Stock broking firms have been given time till April to comply with the Securities and Exchange Board of India (SEBI) directive to record evidence of client orders received over phone.
SEBI in its circular( CIR/HO/MIRSD/MIRSD2/CIR/P/2017/124) dated November 30 had directed brokerages to maintain records of client orders received over phone for a period of three years. In cases where there is a complaint regarding a trade by the client, the records have to be maintained until the resolution of the dispute.
As brokerages had asked for time to implement the directive due to operational difficulties, SEBI has given time till April to comply with the order. No further extension shall be given to comply with the guidelines, SEBI said.
In a related circular issued previously dated September 26, 2017 ( CIR/HO/MIRSD/MIRSD2/CIR/P/2017/108) it was said that “when dispute arises, the burden of proof will be on the broker to produce the above records for the disputed trades’.However for exceptional cases such as technical failure etc. where broker fails to produce order placing evidences the broker shall justify with reasons for the same and depending upon merit of the same, other appropriate evidences like post trade confirmation by client, receipt/payment of funds/securities by client in respect of disputed trade, etc. shall also be considered.”
The stock exchanges have been told to create awareness among brokerages on the issue and also publish in their websites. They also have to make necessary changes in their rules and bye-laws and report and give monthly reports on the implementation of the directive.
The directive was issued by SEBI as per Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors.