Sebi’s new circular for stock brokers: What does it say about email and SMS alerts to investors?

The capital markets regular Securities Exchange Board of India (Sebi) on Wednesday released a master circular for stock brokers. Last year, Sebi had released a master circular on May 17 in respect of stock brokers. 

However, this 414-page master circular released on Wednesday now subsumes all the previous directions and instructions issued in the past.

Here we list out some of the key details pertaining to the requirement of sending alerts to investors. Stock exchanges are being told to send details of the transactions to investors through SMS and email alerts by the end of the trading day. 

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These would be subject to the following:

1. These guidelines are applicable to equity -- cash and derivative -- segments of the stock exchanges.

2. Stock exchanges will provide a platform to stock brokers to upload the details of their clients, preferably in sync with the UCC updation module.

3. Stock brokers are meant to upload the details of clients, such as, name, mobile number, address for correspondence and E-mail address. 

4. The brokers are also told that they will have to ensure that the mobile numbers/ email ids of their employees and authorised persons are not uploaded on behalf of  their clients.

5. There should be separate mobile number/ email IDs uploaded for each client. 

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However, there could be the same contact details when such clients belong to one family. This can be done at the specific written request of a client . And family means self, spouse, dependent children and dependent parents.

Confirmation from investors

After uploading of details by the stock brokers, the Stock Exchanges are meant to take necessary steps to verify the details which include the following:

1. Sending SMS and e-mail directly to the investors at the contract details shared by the brokers.

2. Sending letters to the address of the investors shared by the stock brokers.

Once investors confirm the same, the stock exchanges will start sending the transaction details directly to them.

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The stock exchanges may use the amount set aside from the listing fees (20 percent of the listing fees) for providing services to investors, to meet the expenses for providing this sms and email facility.

It is worth mentioning that the new circular lists out a range of activities including registration of brokers, supervision and oversight to dealings with clients to investor grievance redressal.

These also include default-related provisions and foreign accounts tax compliance.