Publishing Investor Charter and disclosure of Investor Complaints by Stock Brokers on their websites

CIRCULAR
SEBI/HO/MIRSD/DOP/P/CIR/2021/676 December 02, 2021 To, All Recognized Stock Exchanges Stock Brokers through Recognized Stock Exchanges Dear Sir/Madam, Subject: Publishing Investor Charter and disclosure of Investor Complaints by Stock Brokers on their websites
1) In order to facilitate investor awareness about various activities which an investor
deals with such as opening of account, KYC and in person verification, complaint resolution, issuance of contract notes and various statements, process for dematerialization/rematerialization etc., SEBI, in consultation with the market participants, has prepared an Investor Charter for Stock Brokers inter-alia detailing the services provided to Investors, Rights of Investors, various activities of Stock Brokers with timelines, DOs and DON’Ts for Investors and Grievance Redressal Mechanism which is placed at Annexure ‘A’.
2) In this regard, Stock Exchanges are directed to advise Stock Brokers to bring the
Investor Charter for Stock Brokers to the notice of their clients (existing as well as new clients) through disclosing the Investor Charter on their respective websites, making them available at prominent places in the office, provide a copy of Investor Charter as a part of account opening kit to the clients, through e-mails/ letters etc.
3) Additionally, in order to bring about transparency in the Investor Grievance Redressal
Mechanism, it has been decided that all the Stock Brokers shall disclose on their respective websites, the data on complaints received against them or against issues dealt by them and redressal thereof, latest by 7th of succeeding month, as per the format enclosed at Annexure ‘B’ to this circular.

4) These disclosure requirements are in addition to those already mandated by SEBI.
The provisions of this circular shall come into effect from January 01, 2022.
5) Stock Exchanges are hereby directed to bring the provisions of this circular to the
notice of the Stock Brokers.
6) This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets. Yours faithfully, Narendra Rawat General Manager Market Intermediaries Regulation and Supervision Department

Annexure-A
Investor Charter – Stock Brokers
VISION
To follow highest standards of ethics and compliances while facilitating the trading by clients in securities in a fair and transparent manner, so as to contribute in creation of wealth for investors. MISSION i) To provide high quality and dependable service through innovation, capacity enhancement and use of technology. ii) To establish and maintain a relationship of trust and ethics with the investors. iii) To observe highest standard of compliances and transparency. iv) To always keep ‘protection of investors’ interest’ as goal while providing service. Services provided to Investors

• Execution of trades on behalf of investors.

• Issuance of Contract Notes.

• Issuance of intimations regarding margin due payments.

• Facilitate execution of early pay-in obligation instructions.

• Settlement of client’s funds.

• Intimation of securities held in Client Unpaid Securities Account (CUSA) Account.

• Issuance of retention statement of funds.

• Risk management systems to mitigate operational and market risk.

• Facilitate client profile changes in the system as instructed by the client.

• Information sharing with the client w.r.t. exchange circulars.

• Redressal of Investor’s grievances.
  Rights of Investors

• Ask for and receive information from a firm about the work history and background of
  the person handling your account, as well as information about the firm itself.

• Receive complete information about the risks, obligations, and costs of any
  investment before investing.

• Receive recommendations consistent with your financial needs and investment
  objectives.

• Receive a copy of all completed account forms and agreements.

• Receive account statements that are accurate and understandable.

• Understand the terms and conditions of transactions you undertake.

• Access your funds in a timely manner and receive information about any restrictions
  or limitations on access.

• Receive complete information about maintenance or service charges, transaction or
  redemption fees, and penalties.

• Discuss your grievances with compliance officer of the firm and receive prompt
  attention to and fair consideration of your concerns.
  Various activities of Stock Brokers with timelines S.No. Activities Expected Timelines
  1. KYC entered into KRA System and
  CKYCR
  10 days of account opening
  2. Client Onboarding Immediate, but not later than one week
  3. Order execution Immediate on receipt of order, but not
  later than the same day
  4. Allocation of Unique Client Code Before trading
  5. Copy of duly completed Client
  Registration Documents to clients
  7 days from the date of upload of Unique
  Client Code to the Exchange by the trading member
  6. Issuance of contract notes 24 hours of execution of trades
  7. Collection of upfront margin from
  client
  Before initiation of trade
  8. Issuance of intimations regarding
  other margin due payments
  At the end of the T day
  9. Settlement of client funds 30 days / 90 days for running account
  settlement (RAS) as per the preference of client.
  If consent not given for RAS – within 24 hours of pay-out
  10. ‘Statement of Accounts’ for Funds,
  Securities and Commodities
  Weekly basis (Within four trading days of following week)
  11. Issuance of retention statement of
  funds/commodities
  5 days from the date of settlement
  12. Issuance of Annual Global
  Statement
  30 days from the end of the financial year
  13. Investor grievances redressal 30 days from the receipt of the complaint
  DOs and DON’Ts for Investors
  DOs DON’Ts
  1. Read all documents and conditions being
  agreed before signing the account opening form.
  2. Receive a copy of KYC, copy of account
  opening documents and Unique Client Code.
  3. Read the product / operational framework /
  timelines related to various Trading and
  Clearing & Settlement processes.
  1. Do not deal with unregistered
  stock broker.
  2. Do not forget to strike off
  blanks in your account opening and KYC.
  3. Do not submit an incomplete
  account opening and KYC form.

4. Receive all information about brokerage, fees
and other charges levied.
5. Register your mobile number and email ID in
your trading, demat and bank accounts to get regular alerts on your transactions.
6. If executed, receive a copy of Power of
Attorney. However, Power of Attorney is not a mandatory requirement as per SEBI / Stock Exchanges. Before granting Power of Attorney, carefully examine the scope and implications of powers being granted.
7. Receive contract notes for trades executed,
showing transaction price, brokerage, GST and STT etc. as applicable, separately, within 24 hours of execution of trades.
8. Receive funds and securities / commodities on
time within 24 hours from pay-out.
9. Verify details of trades, contract notes and
statement of account and approach relevant authority for any discrepancies. Verify trade details on the Exchange websites from the trade verification facility provided by the Exchanges.
10. Receive statement of accounts periodically. If
opted for running account settlement, account has to be settled by the stock broker as per the option given by the client (30 or 90 days).
11. In case of any grievances, approach stock
broker or Stock Exchange or SEBI for getting the same resolved within prescribed timelines.
4. Do not forget to inform any
change in information linked to trading account and obtain confirmation of updation in the system.
5. Do not transfer funds, for the
purposes of trading to anyone other than a stock broker. No payment should be made in name of employee of stock broker.
6. Do not ignore any emails /
SMSs received with regards to trades done, from the Stock Exchange and raise a concern, if discrepancy is observed.
7. Do not opt for digital contracts,
if not familiar with computers.
8. Do not share trading
password.
9. Do not fall prey to fixed /
guaranteed returns schemes.
10. Do not fall prey to fraudsters
sending emails and SMSs luring to trade in stocks / securities promising huge profits.
11. Do not follow herd mentality
for investments. Seek expert and professional advice for your investments. Grievance Redressal Mechanism Level 1 – Approach the Stock Broker at the designated Investor Grievance e-mail ID of the stock broker. The Stock Broker will strive to redress the grievance immediately, but not later than 30 days of the receipt of the grievance. Level 2 – Approach the Stock Exchange using the grievance mechanism mentioned at the website of the respective exchange. Complaints Resolution Process at Stock Exchange explained graphically:

Timelines for complaint resolution process at Stock Exchanges against stock brokers S. No. Type of Activity Timelines for activity

1. Receipt of Complaint Day of complaint (C Day).
2. Additional information sought from the
   investor, if any, and provisionally forwarded to stock broker. C + 7 Working days.
3. Registration of the complaint and
   forwarding to the stock broker.
   C+8 Working Days i.e. T day.
4. Amicable Resolution. T+15 Working Days.
5. Refer to Grievance Redressal
   Committee (GRC), in case of no amicable resolution.
   T+16 Working Days.
6. Complete resolution process post
   GRC.
   T + 30 Working Days.
7. In case where the GRC Member
   requires additional information, GRC order shall be completed within. T + 45 Working Days.
8. Implementation of GRC Order. On receipt of GRC Order, if the order is in
   favour of the investor, debit the funds of the stock broker. Order for debit is issued immediately or as per the directions given in GRC order.
9. In case the stock broker is aggrieved
   by the GRC order, will provide intention to avail arbitration Within 7 days from receipt of order

• Shared with broker
• Broker Explanation
  shared with client
• Amicable resolution
  attempted
  Client not satisfied with explanation from Broker
• Place before GRC
• GRC order acceptable
  by client, the complaint stands resolved
  Client not satisfied with
  GRC Order
• File for Arbitration
• Arbitration Award
  passed
  Client not staisfied with
  Arbitration Award
• File for Appellate
  Arbitration
• Appellate Award
  passed
  Client not satisfied with
  Appellate Arbitration Award
  Complaint Lodged by Client
  Client may file suit before appropriate Court

S. No. Type of Activity Timelines for activity 10.
If intention from stock broker is received and the GRC order amount is upto Rs.20 lakhs Investor is eligible for interim relief from Investor Protection Fund (IPF).The interim relief will be 50% of the GRC order amount or Rs.2 lakhs whichever is less. The same shall be provided after obtaining an Undertaking from the investor. 11. Stock Broker shall file for arbitration Within 6 months from the date of GRC recommendation 12. In case the stock broker does not file for arbitration within 6 months The GRC order amount shall be released to the investor after adjusting the amount released as interim relief, if any. Handling of Investor’s claims / complaints in case of default of a Trading Member / Clearing Member (TM/CM) Default of TM/CM Following steps are carried out by Stock Exchange for benefit of investor, in case stock broker defaults:

• Circular is issued to inform about declaration of Stock Broker as Defaulter.
• Information of defaulter stock broker is disseminated on Stock Exchange website.
• Public Notice is issued informing declaration of a stock broker as defaulter and inviting
  claims within specified period.
• Intimation to clients of defaulter stock brokers via emails and SMS for facilitating
  lodging of claims within the specified period.
  Following information is available on Stock Exchange website for information of investors:
• Norms for eligibility of claims for compensation from IPF.
• Claim form for lodging claim against defaulter stock broker.
• FAQ on processing of investors’ claims against Defaulter stock broker.
• Provision to check online status of client’s claim.
  Level 3 – The complaint not redressed at Stock Broker / Stock Exchange level, may be lodged with SEBI on SCORES (a web based centralized grievance redressal system of SEBI) @ https://scores.gov.in/scores/Welcome.html

Annexure – B
Format for Investor Complaints Data to be displayed by Stock Brokers on their respective websites Data for every month ending S N Receive d from Carried forwar d from previou s month Receive d during the month Total Pendin g Resolve d* Pending at the end of the month Average Resoluti on time^ (in days) Pendin g for less than 3 month s Pendin g for more than 3 month s 1 2 3 4 5 6 7 8 1 Directly from Investors

2 SEBI
(SCORE
S)

3 Stock
Exchang es

4 Other
Sources
(if any)

5 Grand
Total

Trend of monthly disposal of complaints
SN Month Carried forward from previous month Received Resolved* Pending 1 2 3 4 5 6

1 April -YYYY
2 May-YYYY
3 June-YYYY
4 July-YYYY
….
…..
March-YYYY
Grand Total
*Should include complaints of previous months resolved in the current month, if any. Should include total complaints pending as on the last day of the month, if any. ^Average resolution time is the sum total of time taken to resolve each complaint in the current month divided by total number of complaints resolved in the current month. Trend of annual disposal of complaints SN Year Carried forward from previous year Received during the year Resolved during the year Pending at the end of the year 1 2017-18 2 2018-19 3 2019-20 4 2020-21 5 2021-22 Grand Total