Investor Charter for Stock Brokers

CIRCULAR SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2025/22 February 21, 2025 To, All recognized Stock Exchanges Stock Brokers through Recognized Stock Exchanges Madam / Sir, Sub: Investor Charter for Stock Brokers 1. SEBI, vide Circular no. SEBI/HO/MIRSD/DOP/P/CIR/2021/676 dated December 02, 2021 (hereinafter mentioned as ‘Circular’) and Clause 75 of Master Circular for Stock Brokers dated August 09, 2024 (hereinafter mentioned as ‘Master Circular’), inter alia, issued Investor charter for stock brokers. 2. In a move to enhance financial consumer protection alongside enhanced financial inclusion and financial literacy and in view of the recent developments in the securities market including introduction of Online Dispute Resolution (ODR) platform and SCORES 2.0, it has been decided to modify the investor charter for stock brokers. 3. In view of the above and based on consultation with Brokers’ Industry Standards Forum (ISF), updated investor charter for stock brokers is placed at Annexure A. 4. In this regard, Stock Exchanges are directed to advise Stock Brokers to bring the Investor Charter for Stock Brokers to the notice of their clients (existing as well as new clients) through disclosing the Investor Charter on their respective websites, making them available at prominent places in the office, provide a copy of Investor Charter as a part of account opening kit to the clients, through e-mails/ letters etc. 5. Additionally, in order to ensure transparency in the Investor Grievance Redressal Mechanism, all the Stock Brokers shall continue to disclose on their respective Page 1 of 11websites, the data on complaints received against them or against issues dealt by them and redressal thereof, latest by 7th of succeeding month, as per the format enclosed at Annexure ‘B’ to this circular. 6. The provisions of this circular shall come into force with immediate effect. 7. With the issuance of this circular, SEBI, Circular. SEBI/HO/MIRSD/DOP/P/CIR/2021/676 dated December 02, 2021 stands rescinded and Clause 75 of Master Circular for Stock Brokers dated August 09, 2024 stands amended as per this circular. 8. Stock Exchanges are hereby directed to bring the provisions of this circular to the notice of the stock brokers. 9. This circular is issued in exercise of powers conferred under Section 11(1) of Chapter IV of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets and shall come into effect from the date of this circular. 10. This circular is available on SEBI website at www.sebi.gov.in under the category: ‘Legal → Circulars Yours faithfully, Sudeep Mishra General Manager Tel. No.: 022-26449365 E-mail: sudeepm@sebi.gov.in Page 2 of 11Annexure-A Investor Charter – Stock Brokers 1. VISION To follow highest standards of ethics and compliances while facilitating the trading by clients in securities in a fair and transparent manner, so as to contribute in creation of wealth for investors. 2. MISSION i) To provide high quality and dependable service through innovation, capacity enhancement and use of technology. ii) To establish and maintain a relationship of trust and ethics with the investors. iii) To observe highest standard of compliances and transparency. iv) To always keep ‘protection of investors’ interest’ as goal while providing service. v) To ensure confidentiality of information shared by investors unless such information is required to be provided in furtherance of discharging legal obligations or investors have provided specific consent to share such information. 3. Services provided to Investors by stockbrokers include I. Execution of trades on behalf of investors. II. Issuance of Contract Notes. III. Issuance of intimations regarding margin due payments. IV. Facilitate execution of early pay-in obligation instructions. V. Periodic Settlement of client’s funds. VI. Issuance of retention statement of funds at the time of settlement. VII. Risk management systems to mitigate operational and market risk. VIII. Facilitate client profile changes in the system as instructed by the client. IX. Information sharing with the client w.r.t. relevant Market Infrastructure Institutions (MII) circulars. X. Provide a copy of Rights & Obligations document to the client. XI. Communicating Most Important terms and Conditions (MITC) to the client. XII. Redressal of Investor’s grievances. 4. Rights of Investors I. Ask for and receive information from a firm about the work history and background of the person handling your account, as well as information about the firm itself (including website providing mandatory information). II. Receive complete information about the risks, obligations, and costs of any investment before investing. III. Receive a copy of all completed account forms and rights & obligation document. IV. Receive a copy of ‘Most Important Terms & Conditions’ (MITC). Page 3 of 11V. Receive account statements that are accurate and understandable. VI. Understand the terms and conditions of transactions you undertake. VII. Access your funds in a prescribed manner and receive information about any restrictions or limitations on access. VIII. Receive complete information about maintenance or service charges, transaction or redemption fees, and penalties in form of tariff sheet. IX. Discuss your grievances with compliance officer / compliance team / dedicated grievance redressal team of the firm and receive prompt attention to and fair consideration of your concerns. X. Close your zero balance accounts online with minimal documentation XI. Get the copies of all policies (including Most Important Terms and Conditions) of the broker related to dealings of your account XII. Not be discriminated against in terms of services offered to equivalent clients XIII. Get only those advertisement materials from the broker which adhere to Code of Advertisement norms in place XIV. In case of broker defaults, be compensated from the Exchange Investor Protection Fund as per the norms in place XV. Trade in derivatives after submission of relevant financial documents to the broker subject to brokers’ adequate due diligence. XVI. Get warnings on the trading systems while placing orders in securities where surveillance measures are in place XVII. Get access to products and services in a suitable manner even if differently abled XVIII. Get access to educational materials of the MIIs and brokers XIX. Get access to all the exchanges of a particular segment you wish to deal with unless opted out specifically as per Broker norms XX. Deal with one or more stockbrokers of your choice without any compulsion of minimum business XXI. Have access to the escalation matrix for communication with the broker XXII. Not be bound by any clause prescribed by the Brokers which are contravening the Regulatory provisions. 5. Various activities of Stock Brokers with timelines S.No. Activities Expected Timelines 1. KYC entered into KRA System 3 working days of account opening and CKYCR 2. Client Onboarding Immediate, but not later than one week 3. Order execution Immediate on receipt of order, but not later than the same day 4. Allocation of Unique Client Code Before trading Page 4 of 115. Copy of duly completed Client 7 days from the date of upload of Registration Documents to clients Unique Client Code to the Exchange by the trading member 6. Issuance of contract notes 24 hours of execution of trades 7. Collection of upfront margin from Before initiation of trade client 8. Issuance of intimations regarding At the end of the T day other margin due payments 9. Settlement of client funds First Friday/Saturday of the month / quarter as per Exchange pre- announced schedule 10. ‘Statement of Accounts’ for Funds, Monthly basis Securities and Commodities 11. Issuance of retention statement of 5 days from the date of settlement funds/commodities 12. Issuance of Annual Global 30 days from the end of the financial Statement year 13. Investor grievances redressal 21 calendar days from the receipt of the complaint 6. DOs and DON’Ts for Investors DOs DON’Ts 1. Read all documents and conditions 1. Do not deal with unregistered stock being agreed before signing the broker. account opening form. 2. Do not forget to strike off blanks in 2. Receive a copy of KYC, copy of your account opening and KYC. account opening documents and 3. Do not submit an incomplete Unique Client Code. account opening and KYC form. 3. Read the product / operational 4. Do not forget to inform any change framework / timelines related to in information linked to trading various Trading and Clearing & account and obtain confirmation of Settlement processes. updation in the system. 4. Receive all information about 5. Do not transfer funds, for the brokerage, fees and other charges purposes of trading to anyone levied. other than a stock broker. No 5. Register your mobile number and payment should be made in name email ID in your trading, demat and of employee of stock broker. Page 5 of 11bank accounts to get regular alerts on 6. Do not ignore any emails / SMSs your transactions. received with regards to trades 6. If executed, receive a copy of Demat done, from the Stock Exchange Debit and Pledge Instruction (DDPI) and raise a concern, if discrepancy However, DDPI is not a mandatory is observed. requirement as per SEBI / Stock 7. Do not opt for digital contracts, if Exchanges. Before granting DDPI, not familiar with computers. carefully examine the scope and 8. Do not share trading password. implications of powers being granted. 9. Do not fall prey to fixed / 7. Receive contract notes for trades guaranteed returns schemes. executed, showing transaction price, 10. Do not fall prey to fraudsters brokerage, GST and STT/CTT etc. as sending emails and SMSs luring to applicable, separately, within 24 trade in stocks / securities hours of execution of trades. promising huge profits. 8. Receive funds and securities/ 11. Do not follow herd mentality for commodities on time, as prescribed investments. Seek expert and by SEBI or exchange from time to professional advice for your time. investments 9. Verify details of trades, contract notes and statement of account and approach relevant authority for any discrepancies. Verify trade details on the Exchange websites from the trade verification facility provided by the Exchanges. 10. Receive statement of accounts periodically. If opted for running account settlement, account has to be settled by the stock broker as per the option given by the client (Monthly or Quarterly). 11. In case of any grievances, approach stock broker or Stock Exchange or SEBI for getting the same resolved within prescribed timelines. 12. Retain documents for trading activity as it helps in resolving disputes, if they arise. Additionally, Investors may refer to Dos and Don’ts issued by MIIs on their respective websites from time to time. Page 6 of 117. Grievance Redressal Mechanism The process of investor grievance redressal is as follows: 1. Investor Investor can lodge complaint/grievance against complaint/Grievances stock broker in the following ways: Mode of filing the complaint with stock broker Investor can approach the Stock Broker at the designated Investor Grievance e-mail ID of the stock broker. The Stock Broker will strive to redress the grievance immediately, but not later than 21 days of the receipt of the grievance Mode of filing the complaint with stock exchanges i. SCORES 2.0 (a web based centralized grievance redressal system of SEBI) (https://scores.sebi.gov.in) Two level review for complaint/grievance against stock broker:  First review done by Designated body/Exchange  Second review done by SEBI ii. Emails to designated email IDs of Exchange 2. Online Dispute If the Investor is not satisfied with the resolution Resolution (ODR) provided by the Market Participants, then the platform for online Investor has the option to file the complaint/ Conciliation and grievance on SMARTODR platform for its resolution Arbitration through online conciliation or arbitration. 3. Steps to be followed in 1. Investor to approach Market Participant for ODR for Review, redressal of complaint Conciliation and Arbitration 2. If investor is not satisfied with response of Market Participant, he/she has either of the following 2 options: Page 7 of 11i. May escalate the complaint on SEBI SCORES portal. ii. May also file a complaint on SMARTODR portal for its resolution through online conciliation and arbitration. 3. Upon receipt of complaint on SMARTODR portal, the relevant MII will review the matter and endeavor to resolve the matter between the Market Participant and investor within 21 days. 4. If the matter could not be amicably resolved, then the matter shall be referred for conciliation. 5. During the conciliation process, the conciliator will endeavor for amicable settlement of the dispute within 21 days, which may be extended with 10 days by the conciliator with consent of the parties to dispute. 6. If the conciliation is unsuccessful, then the investor may request to refer the matter for arbitration. 7. The arbitration process to be concluded by arbitrator(s) within 30 days, which is extendable by 30 days with consent of the parties to dispute. 8. Handling of Investor’s claims / complaints in case of default of a Trading Member / Clearing Member (TM/CM) Default of TM/CM Following steps are carried out by Stock Exchange for benefit of investor, in case stock broker defaults: • Circular is issued to inform about declaration of Stock Broker as Defaulter. • Information of defaulter stock broker is disseminated on Stock Exchange website. • Public Notice is issued informing declaration of a stock broker as defaulter and inviting claims within specified period. • Intimation to clients of defaulter stock brokers via emails and SMS for facilitating lodging of claims within the specified period. Page 8 of 11Following information is available on Stock Exchange website for information of investors: • Norms for eligibility of claims for compensation from IPF. • Claim form for lodging claim against defaulter stock broker. • FAQ on processing of investors’ claims against Defaulter stock broker. • Provision to check online status of client’s claim. • Standard Operating Procedure (SOP) for handling of Claims of Investors in the Cases of Default by Brokers • Claim processing policy against Defaulter/Expelled members • List of Defaulter/Expelled members and public notice issued Page 9 of 11Annexure – B Format for Investor Complaints Data to be displayed by Stock Brokers on their respective websites Data for every month ending S Receive Carried Receive Total Resolve Pending at the Average N d from forwar d Pendin d* end of the Resoluti d from during g month** on time^ previou the (in days) month s month Pendin Pendin g g for f more or than 3 month less s than 3 month s 1 2 3 4 5 6 7 8 1 Directly from Investors 2 SEBI (SCORE S 2.0) 3 Stock Exchang es 4 Other Sources (if any) 5 Grand Total Page 10 of 11Trend of monthly disposal of complaints SN Month Carried forward Received Resolved* Pending** from previous month 1 2 3 4 5 6 1 April -YYYY 2 May-YYYY 3 June-YYYY 4 July-YYYY …. ….. March-YYYY Grand Total *Should include complaints of previous months resolved in the current month, if any. **Should include total complaints pending as on the last day of the month, if any. ^Average resolution time is the sum total of time taken to resolve each complaint in the current month divided by total number of complaints resolved in the current month. Trend of annual disposal of complaints SN Year Carried Received Received Pending at the forward from during the during the end of the previous year year year year 1 2021-22 2 2022-23 3 2023-24 4 2024-25 Grand Total Page 11 of 11