Know how to deal with your Broker or Sub-Broker

Every transaction in the stock exchange is carried out through licensed members called brokers.

To trade in shares, you have to approach a broker However, since most stock exchange brokers deal in very high volumes, they generally do not entertain small investors. These brokers have a network of sub-brokers who provide them with orders.

The general investors should identify a sub-broker for regular trading in shares and place his order for purchase and sale through the sub-broker. The sub-broker will transmit the order to his broker who will then execute it .

SEBI has  laid down certain Guidelines for Dealing with Brokers & Sub-brokers

Here are the DOs

Deal only with SEBI-registered brokers/sub-brokers.

Ensure that the broker/sub-broker has a valid SEBI registration certificate.

Ensure that the broker/sub-broker is permitted to transact in the market.

State clearly to the broker/sub-broker who will be placing orders on your behalf

Insist on client registration form to be signed by the broker/sub-broker before commencing operations.

Enter into an agreement with your broker/sub-broker setting out the terms and conditions clearly.

Insist on contract note/ confirmation memo for trades done each day

Insist on bill for every settlement.

Ensure that broker’s name, trade time and number, transaction price and brokerage are shown distinctly on the contract note.

Insist on periodical statement of accounts.

Issue cheques/drafts in trade name of the broker only.

Ensure receipt of payment/ deliveries within 48 hours of payout

In case of disputes, file written complaint to the broker/sub-broker, to the stock exchange of which he is a member and to SEBI within a reasonable time.

In case of sub-broker disputes, inform the main broker about the dispute within a maximum of 6 months.

Familiarise yourself with the rules, regulations and circulars issued by the stock exchanges/SEBI before carrying out any transactions.

Watch out for the DON’Ts

Don’t deal with unregistered broker/sub-broker

Don’t pay more than the approved brokerage to the intermediary.

Don’t undertake deals on behalf of others.

Don’t neglect to set out in writing orders for higher value given earlier over the phone.

Don’t sign blank delivery instruction slip(s) while meeting security pay-in obligation

Don’t accept unsigned/duplicate contract note/confirmation memo

Don’t accept contract note/confirmation memo signed by any unauthorised person.

Don’t delay payment/deliveries of securities to the broker/ sub-broker.

Don’t get carried away by luring advertisements

Don’t be led by market rumors or get into shady transactions

All the best in your Stock market Trading en devour

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30 Responses to “Know how to deal with your Broker or Sub-Broker”

  1. Swadhin Meher says:

    Thanks for DOs and DON’Ts

  2. nirmala mudaliar says:

    thanks for this valuable information

  3. arun says:

    good information about share market

  4. Ganesh says:

    Thanks for giving important instruction regarding share marketing

  5. Aditya says:

    Wos, I became very happy to after reading the information about stock marketing.

  6. Isha says:

    Thanks for the fruitful information…good one for the beginners…

  7. naveen goyal says:

    this in4mation helped me tooooooo much…
    thanx a lot…………

  8. amotosh says:

    thanks for telling

  9. Amruta Mallya says:

    I am visiting the website for the first time and I am really happy as I am getting ample of information.Thank you so much

  10. Sudhakar says:

    I found this site very impressive, specially it helps the beginners like me a lot 🙂

  11. vinay says:

    i found this site very impressive ,especially it helps the beginners like me…………………………………..

  12. boopathi mudaliar says:

    thanks for your information and I very happy to reading this message

  13. sandep kumar says:

    Thank god finally i got the information about stock market after reading i understood everthing and its clear all my doubt. thank you so much

  14. SANJEEV says:

    I found this site really useful as i was visiting ant share market related site for the first time. It gave me valuable information especially section of dealing with brokers.

    I would recommend that If u put up a copy of various contract documents and SEBI certificates in order to check the authenticity of the certificates provided by the brokers.

    Thanks a lot.

  15. Madhusudhan says:

    The information which u hv gvn is good & it’s helpful for the beginner…bt still more information is needed i think.. Thanks for the good information. 🙂

  16. anil says:

    ya as madhu told , if u put up some copies of certificates we can cross check it wit da certificates they present.

    thank u

  17. anil says:

    sorry as sanjeev told , if u put up some copies of certificates we can cross check it wit da certificates they present.

    thank u

  18. admin says:

    On request by visitors, Please find fgiven below the links to Agreement Documents to be signed with your Broker or Subbroker

    Client Registration Form (Uniform across all the segments and exchanges where the broker is trading on different segments and exchanges)

    Model tripartite agreement between stock broker, subbroker
    and client

    Member Clients Agreements

    Broker Sub broker agreement

    It may be noted however that the documents prescribed as above are model formats. The stock exchanges/stock broker may incorporate any additional clauses in these documents provided these are not in conflict with any of the clauses in the model document, as also the Rules, Regulations, Articles, Byelaws, circulars, directives and guidelines.

  19. vikas says:

    Thease information are very good for making a future in share
    market.vikas napit

  20. Dr V P Singh says:

    Good basic knowledge. I am wiser now in regard to dealing with dealers.

  21. […] 22nd, 2009 Many Investors in India  prefer dealing in shares through their brokers over the Telephone and not trade online because of the security […]

  22. Subhra Ghosh says:

    thanks for this very important information about share trading.

  23. sravanreddy says:

    very very usefull information –thanks

  24. Kamalesh Guha says:

    Wonderful guidelines which certainly play a significant role for the investors in the secondary market.

  25. SUNIL says:

    I HAD JUST TEKEN NIRMAL BANG SEC PVT LTD SUB BROKER SHEEP BUT TILL TIME I M NOT A REGISTERED MEMBER IN SEBI I HAVE SUBMITTED DOCUMENTS 3 MONTHS AGO. IT WILL BE PROBLEM FOR ME?
    PLS SUJJEST ME

  26. Suraj says:

    Thanks for the valuable points…

  27. rajesh reddy.k says:

    It’s so nice for the new entries

  28. prabhat says:

    information is much apreciated.

  29. com says:

    This is an Awesome) post

  30. […] because there is no in-person contact. But you can’t leave everything on trust. Make sure your broker provides you detailed email statements and contract notes of executed […]

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