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GUIDANCE NOTE: DO’S AND DON’TS FOR TRADING ON THE EXCHANGE(S) FOR CLIENTS

    BEFORE YOU BEGIN TO TRADE

  1. Ensure that you deal with and through only SEBI registered intermediaries. You may check their SEBI registration certificate number from the list available on the Stock exchanges www.exchange. com and SEBI website www.sebi.gov.in.
  2. Ensure that you fill the KYC form completely and strike off the blank fields in the KYC form.
  3. Ensure that you have read all the mandatory documents viz. Rights and Obligations, Risk Disclosure Document, Policy and Procedure document of the stock broker.
  4. Ensure to read, understand and then sign the voluntary clauses, if any, agreed between you and the stock broker. Note that the clauses as agreed between you and the stock broker cannot be changed without your consent.
  5. Get a clear idea about all brokerage, commissions, fees and other charges levied by the broker on you for trading and the relevant provisions/ guidelines specified by SEBI/Stock exchanges.
  6. Obtain a copy of all the documents executed by you from the stock broker free of charge.
  7. In case you wish to execute Power ofAttorney (POA) in favour of the Stock broker, authorizing it to operate your bank and demat account, please refer to the guidelines issued by SEBI/Exchanges in this regard.

    8. TRANSACTIONS AND SETTLEMENTS

  8. The stock broker may issue electronic contract notes (ECN) if specifically authorized by you in writing. You should provide your email id to the stock broker for the same. Don’t opt for ECN if you are not familiar with computers.
  9. Don’t share your internet trading account’s password with anyone.
  10. Don’t make any payment in cash to the stock broker.
  11. Make the payments by account payee cheque in favour of the stock broker. Don’t issue cheques in the name of sub-broker. Ensure that you have a documentary proof of your payment/deposit of securities with the stock broker, stating date, scrip, quantity, towards which bank/ demat account such money or securities deposited and from which bank/ demat account.
  12. Note that facility of Trade Verification is available on stock exchanges’ websites, where details of trade as mentioned in the contract note may be verified. 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 the relevant Stock exchange.
  13. In case you have given specific authorization for maintaining running account, payout of funds or delivery of securities (as the case may be), may not be made to you within one working day from the receipt of payout from the Exchange. Thus, the stock broker shall maintain running account for you subject to the following conditions.
    • Such authorization from you shall be dated, signed by you only and contains the clause that you may revoke the same at any time.
    • The actual settlement of funds and securities shall be done by the stock broker, at least once in a calendar quarter or month, depending on your preference. While settling the account, the stock broker shall send to you a ‘statement of accounts’ containing an extract from the client ledger for funds and an extract from the register of securities displaying all the receipts/deliveries of funds and securities. The statement shall also explain the retention of funds and securities and the details of the pledged shares, if any.
    • On the date of settlement, the stock broker may retain the requisite securities/funds towards outstanding obligations and may also retain the funds expected to be required to meet derivatives margin obligations for next 5 trading days, calculated in the manner specified by the exchanges. In respect of cash market transactions, the stock broker may retain entire payin obligation of funds and securities due from clients as on date of settlement and for next day’s business, he may retain funds/securities/margin to the extent of value of transactions executed on the day of such settlement in the cash market.
    • You need to bring any dispute arising from the statement of account or settlement so made to the notice of the stock broker in writing preferably within 7 (seven) working days from the date of receipt of funds/securities or statement, as the case may be. In case of dispute, refer the matter in writing to the Investors Grievance Cell of the relevant Stock exchanges without delay.
  14. In case you have not opted for maintaining running account and pay-out of funds/securities is not received on the next working day of the receipt of payout from the exchanges, please refer the matter to the stock broker. In case there is dispute, ensure that you lodge a complaint in writing immediately with the Investors Grievance Cell of the relevant Stock exchange.
  15. Please register your mobile number and email id with the stock broker, to receive trade confirmation alerts/ details of the transactions through SMS or email, by the end of the trading day, from the stock exchanges.
  16. Ensure that the payment of unpaid securities is made within the prescribed time lines to avoid compulsory liquidation.

    17. INCASE OF TERMINATION O FTRADING MEMBERSHIP

  17. In case, a stock broker surrenders his membership, is expelled from membership or declared a defaulter; Stock exchanges gives a public notice inviting claims relating to only the “transactions executed on the trading system” of Stock exchange, from the investors. Ensure that you lodge a claim with the relevant Stock exchanges within the stipulated period and with the supporting documents.
  18. Familiarize yourself with the protection accorded to the money and/or securities you may deposit with your stock broker, particularly in the event of a default or the stock broker’s insolvency or bankruptcy and the extent to which you may recover such money and/or securities may be governed by the Bye-laws and Regulations of the relevant Stock exchange where the trade was executed and the scheme of the Investors’ Protection Fund in force from time to time.

    19. DISPUTES/ COMPLAINTS

  19. Please note that the details of the arbitration proceedings, penal action against the brokers and investor complaints against the stock brokers are displayed on the website of the relevant Stock exchange.
  20. In case your issue/problem/grievance is not being sorted out by concerned stock broker/sub-broker then you may take up the matter with the concerned Stock exchange. If you are not satisfied with the resolution of your complaint then you can escalate the matter to SEBI. 21. Note that all the stock broker/sub-brokers have been mandated by SEBI to designate an e-mail ID of the grievance redressal division/compliance officer exclusively for the purpose of registering complaints.
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SMEST CAPITAL PRIVATE LIMITED

Democratizing the Fixed Income Market in India.

5, Prabhat Kunj, 24th Road, Khar W, Mumbai 400 052
SEBI Registration Number: INZ000302039
BSE Member Code 6764
care@smest.in | +91 8879966072

Note to investors:

SMEST CAPITAL PRIVATE LIMITED is a SEBI registered broker under BSE new debt segment allowing investors to trade in secondary bonds & debentures through exchange. SMEST is a start up with a mission to digitize the functions of the Debt Market and educate retail investors to encourage participation.
Investments in fixed income securities are subject to market risk, read all the offer related documents carefully before investing.

Filing complaints on SCORES - Easy & Quick:

  • Register on SCORES portal
  • Mandatory details for filing complaint on SCORES
    1. Name
    2. PAN
    3. Address
    4. Mobile number
    5. Email ID
  • Benefits
    1. Effective communication
    2. Quick resolution of grievances

About SMEST

SMEST CAPITAL PRIVATE LIMITED is India's leading Fintech firm, enabling individual investors to invest in Bonds and Debentures online. Bonds are regarded as a reliable form of secondary income, and in some situations, primary income, but over the years, their accessibility has been limited to financial institutions and high-net-worth individuals (HNIs). With SMEST, we are dedicated to making Bonds and Debentures publicly accessible to all retail investors. Through our user-friendly online platform, investors can use this investing opportunity with efficiency.
Let us talk about investing bonds and debentures! First and foremost, what is investing? Investing is the process of purchasing assets with the intention of increasing their value over time and providing returns in the form of income payments or capital gains.

The amount of money you can make by working is virtually always limited. There is just so much money you can put in your firm, how many hours you can work every week, and how much salary raises you can receive. While your income is rather stable, the same cannot be true for your expenses. As you become older, your responsibilities grow, and so does your demand for money. Everything costs money, from purchasing a house to ensuring your children receive the greatest education, from paying for medical crises to planning your retirement, and more. Investing makes sense for this very reason. Investing not only ensures that you have a backup source of income on which to rely, but it also pushes you to set aside a quantity of money on a monthly basis, guaranteeing that you learn financial discipline in the long run!

What Kinds of Investments that you can invest in?

While there are numerous investing options available to you, they may generally be divided into two groups: active investments and passive investments. The former, as the names suggest, demands you to be on the lead, have thorough understanding of market dynamics, and put in time and effort towards the investment; the latter, on the other hand, allows you to invest your money without being too involved in the process. In the case of Passive Investments, buy-and-hold is the preferred method, in which you invest and then hold it for a set period and enjoy the anticipated financial rewards.
Let us take this opportunity to explain two investing possibilities that we believe are both safe, profitable, and, most importantly, passive! You guessed it right if you think like us. We are discussing bonds and debentures. Let us take a closer look at these two investment options.

What are Bonds and Debentures?

There are two types of debt instruments, Bonds and Debentures. All Debentures are Bonds, but not all Bonds are Debentures.
A bond is the most common type of debt instrument issued by the Government, large corporations, or agencies of the Government to raise capital. The borrower uses this money to fund its operations, and investors are entitled to receive interest on their investment.
A debenture is a type of bond or debt instrument that can be secured by collateral or unsecured. In the case of unsecured debentures, which have no collateral backing, investors must rely on the creditworthiness and reputation of the issuer. Debentures are a popular short-term financing option for private enterprises looking to expand their operations or fund prospective projects. They carry a fixed or floating interest rate and the interest rate on unsecured debentures is generally higher than bonds and secured debentures because of the absence of physical assets.

Who Should Invest in Bonds & Debentures?

Bonds are a good option for risk-averse investors. Bonds are seen to be a less risky and safer investment than debentures. Bonds are also a suitable alternative for long-term investments since they provide set principal and interest payments at predetermined intervals. Debentures, however, have the potential to provide investors with larger returns than bonds. Debentures are a viable alternative for short-term investing. It is up to you to determine whether you want to invest in bonds or debentures based on your financial goals after analyzing the advantages and disadvantages of the two.
Note: Before investing, investors should carefully read all the terms and conditions for each instrument and consider the market risks.

What Are the Different Types of Bonds and Debentures in India?

Here is the list of popular Bonds and Debentures available in India.

  • Central Government Bonds
  • State Government Bonds
  • Municipal And Local Authority Bonds
  • Corporate Bonds
  • Public Sector Bonds
  • Tax-free Bonds

What are Corporate Bonds?

Corporate bonds are bonds issued by corporations. Compared to Government bonds (G-sec bonds), corporate bonds generally offer higher yields. Credit rating agencies classify corporate bonds with "A-grade" or higher ratings as safer investment options.

How to Invest in Corporate Bonds?

In India, a Demat Account is required in order to invest in bonds. To access bonds and subsequently invest in them, speak with your broker or bank. The technique is largely manual and takes a long time.
Of course, you can always rely on SMEST for bond investments if you want to have a completely simple and hassle-free online investment experience. SMEST is a stock broker in the debt segment and renowned for its sizable selection of high-quality bond papers, open procedure, and simple online experience. It is important to note that SMEST just serves as a transaction facilitator, works as a broker, and may or may not have bonds or debentures on its books. Our primary goal is to offer clients a smooth and efficient bond investing experience while maintaining transparency and trust.
With us by your side, you can invest in bonds with 3 simple steps –Step 1 : Upload your documents online and complete the KYC.Step 2 : Choose the bonds that match your investment goal.Step 3 : Pay online and receive bond units in your Demat account.Bond investing benefits clients in a variety of ways. Bonds have proven to be a safe investment alternative for clients who are wary of market risk due to the reliability of interest and principal returns.

Features of Corporate Bonds

  • Bonds are known for fixed returns. They are short, medium, and long-term investment tools that entail assured returns, with a low-risk proposition.
  • Bonds offer a legal guarantee wherein the borrower is bound to return the principal amount to the creditors. Moreover, in the event of bankruptcy of the borrower, bondholders precede shareholders in receiving debt repayment.
  • While bonds are low-risk, they also offer lower returns as compared to other risky investment alternatives such as equity mutual funds and direct equity.

Advantages of investing in Bonds?

Investing in bonds can offer several advantages, including:Steady income : Bonds typically provide a fixed income stream in the form of regular interest payments. This can provide a steady source of income for investors.Diversification : Bonds can offer diversification benefits to an investor's portfolio. They can provide a hedge against volatility in the stock market, as bonds generally have a lower level of risk compared to equities.Lower risk : Bonds are generally considered less risky than stocks because they are a debt instrument and the issuer has a legal obligation to pay interest and principal to the bondholder. However, this can vary depending on the creditworthiness of the issuer and other factors.Potential capital appreciation : Although bonds are generally considered a conservative investment, there is still potential for capital appreciation if interest rates decline or if the creditworthiness of the issuer improves.Liquidity : Many bonds are actively traded in the secondary market, providing investors with liquidity and the ability to buy or sell bonds easily.Tax benefits : Depending on the type of bond and the investor's tax situation, investing in bonds can provide tax advantages, such as tax-exempt interest income or the ability to offset capital gains with capital losses.

Is there any Tax advantage to investing in Fixed Income securities?

Yes, there can be tax advantages to investing in certain types of Fixed Income securities, such as Tax‑free Bonds, Municipal Bonds, etc.

Can Fixed Income securities be used as a hedge against inflation?

Yes, some high yielding securities can offer a higher interest rate which can protect your wealth and purchasing power against inflation.

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SEBI Registration No.: INZ000302039 | BSE Member Code: 6764
Compliance Officer Mobile no.: +91 9152120789 | E-mail ID: compliance@smest.in (for any compliance & grievance related complaints)