SEBI Updates Investor Charter for Stock Brokers

The Securities and Exchange Board of India (“SEBI”) has issued a circular (SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2025/22) dated February 21, 2025, introducing modifications to the Investor Charter for Stock Brokers.

Key Updates:

1.       Enhanced Investor Awareness and Transparency:

• Stock brokers must prominently display the Investor Charter on their websites, in their offices, and provide a copy in account opening kits.

• Regular communication through emails and letters to clients is now mandatory to keep them informed about their rights and obligations.

• The Investor Charter outlines the services provided by stock brokers, including trade execution, contract note issuance, margin communication, and grievance redressal.

2.       Investor Grievance Redressal Mechanism:

• Stock brokers are required to disclose monthly complaint data in a structured format on their websites to maintain transparency.

• The Online Dispute Resolution (ODR) platform is introduced to facilitate seamless and efficient dispute resolution.

• Complaints can be lodged through SEBI’s SCORES 2.0 platform, email, or directly with stock exchanges for two-tier grievance handling.

3.       Modification of Investor Charter:

• The updated Investor Charter comprehensively details investor rights and obligations, expected service timelines, and guidance on grievance redressal mechanisms.

• Investors have the right to receive clear information on risks, costs, fees, and charges related to investments.

• Stock brokers must issue contract notes within 24 hours of trade execution and provide timely margin-related intimations.

4.       Timelines for Key Activities:

• KYC completion and updation in the KRA system within 3 working days.

• Order execution immediately upon receipt but no later than the same trading day.

• Settlement of client funds on the first Friday/Saturday of the month/quarter as per exchange guidelines.

• Grievance redressal must be completed within 21 calendar days from the date of complaint receipt.

5.       Implementation Timeline:

The circular is effective immediately and supersedes SEBI Circular SEBI/HO/MIRSD/DOP/P/CIR/2021/676 dated December 02, 2021.

Impact on Investors and Stock Brokers:

• Investors will experience greater transparency, access to structured information, and more efficient grievance redressal mechanisms.

• Stock brokers are required to comply with the updated framework by revising their internal policies, website disclosures, and customer service practices.

Investor Rights Under the New Framework:

• Access to all stock exchanges in a chosen segment unless opted out.

• Receive contract notes, margin statements, and account statements on time.

• Right to dispute resolution through multiple grievance channels.

• Compensation from the Exchange Investor Protection Fund (IPF) in case of stockbroker default.

The updated Investor Charter introduced by SEBI reinforces investor protection, enhances transparency, and ensures efficient dispute resolution. By implementing structured timelines and leveraging technology, SEBI aims to build a more investor-friendly environment in the securities market. Investors and stock brokers must adapt to these changes to promote fair and ethical trading practice.