A client desires to buy or sell shares & securities, he has to transact in the secondary market i.e. through the stock exchange. He cannot do so directly, but has to deal through a broker recognised by SEBI He has to enlist the service of a SEBI registered trading member of NSC or SEBI registered sub-broker of a trading member of NSC/BSE. Different stock exchanges have different bylaws though they all exhibit common safeguards and precautions. In our study we restrict to overview the system adopted in National Stock Exchange/Stock Exchange, Mumbai (BSE), the leading modern stock exchangs of India.

After approaching the broker/sub-broker of the stock exchange to ensure verification of bonafide membership investor may ask the broker/sub-broker to furnish documents such as SEBI registration certificate, Registration with NSE, etc to verify the antecedents of the person. You can also approach the exchange to counter check whether the person holds the valid registration. When a Client instructs his broker to enter into a transaction, he may ask him to buy or sell at the best price and leave the matter to his judgement or he may specify reasonable price limits.

All Indian Residents/Corporates, Non Indian residents, overseas corporate bodies and FII's are also eligible to trade through the Internet. RBI has given guidelines for Internet Banking, in addition to applicability of SEBI guidelines with regard to security transactions.

Trading through the stock exchange is not only compulsory, but it is also safe and risk-free for the investor.

The exchange can ensure settlement and handle disputes/claims arising out of only those trades, which are executed, on NSE/BSE through registered trading members/registered sub-brokers.

An investor should register himself with registered trading members/sub-brokers of NSC by:

• Filling a client registration form.

• And signing a member-Constituent agreement (copy available with all Trading members

• The Investor should read the various terms and conditions carefully and understand their implications before entering into this agreement with your trading member.

• He should check whether it is on a stamp paper of requisite value and whether the stamp paper is valid

• And also whether his name and the name of the trading member are clearly mentioned in the agreement

• He should ensure that both the investor and the trading member have signed on all the pages of the agreement. Also check that the witness has signed and put their name against their signature. He must also check whether the trading member or their representatives have the authority to sign the member-constituent agreement.

1. Order Confirmation Slip - after the order has been placed

2. Trade Confirmation Slip - After the trade has been executed

3. Contract note - where a deal is route through NSE trading member Within 24 hrs of the trade being executed

4. Purchase/sale note - where deal is routed through a registered sub-broker of a NSE trading member Within 24 hrs of the trade being executed

The investor should counter check the details contained in the contract/purchase/sale notes with those on the order and trade confirmation slip. Check whether the order member, trade member and other details on the trade confirmation slip match either those on the contract/purchase/sale notes. In case of any discrepancy, you should bring the same to the notice of the trading member/ sub-broker immediately by way of written communication duly acknowledged by the trading member/sub-broker, clearly mentioning the deals, which do not pertain to him.

It is a confirmation of trades done on a particular day or and on behalf on a client. A contract note issued in the format and manner prescribed by the stock exchange establishes a legally enforceable relationship between the trading member and the client in respect to settlement of trades executed on the exchange as stated in the contract note. Contract notes are made in duplicate, in the member and client both keep one copy each. The said contract notes should be signed by a trading member or by an authorized signatory of the Trading member. After verifying the details contained therein, the 2nd copy of the Contract note should be returned to the trading member duly acknowledged by you.

These documents are very important to enforce the deals transacted through the trading member or sub-broker. In case of disputes/claims/differences, these documents would help you to prove that the transactions have been executed on the exchange through the TM/registered sub-broker. These documents are prerequisites for filling a complaint or arbitration proceeding against TM/registered sub-broker. To ensure that contract note issued to you by the trading member is a valid one, you must verify the following details:

1. The contract note should be in the prescribed format

2. Name and address of the Trading member

3. The SEBI registration number of the trading member

4. Details of trade which order no., trade no, trade time, sec. name, qty, rate, brokerage, settlement no, details of other levies.

5. The trade price should be shown separately from the brokerage charged.

6. Signature of authorized signatory and the arbitration clause stating that the trade is subject to the jurisdiction of Mumbai must be present in the face of the contract note.

1. The purchase/sale note should be in prescribed format.

2. Name address and SEBI registration no. Of the reg. Sub-broker.

3. Name address and SEBI reg. no. Of the affiliated trading member.

4. Details of trade viz. Order no, trade no, trade time, sec name, qty, rate, brokerage, settlement no, details of other levies.

5. The trade price should be shown separately from the brokerage charged

6. Signature of authorized signatory and the arbitration clause stating that the trade is subject to the jurisdiction of Mumbai must be present in the face of the contract note.

As stipulated by SEBI, the maximum brokerage that can be charged is 2.5% of the trade value. This maximum brokerage is inclusive of the brokerage charged by the sub-broker (sub-brokerage cannot exceed 1.5% of the trade value). However the trading member can charge additionally-

1. Service Tax @ 5% of the brokerage.

2. Transaction Charge levied by the stock exchange.

3. Penalties rising on behalf of client (investor).

4. The brokerage and service tax is indicated separately in the contract note

The Investor who had sold securities should deliver the securities to the trading member immediately upon getting the contract note for sale but in any case, before the prescribed securities pay-in day. If he has bought securities he has to pay the amt. Of trading member in such a manner that the amt. Paid is realized before the funds pay-in day. The securities and the funds are paid out to the trading member on the pay-out day.

SEBI has formulated uniform guidelines for good and bad deliveries for documents. An exhaustive list of instances of good or bad delivery of documents- transfer deeds and share certificate is included in the said guidelines. All bad deliveries have to be reported to the clearinghouse by the buying trading member within 48 hrs of pay-out day i.e. generally by Friday.

After buying the shares, the investors' sends the certificate along with the transfer deed to the company for transfer and registration in their names. In certain cases the company for reasons such as signature difference or fake/forged/stolen shares or court injunction preventing transfer rejects the registration. In such cases the company may return the share certificate and transfer deed along with the letter termed as objection memo. All such cases are identified as Company objections.

Stop transfer is the process whereby the company under grounds provided for in the companies' act 1956 stops the transfer of shares. Company on the strength of a copy of FIR generally affects the stop transfer or court order when some securities are reported missing/lost/stolen by the holder of the securities.

The procedure for holding shares and settling trades in scrip-less form is very simple and similar to operating a bank account. A depository Agency reaches the investors through DP's. Banks, custodians of securities and stockbrokers are some of the entities who are DP's. One can start by opening an account with depository agency through a DP. On completion of account opening procedure, he will be allotted an account no. He is then ready to acquire and sell shares in the scrip less form and to demat share certificates, which he already holds.

Despite all precautionary measures taken by you and the regulators, you may have some grievances. The regulator, self regulatory organisations (stock exchange) and the entities supervised by regulators have some kind of mechanism to redress your grievances.

Following table presents the kind of grievances and the authority you should approach for redressal. In addition, you have freedom to take up grievance with SEBI and the court of law.

Investor should immediately write to the company reporting the loss of shares and instruct company to Stop Transfer the shares. You should comply with the formalities intimated by the company for stop transfer or issue of duplicate share certificates. Simultaneously he should lodge a police complaint/Fir reporting the loss or misplacement.