Annexure-2
RISK DISCLOSURE DOCUMENT
The Exchange does not expressly or impliedly, guarantee nor make any representation concerning the completeness, the adequacy or accuracy of
this disclosure documents nor has the Exchange endorsed or passed any merits of participating in the trading. This brief statement does not
disclose all of the risks and other significant aspects of trading. You should, therefore, study security / derivative trading carefully before becoming
involved in it.
In the light of the risks involved, you should undertake transactions only if you understand the nature of the contractual relationship into which you
are entering and the extent of your exposure to risk.
You must know and appreciate that investment in equity / derivatives or other instruments traded on the Exchange(s), which have varying element
of risk, is generally not an appropriate avenue for someone of limited resources/ limited investment and/or trading experience and low risk
tolerance. You should, therefore, carefully consider whether such trading is suitable for you in the light of your financial condition. In case, you trade
on the Exchange and suffer adverse consequences or loss, you shall be solely responsible for the same and the Exchange shall not be responsible,
in any manner whatsoever, for the same and it will not be open for you to take the plea that no adequate disclosure regarding the risks involved was
made or that you were not explained the full risk involved by the concerned member. The Client shall be solely responsible for the consequences and
no contract can be rescinded on that account.
You must acknowledge and accept that there can be no guarantee of profits or no exception from losses while executing orders for purchase
and/or sale on Exchange.
It must be clearly understood by you that your dealings on the Exchange through a member shall be subject to your fulfilling certain formalities set
out by the member, which may, inter alia, include your filing the know your client form and are subject to Rules, Byelaws and Business Rules of the
Exchange guidelines prescribed by SEBI from time to time and circulars as may be issued by the Exchange from time to time.
The Exchange does not provide or purport to provide any advice and shall not be liable to any person who enters into any business relationship with
any member of the Exchange and/ or 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, you should be aware of or must get acquainted with the following:-
1. Basic Risks involved in the trading of security / derivatives Instruments on the Exchange.
i. Risk of Higher Volatility
Volatility refers to the dynamic changes in price that security / derivative contracts undergo when trading activity continues on the
Exchange. Generally, higher the volatility of a security / derivatives contract, greater is its price swings. There may be normally greater
volatility in thinly traded security / derivatives contracts than in actively traded contracts. 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 real losses.
ii. Risk of Lower Liquidity
a. Liquidity refers to the ability of market participants to buy and / or sell security / derivative contract expeditiously at a competitive price
and with minimal price difference. Generally, it is assumed that more the number of orders available in a market, greater is the liquidity.
Liquidity is important because with greater liquidity, it is easier for investors to buy and/ or sell security / derivative contracts swiftly and
with minimal price difference and as a result, investors are more likely to pay or receive a competitive price for security/ derivative
contracts purchased or sold. There may be a risk of lower liquidity in some security / derivative contracts as compared to active security /
derivative contracts. As a result, your order may only be partially executed, or may be executed with relatively greater price difference or
may not be executed at all.
b. Buying / Selling without intention of giving and/ or taking delivery of certain security / derivative may also result into losses, because in
such a situation, security / derivative contracts may have to be squared-off at a low/ high prices, compared to the expected price levels,
so as not to have any obligation to deliver/ receive such security.
iii. Risk of Wider Spreads
a. Spread refers to the difference in best buy price and best sell price. It represents the differential between the price of buying a security/
derivative and immediately selling it or vice versa. Lower liquidity and higher volatility may result in wider than normal spreads for less
liquid or illiquid security/ derivative contracts. This in turn will hamper better price formation.
iv. Risk-reducing orders
a. Most of the Exchanges have a facility for investors to place “limit orders”, “stop loss orders” etc. Placing of such orders (e.g. “stop loss”
orders or “limit” orders) which are intended to limit losses to certain amounts may not be effective many a time because rapid movement
in market conditions may make it impossible to execute such orders.
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b. A “market” order will be executed promptly, subject to availability of orders on opposite side, without regard to price and that while the
customer may receive a prompt execution of a “market” order, the execution may be at available prices of outstanding orders, which
satisfy the order quantity, on price time priority. It may be understood that these prices may be significantly different from the last traded
price or the best price in that security/ derivative contract.
c. A “limit” order will be executed only at the “limit” price specified for the order or a better price. However, while the client received price
protection, there is a possibility that the order may not be executed at all.
d. A stop loss order is generally placed “away” from the current price of a security/ derivative contract, and such order gets activated if and
when the contract 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 contract approaches 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 contract 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.
v. Risk of News Announcements
a. Traders/Manufacturers make news announcements that may impact the price of security/ derivative contracts. 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/ derivative contract.
vi. Risk of Rumours
a. Rumours about the price of a security at times float in the market through word of mouth, newspaper, websites or news agencies, etc., the
investors should be wary of and should desist from acting on rumours.
ii. System Risk
a. High volume trading will frequently occur at the market opening and before market close. Such high volumes may also occur at any point
in the day. These may cause delays in order execution or confirmation.
b. During periods of volatility, on account of market participants continuously modifying their order quantity or prices or placing fresh
orders, there may be delays in execution of order and its confirmation.
c. Under certain market conditions, it may be difficult or impossible to liquidate a position in the market at a reasonable price or at all, when
there are no outstanding orders either on the buy side or the sell side, or if trading is halted in a security due to any action on account of
unusual trading activity or price hitting circuit filters or for any other reason.
viii. System/ Network Congestion
a. Trading on the Exchange is in electronic mode, based on satellite/ leased line communications, combination of technologies and
computer systems to place and route orders. Thus, there exists a possibility of communication failure or system problems or slow or
delayed response from system or trading halt, or any such other problem/glitch whereby not being able to establish access to the trading
system/network, which may be beyond the control of and may result in delay in processing or not processing buy or sell orders either in
part or in full. You are cautioned to note that although these problems may be temporary in nature, but when you have outstanding open
positions or unexecuted orders, these represent a risk because of your obligations to settle all executed transactions.
2. 1. As far as Futures Derivatives are concerned, please note and get yourself acquainted with the following additional features:-
2.1 Effect of “Leverage” or “Gearing”:
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e. Under certain market conditions, an Investor may find it difficult or impossible to execute the transactions. For example, this situation can
occur due to factors such as illiquidity i.e. when there are insufficient bids or offers or suspension of trading due to price limit or circuit
breakers etc.
f. Steps, such as, changes in the margin rate, increase in the cash margin rate etc. may be adopted in order to maintain market stability.
These new measures may be applied to the existing open interests. In such conditions, you will be required to put up additional margins or
reduce your positions.
g. You must ask your Member of the Exchange to provide the full details of the security/ derivative contracts you plan to trade i.e. the
contract specifications and the associated obligations.
TRADING THROUGH WIRELESS TECHNOLOGY OR ANY OTHER TECHNOLOGY:
Any additional provisions defining the features, risks, responsibilities, obligations and liabilities associated with trading through wireless
technology or any other technology should be brought to the notice of the client by the member.
Collection Of Sensitive Personal Data or Information:
We may for the purpose of rendering services, collect personal information such as:
• Name, gender, residential / correspondence address, telephone number, date of birth, marital status, email address or other contact
information;
• PAN, KYC Status, Signature and Photograph;
• Bank account or other payment instrument details; or any other detail for providing services.
We offer online platform System for carrying out trade transaction that collects such personal data or information to process your financial and
non-financial transaction requests. The information so collected may be shared with SEBI/ NSE/ BSE/ MCX /Asset Management Companies of
Mutual Funds/Registrar and Transfer Agents/Collecting Banks/KYC Registration Agencies (KRAs), group companies etc. solely for the
purpose of processing your transaction requests or serving you better.
Under certain circumstances we may be required to share the information given by you with the third parties, where we feel they can
contribute to add value and improve the quality of services imparted by us to you. We shall take all reasonable steps to ensure that the
confidentiality of your information is maintained by imposing strict confidentiality standards on all the third parties with whom we part this
information. In all circumstances we shall ensure that your personal information is protected by strict confidentiality agreement. We shall not
allow any third parties to retain your personal information longer than what is warranted by the nature of services rendered. We would also
impart your personal information wherever it is required to be disclosed under law to any of the governmental agency or regulatory bodies.
By agreeing to avail the service offered by us, you have agreed to the collection and use of your Sensitive Personal Data or Information by us.
You always have the right to refuse or withdraw your consent to share/dissemination of your Sensitive Personal Data or Information by
contacting the customer care. However, in such an event, you would no longer be able to avail the services offered by us.
General
i. Deposited cash and property:
You should familiarize yourself with the protections accorded to the money or other property you deposit particularly in the event of a firm
become insolvent or bankrupt. The extent to which you may recover your money or property may be governed by specific legislation or
local rules. In some jurisdictions, property, which has been specifically identifiable as your own, will be pro-rated in the same manner as
cash for purposes of distribution in the event of a shortfall. In case of any dispute with the Member of the Exchange, the same shall be
subject to arbitration as per the Rules, Bye-laws and Business Rules of the Exchange.
ii. Commission and other charges:
Before you begin to trade, you should obtain a clear explanation of all commissions, fees and other charges for which you will be liable.
These charges will affect your net profit (if any) or increase your loss.
iii. For rights and obligations of the Members/Authorised Persons/ clients, please refer to Annexure 3
iv. The term 'Constituent' shall mean and include a Client, a Customer or an Investor, who deals with a member for the purpose of trading in
the security/ derivative through the mechanism provided by the Exchange.
v. The term 'member' shall mean and include a Trading Member or a Member/Broker, who has been admitted as such by the Exchange and
got a registration certificate from SEBI.
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Annexure - 3 (of KYC Document)
RIGHTS AND OBLIGATIONS OF MEMBERS, AUTHORIZED PERSONS AND CLIENTS
As prescribed by SEBI and Exchanges
1. The client shall invest/trade in those securities/derivatives contracts/other instruments admitted to dealings on the Exchanges as defined in
the Rules, Byelaws and Business Rules/ Regulations of Exchanges/SEBI and circulars/notices issued there under from time to time.
2. The Member, Authorized Person and the client shall be bound by all the Rules, Byelaws and Business Rules of the Exchange and
circulars/notices issued there under and Rules and Regulations of SEBI and relevant notifications of Government authorities as may be in
force from time to time.
3. The client shall satisfy himself of the capacity of the Member to deal in security/ derivative contracts and wishes to execute its orders through
the Member and the client shall from time to time continue to satisfy itself of such capability of the Member before executing orders through
the Member.
4. The Member shall continuously satisfy itself about the genuineness and financial soundness of the client and investment objectives relevant to
the services to be provided.
5. The Member shall take steps to make the client aware of the precise nature of the Member's liability for business to be conducted, including
any limitations, the liability and the capacity in which the Member acts.
6. Requirements of professional diligence
7. The Authorized Person shall provide necessary assistance and co-operate with the Member in all its dealings with the client(s).
CLIENT INFORMATION
8. The client shall furnish all such details in full as are required by the Member in “Account Opening Form” with supporting details, made
mandatory by exchanges/SEBI from time to time.
9. The client shall familiarize himself with all the mandatory provisions in the Account Opening documents. Any additional clauses or documents
specified by the Member shall be non-mandatory; therefore, subject to specific acceptance by the client.
10. The client shall immediately notify the Member in writing if there is any change in the information in the 'account opening form' as provided at
the time of account opening and thereafter; including the information on winding up petition/insolvency petition or any litigation which may
have material bearing on his capacity. The client shall provide/update the financial information to the Member on an annual basis. In case the
financial information is not updated as on date (date should not be older than last 12 months) by the client, the Member reserves the right to
restrain the client from executing any transaction in the account maintained with the Member to adhere with regulatory requirements.
11. A. Protection from unfair terms in financial contracts**
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d. A term is transparent if it –
I. is expressed in reasonably plain language that is likely to be understood by the Client;
ii. is legible and presented clearly; and
iii. is readily available to the Client affected by the term.
e. If a term of a financial contract is determined to be unfair under point 11.A.c, the parties will continue to be bound by the remaining terms
of the financial contract to the extent that the financial contract is capable of enforcement without the unfair term.
11.B.
a. “Non-negotiated contract” means a contract whose terms, other than the terms contained in point 11.C. (given below) are not negotiated
between the parties to the financial contract and includes –
i. a financial contract in which, relative to the Client, the Member has a substantially greater bargaining power in determining terms of
the financial contract; and
ii. a standard form contract.
b. “Standard form contract” means a financial contract that is substantially not negotiable for the Client, except for the terms contained in
point 11.C.
c. Even if some terms of a financial contract are negotiated in form, the financial contract may be regarded as a non-negotiated contract if
so indicated by –
i. an overall and substantial assessment of the financial contract; and
ii. the substantial circumstances surrounding the financial contract
d. In a claim that a financial contract is a non-negotiated contract, the onus of demonstrating otherwise will be on the Member.
11.C.
a. The above does not apply to a term of a financial contract if it –
i. defines the subject matter of the financial contract;
ii. sets the price that is paid, or payable, for the provision of the financial product or financial service under the financial contract and
has been clearly disclosed to the Client; or
iii. is required, or expressly permitted, under any law or regulations.
b. The exemption under point 11.C does not apply to a term that deals with the payment of an amount which is contingent on the occurrence
or non- occurrence of any particular event.
12. The Member and Authorized Person shall maintain all the details of the client as mentioned in the account opening form or any other
information pertaining to the client, confidentially and that they shall not disclose the same to any person/authority except as required under
any law/regulatory requirements. Provided however that the Member may so disclose information about his client to any person or authority
with the express permission of the client.
13. A. Protection of personal information and confidentiality
13. B.
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a. A Member may disclose personal information relating to a Client to a third party only if –
i. it has obtained prior written informed consent of the Client for the disclosure, after giving the Client an effective opportunity to refuse
consent;
ii. the Client has directed the disclosure to be made;
iii. the Regulator has approved or ordered the disclosure, and unless prohibited by the relevant law or regulations, the Client is given an
opportunity to represent under such law or regulations against such disclosure;
iv. the disclosure is required under any law or regulations, and unless prohibited by such law or regulations, the Client is given an
opportunity to represent under such law or regulations against such disclosure;
v. the disclosure is directly related to the provision of a financial product or financial service to the Client, if the Member –
vi. the disclosure is made to protect against or prevent actual or potential fraud, unauthorised transactions or claims, if the Member
arranges with the third party to maintain the confidentiality of the personal information in the manner required under this Part.-
b. “Third party” means any person other than the concerned Member, including a person belonging to the same group as the Member.
14. A. Requirement of fair disclosure both initially and on continuing basis
a. Member must ensure fair disclosure of information that is likely to be required by a Client to make an informed transactional decision.
b. In order to constitute fair disclosure, the information must be provided –
i. sufficiently before the Client enters into a financial contract, so as to allow the Client reasonable time to understand the information;
ii. in writing and in a manner that is likely to be understood by a Client belonging to a particular category; and
iii. in a manner that enables the Client to make reasonable comparison of the financial product or financial service with other similar
financial products or financial services.
c. The types of information that must be disclosed to a Client in relation to a financial product or financial service, which may include
information regarding –
i. main characteristics of the financial product or financial service, including its features, benefits and risks to the Client;
ii. consideration to be paid for the financial product or financial service or the manner in which the consideration is calculated;
iii. existence, exclusion or effect of any term in the financial product or financial contract;
iv. nature, attributes and rights of the Member, including its identity, regulatory status and affiliations;
v. contact details of the Member and the methods of communication to be used between the Member and the Client;
vi. rights of the Client to rescind a financial contract within a specified period; or
vii. rights of the Client under any law or regulations.
14.B
a. Member must provide a Client that is availing a financial product or financial service provided by it, with the following continuing
disclosures–
i. any material change to the information that was required to be disclosed under point 14.A at the time when the Client initially availed
the financial product or financial service;
ii. information relating to the status or performance of a financial product held by the Client, as may be required to assess the rights or
interests in the financial product or financial service; and
iii. any other information that may be specified.
b. A continuing disclosure must be made –
i. within a reasonable time-period from the occurrence of any material change or at reasonable periodic intervals, as applicable; and
ii. in writing and in a manner that is likely to be understood by a Client belonging to that category.
Third Party Sites
14.C
i. Our Trading Platform may contain links or direct Users to various third-party platforms. If the Client uses or clicks on any of these links, the
Client may be directed/redirected to such external platforms/Websites.
ii. If the Client decides to visit any such external link, the Client does so at their own risk, responsibility and liability. Mirae Asset Sharekhan
does not endorse any platform linked to it or the information appearing therein or any of the products or services described therein on the
Platform. Any display of third-party goods/services offered through the Platform does not in any way imply, suggest, or constitute any
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iii.
reputation, sponsorship, endorsement or approval by Mirae Asset Sharekhan of any such third parties. The Client agrees that Mirae Asset
Sharekhan is in no way responsible for the timeliness, accuracy or completeness of information that they may obtain from these third
parties and which may be posted/published on the third-party platforms, and as may be amended from time to time.
The Client agrees and understands that when using our trading platform, they will be exposed to User content from a variety of sources
and by different Users, and that Mirae Asset Sharekhan is not responsible for the accuracy, usefulness, safety, or intellectual property
rights of or relating to such User content.
MARGINS
15. The client shall pay applicable initial margins, withholding margins, special margins or such other margins as are considered necessary by the
Member or the Exchange or as may be directed by SEBI from time to time as applicable to the segment(s) in which the client trades. The
Member is permitted in its sole and absolute discretion to collect additional margins (even though not required by the Exchange or SEBI) and
the client shall be obliged to pay such margins within the stipulated time.
16. The client understands that payment of margins by the client does not necessarily imply complete satisfaction of all dues. In spite of
consistently having paid margins, the client may, on the settlement of its trade, be obliged to pay (or entitled to receive) such further sums as
the contract may dictate/require.
TRANSACTIONS AND SETTLEMENTS
17. The client shall give any order for buy or sell of security/ derivative contract in writing or in such form or manner, as may be mutually agreed
between the client and the Member however ensuring the regulatory requirements in this regard are complied with. The Member shall ensure
to place orders and execute the trades of the client, only in the Unique Client Code assigned to that client.
18. The Member shall inform the client and keep him apprised about trading/settlement cycles, delivery/payment schedules, any changes therein
from time to time, and it shall be the responsibility in turn of the client to comply with such schedules/procedures of the relevant exchange
where the trade is executed.
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The Member shall ensure that the money deposited by the client shall be kept in a separate account, distinct from his/its own account or
account of any other client and shall not be used by the Member for him/herself/itself or for any other client or for any purpose other than the
purposes mentioned in Rules, circulars, notices, guidelines of SEBI and/or Rules, Business Rules, Bye-laws, circulars and notices of
Exchange.
20. Where the Exchange(s) cancels trade(s) suo moto all such trades including the trade/s done on behalf of the client shall ipso facto stand
cancelled, Member shall be entitled to cancel the respective contract(s) with client(s).
21. The transactions executed on the Exchange are subject to Rules, Byelaws and Business Rules and circulars/notices issued thereunder of the
Exchanges where the trade is executed and all parties to such trade shall have submitted to the jurisdiction of such court as may be specified
by the Byelaws and Business Rules of the Exchanges where the trade is executed for the purpose of giving effect to the provisions of the
Rules, Byelaws and Business Rules of the Exchanges and the circulars/notices issued thereunder.
BROKERAGE
22. The Client shall pay to the Member brokerage and statutory levies as are prevailing from time to time and as they apply to the Client's account,
transactions and to the services that Member renders to the Client. The Member shall not charge brokerage more than the maximum
brokerage permissible as per the Rules, Business Rules and Bye-laws of the relevant exchanges and/or Rules of SEBI.
LIQUIDATION AND CLOSE OUT OF POSITION
23. Without prejudice to the Member's other rights (including the right to refer a matter to arbitration), the client understands that the Member
shall be entitled to liquidate/close out all or any of the client's positions for non-payment of margins or other amounts, outstanding debts, etc.
and adjust the proceeds of such liquidation/close out, if any, against the client's liabilities/obligations. Any and all losses and financial charges
on account of such liquidation/closing-out shall be charged to and borne by the client.
24. In the event of death or insolvency of the client or his/its otherwise becoming incapable of receiving and paying for or delivering or transferring
securities which the client has ordered to be bought or sold, Member may close out the transaction of the client and claim losses, if any,
against the estate of the client. The client or his nominees, successors, heirs and assignee shall be entitled to any surplus which may result
there from. The client shall note that transfer of funds/securities in favor of a Nominee shall be valid discharge by the Member against the legal
heir.
DISPUTE RESOLUTION
25. The Member shall co-operate in redressing grievances of the client in respect of all transactions routed through it.
26. The client and the Member shall refer any claims and/or disputes with respect to deposits, margin money, etc., to arbitration as per the Rules,
Byelaws and Business Rules of the Exchanges where the trade is executed and circulars/notices issued thereunder as may be in force from
time to time.
27. The client/Member understands that the instructions issued by an authorized representative for dispute resolution, if any, of the
client/Member shall be binding on the client/Member in accordance with the letter authorizing the said representative to deal on behalf of the
said client/Member.
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