safeguards for investors before trading in securities

By | November 1, 2015

These are some of the safeguards the investors should keep in mind before trading in securities market.

  1. 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 :

  1. Entering into an Agreement

Fill in a Client registration form with the Broker / Sub – broker

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.

  1. 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.

  1.           Contract Note – Form ‘A’ – Contract Note issued where Member is acting for constituents as brokers/ agents.
  2.          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 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 Investor Service Centre is situated, shall have jurisdiction, must be present on the face of the Contract note.

  1. 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.
Open a demat account.
Opt for buying and selling shares in demat form.
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.
Shares and /or Debentures of Joint 0.25 per stock companies share/ debenture or 2.5% of the contract price per share/ Debenture whichever is higher.
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 nearest Regional Investor Service Centres of BSE
The Complaint against trading members of the Exchange or Applications for Arbitration should be filed at the nearest Regional Investor Service Centre referred, 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. The hearings shall be held in the concerned Regional Investor Service Centre in which the Applicant had duly filed the Complaints / Application for Arbitration.

BSE Investor Service Centre

203/204,’ Abhishree Avenue’
Near Nehru Nagar Circle
S. M. Road,Ambawadi
Ahmedabad – 380 015
Telephone No.: 079-2640 2992 / 2646 2992
Fax No.: 079 – 2640 2992
E‐mail Id:

BSE Investor Service Centre

No.4, Vijaya Towers, 3rd Floor Kodambakkam High Road Palm Grove Hotel)
Chennai – 600 034
Tele. No.:044-42089959
Telefax No.:044-42089958
E-mail Id:,

New Delhi

BSE Investor Service Centre

15th Floor, Dr. Gopal Das Bhawan,
28 Barakhamba Road, Connaught Place
New Delhi – 110 001
Tele. No. :011-43007413/14/15/16
Telefax No.:044-42089958


BSE Investor Service Centre

Flat no. 302, Marigold Pavani Estates,
Dwarkapuri Colony,
Hyderabad – 500082
Telephone No.: 040-30605844/45/46
E-mail Id:


BSE Investor Service Centre

201, Palika Plaza
Phase II, MTH Compound
Tele No.: 0731-4008208
Fax No.: 0731-4008222
E-mail Id:


BSE Investor Service Centre

5th Floor, Padam Towers
14/113, Civil Lines
Kanpur – 208001
Tele No.: 0512 – 233 8115 / 233 8074
E-mail Id:


BSE Investor Service Centre

57 Jawaharlal Nehru Road,
Horizon, 2nd Floor Near Rabindra Sadan Metro
Kolkata – 700 071
Tele. No. :033-22821375,
Telefax No.:033-22821376


BSE Investor Service Centre

Cama Building, 1st floor,
Dalal Street,
Fort, Mumbai – 400001.
Tele. No.: 022-22721233/34
Fax No.: 022-22723677
E-mail Id:


BSE Investor Service Centre

Stock Exchange Towers,
Annexe Building No. 51,
1st Cross, J C Road,
Bangalore – 560027


BSE Investor Service Centre

Shivleela Chambers,
4th Floor,752 Sadashiv Peth,
R.B.Kumathekar Marg,
Pune – 411030.


BSE Investor Service Centre

Office No. 401, Situated on 4th floor,
Durga Business Center,
Opp. Hotel Gangaur, M.I.Road,
Jaipur – 302001



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.
      Brokerage & Stamp Duty

BSE has not prescribed any minimum brokerage, and hence the same is negotiable. Though the maximum brokerage allowed is 2.5% percent of the contract price, the brokerage generally charged by the Members is much lower. A Member may have different scales of brokerages for delivery transactions, trading transactions and the like.

The present duty for equity shares transfer is 25paise for every Rs.100 or part thereof, on the amount of consideration while the duty for transfer of debentures varies from state to state, applicable on the basis of the location of the registered office of the concerned issuing company.

      Investor Awareness & Education 

      Investor Awareness Program

Investor Awareness Programs are being regularly conducted by BSE at various places in the country to educate the investors and to create awareness among the investors regarding the capital market and in particular the working of the stock exchanges. The Investor Awareness Programs cover topics like DOs and DON’Ts for investors, Instruments of Investment, Portfolio approach, Mutual funds, Trading, Clearing and Settlement, Rolling Settlement, Investors’ Protection Fund, Trade Guarantee Fund, Dematerialisation of Shares, Debt Market, Investors’ Grievance Redressal system available with SEBI, BSE & Company Law Board, information on S&P BSE Sensex and other Indices, Derivatives etc.

BSE also takes initiatives through:
BSE Training Institute (BTI) which organises investor education programs periodically on various subjects like Capital Markets, Fundamental Analysis, Technical Analysis, Derivatives, Index Futures and Options, Debt Market etc. For the Derivatives market, BTI conducts BCDE i.e. BSE’s certification on Derivative Exchange, a certification test recognized by the SEBI. For details, please contact : BSE Training Institute, 18th Floor, P.J.Tower, Dalal Street, Mumbai – 400001.

BSE’s official Website: which is the focal point for information dissemination. It updates the investors with the latest information on the stock market on a daily basis through real time updation of statistical data on market activity, corporate information and results. Educative articles on various products and processes are also available on the site.

Publications: BSE regularly comes out with publications for investor education on various products and processes

Source : BSE

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