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TMI BlogRisk Disclosure Document.X X X X Extracts X X X X X X X X Extracts X X X X ..... -laws, rules and regulations for the implementation of the above decision immediately. 3.2. bring the provisions of this circular to the notice of the member brokers/clearing members of the Exchange and also to disseminate the same on the website. 3.3. communicate to SEBI, the status of the implementation of the provisions of this circular in Section II, item no. 13 of the Monthly Development Report for the month of October 2003. 4. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with Section 10 of the Securities Contracts (Regulation) Act 1956, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. Yours faithfully, V S SUNDARESAN Encl:- a/a RISK DISCLOSURE DOCUMENT This document is issued by the National Stock Exchange of India (hereinafter referred to as "NSE") in coordination with the Securities and Exchange Board of India (hereinafter referred to as "SEBI") and contains important information on trading in the Equities Segment of NSE. All constituents are urged to read it before making a purchase or a sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith any trading member and/or sub-broker of NSE and/or any third party based on any information contained in this document. Any information contained in this document must not be construed as business advice/investment advice. No consideration to trade should be made without thoroughly understanding and reviewing the risks involved in such trading. If you are unsure, you must seek professional advice on the same. In considering whether to trade or authorize someone to trade for you, you should be aware of the following:- 1. BASIC RISKS INVOVLED IN TRADING ON THE STOCK EXCHANGE (EQUITY AND OTHER INSTRUMENTS) 1.1 Risk of Higher Volatility: Volatility refers to the dynamic changes in price that securities undergo when trading activity continues on the Stock Exchange. Generally, higher the volatility of a security, greater is its price swings. There may be normally greater volatility in thinly traded securities than in active securities. As a result of volatility, your order may only be partially executed or not executed at all, or the price at which your order got executed may be substantially different from the last traded price or change substantially thereafter, resulting in no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified for the order or a better price. However, while the customer receives price protection, there is a possibility that the order may not be executed at all. 1.4.3 A stop loss order is generally placed "away" from the current price of a stock, and such order gets activated if and when the stock reaches, or trades through, the stop price. Sell stop orders are entered ordinarily below the current price, and buy stop orders are entered ordinarily above the current price. When the stock reaches the pre-determined price, or trades through such price, the stop loss order converts to a market/limit order and is executed at the limit or better. There is no assurance therefore that the limit order will be executable since a stock might penetrate the pre-determined price, in which case, the risk of such order not getting executed arises, just as with a regular limit order. 1.5 Risk of News Announcements: Issuers make news announcements that may impact the price of their securities. These announcements may occur during trading, and when combined with lower liquidity and higher volatility, may suddenly cause an unexpected positive or negative movement in the price of the security. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds "National Stock Exchange of India Ltd.", "NSE" and other references, , such as, web-site, etc., need to be suitably replaced by the respective stock exchanges while preparing their own risk disclosure document. ANNEXURE-1 INVESTORS' RIGHTS AND OBLIGATIONS: 1.1 You should familiarise yourself with the protection accorded to the money or other property you may deposit with your trading member, particularly in the event of a default in the stock market or the broking firm's insolvency or bankruptcy. 1.1.1 Please ensure that you have a documentary proof of your having made deposit of such money or property with the trading member, stating towards which account such money or property deposited. 1.1.2 Further, it may be noted that the extent to which you may recover such money or property may be governed by the Bye-laws and Regulations of NSE and the scheme of the Investors' Protection Fund in force from time to time. 1.1.3 Any dispute with the trading member with respect to deposits, margin money, etc., and producing an appropriate proof thereof, shall be subject to arbitration as per the Rules, Byelaws/ Regulations of NSE or its Clearing Corporation. 1.2 Before you begin to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Investors Grievance Cell of NSE. 1.3.7 Facility of Trade Verification is available on NSE website (www.nse-india.com), where details of trade as mentioned in the contract note may be verified from the trade date upto five trading days. Where trade details on the website, do not tally with the details mentioned in the contract note, immediately get in touch with the Investors Grievance Cell of NSE. 1.3.8 Ensure that payment/delivery of securities against settlement is given to the concerned trading member within one working day prior to the date of pay-in announced by NSE or it's Clearing Corporation. Payments should be made only by account payee cheque in favour of the firm/company of the trading member and a receipt or acknowledgement towards what such payment is made be obtained from the trading member. Delivery of securities is made to the pool account of the trading member rather than to the beneficiary account of the trading member. 1.3.9 In case pay-out of money and/or securities is not received on the next working day after date of pay-out announced by NSE or its Clearing Corporation, please follow-up with the concerned trading member for its release. In case pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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