What Are Some Stock Broker Defaults That Investors Can Avoid?

The advent of demat accounts has brought a revolutionary change in stock trading in India. Tech-savvy millennials are more attracted to the stock market as online demat, and trading accounts have made the process seamless and convenient. But lack of technological know-how and financial literacy can leave many investors vulnerable to fraud and mismanagement. While the regulators - the Securities Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) keep working in the interest of investors, investors also need to take cautious investing steps.

One of the concerns that came into the picture is the stockbroker default. The main reason for such defaults is the misuse of investors' financial assets and funds. Many times brokers try to take upfront payments unnecessarily. It can be advance payments for commodities that are going to arrive. They may take Power of Attorney (PoA) from the investors for trading and misuse their securities for their benefit. 

Even though your financial securities are safe in your Demat account, you should be vigilant about the safety steps. Solely relying on the regulatory bodies is not enough. Investors need to understand the measures, to-do, and not-to-do, for the safety of accounts. The post will familiarise you with some guidelines to be followed to save you from forgery or stockbroker defaults.