You can browse through the “Legal Framework” section on the SEBI website http://www.sebi.gov.in for complete information relating to acts, rules, regulations, circulars, and guidelines relating to securities market.
Day trading refers to buying and selling of securities within the same trading day such that all positions will be closed before the market close of the trading day. In the Indian securities market only retail investors are allowed to day trade.
Good understanding of investment opportunities alone may not help the investor in the securities market to trade. It is also important that the investor understands the process of investing, such as finding an appropriate broker, handling buying and selling of securities and maintaining records. Before choosing a broker/sub-broker the investor should be aware of the following things:- Ø From where the broker/sub-broker has learnt the business? Ø How long has he been serving the securities industry? Ø Whether he has eligible qualifications as a broker? Ø How many clients does he serve? Ø What fees and expenses does he charge?
a) Entering into an agreement with his client or with sub broker and client b) Maintenance of separate books of accounts and records for clients c) Maintenance of money of clients in a separate account and their own money in a separate account. d) Issue of daily statement of collateral utilization to clients e) Appointment of compliance officer f) Issue of contract note to his client within 24hrs of the execution of the contract. g) Delivery / Payment to be made to the client within 24 hrs of pay–out. h) Other duties as specified in the SEBI (Stock Brokers and Sub-Brokers) Rules, 1992. 62. What are the major rights and obligations of an investor? a) Before entering into a contract with the broker, ensure that he is registered with SEBI. b) Satisfy yourself about the credentials of the broker by asking for information/documents supporting his claims. c) Keep a documentary proof of having made deposit of money or securities with the broker. d) Before activating your trading account, obtain clear idea from your broker about all brokerage, commissions, fees and other charges which will be levied on your trades. e) Furnish details in full as are required by the broker as required in “know your client” (KYC) norms. f) Ensure that a contract note is issued by the broker which contains complete records of every transaction within 24hrs of the execution of the contract. g) In case pay-out of money and / or securities is not received on the next working day after date of pay-out, follow up with the concerned broker for its release. If it is not released within five working days, ensure to lodge a complaint immediately with the Investors’ Grievance Cell of the exchange. h) Ensure to receive a complete ‘Statement of Accounts’ for both funds and securities settlement every quarter.
Beneficial owner Account (B.O. account) / Demat Account: It is an account opened with a depository participant in the name of client for the purpose of holding and transferring securities. Trading Account: An account which is opened by the broker in the name of the respective investor for the maintenance of transactions executed while buying and selling of securities. Client Account / Bank Account: A bank account which is in the name of the respective client and is used for debiting or crediting money for trading in the securities market. With whom should the investor file his complaint against an intermediary? In case an investor feels that his issue/problem/grievance is not being sorted out by concerned intermediary then he may take up the matter with the immediate/next higher level authority/SRO for the concerned intermediary. If the investor is not satisfied with the resolution of his complaint then he can escalate the matter to SEBI. Example: for complaint against sub-broker/broker you may approach stock exchange. For complaints against DPs, you may approach Depository. In order to expedite the process of redressel of complaints and to make the process of lodging a complaint easier for the complainants, all SEBI registered intermediaries have been mandated to designate an e-mail ID of the grievance redressel division/compliance officer exclusively for the purpose of registering complaints. The intermediaries have also been advised to display the email ID and other relevant details prominently on their websites.
Yes. With effect from July 02, 2007, PAN has been made mandatory for all the investors participating in the securities market. In order to strengthen the Know Your Client (KYC) norms and identify every participant in the securities market with their respective PAN to ensure sound audit trail of all the transactions, SEBI has mandated PAN as the sole identification number for all persons transacting in the securities market, irrespective of the amount of transaction.
In a Trade for Trade segment, settlement of trades is done on the basis of gross obligations for the day. No netting is allowed and every trade is being settled separately.
The normal course of online trading in the Indian market context is placed below: Step 1. Investor / trader decides to trade Step 2. Places order with a broker to buy / sell the required quantity of respective securities Step 3. Best priced order matches based on price-time priority Step 4. Order execution is electronically communicated to the broker’s terminal Step 5. Trade confirmation slip issued to the investor / trader by the broker Step 6. Within 24 hours of trade execution, contract note is issued to the investor / trader by the broker Step 7 Pay-in of funds and securities before T+2 day Step 8. Pay-out of funds and securities on T+2 day In case of short or bad delivery of funds / securities, the exchange orders for an auction to settle the delivery. If the shares could not be bought in the auction, the transaction is closed out as per SEBI guidelines.
Direct Market Access (DMA) is a facility which allows brokers to offer clients direct access to the exchange trading system through the broker’s infrastructure without manual intervention by the broker. Some of the advantages offered by DMA are direct control of clients over orders, faster execution of client orders, reduced risk of errors associated with manual order entry, greater transparency, increased liquidity, lower impact costs for large orders, better audit trails and better use of hedging and arbitrage opportunities through the use of decision support tools / algorithms for trading. Presently, DMA facility is available for institutional investors.