Sebi tightens stock broker norms to curb unauthorised trades

Updated: Tue, Sep 26, 2017
07:19 pm
PTI
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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,"

it added.

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

said.

 

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)

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