SEBI Chief Defends Order To Record Client Calls. Brokers Term It Impractical
Maintaining proof of client instructions will curb unauthorised trading, says SEBI chief.
India’s stock market regulator said there’s nothing unusual in its order asking brokers to maintain written record of instructions given by clients to curb unauthorised trades.
“I think it’s a move in the right direction,” Ajay Tyagi, chairman of the Securities and Exchange Board of India, told BloombergQuint on the sidelines of ‘iRunForFun’ marathon organised by IL&FS Financial Services. This will help in arbitration of disputes and the move will benefit both the clients and the brokers, he said. In case, there is no other communication, the brokers can communicate through the phone and record the conversation, he said.
The regulator’s September 26 order said a considerable proportion of investor complaints are against “unauthorised trades”. “We’ll see if there’s some issue (with the order). As of now, I think there’s no issue,” Tyagi said.
The Association of National Exchanges Members of India have called the move impractical. Recording calls at the dealer’s terminal with voice identification and its retrieval is difficult, it said in an letter to the regulator. BloombergQuint has obtained a copy of the letter. It says…
• Telephone recording at the dealer’s terminal with accuracy of voice identification and its retrieval is difficult.
• Clients who trade directly from the broker’s office may communicate deals verbally and as the trade is time-sensitive, asking for a written instruction every time an order is placed would be cumbersome as the prices move very fast.
• One client may use multiple modes of communication like text messages, WhatsApp, or even calls and to keep track of all the modes would be an issue.
• Tracking modifications and cancellations in all the orders is arduous as the average volume of daily trade, both NSE and BSE combined, is about 1.39 crore.
Tyagi, however, reiterated that there’s nothing unusual about it, whether clients communicate through SMS, e-mail or whatever mode. “In today’s world, the clients should communicate with their brokers to check if they are placing an order or not. This will ensure that there are no disputes later.”