MCX Client Account Opening Procedure Circulars 2013

MCX Stock Exchange Limited
Inspection Department
Ref: MCX-SX/INSP/945/2013
January 14, 2013
Sub: Applicability of Client Account Opening Procedure Circulars and enabling of

existing clients to trade in new segment/new exchange.
Members may note that the various SEBI circulars relating to Client Account Opening
Procedure as mentioned in Annexure I and which were forwarded by the Exchange
earlier shall be applicable to the Capital Market and Futures and Options Segments.
Enabling Constituents/Clients to trade on new segments / new exchange:
Members' attention is drawn to SEBI's circular no. CIR/MIRSD/16/2011 dated August
22, 2011, which mentions inter alia that any client of the member intending to trade in
any new segment/new exchange shall give a separate authorisation/letter to the
member indicating (by signing) the relevant segment/ exchange the client wishes to
trade in. The SEBI circular along with all annexures is annexed to this circular marked
as Annexure II.
An indicative format of the authorisation letter for enabling existing Constituents to trade
on new segments of the Exchange is annexed to this circular and marked as Annexure
III. Members may keep in mind their particular circumstances while finalizing and using
the same.
The members are advised to take note of the same and ensure compliance.
In case of any query, members may contact the Compliance Team of the Exchange on
022-6731 9088 or on: [email protected]
Leena Ranade
Manager
Encl:
1. Client Account Opening Procedure - Annexure I
2. SEBI circular No. CIR/MIRSD/16/2011 dated August 22, 2011- Annexure II
3. Indicative format of the authorisation letter - Annexure III
----------------------------------------------- Corporate office ------------------------------------------MCX Stock Exchange Limited
2nd Floor, Exchange Square Suren Road, Chakala, Andheri (East),
Mumbai 400 093
Tel.: 022 67319010, Fax: 022 67269576
www.mcx-sx.com email: [email protected]
Annexure III
Date:
To,
(Members Name)
(Address),
(Address)
Dear Sir / Madam,
Sub: Modification in the Common details/ additional details mentioned in the KYC
Ref: Client Code: ___________________
1. I / We_______________________________________ registered with you as a client
and wish to modify/add Trading Preference mentioned by me/us in the KYC forms
submitted to you at the time of my enrolment or at any time thereafter.
2. I wish to trade in :
Exchange
Segment
MCX Stock Exchange Ltd.
Equity
F&O
Currency
Derivatives
Signature
3. This letter is in addition to the authorization/preference given earlier by me/us to you

modifying my trading preferences.
4. I/We understand that the brokerage charged to me in the new segment/ new exchange
respective segment is specified below:
Segment
Minimum
Maximum
5. I/We further confirm having read and understood the contents of the Rights and
Obligations document(s) and Risk Disclosure Document. I/We do hereby agree to be
bound by such provisions as outlined in these documents. I/We have also been informed
that the standard set of documents has been displayed for Information on (Members
name) designated website, if any.
Page 1 of 2
Please enable me to deal/trade on MCX Stock Exchange on aforesaid Segment(s).

Yours Sincerely,
Thanking you,
Name of Client
Signature of Client
Client Code: ______________________
Place: _______
Date: ________
(In case of Non-individual clients, affix relevant Company Stamp and Signed by authorized
signatories- The Modification letter should be signed in the same order as it has been signed in
the original KYC)
Page 2 of 2
MCX Stock Exchange Limited

Inspection Department
SEBI circulars relating to Client Account Opening Procedure
SEBI Circular details
Annexure I
Exchange Circular details
SEBI circular no. CIR/MIRSD/16/2011 dated

MCX-SX/INSP/628/2011 dated August 24, 2011
August 22, 2011
SEBI circular no. MIRSD/ SE /Cir-19/2009 MCX-SX/INSP/238/2009 dated December 04, 2009
dated December 03, 2009
SEBI circular no. CIR/MIRSD/ 09 /2012 dated MCX-SX/INSP/826/2012 dated August 13, 2012
August 13, 2012
SEBI circular no. Cir/MIRSD/9/2010 dated MCX-SX/INSP/471/2010 dated November 10, 2010
November 04, 2010
SEBI circular no. SEBI/MIRSD/Cir.No.02/2010
MCX-SX/INSP/268/2010 dated January 20, 2010
dated January 18, 2010
SEBI circular no. CIR/MIRSD/22/2011 dated MCX-SX/INSP/654/2011 dated November 2, 2011
October 25, 2011
SEBI circular no. MIRSD/Cir-26/2011 dated
MCX-SX/INSP/670/2011 dated December 26, 2011
December 23, 2011
SEBI circular no. MIRSD/Cir-5/2012 dated
MCX-SX/INSP/756/2012 dated April 16, 2012
April 13, 2012
Annexure - 1
ACCOUNT OPENING KIT

INDEX OF DOCUMENTS
S. No.
1
3
4
5
6
Name of the Document

Brief Significance of the Document
Page No
MANDATORY DOCUMENTS AS PRESCRIBED BY SEBI & EXCHANGES
Account Opening Form
A. KYC form - Document captures the basic information
about the constituent and an instruction/check list.
B. Document captures the additional information about the
constituent relevant to trading account and an
instruction/check list.
Document stating the Rights & Obligations of stock
broker/trading member, sub-broker and client for trading on
Rights and Obligations
exchanges (including additional rights & obligations in case
of internet/wireless technology based trading).
Risk Disclosure Document
Document detailing risks associated with dealing in the
(RDD)
securities market.
Guidance note
Document detailing dos and donts for trading on exchange,
for the education of the investors.
Policies and Procedures
Document describing significant policies and procedures of
the stock broker (to be added by the stock broker).
Tariff sheet
Document detailing the rate/amount of brokerage and other
charges levied on the client for trading on the stock
exchange(s) (to be added by the stock broker).
VOLUNTARY DOCUMENTS AS PROVIDED BY THE STOCK BROKER
7
8
Name of stock broker/trading member/clearing member: ---------------------------------------------------------------------------SEBI Registration No. and date: -----------------------------------------------------------------------------------------------------------Registered office address: ------------------------------------------------------------------------------------------------------------------Ph: ------------------------ Fax: ----------------------- Website: -----------------------------------------------------------------------------Correspondence office address: -----------------------------------------------------------------------------------------------------------Ph: ------------------------ Fax: ----------------------- Website: -----------------------------------------------------------------------------Compliance officer name, phone no. & email id: --------------------------------------------------------------------------------------CEO name, phone no. & email id: ---------------------------------------------------------------------------------------------------------For any grievance/dispute please contact stock broker (name) at the above address or email id- [email protected]
and Phone no. 91-XXXXXXXXXX. In case not satisfied with the response, please contact the concerned
exchange(s) at [email protected] and Phone no. 91-XXXXXXXXXX.
Annexure - 2
KNOW YOUR CLIENT (KYC) APPLICATION FORM
For Individuals
Please fill this form in ENGLISH and in BLOCK LETTERS.
A. IDENTITY DETAILS
1. Name of the Applicant: ________________________________________________________________
PHOTOGRAPH
Please affix your
recent passport
size photograph
and sign across it
2. Fathers/ Spouse Name: _______________________________________________________________

3. a. Gender: Male/ Female
b. Marital status: Single/ Married
4. a. Nationality: ___________________________
c. Date of birth: ____________(dd/mm/yyyy)
b. Status: Resident Individual/ Non Resident/ Foreign National
5. a. PAN: ____________________ b. Unique Identification Number (UID)/ Aadhaar, if any:_______________________

6. Specify the proof of Identity submitted: _______________________________________________________________
B. ADDRESS DETAILS
1. Address for correspondence: ________________________________________________________________________
________ City/town/village: ___________ Pin Code: __________ State: ______________ Country: _________________
2. Contact Details: Tel. (Off.) _______ Tel. (Res.) ________ Mobile No.: _________ Fax: _________ Email id: __________
3. Specify the proof of address submitted for correspondence address:_______________________________________
4. Permanent Address (if different from above or overseas address, mandatory for Non-Resident Applicant): ____________
________ City/town/village: ___________ Pin Code: _________ State: ______________ Country: __________________
5. Specify the proof of address submitted for permanent address: ___________________________________________
C. OTHER DETAILS
1. Gross Annual Income Details (please specify): Income Range per annum: Below Rs 1 Lac / 1-5 Lac /5-10 Lac / 10-25
Lac / >25 Lacs
or
Net-worth as on (date). (------------------------------) (Net worth should not be older than 1 year)
2. Occupation (please tick any one and give brief details): Private Sector/ Public Sector/ Government Service/Business/
Professional/ Agriculturist/ Retired/ Housewife/ Student/ Others ______________________________________________
3. Please tick, if applicable: Politically Exposed Person (PEP)/ Related to a Politically Exposed Person (PEP)
4. Any other information: ______________________________________________________________________________
DECLARATION
I hereby declare that the details furnished above are true and correct to the best of my knowledge and belief and I undertake to
inform you of any changes therein, immediately. In case any of the above information is found to be false or untrue or
misleading or misrepresenting, I am aware that I may be held liable for it.
__________________
Signature of the Applicant
Date: ___________ (dd/mm/yyyy)

FOR OFFICE USE ONLY
(Originals verified) True copies of documents received

(Self-Attested) Self Certified Document copies received
(..)
Signature of the Authorised Signatory
Date .
Seal/Stamp of the intermediary
KNOW YOUR CLIENT (KYC) APPLICATION FORM

For Non-Individuals
Please fill this form in ENGLISH and in BLOCK LETTERS.
A. IDENTITY DETAILS
1. Name of the Applicant: ________________________________________________________________
PHOTOGRAPH
Please affix the
recent passport
size photographs
and sign across it
2. Date of incorporation: _______________(dd/mm/yyyy) & Place of incorporation: ________________

3. Date of commencement of business: ______________________________________________________ (dd/mm/yyyy)
4. a. PAN: _______________________________ b. Registration No. (e.g. CIN): _________________________________
5. Status (please tick any one):
Private Limited Co./Public Ltd. Co./Body Corporate/Partnership/Trust/Charities/NGOs/FI/ FII/HUF/AOP/ Bank/Government
Body/Non-Government Organization/Defense Establishment/BOI/Society/LLP/ Others (please specify) _______________
B. ADDRESS DETAILS
1. Address for correspondence: ________________________________________________________________________
_________ City/town/village: _____________ Pin Code: _________ State: ______________ Country: _______________
2. Contact Details: Tel. (Off.) _______ Tel. (Res.) _______ Mobile No.: ________ Fax: ___________ Email id: __________
3. Specify the proof of address submitted for correspondence address: ______________________________________
4. Registered Address (if different from above): ____________________________________________________________
_________ City/town/village: _____________ Pin Code: _________ State: _____________ Country: ________________
5. Specify the proof of address submitted for registered address: ___________________________________________
C. OTHER DETAILS
1. Gross Annual Income Details (please specify): Income Range per annum: Below Rs 1 Lac / 1-5 Lac /5-10 Lac / 10-25
Lac / 25 Lacs-1 crore/ > 1 crore
2. Net-worth as on (date) ... (dd/mm/yyyy): __________________ (*Net worth should not be older than 1 year)
3. Name, PAN, residential address and photographs of Promoters/Partners/Karta/Trustees and whole time directors:
_________________________________________________________________________________________________
4. DIN/UID of Promoters/Partners/Karta and whole time directors: ___________________________________________
5. Please tick, if applicable, for any of your authorized signatories/Promoters/Partners/Karta/Trustees/whole time
directors: Politically Exposed Person (PEP)/ Related to a Politically Exposed Person (PEP)
6. Any other information: _____________________________________________________________________________
DECLARATION
I/We hereby declare that the details furnished above are true and correct to the best of my/our knowledge and belief and I/we
undertake to inform you of any changes therein, immediately. In case any of the above information is found to be false or
untrue or misleading or misrepresenting, I am/we are aware that I/we may be held liable for it.
_____________________________________
Name & Signature of the Authorised Signatory
Date: ___________ (dd/mm/yyyy)

FOR OFFICE USE ONLY
(Originals verified) True copies of documents received

(Self-Attested) Self Certified Document copies received
(..)
Date .
Seal/Stamp of the intermediary
INSTRUCTIONS/CHECK LIST FOR FILLING KYC FORM

A. IMPORTANT POINTS:
1. Self attested copy of PAN card is mandatory for all clients, including Promoters/Partners/Karta/Trustees
and whole time directors and persons authorized to deal in securities on behalf of company/firm/others.
2. Copies of all the documents submitted by the applicant should be self-attested and accompanied by
originals for verification. In case the original of any document is not produced for verification, then the
copies should be properly attested by entities authorized for attesting the documents, as per the below
mentioned list.
3. If any proof of identity or address is in a foreign language, then translation into English is required.
4. Name & address of the applicant mentioned on the KYC form, should match with the documentary proof
submitted.
5. If correspondence & permanent address are different, then proofs for both have to be submitted.
6. Sole proprietor must make the application in his individual name & capacity.
7. For non-residents and foreign nationals, (allowed to trade subject to RBI and FEMA guidelines), copy of
passport/PIO Card/OCI Card and overseas address proof is mandatory.
8. For foreign entities, CIN is optional; and in the absence of DIN no. for the directors, their passport copy
should be given.
9. In case of Merchant Navy NRIs, Mariners declaration or certified copy of CDC (Continuous Discharge
Certificate) is to be submitted.
10. For opening an account with Depository participant or Mutual Fund, for a minor, photocopy of the School
Leaving Certificate/Mark sheet issued by Higher Secondary Board/Passport of Minor/Birth Certificate
must be provided.
11. Politically Exposed Persons (PEP) are defined as individuals who are or have been entrusted with
prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior
politicians, senior Government/judicial/ military officers, senior executives of state owned corporations,
important political party officials, etc.
B. Proof of Identity (POI): - List of documents admissible as Proof of Identity:
1. Unique Identification Number (UID) (Aadhaar)/ Passport/ Voter ID card/ Driving license.
2. PAN card with photograph.
3. Identity card/ document with applicants Photo, issued by any of the following: Central/State Government
and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled
Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities, Professional Bodies
such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and Credit cards/Debit cards issued by
Banks.
C. Proof of Address (POA): - List of documents admissible as Proof of Address:
(*Documents having an expiry date should be valid on the date of submission.)
1. Passport/ Voters Identity Card/ Ration Card/ Registered Lease or Sale Agreement of Residence/ Driving
License/ Flat Maintenance bill/ Insurance Copy.
2. Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill - Not more than 3 months old.
3. Bank Account Statement/Passbook -- Not more than 3 months old.
4. Self-declaration by High Court and Supreme Court judges, giving the new address in respect of their
own accounts.
5. Proof of address issued by any of the following: Bank Managers of Scheduled Commercial
Banks/Scheduled Co-Operative Bank/Multinational Foreign Banks/Gazetted Officer/Notary
public/Elected representatives to the Legislative Assembly/Parliament/Documents issued by any Govt.

or Statutory Authority.
6. Identity card/document with address, issued by any of the following: Central/State Government and its
Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial
Banks, Public Financial Institutions, Colleges affiliated to Universities and Professional Bodies such as
ICAI, ICWAI, ICSI, Bar Council etc., to their Members.
7. For FII/sub account, Power of Attorney given by FII/sub-account to the Custodians (which are duly
notarized and/or apostiled or consularised) that gives the registered address should be taken.
8. The proof of address in the name of the spouse may be accepted.
D. Exemptions/clarifications to PAN
(*Sufficient documentary evidence in support of such claims to be collected.)
1. In case of transactions undertaken on behalf of Central Government and/or State Government and by
officials appointed by Courts e.g. Official liquidator, Court receiver etc.
2. Investors residing in the state of Sikkim.
3. UN entities/multilateral agencies exempt from paying taxes/filing tax returns in India.
4. SIP of Mutual Funds upto Rs 50, 000/- p.a.
5. In case of institutional clients, namely, FIIs, MFs, VCFs, FVCIs, Scheduled Commercial Banks,
Multilateral and Bilateral Development Financial Institutions, State Industrial Development Corporations,
Insurance Companies registered with IRDA and Public Financial Institution as defined under section 4A
of the Companies Act, 1956, Custodians shall verify the PAN card details with the original PAN card and
provide duly certified copies of such verified PAN details to the intermediary.
E. List of people authorized to attest the documents:
1. Notary Public, Gazetted Officer, Manager of a Scheduled Commercial/ Co-operative Bank or
Multinational Foreign Banks (Name, Designation & Seal should be affixed on the copy).
2. In case of NRIs, authorized officials of overseas branches of Scheduled Commercial Banks registered in
India, Notary Public, Court Magistrate, Judge, Indian Embassy /Consulate General in the country where
the client resides are permitted to attest the documents.
F. In case of Non-Individuals, additional documents to be obtained from non-individuals, over & above
the POI & POA, as mentioned below:
Types of entity
Corporate
Partnership firm
Trust
HUF
Unincorporated
association or a
body of individuals
Banks/Institutional
Investors
Foreign
Institutional
Investors (FII)
Documentary requirements
Copy of the balance sheets for the last 2 financial years (to be submitted every year).
Copy of latest share holding pattern including list of all those holding control, either
directly or indirectly, in the company in terms of SEBI takeover Regulations, duly certified
by the company secretary/Whole time director/MD (to be submitted every year).
Photograph, POI, POA, PAN and DIN numbers of whole time directors/two directors in
charge of day to day operations.
Photograph, POI, POA, PAN of individual promoters holding control - either directly or
indirectly.
Copies of the Memorandum and Articles of Association and certificate of incorporation.
Copy of the Board Resolution for investment in securities market.
Authorised signatories list with specimen signatures.
Certificate of registration (for registered partnership firms only).
Copy of partnership deed.
Authorised signatories list with specimen signatures.
Photograph, POI, POA, PAN of Partners.
Certificate of registration (for registered trust only).
Copy of Trust deed.
List of trustees certified by managing trustees/CA.
Photograph, POI, POA, PAN of Trustees.
PAN of HUF.
Deed of declaration of HUF/ List of coparceners.
Bank pass-book/bank statement in the name of HUF.
Photograph, POI, POA, PAN of Karta.
Proof of Existence/Constitution document.
Resolution of the managing body & Power of Attorney granted to transact business on its
behalf.
Authorized signatories list with specimen signatures.
Copy of the constitution/registration or annual report/balance sheet for the last 2 financial
years.
Copy of SEBI registration certificate.
Army/ Government
Bodies
Self-certification on letterhead.
Registered Society
Copy of Registration Certificate under Societies Registration Act.

List of Managing Committee members.
Committee resolution for persons authorised to act as authorised signatories with
specimen signatures.
True copy of Society Rules and Bye Laws certified by the Chairman/Secretary.
Annexure 3
TRADING ACCOUNT RELATED DETAILS
For Individuals & Non-individuals
A. BANK ACCOUNT(S) DETAILS
Bank
Name
Branch
address
Bank account no.
Account Type: Saving/Current/

Others-In case of NRI/NRE/NRO
MICR
Number
IFSC code
B. DEPOSITORY ACCOUNT(S) DETAILS

Depository Participant
Name
Depository Name
(NSDL/CDSL)
Beneficiary name
DP ID
Beneficiary ID
(BO ID)
C. TRADING PREFERENCES
*Please sign in the relevant boxes where you wish to trade. The segment not chosen should be struck off by the client.
Exchanges
Name of the
Exchange -1
Name of the
Exchange -2
Segments
Cash
Currency Derivative
F&O
Name of other
Segment s, if any
Name of the
Segments -1, 2...
# If, in future, the client wants to trade on any new segment/new exchange, separate authorization/letter should be taken
from the client by the stock broker.
D. PAST ACTIONS
Details of any action/proceedings initiated/pending/ taken by SEBI/ Stock exchange/any other authority against the
applicant/constituent or its Partners/promoters/whole time directors/authorized persons in charge of dealing in
securities during the last 3 years: ..
E. DEALINGS THROUGH SUB-BROKERS AND OTHER STOCK BROKERS
If client is dealing through the sub-broker, provide the following details:
Sub-brokers Name: ..
SEBI Registration number: ..
Registered office address: ...
Ph: . Fax: .. Website: .
Whether dealing with any other stock broker/sub-broker (if case dealing with multiple stock brokers/sub-brokers,
provide details of all)
Name of stock broker:Name of Sub-Broker, if any:....
Client Code: .Exchange: .....
Details of disputes/dues pending from/to such stock broker/sub- broker: ..
F. ADDITIONAL DETAILS
Whether you wish to receive physical contract note or Electronic Contract Note (ECN) (please specify): ..
Specify your Email id, if applicable: ..
Whether you wish to avail of the facility of internet trading/ wireless technology (please specify):
Number of years of Investment/Trading Experience: .
In case of non-individuals, name, designation, PAN, UID, signature, residential address and photographs of persons
authorized to deal in securities on behalf of company/firm/others: ..
Any other information: .
G. INTRODUCER DETAILS (optional)

Name of the Introducer: ..
(Surname)
(Name)
(Middle Name)
Status of the Introducer: Sub-broker/Remisier/Authorized Person/Existing Client/Others, please specify
Address and phone no. of the Introducer: . Signature of the Introducer:
H. NOMINATION DETAILS (for individuals only)
I/We wish to nominate
I/We do not wish to nominate
Name of the Nominee: . Relationship with the Nominee: .
PAN of Nominee: ... Date of Birth of Nominee: ...
Address and phone no. of the Nominee: .
If Nominee is a minor, details of guardian:
Name of guardian: Address and phone no. of Guardian: ....
Signature of guardian ..
WITNESSES (Only applicable in case the account holder has made nomination)
Name ------------------------Name ----------------------------Signature --------------------Signature -----------------------Address ----------------------Address -------------------------________________________________________________________________________________________________
DECLARATION
1. I/We hereby declare that the details furnished above are true and correct to the best of my/our knowledge and belief
and I/we undertake to inform you of any changes therein, immediately. In case any of the above information is found
to be false or untrue or misleading or misrepresenting, I am/we are aware that I/we may be held liable for it.
2. I/We confirm having read/been explained and understood the contents of the document on policy and procedures of
the stock broker and the tariff sheet.
3. I/We further confirm having read and understood the contents of the Rights and Obligations document(s) and Risk
Disclosure Document. I/We do hereby agree to be bound by such provisions as outlined in these documents. I/We
have also been informed that the standard set of documents has been displayed for Information on stock brokers
designated website, if any.
Place ----------------------Date ------------------------
(---------------------------------------------------)
Signature of Client/ (all) Authorized Signatory (ies)
________________________________________________________________________________________________
FOR OFFICE USE ONLY

UCC Code allotted to the Client: -------------------Documents verified with
Originals
Name of the Employee
Employee Code
Designation of the employee
Date
Signature
Client Interviewed By
In-Person Verification done by
I / We undertake that we have made the client aware of Policy and Procedures, tariff sheet and all the non-mandatory
documents. I/We have also made the client aware of Rights and Obligations document (s), RDD and Guidance Note.
I/We have given/sent him a copy of all the KYC documents. I/We undertake that any change in the Policy and
Procedures, tariff sheet and all the non-mandatory documents would be duly intimated to the clients. I/We also
undertake that any change in the Rights and Obligations and RDD would be made available on my/our website, if any,
for the information of the clients.
..
Date .
Seal/Stamp of the stock broker
_______________________________________________________________________________________________
INSTRUCTIONS/ CHECK LIST

1. Additional documents in case of trading in derivatives segments - illustrative list:
Copy of ITR Acknowledgement
Copy of Annual Accounts
In case of salary income - Salary Slip, Copy of Form 16
Net worth certificate
Copy of demat account holding statement.
Bank account statement for last 6 months
Any other relevant documents substantiating ownership of Self declaration with relevant supporting documents.
assets.
*In respect of other clients, documents as per risk management policy of the stock broker need to be provided by the
client from time to time.
2. Copy of cancelled cheque leaf/ pass book/bank statement specifying name of the constituent, MICR Code or/and
IFSC Code of the bank should be submitted.
3. Demat master or recent holding statement issued by DP bearing name of the client.
4. For individuals:
a. Stock broker has an option of doing in-person verification through web camera at the branch office of the
stock broker/sub-brokers office.
b. In case of non-resident clients, employees at the stock brokers local office, overseas can do in-person
verification. Further, considering the infeasibility of carrying out In-person verification of the non-resident
clients by the stock brokers staff, attestation of KYC documents by Notary Public, Court, Magistrate,
Judge, Local Banker, Indian Embassy / Consulate General in the country where the client resides may be
permitted.
5. For non-individuals:
a. Form need to be initialized by all the authorized signatories.
b. Copy of Board Resolution or declaration (on the letterhead) naming the persons authorized to deal in
securities on behalf of company/firm/others and their specimen signatures.
________________________________________________________________________________________________
Annexure 4
RIGHTS AND OBLIGATIONS OF STOCK BROKERS, SUB-BROKERS AND CLIENTS
as prescribed by SEBI and Stock Exchanges
1. The client shall invest/trade in those securities/contracts/other instruments admitted to dealings on the Exchanges
as defined in the Rules, Byelaws and Regulations of Exchanges/ Securities and Exchange Board of India (SEBI)
and circulars/notices issued there under from time to time.
2. The stock broker, sub-broker and the client shall be bound by all the Rules, Byelaws and Regulations of the
Exchange and circulars/notices issued there under and Rules and Regulations of SEBI and relevant notifications of
Government authorities as may be in force from time to time.
3. The client shall satisfy itself of the capacity of the stock broker to deal in securities and/or deal in derivatives
contracts and wishes to execute its orders through the stock broker and the client shall from time to time continue
to satisfy itself of such capability of the stock broker before executing orders through the stock broker.
4. The stock broker shall continuously satisfy itself about the genuineness and financial soundness of the client and
investment objectives relevant to the services to be provided.
5. The stock broker shall take steps to make the client aware of the precise nature of the Stock brokers liability for
business to be conducted, including any limitations, the liability and the capacity in which the stock broker acts.
6. The sub-broker shall provide necessary assistance and co-operate with the stock broker in all its dealings with the
client(s).
CLIENT INFORMATION
7. The client shall furnish all such details in full as are required by the stock broker in "Account Opening Form with
supporting details, made mandatory by stock exchanges/SEBI from time to time.
8. The client shall familiarize himself with all the mandatory provisions in the Account Opening documents. Any
additional clauses or documents specified by the stock broker shall be non-mandatory, as per terms & conditions
accepted by the client.
9. The client shall immediately notify the stock broker in writing if there is any change in the information in the account
opening form as provided at the time of account opening and thereafter; including the information on winding up
petition/insolvency petition or any litigation which may have material bearing on his capacity. The client shall
provide/update the financial information to the stock broker on a periodic basis.
10. The stock broker and sub-broker shall maintain all the details of the client as mentioned in the account opening
form or any other information pertaining to the client, confidentially and that they shall not disclose the same to any
person/authority except as required under any law/regulatory requirements. Provided however that the stock broker
may so disclose information about his client to any person or authority with the express permission of the client.
MARGINS
11. The client shall pay applicable initial margins, withholding margins, special margins or such other margins as are
considered necessary by the stock broker or the Exchange or as may be directed by SEBI from time to time as
applicable to the segment(s) in which the client trades. The stock broker is permitted in its sole and absolute
discretion to collect additional margins (even though not required by the Exchange, Clearing House/Clearing
Corporation or SEBI) and the client shall be obliged to pay such margins within the stipulated time.
12. The client understands that payment of margins by the client does not necessarily imply complete satisfaction of all
dues. In spite of consistently having paid margins, the client may, on the settlement of its trade, be obliged to pay
(or entitled to receive) such further sums as the contract may dictate/require.
TRANSACTIONS AND SETTLEMENTS
13. The client shall give any order for buy or sell of a security/derivatives contract in writing or in such form or manner,
as may be mutually agreed between the client and the stock broker. The stock broker shall ensure to place orders
and execute the trades of the client, only in the Unique Client Code assigned to that client.
14. The stock broker shall inform the client and keep him apprised about trading/settlement cycles, delivery/payment
schedules, any changes therein from time to time, and it shall be the responsibility in turn of the client to comply
with such schedules/procedures of the relevant stock exchange where the trade is executed.
15. The stock broker shall ensure that the money/securities deposited by the client shall be kept in a separate account,
distinct from his/its own account or account of any other client and shall not be used by the stock broker for
himself/itself or for any other client or for any purpose other than the purposes mentioned in Rules, Regulations,
circulars, notices, guidelines of SEBI and/or Rules, Regulations, Bye-laws, circulars and notices of Exchange.
16. Where the Exchange(s) cancels trade(s) suo moto all such trades including the trade/s done on behalf of the client
shall ipso facto stand cancelled, stock broker shall be entitled to cancel the respective contract(s) with client(s).
17. The transactions executed on the Exchange are subject to Rules, Byelaws and Regulations and circulars/notices
issued thereunder of the Exchanges where the trade is executed and all parties to such trade shall have submitted
to the jurisdiction of such court as may be specified by the Byelaws and Regulations of the Exchanges where the
trade is executed for the purpose of giving effect to the provisions of the Rules, Byelaws and Regulations of the
Exchanges and the circulars/notices issued thereunder.
BROKERAGE
18. The Client shall pay to the stock broker brokerage and statutory levies as are prevailing from time to time and as
they apply to the Clients account, transactions and to the services that stock broker renders to the Client. The
stock broker shall not charge brokerage more than the maximum brokerage permissible as per the rules,
regulations and bye-laws of the relevant stock exchanges and/or rules and regulations of SEBI.
LIQUIDATION AND CLOSE OUT OF POSITION
19. Without prejudice to the stock broker's other rights (including the right to refer a matter to arbitration), the client
understands that the stock broker shall be entitled to liquidate/close out all or any of the client's positions for nonpayment of margins or other amounts, outstanding debts, etc. and adjust the proceeds of such liquidation/close out,
if any, against the client's liabilities/obligations. Any and all losses and financial charges on account of such
liquidation/closing-out shall be charged to and borne by the client.
20. In the event of death or insolvency of the client or his/its otherwise becoming incapable of receiving and paying for
or delivering or transferring securities which the client has ordered to be bought or sold, stock broker may close out
the transaction of the client and claim losses, if any, against the estate of the client. The client or his nominees,
successors, heirs and assignee shall be entitled to any surplus which may result there from. The client shall note
that transfer of funds/securities in favor of a Nominee shall be valid discharge by the stock broker against the legal
heir.
21. The stock broker shall bring to the notice of the relevant Exchange the information about default in
payment/delivery and related aspects by a client. In case where defaulting client is a corporate
entity/partnership/proprietary firm or any other artificial legal entity, then the name(s) of
Director(s)/Promoter(s)/Partner(s)/Proprietor as the case may be, shall also be communicated by the stock broker
to the relevant Exchange(s).
DISPUTE RESOLUTION
22. The stock broker shall provide the client with the relevant contact details of the concerned Exchanges and SEBI.
23. The stock broker shall co-operate in redressing grievances of the client in respect of all transactions routed through
it and in removing objections for bad delivery of shares, rectification of bad delivery, etc.
24. The client and the stock broker shall refer any claims and/or disputes with respect to deposits, margin money, etc.,
to arbitration as per the Rules, Byelaws and Regulations of the Exchanges where the trade is executed and
circulars/notices issued thereunder as may be in force from time to time.
25. The stock broker shall ensure faster settlement of any arbitration proceedings arising out of the transactions
entered into between him vis--vis the client and he shall be liable to implement the arbitration awards made in
such proceedings.
26. The client/stock-broker understands that the instructions issued by an authorized representative for dispute
resolution, if any, of the client/stock-broker shall be binding on the client/stock-broker in accordance with the letter
authorizing the said representative to deal on behalf of the said client/stock-broker.
TERMINATION OF RELATIONSHIP
27. This relationship between the stock broker and the client shall be terminated; if the stock broker for any reason
ceases to be a member of the stock exchange including cessation of membership by reason of the stock broker's
default, death, resignation or expulsion or if the certificate is cancelled by the Board.
28. The stock broker, sub-broker and the client shall be entitled to terminate the relationship between them without
giving any reasons to the other party, after giving notice in writing of not less than one month to the other parties.
Notwithstanding any such termination, all rights, liabilities and obligations of the parties arising out of or in respect
of transactions entered into prior to the termination of this relationship shall continue to subsist and vest in/be
binding on the respective parties or his/its respective heirs, executors, administrators, legal representatives or
successors, as the case may be.
29. In the event of demise/insolvency of the sub-broker or the cancellation of his/its registration with the Board
or/withdrawal of recognition of the sub-broker by the stock exchange and/or termination of the agreement with the
sub broker by the stock broker, for any reason whatsoever, the client shall be informed of such termination and the
client shall be deemed to be the direct client of the stock broker and all clauses in the Rights and Obligations
document(s) governing the stock broker, sub-broker and client shall continue to be in force as it is, unless the client
intimates to the stock broker his/its intention to terminate their relationship by giving a notice in writing of not less
than one month.
ADDITIONAL RIGHTS AND OBLIGATIONS
30. The stock broker shall ensure due protection to the client regarding clients rights to dividends, rights or bonus
shares, etc. in respect of transactions routed through it and it shall not do anything which is likely to harm the
interest of the client with whom and for whom they may have had transactions in securities.
31. The stock broker and client shall reconcile and settle their accounts from time to time as per the Rules,
Regulations, Bye Laws, Circulars, Notices and Guidelines issued by SEBI and the relevant Exchanges where the
trade is executed.
32. The stock broker shall issue a contract note to his constituents for trades executed in such format as may be
prescribed by the Exchange from time to time containing records of all transactions including details of order
number, trade number, trade time, trade price, trade quantity, details of the derivatives contract, client code,
brokerage, all charges levied etc. and with all other relevant details as required therein to be filled in and issued in
such manner and within such time as prescribed by the Exchange. The stock broker shall send contract notes to
the investors within one working day of the execution of the trades in hard copy and/or in electronic form using
digital signature.
33. The stock broker shall make pay out of funds or delivery of securities, as the case may be, to the Client within one
working day of receipt of the payout from the relevant Exchange where the trade is executed unless otherwise
specified by the client and subject to such terms and conditions as may be prescribed by the relevant Exchange
from time to time where the trade is executed.
34. The stock broker shall send a complete `Statement of Accounts for both funds and securities in respect of each of
its clients in such periodicity and format within such time, as may be prescribed by the relevant Exchange, from
time to time, where the trade is executed. The Statement shall also state that the client shall report errors, if any, in
the Statement within such time as may be prescribed by the relevant Exchange from time to time where the trade
was executed, from the receipt thereof to the Stock broker.
35. The stock broker shall send daily margin statements to the clients. Daily Margin statement should include, interalia, details of collateral deposited, collateral utilized and collateral status (available balance/due from client) with
break up in terms of cash, Fixed Deposit Receipts (FDRs), Bank Guarantee and securities.
36. The Client shall ensure that it has the required legal capacity to, and is authorized to, enter into the relationship with
stock broker and is capable of performing his obligations and undertakings hereunder. All actions required to be
taken to ensure compliance of all the transactions, which the Client may enter into shall be completed by the Client
prior to such transaction being entered into.
ELECTRONIC CONTRACT NOTES (ECN)
37. In case, client opts to receive the contract note in electronic form, he shall provide an appropriate e-mail id to the
stock broker. The client shall communicate to the stock broker any change in the email-id through a physical letter.
If the client has opted for internet trading, the request for change of email id may be made through the secured
access by way of client specific user id and password.
38. The stock broker shall ensure that all ECNs sent through the e-mail shall be digitally signed, encrypted, non-tamper
able and in compliance with the provisions of the IT Act, 2000. In case, ECN is sent through e-mail as an
attachment, the attached file shall also be secured with the digital signature, encrypted and non-tamperable.
39. The client shall note that non-receipt of bounced mail notification by the stock broker shall amount to delivery of the
contract note at the e-mail ID of the client.
40. The stock broker shall retain ECN and acknowledgement of the e-mail in a soft and non-tamperable form in the
manner prescribed by the exchange in compliance with the provisions of the IT Act, 2000 and as per the extant
rules/regulations/circulars/guidelines issued by SEBI/Stock Exchanges from time to time. The proof of delivery i.e.,
log report generated by the system at the time of sending the contract notes shall be maintained by the stock
broker for the specified period under the extant regulations of SEBI/stock exchanges. The log report shall provide
the details of the contract notes that are not delivered to the client/e-mails rejected or bounced back. The stock
broker shall take all possible steps to ensure receipt of notification of bounced mails by him at all times within the
stipulated time period under the extant regulations of SEBI/stock exchanges.
41. The stock broker shall continue to send contract notes in the physical mode to such clients who do not opt to
receive the contract notes in the electronic form. Wherever the ECNs have not been delivered to the client or has
been rejected (bouncing of mails) by the e-mail ID of the client, the stock broker shall send a physical contract note
to the client within the stipulated time under the extant regulations of SEBI/stock exchanges and maintain the proof
of delivery of such physical contract notes.
42. In addition to the e-mail communication of the ECNs to the client, the stock broker shall simultaneously publish the
ECN on his designated web-site, if any, in a secured way and enable relevant access to the clients and for this
purpose, shall allot a unique user name and password to the client, with an option to the client to save the contract
note electronically and/or take a print out of the same.
LAW AND JURISDICTION
43. In addition to the specific rights set out in this document, the stock broker, sub-broker and the client shall be entitled
to exercise any other rights which the stock broker or the client may have under the Rules, Bye-laws and
Regulations of the Exchanges in which the client chooses to trade and circulars/notices issued thereunder or Rules
and Regulations of SEBI.
44. The provisions of this document shall always be subject to Government notifications, any rules, regulations,
guidelines and circulars/notices issued by SEBI and Rules, Regulations and Bye laws of the relevant stock
exchanges, where the trade is executed, that may be in force from time to time.
45. The stock broker and the client shall abide by any award passed by the Arbitrator(s) under the Arbitration and
Conciliation Act, 1996. However, there is also a provision of appeal within the stock exchanges, if either party is not
satisfied with the arbitration award.
46. Words and expressions which are used in this document but which are not defined herein shall, unless the context
otherwise requires, have the same meaning as assigned thereto in the Rules, Byelaws and Regulations and
circulars/notices issued thereunder of the Exchanges/SEBI.
47. All additional voluntary clauses/document added by the stock broker should not be in contravention with
rules/regulations/notices/circulars of Exchanges/SEBI. Any changes in such voluntary clauses/document(s) need to
be preceded by a notice of 15 days. Any changes in the rights and obligations which are specified by
Exchanges/SEBI shall also be brought to the notice of the clients.
48. If the rights and obligations of the parties hereto are altered by virtue of change in Rules and regulations of SEBI or
Bye-laws, Rules and Regulations of the relevant stock Exchanges where the trade is executed, such changes shall
be deemed to have been incorporated herein in modification of the rights and obligations of the parties mentioned
in this document.
INTERNET & WIRELESS TECHNOLOGY BASED TRADING FACILITY PROVIDED BY STOCK BROKERS TO CLIENT
(All the clauses mentioned in the Rights and Obligations document(s) shall be applicable. Additionally, the
clauses mentioned herein shall also be applicable.)
1. Stock broker is eligible for providing Internet based trading (IBT) and securities trading through the use of wireless
technology that shall include the use of devices such as mobile phone, laptop with data card, etc. which use
Internet Protocol (IP). The stock broker shall comply with all requirements applicable to internet based
trading/securities trading using wireless technology as may be specified by SEBI & the Exchanges from time to
time.
2. The client is desirous of investing/trading in securities and for this purpose, the client is desirous of using either the
internet based trading facility or the facility for securities trading through use of wireless technology. The Stock
broker shall provide the Stock brokers IBT Service to the Client, and the Client shall avail of the Stock brokers IBT
Service, on and subject to SEBI/Exchanges Provisions and the terms and conditions specified on the Stock
brokers IBT Web Site provided that they are in line with the norms prescribed by Exchanges/SEBI.
3. The stock broker shall bring to the notice of client the features, risks, responsibilities, obligations and liabilities
associated with securities trading through wireless technology/internet/smart order routing or any other technology
should be brought to the notice of the client by the stock broker.
4. The stock broker shall make the client aware that the Stock Brokers IBT system itself generates the initial
password and its password policy as stipulated in line with norms prescribed by Exchanges/SEBI.
5. The Client shall be responsible for keeping the Username and Password confidential and secure and shall be
solely responsible for all orders entered and transactions done by any person whosoever through the Stock
brokers IBT System using the Clients Username and/or Password whether or not such person was authorized to
do so. Also the client is aware that authentication technologies and strict security measures are required for the
internet trading/securities trading through wireless technology through order routed system and undertakes to
ensure that the password of the client and/or his authorized representative are not revealed to any third party
including employees and dealers of the stock broker
6. The Client shall immediately notify the Stock broker in writing if he forgets his password, discovers security flaw in
Stock Brokers IBT System, discovers/suspects discrepancies/ unauthorized access through his
username/password/account with full details of such unauthorized use, the date, the manner and the transactions
effected pursuant to such unauthorized use, etc.
7. The Client is fully aware of and understands the risks associated with availing of a service for routing orders over
the internet/securities trading through wireless technology and Client shall be fully liable and responsible for any
and all acts done in the Clients Username/password in any manner whatsoever.
8. The stock broker shall send the order/trade confirmation through email to the client at his request. The client is
aware that the order/ trade confirmation is also provided on the web portal. In case client is trading using wireless
technology, the stock broker shall send the order/trade confirmation on the device of the client.
9. The client is aware that trading over the internet involves many uncertain factors and complex hardware, software,
systems, communication lines, peripherals, etc. are susceptible to interruptions and dislocations. The Stock broker
and the Exchange do not make any representation or warranty that the Stock brokers IBT Service will be available
to the Client at all times without any interruption.
10. The Client shall not have any claim against the Exchange or the Stock broker on account of any suspension,
interruption, non-availability or malfunctioning of the Stock brokers IBT System or Service or the Exchanges
service or systems or non-execution of his orders due to any link/system failure at the Client/Stock
brokers/Exchange end for any reason beyond the control of the stock broker/Exchanges.
Annexure 5
RISK DISCLOSURE DOCUMENT FOR CAPITAL MARKET AND DERIVATIVES SEGMENTS
This document contains important information on trading in Equities/Derivatives Segments of the stock exchanges. All
prospective constituents should read this document before trading in Equities/Derivatives Segments of the Exchanges.
Stock exchanges/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 have Stock exchanges /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 relationship into
which you are entering and the extent of your exposure to risk.
You must know and appreciate that trading in Equity shares, derivatives contracts or other instruments traded on the Stock
Exchange, 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 Stock exchanges and
suffer adverse consequences or loss, you shall be solely responsible for the same and Stock exchanges/its Clearing
Corporation 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 stock broker. 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 derivative contract being traded on Stock
exchanges.
It must be clearly understood by you that your dealings on Stock exchanges through a stock broker shall be subject to your
fulfilling certain formalities set out by the stock broker, which may inter alia include your filling the know your client form,
reading the rights and obligations, dos and donts, etc., and are subject to the Rules, Byelaws and Regulations of relevant
Stock exchanges, its Clearing Corporation, guidelines prescribed by SEBI and in force from time to time and Circulars as
may be issued by Stock exchanges or its Clearing Corporation and in force from time to time.
Stock exchanges 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 stock broker of Stock exchanges 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. 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. BASIC RISKS:
1.1 Risk of Higher Volatility:
Volatility refers to the dynamic changes in price that a security/derivatives contract undergoes when trading activity continues
on the Stock Exchanges. Generally, higher the volatility of a security/derivatives contract, greater is its price swings. There
may be normally greater volatility in thinly traded securities / derivatives contracts than in active securities /derivatives
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.
1.2 Risk of Lower Liquidity:

Liquidity refers to the ability of market participants to buy and/or sell securities / derivatives 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 / derivatives contracts swiftly and with minimal price difference, and as a result, investors are more likely to pay or
receive a competitive price for securities / derivatives contracts purchased or sold. There may be a risk of lower liquidity in
some securities / derivatives contracts as compared to active securities / derivatives 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.
1.2.1 Buying or selling securities / derivatives contracts as part of a day trading strategy may also result into losses, because
in such a situation, securities / derivatives contracts may have to be sold / purchased at low / high prices, compared to the
expected price levels, so as not to have any open position or obligation to deliver or receive a security / derivatives contract.
1.3 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 / derivatives contract 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 / derivatives contracts. This in turn will hamper better price formation.
1.4 Risk-reducing orders:
The placing of orders (e.g., "stop loss orders, 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.
1.4.1 A "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 / derivatives contract.
1.4.2 A "limit" order will be executed only at the "limit" price specified for the order or a better price. However, while the
customer receives price protection, there is a possibility that the order may not be executed at all.
1.4.3 A stop loss order is generally placed "away" from the current price of a stock / derivatives contract, and such order gets
activated if and when the security / derivatives 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
security / derivatives contract 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 security / derivatives contract might penetrate the pre-determined price, in which case, the risk of such
order not getting executed arises, just as with a regular limit order.
1.5 Risk of News Announcements:
News announcements that may impact the price of stock / derivatives contract may occur during trading, and when combined
with lower liquidity and higher volatility, may suddenly cause an unexpected positive or negative movement in the price of the
security / contract.
1.6 Risk of Rumors:
Rumors about companies / currencies at times float in the market through word of mouth, newspapers, websites or news
agencies, etc. The investors should be wary of and should desist from acting on rumors.
1.7 System Risk:
High volume trading will frequently occur at the market opening and before market close. Such high volumes may also occur
at any point in the day. These may cause delays in order execution or confirmation.
1.7.1 During periods of volatility, on account of market participants continuously modifying their order quantity or prices or
placing fresh orders, there may be delays in order execution and its confirmations.
1.7.2 Under certain market conditions, it may be difficult or impossible to liquidate a position in the market at a reasonable
price or at all, when there are no outstanding orders either on the buy side or the sell side, or if trading is halted in a security /
derivatives contract due to any action on account of unusual trading activity or security / derivatives contract hitting circuit
filters or for any other reason.
1.8 System/Network Congestion:
Trading on exchanges is in electronic mode, based on satellite/leased line based communications, combination of
technologies and computer systems to place and route orders. Thus, there exists a possibility of communication failure or
system problems or slow or delayed response from system or trading halt, or any such other problem/glitch whereby not
being able to establish access to the trading system/network, which may be beyond control and may result in delay in
processing or not processing buy or sell orders either in part or in full. You are cautioned to note that although these
problems may be temporary in nature, but when you have outstanding open positions or unexecuted orders, these represent
a risk because of your obligations to settle all executed transactions.
2. As far as Derivatives segments are concerned, please note and get yourself acquainted with the following
additional features:2.1 Effect of "Leverage" or "Gearing":
In the derivatives market, the amount of margin is small relative to the value of the derivatives contract so the transactions
are 'leveraged' or 'geared'. Derivatives trading, which is conducted with a relatively small amount of margin, provides the
possibility of great profit or loss in comparison with the margin amount. But transactions in derivatives carry a high degree of
risk.
You should therefore completely understand the following statements before actually trading in derivatives and also trade
with caution while taking into account one's circumstances, financial resources, etc. If the prices move against you, you may
lose a part of or whole margin amount in a relatively short period of time. Moreover, the loss may exceed the original margin
amount.
A. Futures trading involve daily settlement of all positions. Every day the open positions are marked to market based on the
closing level of the index / derivatives contract. If the contract has moved against you, you will be required to deposit the
amount of loss (notional) resulting from such movement. This amount will have to be paid within a stipulated time frame,
generally before commencement of trading on next day.
B. If you fail to deposit the additional amount by the deadline or if an outstanding debt occurs in your account, the stock
broker may liquidate a part of or the whole position or substitute securities. In this case, you will be liable for any losses
incurred due to such close-outs.
C. Under certain market conditions, an investor may find it difficult or impossible to execute transactions. For example, this
situation can occur due to factors such as illiquidity i.e. when there are insufficient bids or offers or suspension of trading due
to price limit or circuit breakers etc.
D. In order to maintain market stability, the following steps may be adopted: changes in the margin rate, increases in the cash
margin rate or others. These new measures may also be applied to the existing open interests. In such conditions, you will be
required to put up additional margins or reduce your positions.
E. You must ask your broker to provide the full details of derivatives contracts you plan to trade i.e. the contract specifications
and the associated obligations.
2.2 Currency specific risks:
1. The profit or loss in transactions in foreign currency-denominated contracts, whether they are traded in your own or
another jurisdiction, will be affected by fluctuations in currency rates where there is a need to convert from the currency
denomination of the contract to another currency.
2. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example
when a currency is deregulated or fixed trading bands are widened.
3. Currency prices are highly volatile. Price movements for currencies are influenced by, among other things: changing
supply-demand relationships; trade, fiscal, monetary, exchange control programs and policies of governments; foreign
political and economic events and policies; changes in national and international interest rates and inflation; currency
devaluation; and sentiment of the market place. None of these factors can be controlled by any individual advisor and no
assurance can be given that an advisor's advice will result in profitable trades for a participating customer or that a customer
will not incur losses from such events.
2.3 Risk of Option holders:
1. An option holder runs the risk of losing the entire amount paid for the option in a relatively short period of time. This risk
reflects the nature of an option as a wasting asset which becomes worthless when it expires. An option holder who neither
sells his option in the secondary market nor exercises it prior to its expiration will necessarily lose his entire investment in the
option. If the price of the underlying does not change in the anticipated direction before the option expires, to an extent
sufficient to cover the cost of the option, the investor may lose all or a significant part of his investment in the option.
2. The Exchanges may impose exercise restrictions and have absolute authority to restrict the exercise of options at certain
times in specified circumstances.
2.4 Risks of Option Writers:
1. If the price movement of the underlying is not in the anticipated direction, the option writer runs the risks of losing
substantial amount.
2. The risk of being an option writer may be reduced by the purchase of other options on the same underlying interest and
thereby assuming a spread position or by acquiring other types of hedging positions in the options markets or other markets.
However, even where the writer has assumed a spread or other hedging position, the risks may still be significant. A spread
position is not necessarily less risky than a simple 'long' or 'short' position.
3. Transactions that involve buying and writing multiple options in combination, or buying or writing options in combination with
buying or selling short the underlying interests, present additional risks to investors. Combination transactions, such as option
spreads, are more complex than buying or writing a single option. And it should be further noted that, as in any area of
investing, a complexity not well understood is, in itself, a risk factor. While this is not to suggest that combination strategies
should not be considered, it is advisable, as is the case with all investments in options, to consult with someone who is
experienced and knowledgeable with respect to the risks and potential rewards of combination transactions under various
market circumstances.
3. TRADING THROUGH WIRELESS TECHNOLOGY/ SMART ORDER ROUTING OR ANY OTHER TECHNOLOGY:
Any additional provisions defining the features, risks, responsibilities, obligations and liabilities associated with securities
trading through wireless technology/ smart order routing or any other technology should be brought to the notice of the client
by the stock broker.
4. GENERAL
4.1 The term constituent shall mean and include a client, a customer or an investor, who deals with a stock broker for the
purpose of acquiring and/or selling of securities / derivatives contracts through the mechanism provided by the Exchanges.
4.2 The term stock broker shall mean and include a stock broker, a broker or a stock broker, who has been admitted as
such by the Exchanges and who holds a registration certificate from SEBI.
Annexure-6
GUIDANCE NOTE - DOs AND DONTs FOR TRADING ON THE EXCHANGE(S) FOR INVESTORS
BEFORE YOU BEGIN TO TRADE
1. Ensure that you deal with and through only SEBI registered intermediaries. You may check their SEBI registration
certificate number from the list available on the Stock exchanges www.exchange.com and SEBI website www.sebi.gov.in.
2. Ensure that you fill the KYC form completely and strike off the blank fields in the KYC form.
3. Ensure that you have read all the mandatory documents viz. Rights and Obligations, Risk Disclosure Document, Policy
and Procedure document of the stock broker.
4. Ensure to read, understand and then sign the voluntary clauses, if any, agreed between you and the stock broker. Note
that the clauses as agreed between you and the stock broker cannot be changed without your consent.
5. Get a clear idea about all brokerage, commissions, fees and other charges levied by the broker on you for trading and the
relevant provisions/ guidelines specified by SEBI/Stock exchanges.
6. Obtain a copy of all the documents executed by you from the stock broker free of charge.
7. In case you wish to execute Power of Attorney (POA) in favour of the Stock broker, authorizing it to operate your bank and
demat account, please refer to the guidelines issued by SEBI/Exchanges in this regard.
TRANSACTIONS AND SETTLEMENTS
8. The stock broker may issue electronic contract notes (ECN) if specifically authorized by you in writing. You should
provide your email id to the stock broker for the same. Dont opt for ECN if you are not familiar with computers.
9. Dont share your internet trading accounts password with anyone.
10. Dont make any payment in cash to the stock broker.
11. Make the payments by account payee cheque in favour of the stock broker. Dont issue cheques in the name of subbroker. Ensure that you have a documentary proof of your payment/deposit of securities with the stock broker, stating
date, scrip, quantity, towards which bank/ demat account such money or securities deposited and from which bank/ demat
account.
12. Note that facility of Trade Verification is available on stock exchanges websites, where details of trade as mentioned in
the contract note may be verified. Where trade details on the website do not tally with the details mentioned in the contract
note, immediately get in touch with the Investors Grievance Cell of the relevant Stock exchange.
13. In case you have given specific authorization for maintaining running account, payout of funds or delivery of securities (as
the case may be), may not be made to you within one working day from the receipt of payout from the Exchange. Thus,
the stock broker shall maintain running account for you subject to the following conditions:
a) Such authorization from you shall be dated, signed by you only and contains the clause that you may revoke the
same at any time.
b) The actual settlement of funds and securities shall be done by the stock broker, at least once in a calendar quarter or
month, depending on your preference. While settling the account, the stock broker shall send to you a statement of
accounts containing an extract from the client ledger for funds and an extract from the register of securities displaying
all the receipts/deliveries of funds and securities. The statement shall also explain the retention of funds and
securities and the details of the pledged shares, if any.
c) On the date of settlement, the stock broker may retain the requisite securities/funds towards outstanding obligations
and may also retain the funds expected to be required to meet derivatives margin obligations for next 5 trading days,
calculated in the manner specified by the exchanges. In respect of cash market transactions, the stock broker may
retain entire pay-in obligation of funds and securities due from clients as on date of settlement and for next days
business, he may retain funds/securities/margin to the extent of value of transactions executed on the day of such
settlement in the cash market.

d) You need to bring any dispute arising from the statement of account or settlement so made to the notice of the stock
broker in writing preferably within 7 (seven) working days from the date of receipt of funds/securities or statement, as
the case may be. In case of dispute, refer the matter in writing to the Investors Grievance Cell of the relevant Stock
exchanges without delay.
14. In case you have not opted for maintaining running account and pay-out of funds/securities is not received on the next
working day of the receipt of payout from the exchanges, please refer the matter to the stock broker. In case there is
dispute, ensure that you lodge a complaint in writing immediately with the Investors Grievance Cell of the relevant Stock
exchange.
15. Please register your mobile number and email id with the stock broker, to receive trade confirmation alerts/ details of the
transactions through SMS or email, by the end of the trading day, from the stock exchanges.
IN CASE OF TERMINATION OF TRADING MEMBERSHIP
16. In case, a stock broker surrenders his membership, is expelled from membership or declared a defaulter; Stock
exchanges gives a public notice inviting claims relating to only the "transactions executed on the trading system" of Stock
exchange, from the investors. Ensure that you lodge a claim with the relevant Stock exchanges within the stipulated period
and with the supporting documents.
17. Familiarize yourself with the protection accorded to the money and/or securities you may deposit with your stock broker,
particularly in the event of a default or the stock brokers insolvency or bankruptcy and the extent to which you may
recover such money and/or securities may be governed by the Bye-laws and Regulations of the relevant Stock exchange
where the trade was executed and the scheme of the Investors Protection Fund in force from time to time.
DISPUTES/ COMPLAINTS
18. Please note that the details of the arbitration proceedings, penal action against the brokers and investor complaints
against the stock brokers are displayed on the website of the relevant Stock exchange.
19. In case your issue/problem/grievance is not being sorted out by concerned stock broker/sub-broker then you may take up
the matter with the concerned Stock exchange. If you are not satisfied with the resolution of your complaint then you can
escalate the matter to SEBI.
20. Note that all the stock broker/sub-brokers have been mandated by SEBI to designate an e-mail ID of the grievance
redressal division/compliance officer exclusively for the purpose of registering complaints.

Securities and Exchange Board of India
CIRCULAR
CIR/MIRSD/16/2011
August 22, 2011
All Recognized Stock Exchanges

Dear Sirs,
Subject: Simplification and Rationalization of Trading Account Opening Process.
1. SEBI has been getting feedback from the investors that the present trading account
opening procedure is very cumbersome. The investor has to enter into a number of
agreements depending on his trading preferences i.e. stock exchanges, segments,
internet / wireless technology based trading, etc. As a result, it requires a large
number of signatures on various documents devised by the stock brokers/trading
members.
2. With a view to simplify and rationalize the account opening process, we have
reviewed, consolidated and updated all the documents/requirements prescribed in
respect of account opening process over the years, in consultation with major stock
exchanges and market participants. The simplification includes replacement of all
client-broker agreements with the Rights and Obligations document, which shall be
mandatory and binding on the existing and new stock brokers (including trading
members) and clients. Accordingly, SEBI (Stock Broker and Sub-Broker)
Regulations, 1992 have been amended suitably vide notification No. LADNRO/GN/2011-12/19/26273 dated August 17, 2011.
3. SEBI has devised the uniform documentation to be followed by all the stock brokers
/ trading members; a copy thereof to be provided by them to the clients. The details
of such documents are listed below:
i.
ii.
iii.
iv.
v.
Index of documents giving details of various documents for client account opening
process - Annexure-1
Client Account Opening Form in two parts:
a. Know Your Client (KYC) form capturing the basic information about the
client and instruction/check list to fill up the form - Annexure-2.
b. Document capturing additional information about the client related to trading
account -Annexure-3.
Document stating the Rights & Obligations of stock broker, sub-broker and client
for trading on exchanges (including additional rights & obligations in case of
internet / wireless technology based trading) Annexure4.
Uniform Risk Disclosure Documents (for all segments / exchanges) - Annexure-5.
Guidance Note detailing Dos and Donts for trading on exchanges - Annexure-6.
4. In the account opening process, the stock brokers / trading members would also
give the following useful information to the clients:
a. A tariff sheet specifying various charges, including brokerage, payable by the
client to avoid any disputes at a later date.
Page 1 of 3

b. Information on contact details of senior officials within the stock broking firm and
investor grievance cell in the stock exchange, so that the client can approach
them in case of any grievance.
5. It may be noted that any voluntary clause / document added by the stock brokers
shall form part of the non-mandatory documents. The stock broker shall ensure that
any voluntary clause/document shall neither dilute the responsibility of the stock
broker nor it shall be in conflict with any of the clauses in the mandatory documents,
Rules, Bye-laws, Regulations, Notices, Guidelines and Circulars issued by SEBI and
the stock exchanges from time to time. Any such clause introduced in the existing as
well as new documents shall stand null and void.
6. The client will now be required to sign only on one document i.e. Account Opening
Form. Further, in the same form, the client shall continue to put his signatures
instead of saying yes or tick mark while indicating preferences for trading in
different exchanges / segments, in accordance with existing requirements. However,
in case the investor wants to avail Running Account facility, execute Power of
Attorney, etc., he would have to give specific authorization to the stock broker in
order to avoid any dispute in the future.
7. In case the stock broker is also a depository participant, he can use the same KYC
form (as specified in Annexure-2) for basic details and take additional information
pertaining to demat account.
8. The stock brokers shall take necessary steps to implement this circular immediately
and ensure its full compliance in respect of all new clients acquired on or after 15
days from the date of this circular.
9. The following SEBI circulars shall stand modified to the extent of the above changes:
a. No.SMD/POLICY/CIRCULR/5-97 dated April 11, 1997
b. No. SMD/POLICY/CIRCULAR/11-97 dated May 21, 1997
c. No. FITTC/DC/CIR-3468/98 dated December 03, 1998
d. No. SMDRP/POLICY/CIR- 06/2000 dated January 3, 2000
a. No. SEBI/MRD/SE/Cir- 37/2003 dated September 30, 2003
e. No. SEBI/MIRSD/DPS-1/Cir-31/2004 dated August 26, 2004
f. No. MIRSD/SE/Cir-19/2009 dated December 3, 2009
g. No. CIR/MRD/DP/25/2010 dated August 27, 2010
h. No. CIR/MRD/DP/26/2010 dated August 27, 2010
10. The Stock Exchanges are directed to:
a. bring the provisions of this circular to the notice of the Stock Brokers and also
disseminate the same on their websites.
b. make necessary amendments to the relevant bye-laws, rules and regulations
for the implementation of the above decision in co-ordination with one another
to achieve uniformity in approach.
c. communicate to SEBI, the status of the implementation of the provisions of
this circular Monthly Development Report of the following month; and
d. monitor the compliance of this circular through half-yearly internal audit and
inspections of stock brokers.
Page 2 of 3

11. 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,
B. N. Sahoo
Deputy General Manager
022-26449250
email: [email protected]
Enclosures: Annexures 1-6
Page 3 of 3

MCX Client Account Opening Procedure Circulars 2013

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MCX Stock Exchange Limited

January 14, 2013

Sub: Applicability of Client Account Opening Procedure Circulars and enabling of

MCX Stock Exchange Ltd.

MCX Stock Exchange Ltd.

MCX Stock Exchange Ltd.

3. This letter is in addition to the authorization/preference given earlier by me/us to you

Please enable me to deal/trade on MCX Stock Exchange on aforesaid Segment(s).

MCX Stock Exchange Limited

Exchange Circular details

SEBI circular no. CIR/MIRSD/16/2011 dated

ACCOUNT OPENING KIT

Name of the Document

2. Fathers/ Spouse Name: _______________________________________________________________

b. Marital status: Single/ Married

c. Date of birth: ____________(dd/mm/yyyy)

b. Status: Resident Individual/ Non Resident/ Foreign National

5. a. PAN: ____________________ b. Unique Identification Number (UID)/ Aadhaar, if any:_______________________

Date: ___________ (dd/mm/yyyy)

(Originals verified) True copies of documents received

Seal/Stamp of the intermediary

KNOW YOUR CLIENT (KYC) APPLICATION FORM

2. Date of incorporation: _______________(dd/mm/yyyy) & Place of incorporation: ________________

Date: ___________ (dd/mm/yyyy)

(Originals verified) True copies of documents received

Seal/Stamp of the intermediary

INSTRUCTIONS/CHECK LIST FOR FILLING KYC FORM

public/Elected representatives to the Legislative Assembly/Parliament/Documents issued by any Govt.

Copy of Registration Certificate under Societies Registration Act.

Bank account no.

Account Type: Saving/Current/

B. DEPOSITORY ACCOUNT(S) DETAILS

G. INTRODUCER DETAILS (optional)

FOR OFFICE USE ONLY

In-Person Verification done by

INSTRUCTIONS/ CHECK LIST

1.2 Risk of Lower Liquidity:

settlement in the cash market.

August 22, 2011

All Recognized Stock Exchanges

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5. a. PAN: b. Unique Identification Number (UID)/ Aadhaar, if any:___

2. Date of incorporation: _(dd/mm/yyyy) & Place of incorporation: __