Share Market

It is important to know how to deal with brokers as they are the middlemen from the investor with the stock market, as the stock market is a virtual place where there is no direct contact between buyer and seller. Unlike the normal market, where we get a wide range of goods and services displayed in front of us, in the share markets securities are traded in these markets. The security mentioned here refers to the different shares, stock, bonds, debentures, etc of companies. In fact, we use the term invest to signify the purchase of any securities as we do not buy or purchase the securities like shares and stocks rather we invest in it. Every transaction in the stock exchange is carried out through licensed members called brokers. That is where the importance of how to deal with the brokers comes in.

The brokers being the middlemen are the person who carries out certain functions on behalf of his clients. Thus, it is important that you learn how to deal with your broker and sub broker. The Securities and Exchange Board of India has laid down certain Guidelines of the Do’s and the Don’ts for Dealing with Brokers & Sub-brokers.

Among the list of the Do’s includes the need to deal with only the SEBI-registered brokers/sub-brokers. Besides, ensuring that the broker/sub-broker one deals with has a valid SEBI registration certificate and is permitted to transact in the market. One must also state clearly to the broker/sub-broker who will be placing orders on your behalf and enter into an agreement with your broker/sub-broker, by setting out the terms and conditions clearly.

There are also the don’ts which SEBI has cautioned on dealing with the brokers such not to deal with the unregistered broker/sub-broker and pay more than the approved brokerage to the intermediary. Never to undertake deals on behalf of others and not to neglect to set out in writing orders for higher value given earlier over the phone and never sign blank delivery instruction slip(s) while meeting security pay-in obligation. One should also not accept unsigned/duplicate contract note/confirmation memo and accept contract note/confirmation memo signed by any unauthorized person.

To also ensure that the payment/deliveries of securities to the broker/ sub-broker be paid in time and never get carried away by luring advertisements and be mislead by market rumors and stay away from transactions, which looks shady and is not transparent.