Brokerages to Keep Telephonic Records of Client Orders from April | CORPORATE ETHOS

Brokerages to Keep Telephonic Records of Client Orders from April

By: | January 11, 2018
stock telephonic record

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.