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Kataria Investors Awareness

At Kataria, we believe in empowering the customer about his rights and obligations and make sure that the client understands the Do’s and Don’t’s of dealing in securities market before investing. We firmly comply with the regulatory rules and regulations and uphold it in the true spirit. For ease of access, we are providing a snapshot of various things that an educated investor need to be aware off before investing in the markets.

Do’s for Clients for dealing in securities market

Trade only through Registered Members of the Exchange. Check from the Exchange website at following links

to see whether the Member is registered with the Exchange.

Insist on filling up a standard ‘Know Your Client (KYC)’ form before you commence trading.

Insist on getting a Unique Client Code (UCC) and ensure all your trades are done under the said UCC.

Insist on reading and signing a standard ‘Risk Disclosure Agreement’.

Obtain a copy of your KYC and/ or other documents executed by you with the Member, from the Member.

Cross check the genuineness of trades carried out at the Exchange through the trade verification facility available on the Exchange website at the following links.

The trades can be verified online where trade information is available up to 5 working days from the trade date.

Insist on a duly signed Contract Note in specified format for every executed trade within 24 hours of trade,highlighting the details of the trade along with your UCC.

Ensure that the Contract Note contains all the relevant information such as Member Registration Number,Order No., Order Date, Order time, Trade No., Trade rate, Quantity, Arbitration Clause, etc.

Obtain receipt for collaterals deposited with the Member towards margins.

Go through the Rules, Bye-laws, Regulations, Circulars, Directives, Notifications of the Exchange as well as of the Regulators, Government and other authorities to know your rights and duties vis-a-vis those of the Member.

Ask all relevant questions and clear your doubts with your Member before transacting.

Insist on receiving the bills for every settlement.

Insist on Monthly statements of your ledger account and report any discrepancies in the statement to your Member within 7 working days. In case of unsatisfactory response report the discrepancy to the Exchange within 15 working days from the date of cause of action.

Scrutinize minutely both the transaction & holding statements that you receive from your Depository Participant.,/

Keep Delivery Instruction Slips (DIS) book issued by DPs in safe possession.

Ensure that the DIS numbers are preprinted and your account number (UCC) is mentioned in the DIS book.

Freeze your Demat account in case of your absence for longer duration or in case of not using the account frequently.

Pay required margins in time and only by Cheque and ask for receipt thereof from the Member.

Deliver the commodities in case of sale or pay the money in case of purchase within the time prescribed.

Understand and comply with accounting standards for derivatives.

Ensure to read, understand and then sign the voluntary clauses, if any, agreed between you and the Member. Note that the clauses as agreed between you and the Member cannot be changed without your consent.

Get a clear idea about all brokerage, commissions, fees and other charges levied by the Member on you for trading and the relevant provisions/guidelines specified by FMC/Commodity exchanges.

Make the payments by account payee cheque in favour of the Member. Ensure that you have a documentary proof of your payment/deposit of commodities with the Member, stating date, commodity, quantity, towards which bank/ demat account such money or commodities (in the form of warehouse receipts) deposited and from which bank/ demat . account.

The payout of funds or delivery of commodities (as the case may be) shall not be made to you within one working day from the receipt of payout from the Exchange, in case you have given specific authorization for maintaining running account to the member. Thus, in this regard, the running account authorization provided by you to the Member shall be subject to the following conditions:

Such authorization from you shall be dated, signed by you only and contains the clause that you may revoke the same at any time.
You need to bring any dispute arising from the statement of account to the notice of the Member in writing preferably within 7 (seven) working days from the date of receipt of funds/commodities or statement, as the case may be. In case of dispute, refer the matter in writing to the Investors Grievance Cell of the relevant Commodity exchanges without delay.
In case you have not opted for maintaining running account and pay-out is not received on the next working day of the receipt of payout from the exchanges, please refer the matter to the Member. In case there is dispute, ensure that you lodge a complaint in writing immediately with the Investors Grievance Cell of the relevant Commodity exchange.
Please register your mobile number and email id with the Member, to receive trade confirmation alerts/ details of the transactions through SMS or email, by the end of the trading day, from the commodity exchanges.

You should familiarize yourself with the protection accorded to the money or other property you may deposit with your member, particularly in the event of a default in the commodity derivatives market or the member becomes insolvent or bankrupt.

Please ensure that you have a documentary proof of having made the deposit of such money or property with the member, stating towards which account such money or property deposited.

In case your problem/grievance/issue is not being sorted out by concerned Member/Authorised Person then you may take up the matter with the concerned Commodity Exchange. If you are not satisfied with the resolution of your complaint then you can escalate the matter to FMC.

Don’t’s for Clients for dealing in securities market

Do not deal with any unregistered intermediaries.

Do not undertake off-market transactions as such transactions are illegal and fall outside the jurisdiction of the Exchange.

Do not enter into assured returns arrangement with any Member

Do not get carried away by luring advertisements, rumours, hot tips, explicit/ implicit promise of returns, etc.

Do not make payments in cash/ take any cash towards margins and settlement to/ from the Member.

Do not start trading before reading and understanding the Risk Disclosure Agreement.

Do not neglect to set out in writing, orders for higher value given over phone.

Do not accept unsigned/duplicate contract note/confirmation memo.

Do not accept contract note/confirmation memo signed by any unauthorized person.

Don’t share your internet trading account’s password with anyone

Do not delay payment/deliveries of commodities to Member.

Do not forget to take note of risks involved in the investments.

Do not sign blank Delivery Instruction Slips (DIS) while furnishing commodities, deposits and/or keep them with Depository Participants (DP) or member to save time.

Do not pay brokerage in excess of that rates prescribed by the Exchange.

Don’t issue cheques in the name of Authorized Person.

Jaago Grahak Jaago

“I avoid DABBA TRADING in commodity futures”

Dabba (off-exchange) trading is both risky and illegal.

Dabba trading or trading in commodity futures outside the FMC-regulated exchanges is illegal as per the Forward Contracts Regulation Act (FCRA), 1952.
Dabba trading is also risky as it does not provide protection against counterparty default risk as guaranteed by commodity futures exchanges for trades done on them.

I insist on and verify records of all my commodity futures trades.

I insist on keeping all the records (contract notes etc.) related to my trades.
I also verify the authenticity of these records with the detailed information available on the exchange website upto 5 working days from the day of trade.

A dispute in Dabba trading cannot be redressed by the commodity exchange.

Dispute arising in Dabba trading can only be referred to police.
However, disputes arising in trades done on commodity futures exchanges can be redressed, including through arbitration,as provided by the exchange bylaws and regulations.

“There are NO GUARANTEED RETURNS on commodity market investment”

Risk is an integral part of investment in commodity markets, and returns from this market cannot be assured.

Beware of all promotional and sales advertisements/literatures/talks that promise guaranteed and high returns on your investment in commodity futures markets.

Knowledge of physical markets of the commodities that you invest in is essential to make informed decision.

Do not believe in price tips and rumours. Do your own homework to trade in them successfully.

“I TRADE ONLY on recognised commodity futures exchanges”

I know how to protect my investment

I trade only on regulated Commodity Futures Exchanges. Trading outside Recognised Exchanges (Dabba trading) is illegal and has the risk of losing my investment (margin money)

Trading in Recognised Commodity Futures Exchanges is transparent and it gives everybody equal access

Being regulated, Commodity Futures Exchanges provide equal access to all subject to common entry norms

Trading on Recognised Commodity Exchanges gives me peace of mind about security of my money and fair trading

Regulated Commodity Exchanges guarantee quality, quantity, price, settlement, etc, as per contract terms

The Commodity Futures Exchange protects my interests in case of a dispute

The Commodity Futures Exchange ensures issue of a contract note as a proof of order execution with all trade details, which enables me to seek redressal for any grievance/dispute. Trading outside an exchange is illegal and cannot provide legal remedies/redress my grievances

” Trade in Commodity Futures WITHOUT FEAR OF FRAUD. “

Know Your Rights…

Insist on a contract note for trades executed
Approach the Exchange or the Forward Markets Commission (FMC) for redressal of your grievances
Ensure that trading in your account is conducted only on your specific instructions and without unreasonable delay
Insist on periodical statement of ledger accounts
Conduct transactions only through cheque

” I TAKE MY OWN INVESTMENT DECISIONS “

I do my own research on commodities and take my own decisions while investing

Besides supply and demand fundamentals, interest rates, exchange rates and govt. policy too drives commodity prices. I seek information on these pricemoving factors from reliable independent sources before taking my trading decisions

I don’t get lured by false promises of assured returns

Returns can never be guaranteed in the commodity futures market.

I don’t avail of portfolio management services (PMS)

PMS services in commodities are not permitted by Forward Markets Commission (FMC) the regulator for the commodity futures market and is illegal

It’s my money; I manage it myself

I do not invest in commodities that I do not understand. I know that investing in commodities is different from investing in securities or other instruments. Without knowledge of fundamental factors, I do not risk my hard-earned money.

” I am AN IDEAL FUTURES MARKET TRADER “

I trade only on recognised commodity futures exchanges

I know that trading outside an exchange platform is illegal

I trade through brokers/members registered with the Forward Markets Commission (FMC). List of such brokers is available on the exchange websites.

I verify my broker’s credentials

I don’t get lured by promises of assured returns before trading

I do my own research on commodities before trading I study the contract specifications and the delivery and settlement procedure before trading

I keep verified records of all market transactions

I insist on contract notes, receipts and account statements from my broker. Verify them with the information available on the Exchange website

I always pay by cheque from my designated account

I pay the broker by cheque (including margins), in his name, insist on receipts and keep these carefully and understand that I am entitled to receive funds within 48 hours of Exchange’s pay-out

I trade within my investment and risk taking capacity

I know my ability to take risks and avoid overtrading despite lure of making huge profit