Annexure – I Do’s and Don’t’s of Investing/ trading in securities

Annexure – I: Do’s and Don’ts of Investing/Trading in Securities

Investment Guidance: Consult with a SEBI registered Investment Advisor for investment needs.
Investment Objective: Invest in a scheme/product based on investment objective and risk appetite.
Contract Note: Insist on a valid contract note for trades done within 24 hours of the transaction.
Portfolio Tracking: Keep track of the portfolio in the demat account on a regular basis.
Document Review: Read all documents carefully before signing them.
Charge Awareness: Note all applicable charges/fees/brokerage and keep a record.
Record Keeping: Keep a record of signed documents, account statements, contract notes, and payments.
Financial Review: Periodically review financial needs and the portfolio to ensure goals are achievable.
Cash Transactions: Always pay for transactions using banking channels, avoiding cash dealings.
Information Update: Inform the stock broker/depository participant of any changes in address, bank details, email, or mobile number.
Nomination Facility: Avail of the nomination facility for all investments, with multiple nominations allowed in demat accounts.
Account Settlement: Get running accounts settled periodically (every 30 or 90 days).
Account Checking: Regularly check the running account and trading account.
Communication Review: Regularly review daily SMS and email from the Exchange regarding trades and balances.

Key Don’ts

Borrowing: Don’t borrow money for investment.
Unregistered Brokers: Don’t deal with unregistered brokers or intermediaries.
Excessive Brokerage: Don’t pay more than the agreed brokerage/charges.
Blank Documents: Don’t sign blank forms or Delivery Instruction Slips.
Power of Attorney: Don’t issue a general Power of Attorney (PoA); instead, issue a specific one if necessary.
Dispute Resolution: In case of disputes, file a written complaint to the intermediary/Stock Exchange/SEBI within a reasonable time.
Dabba Trading: Avoid Dabba Trading as it is illegal and offers no benefits of safe and guaranteed trades.
Hot Tips: Don’t rely on hot tips for investment decisions.
Password Sharing: Never share the password for the online account with anyone and change passwords frequently.
Ponzi Schemes: Don’t fall prey to Ponzi schemes, unregistered chit funds, or unregistered deposit schemes.
KYC Documents: Don’t forget to strike off blank spaces in KYC documents.
Digital Contracts: Don’t opt for digital contracts if not familiar with computers.

Annexure - II: Rights and Obligations of Investors

Rights of Investors

Unique Client Code (UCC): Get a UCC from the broker.
KYC Documents: Get a copy of KYC and other documents executed from the intermediary.
Trade Execution: Get trades executed only in the investor’s UCC.
Order Placement: Place orders after meeting the agreed norms with the Member.
Best Price: Get the best price for trades.
Contract Note: Receive a contract note for trades executed.
Charge Details: Ask for details of charges levied.
Funds and Securities: Receive funds and securities on time.
Account Statements: Receive statements of accounts from the trading member.
Account Settlement: Ask for settlement of accounts.
Scheduled Statements: Get statements as per the agreed schedule.

Obligations of Investors

KYC Execution: Execute Know Your Client (KYC) documents and provide supporting documents.
Voluntary Conditions: Understand voluntary conditions agreed with the trading member.
Rights Understanding: Understand the rights given to the Trading Members.
Risk Disclosure: Read the Risk Disclosure Document.
Product Understanding: Understand the product and operational framework and deadlines.
Margin Payment: Pay margins in time.
Funds and Securities Payment: Pay funds and securities for settlement in time.
Trade Verification: Verify details of trades.
Account Verification: Verify bank account and DP account for funds and securities movement.
Contract Note Review: Review contract notes and statements of account.

Annexure - III: Caution against Unregistered Investment Advisers

SEBI Registration: Check if the Investment Adviser is registered with SEBI under the SEBI (Investment Advisers) Regulations, 2013.
Investment Advice: Be cautious of entities offering investment advice without SEBI registration.
Code of Conduct: Ensure the Investment Adviser follows the Code of Conduct.
Malpractices: Be aware of malpractices such as assured returns, exorbitant fees, mis-selling, and poor service.
SEBI Website: Check the list of registered Investment Advisers on the SEBI website.

Do’s and Don’ts while Dealing with Investment Advisers

Do’s

Deal with SEBI registered Investment Advisers.
Check the SEBI registration number.
Ensure the Investment Adviser has a valid registration certificate.
Pay only advisory fees through banking channels and maintain receipts.
Insist on risk profiling before accepting investment advice.
Ask relevant questions and clear doubts with the Investment Adviser.
Assess the risk-return profile of the investment.
Insist on getting terms and conditions in writing.
Be vigilant in transactions and approach authorities for redressal of grievances.

Don’ts

Don’t deal with unregistered entities.
Don’t fall for stock tips or assured returns.
Don’t give money to the Investment Adviser for investment.
Don’t pay more than agreed advisory fees.
Don’t fall prey to luring advertisements or market rumors.
Don’t take decisions based solely on phone calls or messages.
Don’t fall for limited period discounts or incentives.
Don’t rush into investments that don’t match your risk appetite and goals.

Annexure - IV: Unified Payment Interface (UPI) in ASBA

UPI Mechanism: Use UPI as a payment mechanism for investing in IPOs.
UPI Process: The process involves bidding through UPI, blocking of funds, and payment for shares post-allocation.
UPI ID: Create a UPI ID with a bank mentioned in the list of Self-Certified Syndicate Banks (SCSBs).
Mobile Applications: Use only authorized mobile applications for UPI transactions.
Syndicate Members: Submit application forms with UPI as a payment mechanism only to Syndicate Members or registered intermediaries.
IPO Application Limit: The limit for IPO application is Rs. 2 Lakhs per transaction on UPI, available only for retail individual investors.

Annexure - V: Glossary

AMC: Annual Maintenance Charges
ASBA: Application Supported by Blocked Amount
BSDA: Basic Services Demat Account
CAS: Consolidated Account Statement
CDSL: Central Depository Services (India) Limited
Demat: Dematerialized
DP: Depository Participant
IA: Investment Advisers
IGRC: Investor Grievance Redressal Committee
IGRP: Investor Grievance Resolution Panel
IPO: Initial Public Offer
KIN: KYC Identification Number
KYC: Know Your Client
MII: Market Infrastructure Institutions
MSE: Metropolitan Stock Exchange of India Limited
NSDL: National Securities Depository Limited
NSE Ltd.: National Stock Exchange of India Limited
PAN: Permanent Account Number
PoA: Power of Attorney
SCORES: SEBI Complaints Redress System
SEBI: Securities and Exchange Board of India
SMS: Short Message Service
UCC: Unique Client Code
UID: Unique Identification

Investor Awareness Initiatives of SEBI

Resource Persons Programs: Financial education programs conducted by SEBI empanelled Resource Persons.
Visit to SEBI Programs: Investor awareness programs for students visiting SEBI offices.
Regional Seminars: Investor education programs conducted by SEBI in coordination with market intermediaries.
Investor Awareness Programs: Programs conducted by SEBI recognized Investors Associations and Commodities Derivatives Trainers.
SMARTs: Investor education programs in Securities Market conducted by SEBI recognized Securities Market Trainers.

FAQs and Online Resources

SEBI Website: www.sebi.gov.in
Investor Website: http://investor.sebi.gov.in
BSE Website: www.bseindia.com
NSE Website: www.nseindia.com
NSDL Website: www.nsdl.co.in
CDSL Website: www.cdslindia.com
MSE Website: www.msei.in

Contact Information

SEBI: Securities and Exchange Board of India, SEBI Bhavan, Plot No.C4-A,'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051
SEBI Helpline: 1800 22 7575 and 1800 266 7575
SEBI Website: www.sebi.gov.in
BSE Ltd.: 25th Floor, P. J. Towers, Dalal Street, Fort, Mumbai - 400 001
NSDL: National Securities Depository Limited, Trade World, ‘A’ Wing, 4th & 5th Floors, Kamala Mills Compound, Lower Parel, Mumbai - 400 013
NSE Ltd.: National Stock Exchange of India Ltd., Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051
CDSL: Central Depository Services (India) Limited, Marathon Futurex, A Wing, 25th Floor, Mafatlal Mills Compound, N. M. Joshi Marg, Lower Parel (E), Mumbai - 400 013
MSE: Metropolitan Stock Exchange of India Limited, 205 A, 2nd floor, Piramal Agastya Corporate Park, Sunder Bung Lane, Kamani Junction, L.B.S. Road, Kurla-West, Mumbai - 400 070.