How to check if your broker is registered or not?

Opening a demat or trading account requires you to provide your PAN, Aadhaar, bank details and other personal information. While evaluating different brokers some people get attracted by the features and offers of trading apps and brokers, but it’s vital to check the regulatory details of the broker.

Most of the brokers have disclosed their regulatory documents on their websites. For example, the document of Chola Securities can be found in their ‘Investor Disclosures’ section.

Registered for what?

Merely finding out if a company is SEBI registered gives little information about that company. Depending upon the services the company provides, it may be registered with SEBI for different activities.

For instance, a company can be registered as a stock broker and also as a depository participant. Being a stock broker means it is authorized to undertake trading activities on behalf of clients on stock exchanges, and as a depository participant, it means the company has the permission to operate a client’s demat account and clear and negotiate trades.

Likewise, a company may be registered as a mutual fund distributor with AMFI and as a Corporate Agent dealing in insurance activities with IRDAI.

Clearly outlining the registrations enables customers to understand the legality of the services provided by the company.

Verify Details with SEBI

You can start by verifying the details on the broker's website and confirming them against the list of recognized intermediaries published by SEBI.

Confirm the name of the company, its registration number and the registration category, if all the three are in harmony with each other, you can move on to the next step.

First time account openers should also look into understanding whether the company is authorized both as a stock broker and as a depository participant. This is important, as both authorizations allow the company to carry out different business activities.

Understand and verify the Disclaimers

Most financial service providers, by way of disclaimer, delimit the scope of services they provide and the activities they undertake.

In the case of Chola Securities Limited, the disclaimer mentions that the company is a stock broker and a depository participant registered with SEBI. It also makes it clear that it does not offer investment advisory services and recommends that investors seek advice from an independent financial advisor before making any investment decisions. 

This is to clarify that if a broker executes an order for a client, the broker is not obliged to recommend an investment to the client and explain the rationale for the recommendation. Before accepting any such recommendations, it is appropriate to understand the basis for the recommendation.

Understand your Rights

Familiarise yourself with the complaints and appraisal mechanism while opening your account and make a mental note of the concerned authorities to facilitate a quick and easy process should the need arise.

SEBI’s SCORES and SMARTODR portals provide a mechanism to bring certain complaints regarding stock brokers before SEBI and attempt to amicably resolve disputes respectively.

What registration does not guarantee

Registration of a stock broker does not give you a guarantee of not making losses in the market. Registered stock brokers are not responsible for the performance of shares and can not answer for sudden falls in equity prices.

However, it is important to go through the registration details and perform a review on the disclaimer note before opening a trading account to ensure you’ve done your part.

Chola Securities has provided its plans on its pricing page, and it will barely take a few minutes of your time to go through it.

You should take these steps to protect your interests and not be sorry later.

This article is for information purpose only. It doesn’t recommend any equity, debt or other investment instruments.