Sebi tells brokers to send clients' monthly account statements


“...the broker should send all the clients a monthly statement... the retention of funds/securities, if any, by the broker should be duly explained in the statement,” Sebi said framing proposed guidelines for client registration and trading operations.

Time limit
Further, Sebi said in the case of any dispute arising out of the settlement, the client should bring it to the notice of the broker within seven working days of receiving the statement.

If the client requests for return of securities or funds lying to his credit with the broker, at any time within these seven days, the same shall be transferred by the broker within one working day from the date of receipt of the request. The market regulator said that comments are invited from the public on the proposal up to August 15, 2009.  Sebi further said the ‘running account authorisation’ should be dated and the clients can ask for their money any time.

Sebi further said the practice of creating email ids by the broker may be discontinued.
“The authorisation for receiving Electronic Contract Notes (ECN) should be signed by the client only and not by any authorised entity or attorney holder,” it added.

The market regulator said it was observed that the funds and securities of the clients lying with the brokers were prone to several risks and brokers were misusing them. “Most brokers are forcing clients to opt for ECN and are also creating email ids instead of using the email ids created and provided by the clients,” it said. There are concerns regarding actual receipt of e-mail id and password by clients, Sebi added.

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