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STOCK BROKER -EXPLAINED

A stockbroker is an individual / organization who are specially given license to participate in the securities market on behalf of clients. The stockbroker has the role of an agent. When the Stockbroker acts as agent for the buyers and sellers of securities, a commission is charged for this service.

As an agent the stock broker is merely performing a service for the investor. This means that the broker will buy for the buyer and sell for the seller, each time making sure that the best price is obtained for the client.

An investor should regard the stockbroker as one who provides valuable service and information to assist in making the correct investment decision. They are adequately qualified to provide answers to a number of questions that the investor might need answers to and to assist in participating in the regional market.

• Are they governed by any Rules and Regulations?

Of course, yes. Stock brokers are governed by SEBI Act, 1992, Securities Contracts (Regulation) Act, 1956, Securities and Exchange Board of India [SEBI (Stock brokers and Sub brokers) Rules and Regulations, 1992], Rules, Regulations and Bye laws of stock exchange of which he is a member as well as various directives of SEBI and stock exchange issued from time to time. Every stock broker is required to be a member of a stock exchange as well as registered with SEBI. Examine the SEBI registration number and other relevant details can be found out from the registration certificate issued by SEBI.

• How do I know whether a broker is registered or not?

Every broker displays  registration details on their website and on all the official documents. You can confirm the registration details on SEBI website. The SEBI website provides the details of all registered brokers. A broker’s registration number begins with the letters “INB” and that of a sub broker with the letters “INS”.

• What are the documents to be signed with stock broker?

Before start of trading with a stock broker, you are required to furnish your details such as name, address, proof of address, etc. and execute a broker client agreement. You are also entitled to a document called ‘Risk Disclosure Document’, which would give you a fair idea about the risks associated with securities market. You need to go through all these documents carefully.

SUB BROKERS

According to the BSE website – “Sub-broker” means any person not being a member of a Stock Exchange who acts on behalf of a member-broker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such member-brokers.

All Sub-brokers are required to obtain a Certificate of Registration from SEBI without which they are not permitted to deal in securities. SEBI has directed that no broker shall deal with a person who is acting as a sub-broker unless he is registered with SEBI and it shall be the responsibility of the member-broker to ensure that his clients are not acting in the capacity of a sub-broker unless they are registered with SEBI as a sub-broker.

It is mandatory for member-brokers to enter into an agreement with all the sub-brokers. The agreement lays down the rights and responsibilities of member-brokers as well as sub-brokers.

STOCK BROKERS IN INDIA.

There are a number of broking houses all over India. Many of them have International presence too. Following are some of the leading Stock Broking firms in India.

• IndiaInfoline

• ICICIdirect

• Share khan

• India bulls

• Geojit Securities

• HDFC

• Reliance Money

• Religare

• Angel Broking

Investors have to check the broker’s terms and conditions and decide about opening a trading account. Only Govt. tax rates like, security transaction tax, stamp duty and service tax are uniform other charges like brokerage for delivery trades, intraday trades, minimum transaction charge, statement charges, DP charges, annual maintenance charges etc., may vary from one broker to another.