Few of the pages on our account opening form, like POA, running account authorization, electronic contract notes (ECN) have “voluntary” written on them which means a client doesn’t need to compulsorily sign on them. But if I don’t sign, Zerodha doesn’t open accounts. Why?
These are standard formats given by SEBI and are made voluntary keeping in mind the traditional and online brokers.
POA just has limited power and is required only while selling shares. With most online brokers it is not possible to sell shares without POA and you will have to go to a traditional broker who accepts shares through a delivery instruction booklet and give it to him before selling shares.
Running account authorization is taken to make it more convenient to operate a trading account. If you don’t sign, we will have to keep sending money back to your bank account from trading account. This would mean incurring payment gateway costs and also cause a time lag in sending/receiving.
Electronic contract note is for operational convenience as we are an online broker and only send contract notes electronically.
Power of Attorney(POA):
When shares are sold from the demat account or when shares are being pledged, specific POA is required for the broker to debit these shares from your demat account. Without specific POA, the broker is not authorized to debit shares from demat when the client sells. Traditionally(offline method), a broker requires a delivery instruction slip(DIS slip) form the client to debit shares from his demat. It was more expensive to courier these slips, there could be a risk of auction settlement if the slips didn’t reach on time and it was cumbersome in terms of selling price etc.
Running Account Authorization:
Running account authorization prevents the broker from transferring the funds back to the client’s bank account everytime the client sells shares from the demat account… It enables the funds to be retained in the clients trading account facilitating seamless buying and selling of shares.
Electronic Contract Notes(ECN):
Electronic contract notes enable you to receive digital contract notes via email, on a daily basis. If this option is left unselected, then it would mean that the client opts to receive physical contract notes which will be charged at Rs.20 per contract note plus courier charges.
Even they forced me to sign voluntary documents even when it is mentioned as voluntary on top of the page.
They also said they won’t submit my KYC if i don’t sign those documents.
Also refused to refund the money which i paid for registration. Poor Service.