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SEBI registered brokers only involved in trading shares, it collects some caution deposit or security deposit from the broker, to ensure the trader counter party risk.
Any transaction in a stock exchange can be made only through a broker hence all the risks are bone by the broker in case his client is at fault. This is usually compensated via caution deposits made by the broker incase the levied penalties are not paid in time.
All traders in the exchange happens through the Broker. The responsibility is with the broker to ensure all the prerequisites are meet before the trading is allowed.
Brokerages deposit a hefty sum with the exchange. This will be used incase of any penalty.
Broker are actually the SEBI registered dealers who involves in facilitating trades for their clients. SEBI has few guidelines for counter party risks which are imposed on the brokers who actually execute the trades. So if a trader or investors tend to have a default risk then this should be taken care by brokers by having a margin amount from the trader/investor. It is the responsibility of the brokers for any defaults from SEBI’s view.
SEBI collects some caution deposits from the registered brokers to ensure the traders counter party risk.
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