To prevent unauthorised trading
activities, markets regulator Sebi today directed stock
brokers to compulsorily keep record of orders placed by
clients from January 1, 2018.
Under the stricter regulatory framework, stock brokers
have to compulsorily "use telephone recording system to record
the instructions and maintain telephone recordings," in case
the client is giving the orders on phone.
Issuing a circular to the stock exchanges, Sebi said that
in spite of measures taken, a considerable proportion of
investor complaints is of the nature of 'unauthorised trades'.
"... it has now been decided that all brokers shall
execute trades of clients only after keeping evidence of the
client placing such order," the circular said.
The evidence could be physical record written and signed
by client, telephone recording, e-mail from authorised ID, log
for internet transactions, record of SMS messages or any other
legally verifiable record, as per the circular.
"When dispute arises, the burden of proof will be on the
broker to produce the above records for the disputed trade,"
The circular would be effective from January 1, 2018.
The regulator said the decision has been taken to further
strengthen regulatory provisions against unauthorised trades
as also to harmonise the requirements across markets.
Currently, the regulations for commodity derivative
markets require members to execute the trade of clients only
after keeping evidence of placing the order and the proof
could also be in the form of sound recording.
However, there are no such requirements in equity, equity
derivative and currency derivative markets.
"Sebi in the past has taken several steps to tackle the
menace of 'unauthorised trades' viz periodic running account
settlement, post transactions SMS/ email by exchanges/
depositories, ticker on broker/ DP websites...," the circular
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)