Reading 50 pages and signing as many times: This is what it takes to open a trading account with a broking company now. However, the process is set to become simpler.
Taking into account the grievances of investors, the capital market regulator, the Securities and Exchange Board of India, issued a circular on 22 August which aims to simplify the account opening process.
The regulator has asked broking firms to reduce the number of pages of the account opening form and signatures required making the process much simpler.
At present, if a customer wants to trade in the cash segment of the National Stock Exchange, the derivatives segment of the Bombay Stock Exchange and the United Stock Exchange, she is required to sign three separate agreements. But under the new system, a customer will be required to sign a unified agreement. “The broader contours of agreements for each of the stock exchanges are the same. Thus, the regulator has said that a customer only needs to mention the names of the stock exchanges and segments he would deal in a common agreement,” says Sandeep Arora, chief operating officer, Union Financial Intermediaries Pvt. Ltd, a Delhi-based broking firm.
However, you may still need to pen 10-20 signatures.
If you open a broking account now, you are only told about the account opening charges unless you ask about the other charges applicable. However, broking houses will now have to mention both mandatory and non-mandatory charges upfront. Mandatory charges are fixed by the government which include stamp duty, securities transaction tax and service tax while non-mandatory charges include brokerage, annual maintenance fee and interest charged on non-payment of dues, among others.
Also, till now you are required to sign documents stating investors’ rights and obligations, but rights and obligations of brokers and sub-brokers are not included. Under the new system, even their rights and obligations will be mentioned.
Another area which the regulator has addressed in the circular is grievance redressal. In order to help investors, trading account opening documents will now have contact details of senior officials of the company along with contact details of investor grievance cells of various stock exchanges.
Though the guidelines are supposed to be effective from 1 September, because of logistics and other problems broking houses may take sometime to implement them. “After getting nod from the legal department, the documents will go to print and then will be sent to various offices of the company,” says a senior official of a Mumbai-based broking firm who did not want to be named.
The brokerages are expected to be ready with the new account opening forms in 10-15 days.
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