PremiumNEW DELHI : In the aftermath of the Karvy Stock Broking scandal, the National Stock Exchange (NSE) has issued an advisory to investors on how to keep their stocks safe. The stock exchange has asked investors to ensure that they receive pay-outs within a day and that funds and securities are not kept idle with the stock broker.
Here is the full advisory:
1) Ensure that pay-out of funds/securities is received in your account within 1 working day from the date of pay-out.
2) Be careful while executing the PoA (Power of Attorney) - specify all the rights that the stock broker can exercise and timeframe for which PoA is valid. It may be noted that PoA is not a mandatory requirement as per SEBI / Exchanges.
3) Register for online applications viz Speed-e and Easiest provided by Depositories for online delivery of securities as an alternative to PoA.
4) Ensure that you receive Contract Notes within 24 hours of your trades and Statement of Account at least once in a quarter from your Stock Broker.
5) Please note that securities provided by you towards margin are not permitted to be pledged by your Stock Broker for raising funds.
6) If you have opted for running account, please ensure that the stock broker settles your account regularly and in any case not later than 90 days (or 30 days if you have opted for 30 days settlement).
7) Do not keep funds and securities idle with the Stock Broker.
8) Regularly login into your account to verify balances and verify the demat statement received from depositories for correctness.
9) Check messages sent by Exchanges on a monthly basis regarding funds and securities balances reported by the trading member and immediately raise a concern if you notice a discrepancy.
10) Always keep your contact details viz Mobile number / Email ID updated with the stock broker. You may take up the matter with Stock Broker / Exchange if you are not receiving the messages from Exchange / Depositories regularly.
11) If you observe any discrepancies in your account or settlements, immediately take up the same with your stock broker and if the Stock Broker does not respond, with the Exchange/Depositories.
With effect from this Monday, both the NSE and BSE have suspended Karvy due to non-compliance of regulatory provisions.
Last month, the Securities and Exchange Board of India (Sebi) had barred Karvy from taking new brokerage clients and also prevented it from using the power of attorneys (PoA). SEBI had found that the Hyderabad-based brokerage firm had misused client securities and routed it for other purposes.
The market regulator had barred the broking firm from taking new clients on board and also directed the exchanges to initiate disciplinary proceedings against the firm.
Karvy took loans to the tune of ₹600 crore by pledging securities worth more than ₹2,300 crore of 95,000 clients with lenders. Out of them, nearly 90% of the clients have got back their securities, which were were illegally transferred by the Karvy to its own account.
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