The Securities and Exchange Board of India (Sebi) expanded on its previous direction to stock brokers to provide SMS and email alerts to clients, aimed at preventing unauthorised trading activities. The clarification mandates that brokers must upload distinct mobile numbers and email addresses for each client account, even if it is a non-individual client, bolstering investor protection.
Under the original circular its August 2011, brokers could use certain details of their clients including separate mobile numbers and email addresses for each client, only if they belonged to immediate family members, which includes an individual’s spouse, dependent children, and parents. However, this provision was limited to individual clients, excluding entities like Hindu Undivided Families (HUFs), partnerships, trusts, and corporations. Sebi has opened the draft circular for public comments until November 18, 2024.
New Change
Yesterday, Sebi proposed to expand this exception to include non-individual clients. Organisations such as HUFs, partnerships, trusts, and corporations could appoint authorized representatives to receive consolidated SMS and email alerts. For instance, a corporate account could designate an individual based on board resolution, while a partnership could select one of its partners for notifications.The proposed guidelines specify authorized representatives for different client types:
In the case of individuals, self, spouse, dependent children and dependent parents
In the case of HUF, Karta or any of the Co-parceners as per prior approval of Karta
In the case of a partnership firm, any of the partners as per prior approval of all authorised partners
In the case of a Trust, any of the trustees or beneficiaries as per resolution passed by the Trust
In the case of Corporates, the Authorised person operating the trading account as per the Board Resolution passed by the Corporate
