NISM Series IV · Chapter 10: Code of Conduct and Investor Protection Measures

L1 · Foundation

Foundation — The broker's code of conduct and the grievance redressal ladder

SEBI's code of conduct for brokers under Chapter VIII of the Stock Brokers Regulations, 2026 — the five general principles, the ten duties towards investors and the six duties towards other brokers; grievance handling at the trading member level with the Investor Charter and disclosure timelines; and SCORES, including SCORES 2.0, its timelines, the two review levels and what it will not entertain.

24 min read · Worth 5% of the paper · Written from pages 304–335 of the official NISM workbook · Updated 18 September 2026

Chapter 10 — Code of Conduct and Investor Protection Measures

Weightage: 5%, the final chapter. It is entirely about conduct, complaints and protection — no arithmetic at all, but a great many precise timelines and thresholds. Learn the numbers.

1. SEBI's Code of Conduct for Brokers

Chapter VIII of the SEBI (Stock Brokers) Regulations, 2026 prescribes the code of conduct.

1.1 General principles — five

#	Principle	Requirement
1	Integrity	Shall maintain HIGH STANDARDS OF INTEGRITY, PROMPTITUDE AND FAIRNESS in the conduct of all its business
2	Exercise of Due Skill and Care	Shall act with DUE SKILL, CARE AND DILIGENCE in the conduct of all its business
3	Manipulation	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	Shall NOT CREATE A FALSE MARKET, either singly or IN CONCERT WITH OTHERS, or indulge in any act detrimental to investors' interest or which leads to interference with the fair and smooth functioning of the market
5	Compliance with Statutory Requirements	Shall abide by all provisions of the Act and the rules and regulations issued by the Government, the Board and the stock exchange

In plain words: be honest, fair and quick. Work with care. Never rig prices, spread rumours or create a false market. Follow every law and rule.

1.2 Duty towards the Investor — ten

⚠️ 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.
Shall PROMPTLY INFORM his client about the EXECUTION OR NON-EXECUTION of an order, and make on-time payment for securities sold and arrange on-time delivery of securities purchased.
Shall issue WITHOUT DELAY a CONTRACT NOTE for all transactions, in the form specified by the stock exchange.
⚠️ Shall NOT DISCLOSE OR DISCUSS with any other person, or make improper use of, the details of personal investments and other CONFIDENTIAL information of the client which he comes to know in his business relationship.
⚠️ Shall NOT ENCOURAGE SALES OR PURCHASES WITH THE SOLE OBJECT OF GENERATING BROKERAGE OR COMMISSION (the practice known as churning). Shall not furnish FALSE OR MISLEADING QUOTATIONS or give any other false or misleading advice or information with a view to inducing him to do business in particular securities.
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.
⚠️ Shall DISCLOSE WHETHER HE IS ACTING AS A PRINCIPAL OR AS AN AGENT, and ensure NO CONFLICT OF INTEREST arises. In the event of a conflict he shall INFORM THE CLIENT, shall NOT seek a direct or indirect personal advantage from the situation, and SHALL NOT CONSIDER CLIENTS' INTEREST INFERIOR TO HIS OWN.
⚠️ Shall NOT make a recommendation to any client who might be expected to rely on it UNLESS HE HAS REASONABLE GROUNDS FOR BELIEVING THE RECOMMENDATION IS SUITABLE FOR SUCH A CLIENT, on the basis of facts disclosed by the client as to his security holdings, financial situation and objectives of such investment.
⚠️ Shall NOT render 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. Where an employee gives such advice, he too must disclose the interest of his dependent family members and employer.
Should have ADEQUATELY TRAINED STAFF and arrangements to render FAIR, PROMPT AND COMPETENT services to clients.

In plain words: get clients the best price and serve small investors too. Report back and settle quickly. Keep client details private. Do not churn accounts for brokerage. Recommend only what suits the client, and declare your interest before advising in public media.

1.3 Duty towards other Stock-Brokers — six

Shall CO-OPERATE with the other contracting party in COMPARING UNMATCHED TRANSACTIONS. Shall NOT knowingly and wilfully deliver documents which constitute BAD DELIVERY, and shall co-operate for PROMPT REPLACEMENT of documents declared as bad delivery.
Shall extend FULLEST CO-OPERATION to other stock-brokers in PROTECTING THE INTERESTS OF HIS CLIENTS regarding their rights to DIVIDENDS, BONUS SHARES, RIGHT SHARES and any other right related to such securities.
Shall carry out his transactions with other stock-brokers and COMPLY WITH HIS OBLIGATIONS in completing the settlement of transactions with them.
⚠️ Shall NOT ADVERTISE HIS BUSINESS PUBLICLY UNLESS PERMITTED BY THE STOCK EXCHANGE.
⚠️ Shall NOT RESORT TO UNFAIR MEANS OF INDUCING CLIENTS FROM OTHER STOCK-BROKERS.
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 SEBI and the stock exchange.

In plain words: cooperate with other brokers, settle with them on time, and do not poach their clients unfairly. Do not advertise publicly without the exchange's permission.

2. Investor grievance redressal

Investors may have grievances (a) against the INTERMEDIARY/BROKING FIRM through which they transact, or (b) against the COMPANY of which they are a shareholder.

⚠️ "In the event of any grievance(s), the investor is FIRST REQUIRED TO APPROACH THE CONCERNED INTERMEDIARY / TRADING FIRM / COMPANY for settling his/her grievance."

2.1 At the trading member level

All trading firms have a DESIGNATED CELL/PERSON for redressing investor grievances. Matters are resolved at the branch level or firm level depending on the nature of the complaint.
⚠️ All registered brokers shall designate an E-MAIL ID of the grievance redressal division / compliance officer EXCLUSIVELY for registering complaints by investors, and display the email ID and other details prominently on their websites and in materials, pamphlets and advertisement campaigns.
The offices of all stock brokers (and their registered authorised persons) shall PROMINENTLY DISPLAY basic information about the grievance redressal mechanism.
⚠️ "The stock broker shall endeavour to redress investor grievances promptly within the time specified (CURRENTLY WITHIN 21 DAYS FROM THE RECEIPT OF COMPLAINT)".
The stock broker shall MAINTAIN RECORDS regarding investor grievances received and their redressal.

In plain words: every broker needs a complaint desk and a dedicated complaint email, shown on its website and in its offices. Complaints should be resolved within 21 days.

The Investor Charter. SEBI has prepared an Investor Charter for Stock Brokers, detailing services provided to investors, rights of investors, various activities of stock brokers with timelines, DOs and DON'Ts for investors, and the grievance redressal mechanism.

Brokers must bring it to the notice of clients (existing as well as new) by:

Disclosing it on their websites.
Making it available at prominent places in the office.
⚠️ Providing a copy AS PART OF THE ACCOUNT OPENING KIT.
Through e-mails and letters

2.2 Two disclosure timelines to memorise

⚠️ "All the Stock Brokers shall DISCLOSE ON THEIR RESPECTIVE WEBSITES the data on COMPLAINTS RECEIVED against them or against issues dealt by them and REDRESSAL thereof, LATEST BY 7th OF THE SUCCEEDING MONTH."

⚠️ Under the SEBI (Intermediaries) Regulations 2008: "The stock broker shall AT THE END OF EACH QUARTER of a financial year ending on 31st March UPLOAD INFORMATION about the number of investor grievances RECEIVED, REDRESSED and those REMAINING UNRESOLVED BEYOND THREE MONTHS of receipt, on the website."

(The same 7th of the succeeding month disclosure obligation applies to stock exchanges, depositories and clearing corporations in respect of complaints against them.)

3. SCORES — SEBI Complaints Redressal System

Its four salient features:

Centralised database of all complaints.
Online movement of complaints to the concerned entities.
Online upload of Action Taken Reports (ATRs) by the concerned entities.
Online tracking of status of complaints by investors.

In plain words: SCORES is SEBI's online complaint system, open all the time. It sends each complaint to the firm, collects the firm's action taken report, and lets the investor track progress.

How it works: investors register on the portal; when a complaint is lodged, an EMAIL ACKNOWLEDGEMENT is generated for reference and tracking. The system lets intermediaries and listed companies receive complaints against them electronically. ⚠️ If an investor submits a MANUAL complaint, "the same is DIGITISED BY SEBI and uploaded on SCORES", after which follow-up action is in electronic form only.

Investors may seek assistance in filing complaints from SEBI-recognised INVESTOR ASSOCIATIONS or from SEBI's TOLL FREE HELPLINE NUMBERS.

⚠️ But the sequencing matters: SEBI has received inputs that "investor grievances can be resolved faster if the grievance is taken up DIRECTLY WITH THE ENTITY AT THE FIRST INSTANCE." So "it appears prudent and time saving if the investors approach the concerned listed company or registered intermediary FIRST with all the requisite details. In case the listed company or registered intermediary FAILS TO REDRESS the complaint to the investor's satisfaction, the investor may file a complaint in SCORES."

In plain words: go to the company or broker first. Use SCORES only if that does not solve the problem.

3.1 The revised framework and its timelines

SEBI circular dated September 20, 2023 provided the revised framework, linking SCORES to the Online Dispute Resolution platform.

Step	Timeline
Entity resolves the complaint and uploads the ATR on SCORES	⚠️ Within 21 CALENDAR DAYS of receipt of the complaint
Complainant may request a REVIEW if dissatisfied	⚠️ Within 15 CALENDAR DAYS from the date of the ATR
Designated Body submits the revised ATR to the complainant	⚠️ Within 10 CALENDAR DAYS of the review being sought
Complainant may seek a SECOND review	⚠️ Within 15 CALENDAR DAYS from the date of submission of the ATR by the Designated Body
Investor may lodge a complaint on SCORES	⚠️ Within ONE YEAR from the date of cause of complaint

Other features of the framework:

Complaints lodged on SCORES are AUTOMATICALLY FORWARDED to the concerned entity, and the ATR is automatically routed back to the complainant.
⚠️ For a STOCK BROKER, the STOCK EXCHANGE is the DESIGNATED BODY, which "shall ensure that the concerned Entity submits the ATRs within the stipulated time of 21 calendar days".
If the complainant is satisfied, or does not seek review within 15 calendar days, THE COMPLAINT SHALL BE DISPOSED on SCORES.
If the complainant is not satisfied, OR the Designated Body has not submitted the ATR within 10 calendar days, SEBI may take cognizance for SECOND REVIEW.
⚠️ "The second review Complaint shall be treated as 'resolved' or 'disposed' or 'closed' ONLY WHEN SEBI 'disposes' or 'closes' the Complaint in SCORES. Hence, MERE FILING OF ATR with respect to a SEBI review complaint WILL NOT MEAN that the SEBI review complaint is disposed".

The one-year window applies where the investor has approached the entity and: the entity REJECTED the complaint; OR the complainant RECEIVES NO COMMUNICATION; OR the complainant is NOT SATISFIED with the reply or redressal action taken.

(Note the contrast the workbook draws: "presently, the limitation period for filing an ARBITRATION reference with stock exchanges is THREE YEARS", against one year for a SCORES complaint.)

Complaint Review facility: ⚠️ an investor unsatisfied with the redressal may, WITHIN 15 DAYS from the date of CLOSURE of his complaint in SCORES, opt for review, and the complaint shall be ESCALATED.

3.2 SCORES 2.0

⚠️ SEBI launched SCORES 2.0 with effect from APRIL 01, 2024, at https://scores.sebi.gov.in — and "investors can lodge complaints ONLY through the new version" from that date.

Its six salient features:

REDUCED AND UNIFORM TIMELINES across the securities market — 21 CALENDAR DAYS from date of receipt.
AUTO-ROUTING of complaints to the concerned regulated entity, "so as to ELIMINATE TIME LAPSES in the flow of complaints".
MONITORING of timely redressal by the DESIGNATED BODIES.
TWO LEVELS OF REVIEW — first by the Designated Body, second by SEBI.
⚠️ AUTO-ESCALATION of a complaint to the next level "in case of NON-ADHERENCE TO THE PRESCRIBED TIMELINES by the regulated entity or the Designated Body".
⚠️ INTEGRATION WITH THE KYC REGISTRATION AGENCY DATABASE for easy registration of the investor onto SCORES.

3.3 What SCORES will not handle

Types of complaints NOT dealt with through SCORES:

Complaints against companies that are unlisted/delisted, or in the dissemination board of stock exchanges.
Complaints that are SUB-JUDICE — under consideration by a court of law or quasi-judicial proceedings.
Complaints falling under the purview of OTHER REGULATORY BODIES — RBI, IRDAI, PFRDA, CCI — or other ministries such as MCA.
Complaints against a sick company, or a company where a moratorium order is passed in winding up / insolvency proceedings.
Complaints against companies struck off from the RoC, or a vanishing company per the MCA list.
Companies under liquidation / BIFR.

Matters that cannot be considered complaints under SCORES at all:

(a) not pertaining to investment in the securities market · (b) ⚠️ ANONYMOUS complaints — EXCEPT WHISTLE-BLOWER complaints · (c) incomplete or un-specific complaints · (d) allegations without supporting documents · (e) suggestions or seeking guidance/explanation · (f) ⚠️ not satisfied with the TRADING PRICE of the shares · (g) non-listing of shares of a private offer · (h) disputes arising out of a private agreement with companies/intermediaries · (i) matters involving fake/forged documents · (j) matters not in SEBI's purview · (k) complaints about any unregistered/unregulated activity

⚠️ All recognised stock exchanges, depositories and clearing corporations must display on the HOME PAGE of their websites AND MOBILE APPS: a link/option to lodge a complaint with them directly, and a link to the SCORES website / SCORES mobile app.

3.4 Investor Service Centres

By circular dated December 03, 1997, SEBI advised all stock exchanges to open or maintain AT LEAST ONE Investor Service Centre. Subsequently, exchanges were mandated to open ISCs in the metro cities — New Delhi, Mumbai, Chennai and Kolkata — and exchanges having nationwide terminals must additionally open them in Ahmedabad, Hyderabad, Kanpur, Indore, Bangalore, Pune, Jaipur, Ghaziabad, Lucknow, Gurgaon, Patna and Vadodara.

Minimum facilities at an ISC:

⚠️ FOUR financial daily newspapers, with AT LEAST ONE IN THE REGIONAL LANGUAGE of the place.
A dedicated desktop or laptop with internet connectivity, to access information in the public domain and SEBI's and the exchange's grievance redressal portals.
Facilities for receiving investor complaints in BOTH PHYSICAL AND ELECTRONIC form.
FACILITATION DESKS to assist investors in the dispute resolution process.
⚠️ Arbitration and appellate arbitration facility, INCLUDING VIDEO-CALLING facility for attending online arbitration or grievance redressal meetings.
A meeting room for at least 5 to 6 persons, and additional sitting space for at least 5 to 6 persons.

Complaints may be lodged with an exchange through: (i) SCORES 2.0 (two-level review — first by the exchange, second by SEBI); (ii) the exchange's own web portal; (iii) e-mails to designated exchange e-mail IDs; and (iv) SMARTODR at https://smartodr.in/login.

Think of it like this

The doctor who prescribes what suits the patient, not what pays best

A doctor who prescribes an expensive course of medicine because the pharmacy pays him a cut has broken something more fundamental than a billing rule. He has put his interest above the person who trusted him.

Two clauses of the broker's code guard against exactly this.

On churning: ⚠️ "A stock-broker shall NOT ENCOURAGE SALES OR PURCHASES OF SECURITIES WITH THE SOLE OBJECT OF GENERATING BROKERAGE OR COMMISSION."

On suitability: ⚠️ "A stock-broker shall NOT make a recommendation to any client who might be expected to rely thereon... 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."

And where the broker's own interest genuinely collides with the client's, the code does not merely ask for disclosure. It adds: "he shall NOT CONSIDER CLIENTS' INTEREST INFERIOR TO HIS OWN."

Escalation is a staircase, not a lift

If your electricity bill is wrong, you do not begin by writing to the regulator. You go to the utility's own complaints desk. Only if they fail do you climb higher.

The securities market works the same way, and the workbook is explicit about the reason: "investor grievances can be resolved FASTER if the grievance has been taken up DIRECTLY WITH THE ENTITY AT THE FIRST INSTANCE."

The staircase:

The Market Participant — 21 calendar days to resolve
SCORES — where the investor is unsatisfied; the entity uploads an ATR in 21 days
First review by the Designated Body (for a stock broker, the stock exchange) — within 10 days
Second review by SEBI
The ODR Portal — online conciliation, then online arbitration

And the workbook adds the alternative route: "the investor/client can initiate dispute resolution through the ODR Portal if the grievance lodged with the concerned Market Participant was not satisfactorily resolved, OR AT ANY STAGE OF THE SUBSEQUENT ESCALATIONS." The staircase is the normal path, not a locked gate.

The deposit that must be made before you may argue

Imagine a landlord who loses a rent dispute and then appeals — while continuing to withhold the money. The tenant wins on paper and starves in practice.

SEBI closes that gap. If a Market Participant wants to pursue online arbitration after conciliation has failed, it "must deposit 100% OF THE ADMISSIBLE CLAIM VALUE with the relevant MII PRIOR TO INITIATION." If it wants to challenge an arbitral award, it "must deposit 100% of the amounts payable in terms of the arbitral award" first.

And the investor does not merely watch the money sit there: on application, "the MII may, from the deposit received, RELEASE such amount to the investor/client NOT EXCEEDING Rs 5,00,000" — against an appropriate undertaking, indemnity or security so it can be recovered if the investor ultimately loses.

The consequence of refusing to deposit is severe: the participant "may face consequences as determined necessary or appropriate by the Stock Exchange and could also be LIABLE TO BE DECLARED AS NOT 'FIT AND PROPER'... liable to have their REGISTRATION CANCELLED or their BUSINESS ACTIVITIES SUSPENDED."

The obligation runs both ways, though. An investor who fails to return a released amount "shall NOT be allowed to trade on any of the Stock Exchanges" and his demat holdings and mutual fund holdings shall be FROZEN until he does.

Basis risk — the shirt that comes only in S, M and L

You need a shirt for a 41-inch chest. The shop stocks 40 and 42. Whichever you buy, the fit is wrong — and the mismatch is not the shopkeeper's fault, it is a consequence of standardisation.

The workbook uses exactly this arithmetic. You must hedge an exposure of Rs 9,00,000 with contracts of Rs 2,00,000 each. That needs 4.5 contracts. Since only whole contracts exist, you buy four (under-hedging) or five (over-hedging).

Then a second mismatch: "the derivatives contract expires on the LAST THURSDAY of the contract month. If the exposure to be hedged has maturity of some other day in the month, there will be MISMATCH IN THE MATURITY."

And a third: "differential price change in the exposure and futures contract due to MISMATCH IN UNDERLYING INSTRUMENT. For example, in the attempt to hedge against a two-year GOI bond with the purchase of 91 Day Treasury bill futures, there is a risk the Treasury bill and the bond will NOT FLUCTUATE IDENTICALLY."

Three sources — amount, maturity, and underlying — and the residual they leave behind is basis risk.

Suspicious transaction reporting — tell the authorities, never the customer

A bank teller who notices something odd about a customer's cash deposits reports it upward. What she must not do is mention it to the customer — that would simply help him cover his tracks.

The same discipline binds brokers. "The brokers are expected to REPORT such transactions to FIU through the online mechanism provided by FIU", and ⚠️ "the brokers are NOT SUPPOSED TO INFORM THE CLIENT about this reporting, as it will lead to TIPPING-OFF information to the client, WHICH IS ILLEGAL AND NOT ALLOWED."

The examples the workbook gives of suspicious trades: reversal trades, profit transfer trades, and trades associated with dabba trades.

And the responsibility cannot be outsourced upwards: "though the Exchange through its surveillance mechanism may raise a suspicion, IT IS THE DUTY OF THE CONCERNED BROKER to identify those suspicious transactions through its regular monitoring and report them to FIU" — members "should NOT DEPEND SOLELY UPON THE DIRECTION FROM EXCHANGES' surveillance mechanism" but must have their own robust controls and procedures.

The clock: STRs within 7 DAYS of concluding a transaction is suspicious; NTRs by the 15th of the succeeding month.

Key terms in this chapter

Action Taken Report (ATR): The entity's response to a SCORES complaint, which must be uploaded within 21 calendar days of receipt and is automatically routed back to the complainant.
Admissible claim value: The amount the conciliator determines is payable to the investor where conciliation fails — notified to the parties, the ODR institution and the MII, and determined even where the investor never ascribed a monetary value.
Arbitral tribunal threshold: Where the aggregate of claim and counter-claim exceeds Rs 30 lakh, the matter goes to a tribunal of three arbitrators; otherwise a sole arbitrator hears it, appointed within 5 calendar days.
Basis risk (three sources): The residual exposure left by an imperfect hedge, arising from the contract amount being available only in integral multiples, from last-Thursday expiry not matching the exposure's maturity, and from the underlying instrument differing from the exposure.
Churning: Encouraging sales or purchases of securities with the sole object of generating brokerage or commission. The code forbids it, along with furnishing false or misleading quotations to induce business.
Client risk categorisation: Classification of clients as Low, Medium or High risk under the AML Master Circular, based on location, business activity, turnover, nature of transactions and manner of payment — with politically exposed persons rated higher still.
Code of Conduct for brokers: Chapter VIII of the SEBI (Stock Brokers) Regulations, 2026, setting out five general principles, ten duties towards investors and six duties towards other brokers — from integrity and due skill to a bar on creating a false market.
Complaint Review facility: The option for an investor dissatisfied with redressal to seek review within 15 days of his complaint being closed on SCORES, whereupon the complaint is escalated.
Conciliation: A consensual process before a sole independent conciliator appointed within 5 days, who must attempt resolution within 21 calendar days, extendable by 10 by written consent. Success produces a settlement agreement the MII then monitors.
Delivery Instruction Slip (DIS): The instrument, physical or electronic and signed by the client himself, without which depositories will not permit any off-market transfer of securities.
Demat Debit and Pledge Instruction (DDPI): A separate document replacing the PoA for two purposes only — transfer of securities towards settlement obligations, and pledging or re-pledging for margin. It serves the same purpose while mitigating misuse.
Designated Body: The body that monitors timely redressal and conducts the first review of a SCORES complaint. For a stock broker, the Designated Body is the stock exchange.
Disclosure of interest in public media: A broker or employee giving investment advice in publicly accessible media must first disclose his own interest, that of his dependent family members and that of the employer, including any long or short position in the security.
Document-only arbitration: The process where the claim is Rs 1,00,000 or below — the award is passed within 30 calendar days without a hearing, though the arbitrator may grant one for reasons recorded.
e-KYC: UIDAI's service, accepted by SEBI as valid KYC. The client details and photograph it returns are sufficient proof of identity and address, provided the client authorises access and biometric verification is performed.
Investor Charter: A SEBI-prepared document detailing services provided, rights of investors, activities with timelines, DOs and DON'Ts and the grievance mechanism. Brokers must publish it, display it in office and include it in the account opening kit.
Investor Protection Fund (IPF): A fund stipulated by Central Government notification of 22 August 1985 and administered through a trust, meeting legitimate non-speculative claims of clients of trading members declared defaulters or expelled.
Investor Service Centre (ISC): An exchange facility offering counselling, complaint acceptance in physical and electronic form, facilitation desks, and arbitration facilities with video-calling — required in the four metros and twelve further cities for nationwide exchanges.
KYC Registration Agency (KRA): The agency to whose system a member must upload authenticated KYC information within 10 days of receiving the documents, while retaining the physical originals. The member keeps ultimate responsibility for KYC.
Liveliness test accessibility: Following the Supreme Court judgement of 30 April 2025, a blind person unable to blink for eKYC must not be denied it — alternates include facial expressions, nodding, showing an OTP on camera and real time video recording.
Market Infrastructure Institutions (MIIs): Stock exchanges and depositories collectively, which empanel ODR institutions, operate the common ODR portal, review disputes, monitor payment of settlements and awards, and assist investors with enforcement.
MCSGFC: The Member Core Settlement Guarantee Fund Committee, before which claims against a defaulter trading member are placed for sanction and ratification before the IPF Trust disburses compensation.
ODR Institution: An independent institution empanelled by an MII to conduct time-bound online conciliation and arbitration. An MII's primary ODR institution may not be the primary institution of any other MII.
Online Dispute Resolution (ODR): The framework under the SEBI (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023, operating a common portal run by Market Infrastructure Institutions for online conciliation and online arbitration.
Power of Attorney (PoA): An optional authorisation that may never be insisted upon for account opening, usable only for the specified purposes — settlement transfers, margin pledging, applying for products, and limited fund transfers.
Risk Disclosure Document (RDD): A uniform document across segments that the client must sign before onboarding, acknowledging awareness of every key risk in derivatives trading — price fluctuation, liquidity, basis risk, unhedged positions, short options, counterparty risk and technical failures.
Round-robin allocation: The market-wide system by which disputes referred through the ODR Portal are distributed among all empanelled ODR institutions, after the relevant MII has reviewed the matter within 21 calendar days.
SCORES: SEBI Complaints Redressal System — a 24×7 web-based centralised platform capturing complaints against listed companies and registered intermediaries, with online movement of complaints, upload of Action Taken Reports and status tracking.
SCORES 2.0: The version live from 1 April 2024, adding auto-routing, auto-escalation on missed timelines, monitoring by Designated Bodies, two levels of review and integration with the KYC Registration Agency database.
Section 34 challenge: The route for challenging an arbitral award under the Arbitration and Conciliation Act, 1996. Intention must be filed on the ODR Portal within 7 calendar days, and if no stay is granted within 3 months the award must be complied with.
Slippage: The result of execution risk — an order not being filled at the desired price because of high volatility or the type of order placed.
Suitability requirement: A broker may not make a recommendation a client might rely on unless he has reasonable grounds to believe it suits that client, judged on the client's disclosed security holdings, financial situation and investment objectives.
Suspicious Transaction Report (STR): A report filed with the Financial Intelligence Unit within 7 days of concluding that a transaction or connected series is suspicious, with the Principal Officer recording his reasons and no undue delay in reaching the conclusion.
The 100% deposit rule: A Market Participant must deposit the full admissible claim value before initiating arbitration, and the full award amount before challenging it. Failure can render it not fit and proper, with registration cancelled or business suspended.
Tipping off: Informing a client that a suspicious transaction report has been filed against him. It is expressly illegal and not allowed, since it would defeat the purpose of reporting.
Voluntary freezing of trading accounts: A facility, framed on or before 1 April 2024, letting clients ask their trading member to block online access to their trading account on account of suspicious activity, with a defined process for re-enabling it.

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Original explanatory writing based on the official NISM workbook for Series IV, which is published and copyrighted by NISM. Check figures against the current edition at nism.ac.in.

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