How to open a securities trading account
Investors in capital markets conduct their transactions through a broker or a sub-broker registered with Sebi. For this, they need to open a securities trading account with the concerned entity.
Until recently, while opening such an account, the investor needed to fill up and sign multiple documents. However, Sebi has now simplified the procedure. Investors need to sign only one trading account opening form, which will be standardised across brokers, exchanges and markets segments.
The client account opening form has two parts. Part A is the Know Your Client (KYC) form, and PAN is mandatory for any entity opening a trading account. Part B includes the bank account and demat account details of the client.
Supporting documents: Self-attested copies of PAN card and proof of identity and address from the list specified in the form have to be enclosed.
Rights & obligations document: It lays down the rights and obligations of all parties, investor, broker and sub-broker, to the agreement as specified by Sebi and the stock exchanges.
Risk disclosure: The basic risks of trading and specific risks associated with the various segments of the market are given in this document.
Procedures and tariff note: These documents are specific to each broker. They specify the tariffs that will be charged and the procedures to be followed in all client-broker interactions.
Points to note
Demat connection: If the client wants to open a demat account with the same broker with which he has a trading account, the KYC formality used during the opening of the latter can be used.
Signature: The client's choices regarding exchanges and the segments in which he wants to trade have to be indicated with his signature in the account opening form.
Copy: The brokers must provide a copy of the documentation to the clients after the account has been opened.
Source: Economic Times
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