Sebi move on record keeping ‘impractical’: Stockbrokers’ body

A grouping of stockbrokers has termed Sebi’s directive of compulsorily keeping records of telephonic communications with clients as “not practical” since that would be difficult in terms of identification and retrieval.

Voicing concerns over the directive, the Association of National Exchanges Members of India (ANMI), in a letter to Sebi, also said monitoring of communications with clients would be difficult as multiple modes, including mobile phones and WhatsApp messenger, are used for placing orders.

“Telephone recording is very difficult to have at every dealer’s terminals, with accuracy of voice identification and also retrieval at the time of need,” the letter stated.

The share prices change fast and many clients trade by directly communicating with the dealer, and asking such clients for written orders every time will be very cumbersome and is not investor friendly, the association said.

Furthermore, many orders are modified or cancelled at the direction of a client and matching recording of original orders with modification and cancellation instructions is also very difficult, it added.

“Both the premier exchanges put together, there are 13.9 million number of daily trades on an average. Looking at the volume in the market, such system of written order/recording is not practical,” said the letter.

To prevent unauthorised trading activities, Sebi in September had asked brokers to compulsorily “use telephone recording system to record the instructions and maintain telephone recordings” in case the client is giving the orders.

The brokers have been asked to execute trades of clients only after keeping evidence of the client placing such an order.

The evidence could be physical record written and signed by the client, telephone recording, e-mail from authorised ID, log for Internet transactions, record of SMS messages or any other legally verifiable record. The onus will be on stock brokers to produce proof of clients’ activities in the event of any dispute arising out of a stock trade. The directive will be effective January 1.

ANMI said the “existing system of post trade communication with the client with respect to his executed trade is better”. Instead of only informing value of trade in numeric figures, the communication should also include details of the quantity and scrips traded. The Securities and Exchange Board of India (Sebi) is looking to rope in a media agency for the job of publishing its investor awareness advertisements on digital and traditional platforms, including TV, radio and newspapers. For this, Sebi has issued a notice inviting expressions of interest (EoI) from interested parties.

The chosen bidder would be responsible for helping the Sebi fulfil its objectives of educating and creating awareness among existing retail investors, converting savers into investors and make the future generation aware of various avenues in the securities market.

Also, the agency would have to create awareness about and widen the use of several initiatives of Sebi, including the complaints redressal system, financial