Brokerages will soon have to send the brief details of every transaction in an investor’s account to his email address. The details will include what was bought or sold, with the price.
The Securities and Exchange Board of India (Sebi) had discussed this and was shortly expected to issue instructions to the stock exchanges, said a Sebi source.
At present, the Bombay Stock Exchange and the National Stock Exchange select 250 transactions per day and write to the investors concerned. Sebi has now decided that for investors without an email account, the number to be informed in this random manner should be raised to 1,000 per day. The rest will get emails.
At present, some brokers do send contract notes on emails, but this will now be made compulsory, with the mail to go soon after the transaction is done. This is to check unauthorised transactions by brokers in investors’ accounts.
Investors’ associations have frequently raised this issue. Says G S Sood, president, Society for Consumers’ and Investors’ Protection: “Most of the time, the hired staff of big broking houses do transactions in clients’ accounts to meet their turnover targets. If analysed closely, these transactions can never be done by a prudent investor, as they have been observed to bring no gains.”
To get more business, some big broking houses appoint people who manage to hustle investors into signing forms for opening accounts, with the other details being filled by the agents. “This is dangerous. Investors should be careful and fill up everything themselves,” said Sood.
He says along with emails, the brokers should be asked to send SMSes to investors for every transaction in their account, soon after the transaction. The issue has been discussed by Sebi’s Investor Protection and Education Fund Advisory Committee.
Sood says the banking system is using SMS and email alerts for all banking and credit card transactions, which means the technology to implement the suggestion already exists.
