Voice recording obligation

When a client disputes a trade, the strongest evidence of what actually happened is often the recording of the phone call in which the order was placed. Without it, a dispute comes down to one person's word against another's.

Because of this, SEBI requires brokers to run their dealing rooms on recorded lines only. Every deal must go through a line that is being recorded, and the recordings themselves have to be kept, not discarded quickly after the trade is done.

Chapter 10, section 10.4, lists this among the major duties for members: brokers must have a voice recording mechanism in their dealing room and execute all deals only through recorded lines. These recordings must be maintained for a minimum period equal to whatever period the arbitration mechanism accepts investors' complaints, as notified from time to time. Where a dispute has actually been raised, the workbook goes further: the records must be kept until the final resolution of that dispute, however long that takes.

The purpose stated alongside this obligation is to facilitate resolution of client disputes relating to dealing errors — the recordings exist specifically so there is an objective record to check against, rather than relying on the broker's and the client's conflicting accounts of a phone order.

A client claims he instructed his broker to sell his gold futures position at Rs 62,000 per 10 gm, but the dealer executed the sale only at Rs 61,500, a difference of Rs 500 per 10 gm on a 1 kg lot — a disputed Rs 50,000.

The broker retrieves the recorded line for that trading day and plays back the exact order the client gave, which in fact specified "sell at market" rather than a limit price of Rs 62,000. Because the dealing room runs on recorded lines and the recording was retained, the dispute is resolved by reference to the actual conversation rather than by taking either party's word for it — and because a dispute was formally raised, the broker must now keep that recording until the dispute is finally resolved, not just for the standard minimum period.

Chapter 10 (Code of Conduct and Investor Protection Measures), section 10.4, among the duties and obligations of members, listed alongside the Code of Conduct's general clauses. Expect a question on how long recordings must be kept — tied to the arbitration complaint window, and extended until final resolution once a dispute is raised, not a single fixed number of days in every case.

• There is no fixed short retention period. It runs to whatever period arbitration currently accepts complaints for, and further, until final resolution, once a dispute is actually raised.
• All deals must go through recorded lines — this is not limited to disputed trades or large trades.
• The obligation exists specifically to resolve dealing-error disputes, which is why it sits in the client-duties part of the code rather than in the general-conduct clauses.