Brokerage Firms Related Questions in General


  1. What is the official Title of the principal officer of any Brokerage firm ? Ultimately which official person in the brokerage firm , gets to eat the porridge if something goes wrong?

  2. Except for the customer care executives who deal with everyday queries of a trader, who is the next person a trader can contact regarding legal aspects of a trader and broker relationship ?

  3. Is the Authorized Signatory of the Contact Note legally responsible for errors in the Contract note?

  4. In your opinion, do brokerages in India INTENTONALLY manipulate funds in a traders trading account ? YES / NO

  5. If answer to question 4 is YES. How do they do the manipulation ? Is it in the contract note, financial ledger, demat ?

  6. What are the audit steps a retail daytrader need to follow everyday, to make sure they are not taken for a ride ?

1 Like
  1. hmm… compliance officer is the most important person in a broking business. But if something goes wrong I guess directors/partners will be the most affected.

  2. It will vary based on brokerage firms, there could be various hierarchies. At Zerodha we are like a flat organization, so if there are issues it reaches to Hanan (who heads support) and me quite fast. But that said, I would probably not entertain personal queries if someone else from our team can easily handle it.

  3. The person signing is representing the broking firm. So yeah he and the firm is responsible.

  4. We are a very well regulated market, it is very tough to intentionally manipulate.

  5. The only manipulation if you can call it is where things are done to up the revenue. Dealers/sub-brokers placing unauthorized trades to meet brokerage targets, charging something which was not agreed upon with the client, etc.

  6. Best to stick with brokers who are compliant to rules and regulations. For example certain brokers allow using the same funds for equity and commodity, which is an absolute no-no from SEBI. If you are trading with such a broker, the chances are high that he may break rules elsewhere as well. Best not to trade with brokers who take risk lightly (give excessive leverage and don’t force clients out when they don’t have sufficient funds), when shit hits the fan these brokers might be in trouble. Also keep putting withdrawal request of funds once in a while atleast, if it doesn’t hit your bank within 24 hours and if it repeats a couple of times, maybe there is a liquidity problem. etc…


Once again, thanks for your timely response and for educating us to be productive traders.