Demat Account opening

ashvish007 · #1 26th October 2008, 11:17 PM

Hi,

I want to open a Demat account and contacted one of the brokers for the same purpose. I am a little wary about something they told me. It seems I need to sign an agreement which gives them the right to sell my shares without my permission (something like power of attorney). I asked them why should I sign such a document, and they say that it is mandatory with all brokerage firms and that they will not use it. They are keeping it only as security in case I fail to fulfill my obligations. I wonder whether all brokerage firms ask their clients to sign such an agreement? Please advice.

Thanks
Ashvish

coolboy007 · #2 26th October 2008, 11:38 PM

Quote:

Originally Posted by ashvish007

Hi,

I want to open a Demat account and contacted one of the brokers for the same purpose. I am a little wary about something they told me. It seems I need to sign an agreement which gives them the right to sell my shares without my permission (something like power of attorney). I asked them why should I sign such a document, and they say that it is mandatory with all brokerage firms and that they will not use it. They are keeping it only as security in case I fail to fulfill my obligations. I wonder whether all brokerage firms ask their clients to sign such an agreement? Please advice.

Thanks
Ashvish

Your broker is right , nearly every broker gets a POA signed from their members. Its for their safety :
Eg , if you bought a Nifty future lot and nifty falls 500 points in one day , ur loss will be arnd 25000 , MTM loss is settled EXTRA wid the BAL remaining frm ur ledger , so if you dont provide your BROKER 25000 by next day he will SQ off ur FUT lot without ur consent and also if there are Delivery shares in ur demat they havr the right to sell those shares and get the money they had to pay to exchange on the loss you made , so they NEED POA for that.

IF you will not do margin or F&O trading then no need to sign POA , but these days margin trading comes as default wid brokers like Sharekhan , reliance , icici etc so u will have to sign POA.

Hope you are clear

learn2trade08 · #3 26th October 2008, 11:44 PM

unfortunately the way nifty is taking a nose dive such things will be more commmon.

Quote:

Originally Posted by coolboy007

Your broker is right , nearly every broker gets a POA signed from their members. Its for their safety :
Eg , if you bought a Nifty future lot and nifty falls 500 points in one day , ur loss will be arnd 25000 , MTM loss is settled EXTRA wid the BAL remaining frm ur ledger , so if you dont provide your BROKER 25000 by next day he will SQ off ur FUT lot without ur consent and also if there are Delivery shares in ur demat they havr the right to sell those shares and get the money they had to pay to exchange on the loss you made , so they NEED POA for that.

IF you will not do margin or F&O trading then no need to sign POA , but these days margin trading comes as default wid brokers like Sharekhan , reliance , icici etc so u will have to sign POA.

Hope you are clear

coolboy007 · #4 27th October 2008, 09:29 AM

Quote:

Originally Posted by learn2trade08

unfortunately the way nifty is taking a nose dive such things will be more commmon.

Yups , everyday we having gap downs of 150 points. Who would have thought nifty will plunge 400 points on one day , many dont keep so much margin and the result is positions get sq off further sliding mkts.

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learn2trade08 (26th October 2008)