Stock Market

31.

How To Deal With Brokers/Sub-Brokers In Share Market

2011 has been an eventful year indeed. First it was the ‘Jasmine Revolution’ in the North African nation of Tunisia where the 22-year-old dictatorship of Zine El Abidine Ben Ali tasted dust. Then it was the prolonged public protests and demonstrations by the people of Egypt against the tyrannical and authoritarian regime of Hosni Mubarak, which resulted in his resignation. It was followed by the bloody rebellion in oil rich Libya that proved the undoing of elemental socialist tyrant Muammar Gaddafi and the populace in Yemen, Syria and Baharin is still fighting for profound political, economic and social reforms. It seems the whole world has decided to end hypocrisy and parasitical tendencies in their societal existence. The crescendo of this process has been reached in the financial capital of the world superpower- U.S.A.- in the form of ‘Occupy Wall Street’ (OWS) moment in Zuccotti Park. 

The Role Of Brokers And Sub-Brokers In Current Scenario

The OWS is, in fact, the collective condemnation of corporate greed and share market speculation on the part of Wall Street share brokers. Ever since the so called ‘American monetarist’ policies of Ronald Reagan were implemented, America has been moving towards an increasingly speculative and unstable economy and now the common man in that country has decided to put a stop to this process. However, in India, there is no such bitterness towards desi institutions of stock trading and share brokers, (though scoffed at in certain social circles) aren’t exactly seen as greedy fraudsters. However, that does not mean there are no rotten eggs in the basket. Therefore, in order to make intelligent investments in the stock market and earn profits, investors, whether individuals or collectives, have to understand how to deal with brokers/ sub-brokers in share market. 

Terms Brokers And Sub-Brokers

The stock market is essentially a formalised and closed institution. It might be because it really involves huge amount of financial transactions and symptomatic risks or it might be that the trading and brokering communities, themselves fiercely conservative and closed, do not intend to fritter away their advantageous position. Be as it may, in stock markets around the world, a private individual cannot just jump in to make investments. This can be done only through certain registered and officially recognised brokers who have the license to do so. Hence, stock market brokers are the ones who mediate in the transaction of the investor and the stock market. However, such brokers are involved in high volume trading and often have sub-brokers under their assistance to handle small investors. 

How To Deal With Brokers/Sub-Brokers In Share Market

One thing that novices in the field of stocks investment need to understand is, dealing with brokers and sub-brokers in the share market is no child’s play. One cannot simply rely on the judgement of one’s broker or sub-brokers in matters of investment and there has to be thorough background check even when it is safe to do so. 

For starters, a private investor needs to determine the technical validity of his agent. He or she has to be legally registered with the authorities and should have a proper license to conduct share market transactions on your behalf. The second thing to do is to make the broker or sub-broker sign a registration form for your official professional association. This must be followed by a foolproof and no-nonsense agreement, enumerating minute terms and conditions without any ambiguity. Also, an investor has to demand a contract note or in official parlance, a confirmation memo, for the everyday transaction activity. This is necessary to maintain an accurate record of the transactions made on your behalf. Needless to say, investors also need to ask for pukka bills for transactions wherein transparency with the governing authorities is ensured.