Risk disclosure in the Equity Futures & Options segment aims to inform individual traders about the inherent risks involved in trading these derivative instruments. By disclosing these risks, regulatory bodies such as SEBI seek to ensure that traders are fully aware of the nature of these instruments and the challenges they pose.
9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
On an average, loss makers registered net trading loss close to ₹ 50,000.
Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Beware of fixed/guaranteed/regular returns/capital protection schemes. Brokers or their authorized persons, or any of their associates, are not authorized to offer fixed/guaranteed/regular returns or capital protection on your investment. They are also not authorized to enter into any loan agreement with you to pay interest on the funds offered by you. Please note that in case of default by a member, claims for funds or securities given to the broker under any arrangement/agreement for indicative returns will not be accepted by the relevant Committee of the Exchange as per the approved norms.
Do not keep funds idle with the Stock Broker. Your stock broker must return any credit balance lying with them within three working days if you have not done any transactions within the last 30 calendar days. In case of default by a Member, claims for funds and securities, without any transaction on the exchange, will not be accepted by the relevant Committee of the Exchange as per the approved norms.
Check the frequency of account settlement opted for. If you have opted for a running account, please ensure that your broker settles your account at least once in 90 days (or 30 days if you have opted for 30-day settlement). In the event of a trading member being declared a defaulter, client claims against such a defaulter member will be subject to the norms for eligibility of claims for compensation from the Investor Protection Fund (IPF). These norms are available on the Exchange website at the following link: https://www.nseindia.com/invest/about-defaulter-section.
Brokers are not permitted to accept the transfer of securities as margin. Securities offered as margin/collateral must remain in the client's account and can only be pledged to the broker through a 'margin pledge', created in the Depository system. Clients are not permitted to place any securities with the broker, or their associates, for any reason. Brokers can only take securities belonging to clients for the settlement of securities sold by the client.
Keep your contact details updated with your stock broker. Ensure that your mobile number and email ID are updated with your broker. Email and mobile number are mandatory, and you must provide the same to your broker for updating in Exchange records. If you are not receiving messages from the Exchange/Depositories regularly, take up the matter with your Stock Broker/Exchange immediately.
Don't ignore emails/SMSs from the Exchange. Verify the trades with the contract notes/statements of accounts received from your broker. Report any discrepancies to your broker in writing immediately. If the Stock Broker does not respond, escalate the matter to the Exchange/Depositories promptly.
Check weekly messages sent by Exchanges regarding funds and securities balances. Compare these with the weekly statement of accounts from your broker and immediately raise a concern with the Exchange if you notice any discrepancies.
Do not transfer funds to unauthorized persons for trading purposes. Funds should only be transferred to SEBI-registered Stock Brokers. Avoid transferring funds to anyone, including an authorized person or an associate of the broker.
Avoid unauthorized collective investment schemes or indicative/fixed returns schemes. Investors should abstain from dealing in unauthorized collective investments, portfolio management schemes, or any indicative/guaranteed/fixed returns/payment schemes.