Risk Disclosures

Risk Disclosure Document, Guidance Note, Rights & Obligations and Investor Advisories as required under SEBI Master Circular Clauses 21.13, 49.2 and 85.3.

⚠ 9 Out of 10 Individual Traders in Equity F&O Incurred Net Losses

9 out of 10 individual traders in the equity F&O segment incurred net losses during FY 2021–22.
On average, loss-makers registered a net trading loss close to ₹50,000.
Over and above the net trading losses, loss-makers expended an additional 28% of net trading losses as transaction costs.
Those making net trading profits incurred between 15% to 50% of such profits as transaction costs.

Source: SEBI Study on Analysis of Profit and Loss of Individual Traders dealing in Equity F&O Segment (January 2023) — mandated under SEBI Master Circular Clause 49.2 (Annexure 23).

📄Risk Disclosure Document (RDD)

General Investment Risks

Investments in securities market are subject to market risk. Values can go down as well as up.
Past performance is not indicative of future results. There is no assurance or guarantee of returns.
The securities market is subject to risks including market risk, liquidity risk, credit risk, regulatory risk and operational risk.
Investors should invest only the amount they can afford to lose without affecting their financial wellbeing.

Capital Market Risks

Market Risk: Prices of securities fluctuate based on demand and supply, economic conditions, geopolitical events and other factors.
Liquidity Risk: Some securities may not be easily tradable; large orders may significantly affect market prices.
Concentration Risk: Investing heavily in a single security or sector increases the risk of significant losses.
Settlement Risk: Settlement failures can occur in exceptional circumstances despite the T+1 settlement cycle.

Derivatives (F&O) Specific Risks

High Risk Instrument: F&O trading involves substantial risk of loss. Losses can exceed the initial margin deposited.
Leverage Risk: Derivatives amplify both profits and losses. A small adverse price movement can result in losses many times the margin deposited.
Mark-to-Market (MTM) Losses: Futures positions are marked to market daily. Failure to meet margin calls may result in the position being squared off at a loss.
Options Risk: Buyers of options risk losing the entire premium paid. Writers (sellers) bear potentially unlimited loss.
Expiry Risk: Positions not squared off before expiry are settled at the exchange-determined settlement price.

📚Guidance Note — Do's and Don'ts

Do's

Always insist on a contract note from your broker for every trade executed.
Verify the contract note against your own records of orders placed.
Maintain records of all trading instructions given to your broker.
Regularly review your account statement and report discrepancies immediately.
Keep your KYC details updated with your broker and depository.
Understand the margin requirements and ensure adequate funds are available.
Use only SEBI-registered brokers for executing trades.
Read the Risk Disclosure Document thoroughly before trading in derivatives.
Use SCORES 2.0 and SMART ODR if your complaint is not resolved.

Don'ts

Do not trade on the basis of unverified tips, rumours or hot stock recommendations.
Do not ignore margin calls or fail to top up margins when required.
Do not give unlimited discretion to your broker to trade without proper authorisation.
Do not transfer funds to any personal account of broker representatives.
Do not share OTPs, passwords or login credentials with anyone.
Do not invest borrowed funds in volatile instruments unless you fully understand the risks.
Do not hold excessively concentrated positions in a single stock or sector.

📝Rights & Obligations — Stock Broker & Client

Obligations of the Broker

To provide best execution of client orders and not to front-run or misuse client information.
To issue contract notes within 24 hours of trade execution.
To release funds and securities to the client within prescribed timelines.
To maintain segregated client accounts and not use client funds for proprietary trading.
To make margin calls and provide adequate notice before liquidating positions.
To keep client data confidential and not share it with third parties without consent.

Obligations of the Client

To provide complete, accurate and up-to-date KYC information.
To maintain adequate funds and securities to meet margin and settlement obligations.
To not engage in market manipulation, insider trading or any fraudulent activity.
To verify contract notes and account statements and report discrepancies promptly.

📝Rights & Obligations — Beneficial Owner & DP (CDSL)

The DP shall maintain the BO's demat account accurately and promptly process all instructions.
The BO has the right to receive transaction statements and holding reports at regular intervals or on request.
The BO must ensure instruction slips are properly filled and submitted within cut-off times.
The DP shall not transfer securities without a valid instruction from the BO.
The BO has the right to freeze and unfreeze their demat account.
Disputes between BO and DP are subject to the grievance mechanism of CDSL and SEBI.

📰Policy on Circulation of Unauthenticated News

As required under SEBI Master Circular Clause 85.3:

Employees shall not circulate unverified or unauthenticated news, rumours or information about any listed security through any medium.
Employees shall not use any communication channel to spread market-moving information that is not publicly available.
Any employee found circulating such information shall be subject to disciplinary action, and such matters shall be reported to SEBI / exchanges as required.
Clients are also advised not to act on or spread unverified market information.

🔔Investor Advisories

KYC is a one-time exercise — once done through a SEBI-registered intermediary, you need not undergo it again when you approach another intermediary.
Do not share the credentials of your e-Filing / Income Tax account with anyone.
Check if the broker has any disciplinary actions / penalties on the exchange or SEBI website before dealing.
Beware of fraudsters posing as SEBI officials or broker employees asking for money or OTPs.
Never pay cash to any broker employee. Always insist on proper receipts.
Prevent unauthorised transactions in your demat account by registering your mobile number and email for alerts.