September 27, 2010 6089 VIEWS



The Share Support Service wishes to issue an advisory on the challenges investors have had with engagements with stockbroking firms that have been suspended by the NSE/SEC.
It would appear that this issue requires further clarification by the NSE/SEC but suffice to say, the following represents a guide on what is known at this point in time.
Suspended stock brooking firms by law are not allowed to trade or transact in any form on the floor of exchange.
Interpreted clearly, firms so affected would be temporarily inactive in terms of ‘buy and sell’ on behalf of their respective clients.
The investors/clients of the affected firms would have no option to transfer their accounts to other houses ‘perceived to be safe’.
The concern therefore remains as to what the law intended for investors/clients of such firms to do in the intervening period should a need for a buy or sell arise.
Unofficially, some firms have had to approach other ‘friendly’ stockbrokers to help see the deal through; as a survival tactic to prevent active investors/ traders who buy and sell on daily basis from leaving such firms.
Indeed, such firms have been known to make special arrangements for their big clients and active investors in getting their transactions done as mandated.
Under this scenario however, it is unlikely that such clients are likely to receive their trade alert(s).
On the other hand, and with their smaller clients or inactive investors, they often face challenges in getting their transaction(s) executed on time, as the affected firms often have to collate their respective requests before such mandates could be executed through other means.
Investors who are having challenges with their transactions are advised to approach their firms to find out:
*       If there is any special arrangement for their transactions without extra cost;
*       The time frame for their transactions;
*       The status of their resolution efforts with respect to the suspension; and
*       Any other information/modalities they need to know about the service contracted.
If the client is not comfortable with the arrangements, he/she can transfer his/her account to any other house of his/her choice.
If in doubt, send a request to the NSE/SEC for further guidance.
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