With a view to prohibit misuse of clients? securities and funds by brokers, market regulator Securities & Exchange Board of India (Sebi) has proposed a policy for handling running account authorisation taken by the brokers.
The regulator has also proposed banning brokers from creating email ID for the issuance of electronic contract notes which enable brokers to inform the clients about their transactions.
The authorisation gives the broker the right to retain the funds and securities of the clients with itself on an ongoing basis for meeting the settlement or margin obligation as and when required. However, there have been many instances where the clients? funds and securities have been misused by brokers either for their own proprietary trading or for some other purpose.