Trading in stock market
SEBI
had made mandatory rules for brokers to maintain safe online share trading.
Many cases has been reported where brokers exploiting the investors because few
investors are unaware of their rights. In this article we can see how you can
avoid falling into these traps.
Initial
pitfall occurs at time when you get ready to open a trading account with a
broker. There you are given a lengthy application form and an agreement booklet
with clauses in small print. None pays much patience to go through the printed
document and will just sign it where it is noted. You are committing a huge
mistake by not reading the clauses as it can harm you in future.
Then
what should you do?
You should pay attention to the power of
attorney section. It is the power of attorney that allows the broker to
transact on behalf of you. By signing on the power of attorney pages, you are
signing your rights away. SEBI had issued new guidelines for PoA to
intermediaries as a result of plenty of complaints of misuse and these rules had
curtailed some actions of the broker to ensure investor security. stock broker in Kochi
can transfer the shares sold by you to stock exchange, could pledge your stocks
to meet your margin requirements, can also transfer funds from your bank
account for your settlement obligations and margin requirements etc.
There are investors who blindly sign
brokerage firm and give PoA for moving funds from their bank accounts, as it
seems very convenient for them. It is a wrong decision and could bring in harm
to you.