Rise of American Accounts. "Hollywood. "

(1) Investor sells securities in any of the stock exchanges linked to depository through a broker.

(2) Investor instructs his DP to debit his demat account with the number of securities sold and credit the broker's clearing account.

(3) Before the pay-in-day, broker of the investor transfers the securities to clearing corporation.

(4) The broker receives payment from the stock exchange.

(5) The investor receives payment from the broker for the sale of securities in the same manner as received in case of sale of physical securities.

(B) Procedure for Purchasing Dematerialised Securities

The procedure for purchasing dematerialised securities is also similar to the procedure for buying physical securities.

(1) Investor instructs DP to receive credits into his account in the prescribed form. There may be one time standing instruction or separate instruction each time to receive credits.

(2) Investor purchases securities in any of the stock exchanges linked to depository through a broker.

(3) Broker receives payment from investor and arranges payment to clearing corporation.

(4) Broker receives credit of securities in clearing account on the pay-out-day.

(5) Broker gives instructions to DP to debit clearing account and credit client's account.

(6) Investor receives shares into his account by way of book entry.

7.Rolling Settlement. Rolling settlement is an important measure to enhance the efficiency and integrity of the security market. The shift from the traditional account period settlement marks an important change in the market design and age old practices. In January, 1998 ,SEBI had introduced rolling settlement on a voluntary basis on the stock exchanges for securities, which were eligible for dematerialised trading. However, as there was hardly any response to the voluntary scheme, SEBI introduced compulsory rolling settlement initially for 10 scrips in January 2000 and then increased the number of scrips in a phased manner to 163 by May 2000 and further to 414 scrips from July 2,2001.Rolling settlement has been introduced in the form of T+5 settlement system where T is the trade date and 5 days are given for delivery of securities and cash payments.

FUNCTIONARIES OF STOCK EXCHANGES

Functionaries of stock exchanges refer to those persons or individuals or institutions who perform the functions of a Stock Exchange and who are the registered members of the exchange. The following are the various types of functionaries who function at the stock exchange :

(1) Jobbers

Jobbers are security merchants dealing in shares and debentures as independent operators. They buy and sell securities on their own behalf and try to earn through price changes. Jobbers cannot deal on behalf of public and are barred from taking commission. They directly deal with brokers who in turn make transactions on behalf of public. Jobber generally quotes two prices, one at which he is prepared to purchase and the other at which he is prepared to sell a particular security. The difference between the two prices is the Jobber's profit which is technically known as Jobber's turn.

The London Stock Exchange has two types of members known as Jobbers and brokers. Every members has to declare in the beginning every year whether he will be acting as Jobber or Broker. Once he makes a declaration then he has to stick to it.

Characteristics

1. A jobber purchases and sells securities in his own account and has no contact with the general public.

2. The jobber does not work on commission basis rather he works for profit.

3. A Jobber always quotes two price one high and one low while dealing with brokers and aims at earning profit out of the differences between two prices.

4.A jobber is a professional speculator. He specialises in a limited number of securities.

2.Brokers

Brokers are commission agents, who act as intermediaries between buyers and sellers of securities. They do not purchase or sell securities on their behalf. They bring together buyers and sellers and help them in making a deal. Brokers charge commission from both the parties for their services. Brokers are the experts in estimating trends of prices and can effectively advise their client in reaching a fruitful gain. Brokers get orders from investing public and execute the orders through Jobbers and they are entitled to a prescribed scale of brokerage. The investors who do not know the technicalities of stock exchanges are greatly benefitted by the expertise of brokers.

A broker has to make an application for registration as a member of Stock Exchange to SEBI along with the requisite fee. The Board after satisfying itself that the applicant has the necessary infrastructure to effectively carry out its activities will grant the certificate of registration. The broker has to take adequate measures for rehearsal of grievances of investors within 30 days from the date of receiving complaint and has to inform SEBI about such complaints. Once registered, the brokers have to follow a specified code of conduct.

Duties of a Broker

The duties of a broker can be divided into following three main groups. (a) General duties (b) Duty to the Investors (c) Duties towards other stock brokers.

(a) General Duties. (1) Integrity : A stock-broker, shall maintain high standards of integrity, prompitude and fairness in the conduct of all his business.

(2) Exercise of due skill and care : A stock-broker shall act with due skill, care and diligence in the conduct of all his business.

(3) Manipulation : A stock broker shall not indulge in manipulative, fraudulent or deceptive transactions or schemes or spread rumours with a view to distorting market equilibrium or making personal gains.

(4) Malpractices : A stock-broker shall not create false market either singly or in concert with others or indulge in any act detrimental to the investor's interest or which leads to interference with the fair and smooth functioning of the market. A stock-broker shall not involve himself in excessive speculative business in the market beyond reasonable levels not commensurate with his financial soundness.

(5) Compliance with statutory requirements : A sub-broker shall abide by all the provisions of the Act and the rules, regulations issued by the Government, the Broad and the Stock Exchange from time to time as may be applicable to him.

(b) Duty to the Investor.(1) Execution of Orders : A stock-broker, in his dealings with the clients and the general investing public, shall faithfully execute the orders for buying and selling of securities at the best available market price and not refuse to deal with a small investor merely on the ground of the volume of business involved. A stock-broker shall promptly inform his client about the execution or non-execution of an order, and make prompt payment in respect of securities sold and arrange for prompt delivery of securities purchased by clients.

(2) Issue of Contract Note : A stock-broker shall issue without delay to his client a contract note for all transactions in the form specified by the stock exchange.

(3) Breach of Trust : A stock-broker shall not disclose or discuss with any other person or make improper use of the details of personal investments and other information of a confidential nature of the client which he comes to know in his business relationship.

(4) Business and Commission :

(a) A stock-broker shall not encourage sales or purchases of securities with the sole object of generating brokerage or commission.

(b) A stock-broker shall not furnish false or misleading quotations or give any other false or misleading advice or information to the clients with a view of inducing him to do business in particular securities and enabling himself to earn brokerage or commission thereby.

(5) Business of defaulting clients : A stock-broker shall not deal or transact business knowingly, directly or indirectly or execute an order for a client who has failed to carry out his commitments in relation to securities with another stock-broker.

(6) Fairness to clients : A stock-broker, when dealing with a client, shall disclose whether he is acting as a principal or as an agent and shall ensure at the same time, that no conflict of interest arises between him and the client. In the event of a conflict of interest, he shall inform the client accordingly and shall not seek to gain a direct or indirect personal advantage from the situation and shall not consider clients' interest to his own.

(7) Investment Advice : A stock-broker shall not make a recommendation to any client who might be expected to rely thereon to acquire, dispose of, retain any securities unless he has reasonable grounds for believing that the recommendation is suitable for such a client upon the basis of the facts, if disclosed by such a client as to his own security holdings, financial situation and objectives of such investment. The stock-broker should seek such information from clients, wherever he feels it is appropriate to do so.

(8) Investment Advice in Publicly Accessible Media :(a) A stock broker or any of his employees shall not render, directly or indirectly, any investment advice about any security in the publicly accessible media, whether real-time or non real-time, unless a disclosure of his interest including the interest of his dependent family members and the employer including their long or short position in the said security has been made, while rendering such advice.

(b) In case, an employee of the stock broker is rendering such advice, he shall also disclose the interest of his dependent family members and the employer including their long or short position in the said security, while rendering such advice.

(9) Competence of Stock-Broker : A stock-broker should have adequately trained staff and arrangements to render fair, prompt and competence services to his clients.

(c) Duties towards other sub-brokers stock-brokers. (1) Conduct of Dealings : A stock-broker shall co-operate with the other contracting party in comparing unmatched transactions. A stock-broker shall not knowingly and willfully deliver documents which constitute bad delivery and shall co-operate with other contracting party for prompt replacement which are declared as bad delivery.

(2) Protection of Clients Interests : A stock-broker shall extend fullest co-operation to other stock-broker in protecting the interests of his clients regarding their rights to dividends, bonus shares, right shares and any other right related to such securities.

(3) Transactions with Stock-Brokers. A stock-broker shall carry out his transactions with other stock-brokers and shall comply with his obligations in completing the settlement of transactions with them.

(4) Advertisement and Publicity : A stock-broker shall not advertise his business publicly unless permitted by the stock exchange.

(5) Inducement of Clients : A stock broker shall not resort to unfair means of inducing clients from other stock-brokers.

(6) False or Misleading Returns : A stock-broker shall not neglect or fail or refuse to submit the required returns and not make any false or misleading statement on any returns required to be submitted to the Board and the stock exchange.

General Obligations and Responsibilities

(1) Every stock broker should keep and maintain register of transactions, clients ledger, general ledger, journals, cash book, bank pass book, member's contracts books etc. for a minimum period of 5 years.

(2) Every stock broker shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions etc. issued by SEBI or the Central Government for redressal of investor's grievances.

(3) The stock-broker shall furnish, such books, accounts and other documents in his custody and furnish him with the statements and information relating to securities market, to the inspection authority.

Suspension or Cancellation

SEBI has the power to suspend or cancel registration and impose penalties to a broker,

Spike the rabbit is a A grade class of Broker.