Trading and Investing: A Brief Note on Dos and Don’ts

Markets regulator the Securities and Exchange Board of India (SEBI) has been taking adequate steps aimed at facilitating investor awareness while introducing more transparency to investing. As an individual investor, it is crucial to take into account a few points while trading and investing.

First and foremost, maintain the secrecy of the login credentials that is username and password for internet trading, as they are responsible for all trading transactions. The password is required to be unique with an adequate combination of numerical, capital and small letters along with special characters. Also, change passwords periodically to ensure adequate security.

If trading through a financial solution company or broker, ensure that contract notes are received within 24 hours of the trades.

Maintain a regular check of the trading and depository account balance or holdings. In case of any discrepancies, bring it to the notice of the concerned authority in a brokerage firm or financial solution company. In this regard, keep the required email addresses handy.

From time to time, check messages sent by exchanges and depositories every week regarding funds and securities balance reported by the trading member. Also, compare it with the weekly statement of account sent by a broker firm of a financial solution company. In case of any discrepancies, inform the exchange immediately.

Most important, understand the associated risk factors thoroughly before starting trades in futures and options (F&O), margin trading, currency and commodity segments.

Rely on instincts and avoid believing in baseless and false assurances of guaranteed returns. There is no assurance of guaranteed or fixed periodic returns from the capital market. Brokers or their authorised persons or any of their associates are not authorised to offer such assurance and promises.

The employees, authorised persons, or any of their associates of a brokerage firm or financial solutions company are not permitted to do trading transactions on behalf of an investor. Avoid giving any blanket permission to dealers or officials under any circumstances.

At all costs, avoid signing and delivering blank delivery instruction slips (DIS) for depository transactions to any depository participant or broker.

Essentially, avoid giving any cash for the settlement of trading activities or obligations. Ensure not to issue cheques in the name of an authorised person or employees or an associate of the broker.

Finally, abstain from sharing the internet trading login password with others, including brokers or their authorised persons or any of their associates under any circumstances.

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