SEBI releases investor charter, lays down dos and don'ts of investing in Indian securities market

Market regulator Securities and Exchange Board of India (SEBI) has released the investor charter for investors in securities market which aims at protecting investors' interest. This charter includes the rights and responsibilities of investors, and dos and don'ts of investing in the securities market.
 
The charter has been published to protect the "interests of investors by enabling them to understand the risks involved and invest in a fair, transparent, secure market, and to get services in a timely and efficient manner".
 
It will also ensure that SEBI-registered intermediaries/ regulated entities adhere to their investor charters, including the grievance redressal mechanism.
SEBI has created a separate investor charter for stock exchanges, clearing corporations and depositories; entities which together are known as market infrastructure institutions (MIIs).
 
Further, the investor charter will ensure that causes of investor grievances are analysed on a periodic basis and appropriate policy amendments are made if required.
 
The investor charter was proposed in the Union Budget 2021-2022 with the aim of protecting investors from mis-selling of financial products.
 
The vision of the investor charter is "to protect the interests of investors by enabling them to understand the risks involved and invest in a fair, transparent, secure market, and to get services in a timely and efficient manner."
 
The rights include getting fair and equitable treatment, expecting redressal of investor grievances filed in SCORES in a time bound manner.
 
As per the investor charter, investors have the right to:
 
  • Get fair and equitable treatment.
  • Expect redressal of investor grievances filed in SCORES (Sebi Complaints Redress System) in a timebound manner.
  • Get quality services from SEBI-recognised market infrastructure institutions and SEBI-registered intermediaries/ regulated entities/ asset management companies.
 
Investors have the responsibility to:
 
  • Deal with SEBI-recognised market infrastructure institutions and SEBI-registered intermediaries/ regulated entities only.
  • Update their contact details such as address, mobile number, email id, nomination and other KYC details in case of any changes.
  • Ensure grievances are taken up by concerned entities within a stipulated period of time.
  • Ensure that their accounts are operated only for their own benefit.
 
Dos for investors:
 
  • Read and understand documents carefully before investing.
  • Know about investor grievance-redressal mechanism.
  • Know the risks involved before investing.
  • Keep track of account statements and bring to notice of concerned stock exchange/ intermediary/ AMC any discrepancy that may be noted.
  • Know about various fees, charges, margins, premiums, etc., involved in the transactions.
  • Preserve relevant transaction-related documents.
 
Don’ts for investors:
 
  • Don’t make payments in cash while making any investment in the securities market, beyond the prescribed limit.
  • Don’t share critical information such as account details and passwords with anyone.
 
"Redressal of investor grievances is an important measure towards investor protection," SEBI said.
 
It added that SEBI now publishes a status report about the disposal of investor grievances received on SCORES portal on the website, on a monthly basis.
 
"A mechanism has been established whereby all SEBI regulated intermediaries/entities will have to disclose average time taken for redressal of investor grievances received by them, on their respective websites in a format specified by SEBI starting from January 2022," it said.
 
SEBI said it has put in place an alternate dispute redressal mechanism for grievances against brokers, depository participants at the level of stock exchanges and depositories.
 
SEBI is examining the prospect of establishing similar mechanism for various services provided by other registered intermediaries/ entities.
 

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Changes in Our Business Model
 
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
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What changes:
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Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
 
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