Very important info regarding safety of funds with broking houses

[leoharee]

Hi,
Just enquired with Investor Services Cell (ISC) which is a separate Department in NSE which handles Investor Grievences.

" There is No Minimum Commitment for repayment of Funds by the NSE in case the Broking House absconds with the investors money."

The reason why am quoting this is, in this Traderji Forum " I saw a post which said NSE gives a minimum insurance of 15 Lakhs per account in case the Broking House absconds with investors money." :annoyed:

Based on the evidences provided by the investor after filing a case with NSE on the absconding Broking House, NSE would repay the amount on a PRO RATA BASIS, out of the amount which the absconded Broking House has paid to NSE as a Security Deposit. :thumb:

So, the amount that each investor would get from NSE would be purely determined on how much amount the Broking House has looted, and the available amount with NSE as Security Deposit from absconding Broking House.

Those who posted that 15 Lakhs commitment by NSE, can you just post the link where it has been mentioned ?

I wished to share it with you guys after speaking to ISC Department on NSE (CHENNAI). Any contrary comments please do let me know with a valid proof so that I can cross question ISC Department of NSE regarding the same.

 

[tradedatrend]

Hi,
Just enquired with Investor Services Cell (ISC) which is a separate Department in NSE which handles Investor Grievences.

" There is No Minimum Commitment for repayment of Funds by the NSE in case the Broking House absconds with the investors money."

The reason why am quoting this is, in this Traderji Forum " I saw a post which said NSE gives a minimum insurance of 15 Lakhs per account in case the Broking House absconds with investors money." :annoyed:

Based on the evidences provided by the investor after filing a case with NSE on the absconding Broking House, NSE would repay the amount on a PRO RATA BASIS, out of the amount which the absconded Broking House has paid to NSE as a Security Deposit. :thumb:

So, the amount that each investor would get from NSE would be purely determined on how much amount the Broking House has looted, and the available amount with NSE as Security Deposit from absconding Broking House.

Those who posted that 15 Lakhs commitment by NSE, can you just post the link where it has been mentioned ?

I wished to share it with you guys after speaking to ISC Department on NSE (CHENNAI). Any contrary comments please do let me know with a valid proof so that I can cross question ISC Department of NSE regarding the same.

Dear whoever you are (here on TJ another person is infected with Cleithrophobia, god knows why you seems his pseudo ID)

your post speaks a lot about your understanding of financial market and its structure

If you dont understand basic things like

"Security Deposit" is one thing

and

"Investor Protection Fund" is another thing

then you must stop spreading rumors, people with average fund are far safer with discount brokers than full service brokers who eat client's money

for your "super intelligent brain" here is link where NSE clarifies about Rs. 15 Lakh claim out of NSE's Investor Protection Fund, which has nothing to do with Broker's "Security Deposit"

http://www.nseindia.com/invest/content/defaulters_committee.htm

Now rest in peace and stop spreading Cleithrophobia now and then, every here and there

 

[Biker]

Leaving aside the investor protection fund and security deposit debate, I think brokers running off with clients money is quite possible theoretically. Because we have given running a/c authorisation to settle the trading a/c, so they have right to debit the money from our a/c. Though I have never came across news of brokers absconding with the money, but you never know.

Or the broker may not abscond but use your money to pay off some wrong bet that he had placed?! And then declare himself bankrupt or something. Ofcourse there is law and stuff but who would want to go through all the hassle?

 

[tradedatrend]

some people were never bothered when traditional brokers were eating clients' fund

but now every tom, dick and harry is showing great concern about safety of fund (mainly in the case of discount brokers) and coming with lame, imaginative situation which never occurred

so funny

 

[cloudTrader]

A good article to read about a NON-DISCOUNT Broker

http://www.moneylife.in/article/wiped-out-by-motilal-oswal-an-aggrieved-small-investor-won-in-consumer-court-but-got-shafted-by-sebi/28666.html

This will be like an eye-opener for those who blindly bash discount broking.

 

[lemondew]

The best way to do it I think is this. I am planning for this. No more brokerages and reliance on brokers. http://www.nseindia.com/content/press/intro_alpha_24092012.pdf

I am working to get more details on this one. In touch with nse guys.
Platform(nse now) , compliance( guess none for individual trading) , no exams I guess since i wont be trading for clients . Any folks thought this way.

 

[tradedatrend]

The best way to do it I think is this. I am planning for this. No more brokerages and reliance on brokers. http://www.nseindia.com/content/press/intro_alpha_24092012.pdf

I am working to get more details on this one. In touch with nse guys.
Platform(nse now) , compliance( guess none for individual trading) , no exams I guess since i wont be trading for clients . Any folks thought this way.

If NSE can accept deposit in form of FD or pledging of blue chip share, then a lot of big clients (50 lakh and upwards) can easily kick the ass of any so called big brokerage house

 

[vishnu_1990v]

Nice info for beginners like me.
Making losses without knowledge in stock market creates tense and without fault of the investor or trader brokers creates tension. Shocking the way SEBI responded to Wing Commander (Retd) CR Mohan Raj.
vishnu_1990v

 

[carnot11]

A good article to read about a NON-DISCOUNT Broker

http://www.moneylife.in/article/wiped-out-by-motilal-oswal-an-aggrieved-small-investor-won-in-consumer-court-but-got-shafted-by-sebi/28666.html

This will be like an eye-opener for those who blindly bash discount broking.

Hello All,

I personally have found that a bogus / forged document has been used as documentary evidence to open my account.

I came to know of this fact once I downloaded the scan copies of fully processed and signed papers related to my account, from the brokers database.

The RM was not aware and does not care, the documentation back office does not know nor care, the person (front desk executive) involved in opening the account does have a clue of how and why this additional piece of document is there is in the first place.

This bogus / forged document is signed by the back office team member as verified from original along with name and signature. Close look at the document reveals that it is a very clever work of forgery, but will easily pass in any audit / compliance check.

Thankfully the bogus document did not carry my signature.

Every person at the broker's office I questioned about this bogus document said - it must have been submitted by me, else how is it there in the first place.

Amazing isn't it.

I went ahead and closed my account with India Infoline.

Another incident -

The front desk executive clearly told me - no need to worry about poor documentation, we make sure everything is ok for the audit (if any). Just give us the margin money / photograph / signatures on various documents and we take care of the rest including opening up a bank account.

I never opened an account with Reliance Capital.

Though the above may be or are rare and freak incidents - but never the less the chances are it may be happening with any and all brokers.

Hence we have to care every step of the way with any and all broking houses, as it is the person who is at fault and not the organization / system.

Enjoy,
CArnot

 

[cloudTrader]

Hello All,

I personally have found that a bogus / forged document has been used as documentary evidence to open my account.

I came to know of this fact once I downloaded the scan copies of fully processed and signed papers related to my account, from the brokers database.

The RM was not aware and does not care, the documentation back office does not know nor care, the person (front desk executive) involved in opening the account does have a clue of how and why this additional piece of document is there is in the first place.

This bogus / forged document is signed by the back office team member as verified from original along with name and signature. Close look at the document reveals that it is a very clever work of forgery, but will easily pass in any audit / compliance check.

Thankfully the bogus document did not carry my signature.

Every person at the broker's office I questioned about this bogus document said - it must have been submitted by me, else how is it there in the first place.

Amazing isn't it.

I went ahead and closed my account with India Infoline.

Another incident -

The front desk executive clearly told me - no need to worry about poor documentation, we make sure everything is ok for the audit (if any). Just give us the margin money / photograph / signatures on various documents and we take care of the rest including opening up a bank account.

I never opened an account with Reliance Capital.

Though the above may be or are rare and freak incidents - but never the less the chances are it may be happening with any and all brokers.

Hence we have to care every step of the way with any and all broking houses, as it is the person who is at fault and not the organization / system.

Enjoy,
CArnot

This is going on rampantly in Broking industry. You did the right thing by closing your account. They should know that not all are complacent. :thumb: