investors

  • Execution of trades on behalf of investors.
  • Issuance of Contract Notes.
  • Issuance of intimations regarding margin due payments.
  • Facilitate execution of early pay-in obligation instructions.
  • Settlement of client’s funds.
  • Intimation of securities held in Client Unpaid Securities Account (CUSA) Account.
  • Issuance of retention statement of funds.
  • Risk management systems to mitigate operational and market risk.
  • Facilitate client profile changes in the system as instructed by the client.
  • Information sharing with the client w.r.t. exchange circulars.
  • Redressal of Investor’s grievances.

Rights of Investors

  • Ask for and receive information from a firm about the work history and background of the person handling your account, as well as information about the firm itself.
  • Receive complete information about the risks, obligations, and costs of any investment before investing.
  • Receive recommendations consistent with your financial needs and investment objectives.
  • Receive a copy of all completed account forms and agreements.
  • Receive account statements that are accurate and understandable.
  • Understand the terms and conditions of transactions you undertake.
  • Access your funds in a timely manner and receive information about any restrictions or limitations on access.
  • Receive complete information about maintenance or service charges, transaction or redemption fees, and penalties.
  • Discuss your grievances with compliance officer of the firm and receive prompt attention to and fair consideration of your concerns.

Various activities of Stock Brokers with timelines

S.No. Activities Expected Timelines
1. KYC entered into KRA System and  CKYCR 10 days of account opening
2. Client Onboarding Immediate, but not later than one week
3. Order execution Immediate on receipt of order, but not  later than the same day
4. Allocation of Unique Client Code Before trading
5. Copy of duly completed Client  Registration Documents to clients 7 days from the date of upload of Unique  Client Code to the Exchange by the  trading member
6. Issuance of contract notes 24 hours of execution of trades
7. Collection of upfront margin from  client Before initiation of trade
8. Issuance of intimations regarding  other margin due payments At the end of the T day
9. Settlement of client funds 30 days / 90 days for running account  settlement (RAS) as per the preference of

client.

If consent not given for RAS – within 24  hours of pay-out

10. ‘Statement of Accounts’ for Funds,  Securities and Commodities Weekly basis (Within four trading days of  following week)
11. Issuance of retention statement of  funds/commodities 5 days from the date of settlement
12. Issuance of Annual Global  Statement 30 days from the end of the financial year
13. Investor grievances redressal 30 days from the receipt of the complaint
DOs DON’Ts
1.Read all documents and conditions being  agreed before signing the account opening  form.

2.Receive a copy of KYC, copy of account  opening documents and Unique Client Code.

3.Read the product / operational framework /  timelines related to various Trading and  Clearing & Settlement processes.

1.Do not deal with unregistered  stock broker.

2.Do not forget to strike off  blanks in your account  opening and KYC.

3.Do not submit an incomplete  account opening and KYC  form.

 

4.Receive all information about brokerage, fees  and other charges levied.

5.Register your mobile number and email ID in  your trading, demat and bank accounts to get  regular alerts on your transactions.

6.If executed, receive a copy of Power of  Attorney. However, Power of Attorney is not a  mandatory requirement as per SEBI / Stock  Exchanges. Before granting Power of  Attorney, carefully examine the scope and  implications of powers being granted.

7.Receive contract notes for trades executed,  showing transaction price, brokerage, GST  and STT etc. as applicable, separately, within  24 hours of execution of trades.

8.Receive funds and securities / commodities on  time within 24 hours from pay-out.

9.Verify details of trades, contract notes and  statement of account and approach relevant  authority for any discrepancies. Verify trade  details on the Exchange websites from the  trade verification facility provided by the  Exchanges.

10.Receive statement of accounts periodically. If  opted for running account settlement, account  has to be settled by the stock broker as per the  option given by the client (30 or 90 days).

11.In case of any grievances, approach stock  broker or Stock Exchange or SEBI for getting  the same resolved within prescribed timelines.

4.Do not forget to inform any  change in information linked  to trading account and obtain  confirmation of updation in the  system.

5.Do not transfer funds, for the  purposes of trading to anyone  other than a stock broker. No  payment should be made in  name of employee of stock  broker.

6.Do not ignore any emails /  SMSs received with regards  to trades done, from the Stock  Exchange and raise a  concern, if discrepancy is  observed.

7.Do not opt for digital contracts,  if not familiar with computers.

8.Do not share trading  password.

9.Do not fall prey to fixed /  guaranteed returns schemes.

10.Do not fall prey to fraudsters  sending emails and SMSs

luring to trade in stocks /  securities promising huge  profits.

11.Do not follow herd mentality  for investments. Seek expert  and professional advice for  your investments.

 

Grievance Redressal Mechanism

Level 1 – Approach the Stock Broker at the designated Investor Grievance e-mail ID of the  stock broker. The Stock Broker will strive to redress the grievance immediately, but not later  than 30 days of the receipt of the grievance.

Level 2 – Approach the Stock Exchange using the grievance mechanism mentioned at the  website of the respective exchange.

Complaints Resolution Process at Stock Exchange explained graphically:

S. No. Type of Activity Timelines for activity
1. Receipt of Complaint Day of complaint (C Day).
2. Additional information sought from the  investor, if any, and provisionally  forwarded to stock broker. C + 7 Working days.
3. Registration  of the complaint and  forwarding to the stock broker. C+8 Working Days i.e. T day.
4. Amicable Resolution. T+15 Working Days.
5. Refer to Grievance Redressal  Committee (GRC), in case of no  amicable resolution. T+16 Working Days.
6. Complete  resolution  process  post  GRC. T + 30 Working Days.
7. In case where the GRC Member  requires additional information, GRC  order shall be completed within. T + 45 Working Days.
8. Implementation of GRC Order. On receipt of GRC Order, if the order is in

favour of the investor, debit the funds of the  stock broker. Order for debit is issued  immediately or as per the directions given in  GRC order.

9. In case the stock broker is aggrieved  by the GRC order, will provide  intention to avail arbitration Within 7 days from receipt of order

 

S. No. Type of Activity Timelines for activity
10. If intention from stock broker is  received and the GRC order amount is  upto Rs.20 lakhs Investor is eligible for interim relief from  Investor Protection Fund (IPF).The interim  relief will be 50% of the GRC order amount  or Rs.2 lakhs whichever is less. The same  shall be provided after obtaining an  Undertaking from the investor.
11. Stock Broker shall file for arbitration Within 6 months from the date of GRC  recommendation
12. In case the stock broker does not file  for arbitration within 6 months The GRC order amount shall be released to

the investor after adjusting the amount  released as interim relief, if any.

 

Handling of Investor’s claims / complaints in case of default of a Trading Member Clearing Member (TM/CM)

Default of TM/CM

Following steps are carried out by Stock Exchange for benefit of investor, in case stock broker  defaults:

  • Circular is issued to inform about declaration of Stock Broker as Defaulter.
  • Information of defaulter stock broker is disseminated on Stock Exchange website.
  • Public Notice is issued informing declaration of a stock broker as defaulter and inviting claims within specified period.
  • Intimation to clients of defaulter stock brokers via emails and SMS for facilitating lodging of claims within the specified period.

Following information is available on Stock Exchange website for information of investors:

  • Norms for eligibility of claims for compensation from IPF.
  • Claim form for lodging claim against defaulter stock broker.
  • FAQ on processing of investors’ claims against Defaulter stock broker.
  • Provision to check online status of client’s claim.

Level 3 – The complaint not redressed at Stock Broker / Stock Exchange level, may be lodged  with SEBI on SCORES (a web based centralized grievance redressal system of SEBI) @  https://scores.gov.in/scores/Welcome.html

 

Annexure B

Format for Investor Complaints Data to be displayed by Stock Brokers on their  respective websites

Data for every month ending

 

S

N

Receive

d from

Carried

forwar  d from  previou  s  month

Receive

d  during  the  month

Total

Pendin  g

Resolve

d*

Pending at the

end  of  the  month**

Average

Resoluti  on time^  (in days)

Pendin

g  for  less  than  3

month  s

Pendin

g  for  more  than  3

month  s

1 2 3 4 5 6 7 8
1 Directly

from  Investors

2 SEBI

(SCORE  S)

3 Stock

Exchang  es

4 Other

Sources  (if any)

5 Grand

Total

 

SN Month Carried  forward

from  previous  month

Received Resolved* Pending**
1 2 3 4 5 6

 

1 April -YYYY
2 May-YYYY
3 June-YYYY
4 July-YYYY
….
…..
March-YYYY
Grand Total

 

*Should include complaints of previous months resolved in the current month, if any.

**Should include total complaints pending as on the last day of the month, if any.

^Average resolution time is the sum total of time taken to resolve each complaint in the  current month divided by total number of complaints resolved in the current month.

Trend of annual disposal of complaints

 

SN Year Carried forward

from  previous  year

Received

during the year

Resolved

during  the  year

Pending  at

the end of  the year

1 2017-18
2 2018-19
3 2019-20
4 2020-21
5 2021-22
Grand Total

 

Source – https://www.sebi.gov.in/

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