RIGHTS AND OBLIGATIONS OF STOCK BROKERS, SUB-BROKERS AND CLIENTS
as prescribed by SEBI and Stock Exchanges
The client shall invest/trade in those
securities/contracts/other instruments admitted to dealings on
the Exchanges as defined in the Rules, Byelaws and Regulations
of Exchanges/ Securities and Exchange Board of India (SEBI) and
circulars/notices issued thereunder from time to time. The stock
broker, sub-broker and the client shall be bound by all the
Rules, Byelaws and Regulations of the Exchange and
circulars/notices issued thereunder and Rules Regulations of
SEBI and relevant notifications of Government authorities as may
be in force from time to time.
The client shall satisfy itself of the capacity of the stock
broker to deal in securities and/or deal in derivatives
contracts and wishes to execute its orders through the stock
broker and the client shall from time to time continue to
satisfy itself of such capability of the stock broker before
executing orders through the stock broker.
The stock broker shall continuously satisfy itself about the
genuineness and financial soundness of the client and investment
objectives relevant to the services to be provided.
The stock broker shall take steps to make the client aware of
the precise nature of the Stock broker’s liability for business
to be conducted, including any limitations, the liability and
the capacity in which the stock broker acts.
The sub-broker shall provide necessary assistance and co-operate
with the stock broker in all its dealings with the client(s).
CLIENT INFORMATION
The client shall furnish all such details in full as
are required by the stock broker in "Account Opening Form” with
supporting details, made mandatory by stock exchanges/SEBI from
time to time.
The client shall familiarize himself with all the mandatory
provisions in the Account Opening documents. Any additional
clauses or documents specified by the stock broker shall be
non-mandatory, as per terms & conditions accepted by the client.
The client shall immediately notify the stock broker in writing
if there is any change in the information in the account opening
form as provided at the time of account opening and thereafter;
including the information on winding up petition/insolvency
petition or any litigation which may have material bearing on
his capacity. The client shall provide/update the financial
information to the stock broker on a periodic basis.
The stock broker and sub-broker shall maintain all the details
of the client as mentioned in the account opening form or any
other information pertaining to the client, confidentially and
that they shall not disclose the same to any person/authority
except as required under any law/regulatory requirements.
Provided however that the stock broker may so disclose
information about his client to any person or authority with the
express permission of the client.
MARGINS
The client shall pay applicable initial margins, withholding
margins, special margins or such other margins as are considered
necessary by the stock broker or the Exchange or as may be
directed by SEBI from time to time as applicable to the
segment(s) in which the client trades. The stock broker is
permitted in its sole and absolute discretion to collect
additional margins (even though not required by the Exchange,
Clearing House/Clearing Corporation or SEBI) and the client
shall be obliged to pay such margins within the stipulated time.
The client understands that payment of margins by the client
does not necessarily imply complete satisfaction of all dues. In
spite of consistently having paid margins, the client may, on
the settlement of its trade, be obliged to pay (or entitled to
receive) such further sums as the contract may dictate/require.
TRANSACTIONS AND SETTLEMENTS
The client shall give any order for buy or sell of a
security/derivatives contract in writing or in such form or
manner, as may be mutually agreed between the client and the
stock broker. The stock broker shall ensure to place orders and
execute the trades of the client, only in the Unique Client Code
assigned to that client.
The stock broker shall inform the client and keep him apprised
about trading/settlement cycles, delivery/payments,schedules,
any changes therein from time to time, and it shall be the
responsibility in turn of the client to comply with such
schedules/procedures of the relevant stock exchange where the
trade is executed.
The stock broker shall ensure that the money/securities
deposited by the client shall be kept in a separate account,
distinct from his/its own account or account of any other client
and shall not be used by the stock broker for himself/itself or
for any other client or for any purpose other than the purposes
mentioned in Rules, Regulations, circulars, notices, guidelines
of SEBI and/or Rules, Regulations, Bye-laws, circulars and
notices of Exchange.
Where the Exchange(s) cancels trade(s) suo moto all such trades
including the trade/s done on behalf of the client shall ipso
facto stand cancelled, stock broker shall be entitled to cancel
the respective contract(s) with client(s).
The transactions executed on the Exchange are subject to Rules,
Byelaws and Regulations and circulars/notices issued thereunder
of the Exchanges where the trade is executed and all parties to
such trade shall have submitted to the jurisdiction of such
court as may be specified by the Byelaws and Regulations of the
Exchanges where the trade is executed for the purpose of giving
effect to the provisions of the Rules, Byelaws and Regulations
of the Exchanges and the circulars/notices issued thereunder.
BROKERAGE
The Client shall pay to the stock broker brokerage and
statutory levies as are prevailing from time to time and as they
apply to the Client’s account, transactions and to the services
that stock broker renders to the Client. The stock broker shall
not charge brokerage more than the maximum brokerage permissible
as per the rules, regulations and bye-laws of the relevant stock
exchanges and/or rules and regulations of SEBI.
LIQUIDATION AND CLOSE OUT OF POSITION
Without prejudice to the stock broker's other rights
(including the right to refer a matter to arbitration), the
client understands that the stock broker shall be entitled to
liquidate/close out all or any of the client's positions for
nonpayment of margins or other amounts, outstanding debts, etc.
and adjust the proceeds of such liquidation/close out, if any,
against the client's liabilities/obligations. Any and all losses
and financial charges on account of such liquidation/closing-out
shall be charged to and borne by the client.
In the event of death or insolvency of the client or his/its
otherwise becoming incapable of receiving and paying for or
delivering or transferring securities which the client has
ordered to be bought or sold, stock broker may close out the
transaction of the client and claim losses, if any, against the
estate of the client. The client or his nominees, successors,
heirs and assignee shall be entitled to any surplus which may
result there from. The client shall note that transfer of
funds/securities in favor of a Nominee shall be valid discharge
by the stock broker against the legal heir.
The stock broker shall bring to the notice of the relevant
Exchange the information about default in Payment/delivery and
related aspects by a client. In case where defaulting client is
a corporate Entity/partnership/proprietary firm or any other
artificial legal entity, then the name(s) of
Director(s)/Promoter(s)/Partner(s)/Proprietor as the case may
be, shall also be communicated by the stock broker to the
relevant Exchange(s).
DISPUTE RESOLUTION
The stock broker shall provide the client with the
relevant contact details of the concerned Exchanges and SEBI.
The stock broker shall co-operate in redressing grievances of
the client in respect of all transactions routed through it and
in removing objections for bad delivery of shares, rectification
of bad delivery, etc.
The client and the stock broker shall refer any claims and/or
disputes with respect to deposits, margin money, etc., to
arbitration as per the Rules, Byelaws and Regulations of the
Exchanges where the trade is executed and circulars/notices
issued thereunder as may be in force from time to time.
The stock broker shall ensure faster settlement of any
arbitration proceedings arising out of the transactions entered
into between him vis-à-vis the client and he shall be liable to
implement the arbitration awards made in such proceedings.
The client/stock-broker understands that the instructions issued
by an authorized representative for dispute resolution, if any,
of the client/stock-broker shall be binding on the
client/stock-broker in accordance with the letter authorizing
the said representative to deal on behalf of the said
client/stock-broker.
TERMINATION OF RELATIONSHIP
The relationship between the stock broker and the client shall
be terminated; if the stock broker for any reason ceases to be a
member of the stock exchange including cessation of membership
by reason of the stock broker's default, death, resignation or
expulsion or if the certificate is cancelled by the Board.
The stock broker, sub-broker and the client shall be entitled to
terminate the relationship between them without giving any
reasons to the other party, after giving notice in writing of
not less than one month to the other parties. Notwithstanding
any such termination, all rights, liabilities and obligations of
the parties arising out of or in respect of transactions entered
into prior to the termination of this relationship shall
continue to subsist and vest in/be binding on the respective
parties or his/its respective heirs, executors, administrators,
legal representatives or successors, as the case may be.
In the event of demise/insolvency of the sub-broker or the
cancellation of his/its registration with the Board
or/withdrawal of recognition of the sub-broker by the stock
exchange and/or termination of the agreement with the sub broker
by the stock broker, for any reason whatsoever, the client shall
be informed of such termination and the client shall be deemed
to be the direct client of the stock broker and all clauses in
the ‘Rights and Obligations’ document(s) governing the stock
broker, sub-broker and client shall continue to be in force as
it is, unless the client intimates to the stock broker his/its
intention to terminate their relationship by giving a notice in
writing of not less than one month.
ADDITIONAL RIGHTS AND OBLIGATIONS
The stock broker shall ensure due protection to the
client regarding client’s rights to dividends, rights or bonus
shares, etc. in respect of transactions routed through it and it
shall not do anything which is likely to harm the interest of
the client with whom and for whom they may have had transactions
in securities.
The stock broker and client shall reconcile and settle their
accounts from time to time as per the Rules, Regulations, Bye
Laws, Circulars, Notices and Guidelines issued by SEBI and the
relevant Exchanges where the trade is executed.
The stock broker shall issue a contract note to his constituents
for trades executed in such format as may be prescribed by the
Exchange from time to time containing records of all
transactions including details of order number, trade number,
trade time, trade price, trade quantity, details of the
derivatives contract, client code, brokerage, all charges levied
etc. and with all other relevant details as required therein to
be filled in and issued in such manner and within such time as
prescribed by the Exchange. The stock broker shall send contract
notes to the investors within one working day of the execution
of the trades in hard copy and/or in electronic form using
digital signature.
The stock broker shall make pay out of funds or delivery of
securities, as the case may be, to the Client within one working
day of receipt of the payout from the relevant Exchange where
the trade is executed unless otherwise specified by the client
and subject to such terms and conditions as may be prescribed by
the relevant Exchange from time to time where the trade is
executed.
The stock broker shall send a complete `Statement of Accounts’
for both funds and securities in respect of each of its clients
in such periodicity and format within such time, as may be
prescribed by the relevant Exchange, from time to time, where
the trade is executed. The Statement shall also state that the
client shall report errors, if any, in the Statement within such
time as may be prescribed by the relevant Exchange from time to
time where the trade was executed, from the receipt thereof to
the Stock broker.
The stock broker shall send daily margin statements to the
clients. Daily Margin statement should include, interalia,
details of collateral deposited, collateral utilized and
collateral status (available balance/due from client) with break
up in terms of cash, Fixed Deposit Receipts (FDRs), Bank
Guarantee and securities.
The Client shall ensure that it has the required legal capacity
to, and is authorized to, enter into the relationship with stock
broker and is capable of performing his obligations and
undertakings hereunder. All actions required to be taken to
ensure compliance of all the transactions, which the Client may
enter into shall be completed by the Client prior to such
transaction being entered into.
ELECTRONIC CONTRACT NOTES (ECN)
In case, client opts to receive the contract note in
electronic form, he shall provide an appropriate e-mail id to
the stock broker. The client shall communicate to the stock
broker any change in the email-id through a physical letter. If
the client has opted for internet trading, the request for
change of email id may be made through the secured access by way
of client specific user id and password.
The stock broker shall ensure that all ECNs sent through the
e-mail shall be digitally signed, encrypted, non-tamperble and
in compliance with the provisions of the IT Act, 2000. In case,
ECN is sent through e-mail as an attachment, the attached file
shall also be secured with the digital signature, encrypted and
non-tamperable.
The client shall note that non-receipt of bounced mail
notification by the stock broker shall amount to delivery of the
contract note at the e-mail ID of the client.
The stock broker shall retain ECN and acknowledgement of the
e-mail in a soft and non-tamperable form in the manner
prescribed by the exchange in compliance with the provisions of
the IT Act, 2000 and as per the extant
rules/regulations/circulars/guidelines issued by SEBI/Stock
Exchanges from time to time. The proof of delivery i.e., log
report generated by the system at the time of sending the
contract notes shall be maintained by the stock broker for the
specified period under the extant regulations of SEBI/stock
exchanges. The log report shall provide the details of the
contract notes that are not delivered to the client/e-mails
rejected or bounced back. The stock broker shall take all
possible steps to ensure receipt of notification of bounced
mails by him at all times within the stipulated time period
under the extant regulations of SEBI/stock exchanges.
The stock broker shall continue to send contract notes in the
physical mode to such clients who do not opt to receive the
contract notes in the electronic form. Wherever the ECNs have
not been delivered to the client or has been rejected (bouncing
of mails) by the e-mail ID of the client, the stock broker shall
send a physical contract note to the client within the
stipulated time under the extant regulations of SEBI/stock
exchanges and maintain the proof of delivery of such physical
contract notes.
In addition to the e-mail communication of the ECNs to the
client, the stock broker shall simultaneously publish the ECN on
his designated web-site, if any, in a secured way and enable
relevant access to the clients and for this purpose, shall allot
a unique user name and password to the client, with an option to
the client to save the contract note electronically and/or take
a print out of the same.
LAW AND JURISDICTION
In addition to the specific rights set out in this
document, the stock broker, sub-broker and the client shall be
entitled to exercise any other rights which the stock broker or
the client may have under the Rules, Bye-laws and Regulations of
the Exchanges in which the client chooses to trade and
circulars/notices issued thereunder or Rules and Regulations of
SEBI.
The provisions of this document shall always be subject to
Government notifications, any rules, regulations, guidelines and
circulars/notices issued by SEBI and Rules, Regulations and Bye
laws of the relevant stock exchanges, where the trade is
executed, that may be in force from time to time.
The stock broker and the client shall abide by any award passed
by the Arbitrator(s) under the Arbitration and Conciliation Act,
1996. However, there is also a provision of appeal within the
stock exchanges, if either party is not satisfied with the
arbitration award.
Words and expressions which are used in this document but which
are not defined herein shall, unless the context otherwise
requires, have the same meaning as assigned thereto in the
Rules, Byelaws and Regulations and circulars/notices issued
thereunder of the Exchanges/SEBI.
All additional voluntary clauses/document added by the stock
broker should not be in contravention with
Rules/regulations/notices/circulars of Exchanges/SEBI. Any
changes in such voluntary clauses/document(s) need to be
preceded by a notice of 15 days. Any changes in the rights and
obligations which are specified by Exchanges/SEBI shall also be
brought to the notice of the clients.
If the rights and obligations of the parties hereto are altered
by virtue of change in Rules and regulations of SEBI or
Bye-laws, Rules and Regulations of the relevant stock Exchanges
where the trade is executed, such changes shall be deemed to
have been incorporated herein in modification of the rights and
obligations of the parties mentioned in this document.
INTERNET & WIRELESS TECHNOLOGY BASED TRADING FACILITY
PROVIDED BY STOCK BROKERS TO CLIENT
(All the clauses mentioned in the ‘Rights and
Obligations’ document(s) shall be applicable. Additionally, the
clauses mentioned herein shall also be applicable.)
Stock broker is eligible for providing Internet based trading
(IBT) and securities trading through the use of wireless
technology that shall include the use of devices such as mobile
phone, laptop with data card, etc. which use Internet Protocol
(IP). The stock broker shall comply with all requirements
applicable to internet based trading/securities trading using
wireless technology as may be specified by SEBI & the Exchanges
from time to time.
The client is desirous of investing/trading in securities and
for this purpose, the client is desirous of using either the
internet based trading facility or the facility for securities
trading through use of wireless technology. The Stock broker
shall provide the Stock broker’s IBT Service to the Client, and
the Client shall avail of the Stock broker’s IBT Service, on and
subject to SEBI/Exchanges Provisions and the terms and
conditions specified on the Stock broker’s IBT Web Site provided
that they are in line with the norms prescribed by
Exchanges/SEBI.
The stock broker shall bring to the notice of client the
features, risks, responsibilities, obligations and liabilities
associated with securities trading through wireless
technology/internet/smart order routing or any other technology
should be brought to the notice of the client by the stock
broker.
The stock broker shall make the client aware that the Stock
Broker’s IBT system itself generates the initial password and
its password policy as stipulated in line with norms prescribed
by Exchanges/SEBI.
The Client shall be responsible for keeping the Username and
Password confidential and secure and shall be solely responsible
for all orders entered and transactions done by any person
whosoever through the Stock broker’s IBT System using the
Client’s Username and/or Password whether or not such person was
authorized to do so. Also the client is aware that
authentication technologies and strict security measures are
required for the internet trading/securities trading through
wireless technology through order routed system and undertakes
to ensure that the password of the client and/or his authorized
representative are not revealed to any third party including
employees and dealers of the stock broker
The Client shall immediately notify the Stock broker in writing
if he forgets his password, discovers security flaw in Stock
Broker’s IBT System, discovers/suspects discrepancies/
unauthorized access through his Username/password/account with
full details of such unauthorized use, the date, the manner and
the transactions effected pursuant to such unauthorized use,
etc.
The Client is fully aware of and understands the risks
associated with availing of a service for routing orders over
the internet/securities trading through wireless technology and
Client shall be fully liable and responsible for any and all
acts done in the Client’s Username/password in any manner
whatsoever.
The stock broker shall send the order/trade confirmation through
email to the client at his request. The client is aware that the
order/ trade confirmation is also provided on the web portal. In
case client is trading using wireless technology, the stock
broker shall send the order/trade confirmation on the device of
the client.
The client is aware that trading over the internet involves many
uncertain factors and complex hardware, software, systems,
communication lines, peripherals, etc. are susceptible to
interruptions and dislocations. The Stock broker and the
Exchange do not make any representation or warranty that the
Stock broker’s IBT Service will be available to the Client at
all times without any interruption.
The Client shall not have any claim against the Exchange or the
Stock broker on account of any suspension, interruption,
non-availability or malfunctioning of the Stock broker’s IBT
System or Service or the Exchange’s service or systems or
non-execution of his orders due to any link/system failure at
the Client/Stock brokers/Exchange end for any reason beyond the
control of the stock broker/Exchanges.
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