Top Stock Broker Norms That Professionals Should Be Aware Of

stock market

Selecting an online stock broker is perhaps one of the most critical decisions an investor can make. Every investor has a diversified style of investment in stocks and securities trading, and the range of services offered by brokers allows the trader to be highly selective in determining which online broker fits their needs the best.

Stock brokers are concerned in the buying and selling of stocks in the stock market. They constantly remain in touch with their clients and update them on the fluctuations in the stock market. The stock brokers also advise their clients when to buy and sell stocks and at what rates. Additionally, stock brokers also make sure that their stock trading firm makes maximum profit in long-term.

Let’s take a look at the top stock broker norms that every professional must know about.

Rights Obligations

It is the duty of a stock broker to continuously provide a genuine and financially sound trading platform to the client and devise investment objectives that are relevant to the services being provided.

The stock broker has to take accurate measures to inform the client about the liabilities about the trading including limitations and the execution of the stock broker.

The sub-broker is required to provide the necessary support and co-operation to the client while dealing in the stock market.

Client Information

The stock broker and sub-broker are obliged to preserve the details of their clients as mentioned in the form or any additional data concerning the client while opening the trading account. The brokers must also not disclose information to any individual/authority except as needed under any regulatory/law requirements. The broker has the authority to disclose information about his client to any authority or person with the client’s permission.


Buying on margin is the act of borrowing money from a stock broker to purchase stocks. The client can pay withholding margins, initial margins, special margins or any other margins as deemed essential by the stock broker or the Exchange in which the client deals. The stock broker is authorised in to collect extra margins and the client is required to repay the margins within the specified time limit.

Transactions & Settlements

The stock broker has to notify their client regarding the transactions in the stock market and keep them informed about the schedules, trading and settlement cycles, delivery and payments, or any other exchanges. Moreover, it is the responsibility of the client to comply with the procedures of the relevant stock exchange market where the trade is performed.

The stock broker has to ensure that the securities invested by the client shall be held in a separate account. Moreover, the account must not be used by the stock broker for any other client requirement other than the purposes specified in the rules and regulations of the Exchange and the guidelines of The Securities and Exchange Board of India (SEBI).


The client is obligated to pay the brokerage and statutory fee to the stock broker, which is levied as per the prevailing norms from time to time. The charges may be collected from the client’s account for the services performed by the stock broker. The stock broker will not impose more than the maximum brokerage fee permitted as per the bye-laws of the applicable stock exchanges and the regulations of SEBI.

Dispute Resolution

The stock broker must present the client with the correct contact details of SEBI or the concerned Exchanges. Co-operation in rectifying grievances of the client in all respects such as transactions and the removal of bad delivery of shares and rectification of bad delivery must be monitored by the stock broker.

The stock broker must devise faster settlement plans of any agreement transactions rising out of the deals registered by him with regard to the client. The stock broker is also liable to implement the agreement concessions made in such circumstances.

Termination of Relationship

The association between the stock broker and the client can be terminated if the stock broker discontinues being a member of the stock exchange. The reasons include stock broker’s death, failure, resignation or suspension by the Board.

The stock broker, sub-broker and the client are authorised to terminate the contract between them without providing any reasons to the other party. This can be achieved after giving a one month notice in writing to the other parties.

In today’s technological world, all the financial operations are computerised with highly qualified and trained stock brokers keeping a close surveillance on the stock market. An investor can survive the stock market if they can think swiftly and adapt to the ever-changing financial environment with the help of a stock broker.

Furthermore, the National Stock Exchange (NSE) offers nationwide facilities to all the stock brokers as well as investors to trade transparently. The screen-based automated trading system which utilizes state-of-the-art technology can make the market operations more efficient.