In the wake of Karvy Stock Broking fraud, the National Stock Exchange (NSE) has advised share traders to take some cautionary measures to safeguard their money with the stockbrokers. The exchange has asked the market participants to make sure that pay-out of funds/securities is received in their account within a single working day from the date of pay-out.

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The traders are advised to be careful while executing the PoA (Power of Attorney) and specify all the rights that a stockbroker can exercise and time frame for which PoA is valid.

The NSE advisory: Here are the important points:

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In the cautionary note, the NSE said that providing PoA right to the brokers by the trading account holders is not a mandatory requirement as per Sebi rule.

* The market participants should make sure that they receive Contract Notes within 24 hours of the trades and Statement of Account at least once in a quarter from the stockbroker.

* Securities provided by the traders towards margin are not permitted to pledge by the stockbrokers for raising funds.

* Demat account holders should ensure that stockbrokers settle their accounts regularly and in any case not later than 90 days (or 30 days if you have opted for 30 days settlement).

* They should not keep funds and securities idle with the stockbroker.

* The traders should regularly login into their accounts to verify balances and the demat statement received from depositories for correctness.

* They should check messages sent by the exchanges on a monthly basis regarding funds and securities balances reported by the trading member and immediately raise a concern if they notice any discrepancy.

* The account holders should always keep their contact details such as the mobile number and email ID updated with the stockbroker. A trading account holder should take up the matter with the stockbroker or exchange if they do not receive messages from the exchange/ depositories regularly.

* If an account holder observes any discrepancy in their account or settlements, the issue should be immediately taken up with the stockbroker. If the broker does not respond, the market participant should take up the issue with the exchange/depositories.

The NSE advisory came in the aftermath of Karvy Stock Broking scandal involving misappropriation of clients’ securities and funds. Karvy Stock Broking Ltd pledged clients’ securities and raised about Rs 2,800 crore from various banks and non-banking financial companies.

Sebi has banned the brokerage from accepting new clients and stock exchanges BSE and NSE suspended its trading licence.