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Broker Norms
Broker Norms

This document is issued by the member of the National Stock Exchange of India Ltd. (hereinafter referred to as “NSE”) / Bombay Stock ExchangeLtd. (hereinafter referred to as “BSE”) which has been formulated by the Exchanges in coordination with the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) and contains important information on trading in Equities and F&O Segments of NSE / BSE. All prospective constituents should read this document before trading on Capital Market/Cash Segment or F&O segment of the Exchanges. NSE/BSE/SEBI does neither singly or jointly and expressly nor impliedly guarantee nor make any representation concerning the completeness, the adequacy or accuracy of this disclosure document nor has NSE / BSE/SEBI endorsed or passed any merits of participating in the trading segments. This brief statement does not disclose all the risks and other significant aspects of trading. In the light of the risks involved, you should undertake transactions only if you understand the nature of the contractual relationship into which you are entering and the extent of your exposure to risk. You must know and appreciate that investment in equity shares, derivative or other instruments traded on the Stock Exchange(s), which have varying element of risk, is generally not an appropriate avenue for someone of limited resources/limited investment and/or trading experience and low risk tolerance. You should therefore carefully consider whether such trading is suitable for you in the light of your financial condition. In case you trade on NSE/BSE and suffer adverse consequences or loss, you shall be solely responsible for the same and NSE/ BSE, its Clearing Corporation/Clearing House and/ or SEBI shall not be responsible, in any manner whatsoever, for the same and it will not be open for you to take a plea that no adequate disclosure regarding the risks involved was made or that you were not explained the full risk involved by the concerned member. The constituent shall be solely responsible for the consequences and no contract can be rescinded on that account. You must acknowledge and accept that there can be no guarantee of profits or no exception from losses while executing orders for purchase and/or sale of a security or derivative being traded on NSE/BSE. It must be clearly understood by you that your dealings on NSE / BSE through a member shall be subject to your fulfilling certain formalities set out by the member, which may interalia include your filling the know your client form, client registration form, execution of an agreement, etc., and are subject to the Rules, Byelaws and Regulations of NSE/BSE and its Clearing Corporation, guidelines prescribed by SEBI and in force from time to time and Circulars as may be issued by NSE/BSE or its Clearing Corporation/Clearing House, in force from time to time. NSE / BSE does not provide or purport to provide any advice and shall not be liable to any person who enters into any business relationship with any trading member and/or sub-broker of NSE / BSE and/or any third party based on any information contained in this document. Any information contained in this document must, not be construed as business advice/ investment advice. No consideration to trade should be made without thoroughly understanding and reviewing the risks involved in such trading. If you are unsure, you must seek professional advice on the same. In considering whether to trade or authorize someone to trade for you, you should be aware of or must get acquainted with the following:


    1. Risk of Higher Volatility :

      Volatility refers to the dynamic changes in price that securities undergo when trading activity continues on the Stock Exchange. Generally, higher the volatility of a security/contract, greater is its price swings. There maybe normally greater volatility in thinly traded securities /contracts than in active securities / contracts: As a result of volatility, your order may only be partially executed or not executed at all, or the price at which your order got executed may be substantially different from the last traded price or change substantially thereafter, resulting in notional or real losses.

    2. Risk of Lower Liquidity :

      Liquidity refers to the ability of market participants to buy and/or sell securities / contracts expeditiously at a competitive price and with minimal price difference. Generally, it is assumed that more the numbers of orders available in a market, greater is the liquidity. Liquidity is important because with greater liquidity, it is easier for investors to buy and/or sell securities / contracts swiftly and with minimal price difference, and as a result, investors are more likely to pay or receive a competitive price for securities / contracts purchased or sold. There may be a risk of lower liquidity in some securities / contracts as compared to active securities / contracts; As a result, your order may only be partially executed, or may be executed with relatively greater price difference or may not be executed at all.

      1. Buying/selling without intention of giving and/ or taking delivery of a security, as part of a day trading strategy, may also result into losses, because in such a situation, stocks may have to be sold/purchased at a low/high prices, compared to the expected price levels, so as not to have any obligation to deliver/receive a security.

    3. Risk of Wider Spreads :

      Spread refers to the difference in best buy price and best sell price. It represents the differential between the price of buying a security and immediately selling it or vice versa. Lower liquidity and higher volatility may result in wider than normal spreads for less liquid or illiquid securities / contracts. This in turn will hamper better price formation.

    4. Risk-reducing orders :

      Most Exchanges have a facility for investors to place “limit orders”, ” stop loss orders” etc”. The placing of such orders (e.g., “stop loss order”, or “limit” orders) which are intended to limit losses to certain amounts may not be effective many a time because rapid movement in market conditions may make it impossible to execute such orders.

      1. "market" order will be executed promptly, subject to availability of orders on opposite side, without regard to price and that, while the customer may receive a prompt execution of a “market” order, the execution may be at available prices of outstanding orders, which satisfy the order quantity, on price time priority. It may be understood that these prices may be significantly different from the last traded price or the best price in that security.

      2. "Limit" order will be executed only at the “limit” price specified for the order or a better price. However, while the customer receives price prorection, there is a possibility that the order may not be executed at all.

      3. stop loss order is generally placed “away” ftom the current price of a stock / contract, and such order gets activated ‘if and when the stock / contract reaches, or trades. through, the stop price. Sell stop orders are entered ordinarily below the current price, and buy stop orders are entered ordinarily above the current price. When the stock reaches the pre-determined price, or trades through such price, the stop loss order converts to a market limit order and is executed at the limit or better. There is no assurance therefore that the limit order will be executable since a stock / contract might penetrate the predetermined price, in which case, the risk of such order not getting executed arises, just as with a regular limit order.

Prevent unauthorized transaction in your account: Update E-mail ID / Mobile number with your stockbroker. Receive alerts on your registered mobile number or email at the end of the day directly from exchange. Link PAN with Aadhaar : As per SEBI directive, link your PAN with Aadhaar before September 30, 2021 to keep using your trading account… – Issued in the Interest of Investors