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DOs and DONTs : Investing in Derivatives


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DOs

  • Go through all rules, regulations, bye-laws and disclosures made by theexchanges.
  • Trade only through – Trading Member (TM) registered with SEBI or authorisedperson of TM registered with the exchange.
  • While dealing with an authorised person, ensure that the contract note has beenissued by the TM of the authorized person only.
  • While dealing with an authorized person, pay the brokerage/payments/marginsetc. to the TM only.
  • Ensure that for every executed trade you receive duly signed contract note fromyour TM highlighting the details of the trade along with your unique client-id.
  • Obtain receipt for collateral deposited with Trading Member (TM) towards margin.
  • Go through details of Client-Trading Member Agreement.
  • Know your rights and duties vis-a-vis those of TM/ Clearing Member.
  • Be aware of the risk associated with your positions in the market and margincalls on them.
  • Collect / pay mark to market margins on your futures position on a daily basisfrom / to your Trading member. 

DON’Ts

  • Do not start trading before reading and understanding the Risk DisclosureDocuments
  • Do not trade on any product without knowing the risk and rewards associatedwith it.
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1 Comment »

  1. rishi kumar mishra said,

    February 25, 2009 @ 11:43 am

    thanks

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