Dos and don’ts of dealing with share brokers and authorised person

4 mins read
by Angel One
Learning Dos and don'ts while dealing with brokers is a part of investor education and essential to maintaining the market's integrity.

Investors can’t buy or sell stocks directly in the Indian share market. It is where stockbrokers come into the picture. When you invest in the share market, you interact with brokers and authorised persons

Stockbrokers are members of the stock exchange. Brokers offer investment and financial advisory to individuals. Investors must open a Demat account with a stockbroker to invest in the stock market. The authorised persons are agents appointed by brokers to offer financial advisory on their behalf. Agents are responsible for acquiring new businesses where the broker doesn’t have offices. Often the stockbroker operates through a franchise model consisting of agents, where the agents remain the point of communication between the broker and its clients. 

Both investor and the broker need to ensure they follow the guidelines given by SEBI and conduct transactions following the rules. While the broker confirms the investor’s financial and income status before opening a Demat, the investor must also ensure that he deals with a registered broker to avoid being scammed.   

So, here are the dos and don’ts while dealing with brokers.

Dos while dealing with a broker or authorised person

  • Deal only with SEBI-registered brokers. You must ask to see the SEBI registration certificate of the broker. 
  • Transacting with unregistered brokers is illegal and can result in severe financial loss.
  • Confirm that the broker is allowed to trade in the market. Review and enquire about any ban on the broker prohibiting it from transacting. 
  • Always give unambiguous instructions to your authorised person or broker who will place the orders on your behalf.    
  • Before transacting with any broker, always ensure that he signs the client registration form.
  • Ensure learning all the terms and conditions and the risk disclosure document before signing the agreement with the broker.
  • You must sign all the pages of the broker’s document and ensure that the broker/authorised person also signs. The agreement also needs the signs of two witnesses.
  • Ask the broker to send a contact note/confirmation memo for all the transactions. Similarly, ask for the receipt of settlements. 
  • In case of discrepancies, you must check the trading account history and the exchange. 
  • Your broker must mention its name, trade time and number, transaction price, and brokerage on every contract note.
  • In case of any dispute, always file a written complaint with the SEBI/stock exchange within a reasonable time.
  • In a dispute, the authorised person will inform the broker within six months.
  • SEBI keeps updating the rules and regulations to protect the interests of all the stakeholders involved in the share market. As an investor, keep yourself updated with laws and regulations. 
  • Review your portfolio and Demat transactions regularly to track details of securities in your account.

Don’ts of dealing with share broker and authorised person

  • SEBI prevents any investor from dealing with unregistered brokers under any circumstances. SEBI has mandated all stock brokers to register with the Securities and Exchange Board of India to offer financial advisory and investment services.     
  • Don’t sign the agreement with the broker when you don’t understand the terms and conditions. 
  • Don’t pay more brokerage fees than the mentioned rate in the agreement.
  • Never sign a blank delivery slip under any circumstances.
  • Don’t share your login details and account credentials with anyone, even the authorised person and broker. 
  • Don’t get carried by flashy, unrealistic advertisements.
  • Don’t execute any off-market transaction or pay the broker. 
  • Don’t accept unsigned contract slips or confirmation memos.
  • Don’t fall prey to the free investments advertised by the broker. Use your judgement while making investment decisions.  

Learning the dos and don’ts while dealing with a broker is essential to taking charge of your financial future. 


As an investor, you must learn your rights and update yourself on investment guidelines. Educated investors are an asset to the economy. It is essential that you invest safely and also help in spreading awareness among fellow investors. At Angel One, we help our investor clients to get educated to make informed investment decisions. Open a Demat account with Angel One online and start investing in the market.