BSE warns brokers on unauthorised trades
Noticing an increasing tendency among some brokers to place unauthorised orders on behalf of clients, premier bourse BSE has asked them to exercise extra caution and do due diligence while executing trades.
"...it has been gathered that there have been growing instances of placing unauthorised orders, on behalf of clients...the trading members are hereby advised to exercise extra caution and due-diligence at their end while executing trades on behalf of their clients," BSE told the brokers.
The warning is part of an advisory on the process to be followed by trading members for withholding payout of funds and securities.
BSE said it has been receiving requests from trading members for withholding payout of funds and securities on account of unauthorised transactions or those on account of alleged fraud. The oldest Asian bourse, which is also the fastest in the world with a trade execution speed of 6 microseconds, has asked brokers to lodge a detailed police complaint and submit the same with the exchange well before the scheduled payout date of the unauthorised transactions. It also asked the brokers to provide a copy of the directions issued by police or any competent authority for the exchange to withhold payout of funds and securities.
"Trading members are hereby once again requested to note that the process needs to be followed well before the scheduled payout date of the particular security followed by the exchange," BSE said in the notice.
Brokers have to provide details with respect to trade date, name of the security, client code, client name, buy/sell order, traded quantity and value, the payout date on which the funds and securities will be released and complaint filed by the client with trading member, if any.
"If the direction issued by the competent authority is in order, the exchange shall issue necessary instructions to Indian Clearing Corporation (ICCL) to withhold release of payout of funds and securities in terms of such directions," the BSE notice said.
"ICCL shall inform the trading member once the funds and securities have been withheld in compliance with the direction issued by the competent authority," it added.