Order to stock broker through WhatsApp may be considered as legally verifiable record – SEBI
SEBI in an informal guidance has stated that order to stock broker through WhatsApp from the registered mobile number of the clients may be considered as legally verifiable record.
SEBI had issued circular No. CIR/HO/MIRSD/MIRSD2/CIR/P/2017/108 on September 06, 2017 on Unauthorised Trading by stock brokers. The said circular requires brokers to execute trades of clients only after keeping evidence of client placing such order, which could be, inter alia, in the form of a. Physical record written & signed by client, b. Telephone recording, c. Email from authorized email id, d. Log for internet transactions, e. Record of SMS messages, f. Any other legally verifiable record.
In this regard, a stock broker had made a query to SEBI whether log of client communication (chat) on WhatsApp directing dealers to buy or sell shares can be considered as log of internet transactions or record of SMS messages or legally verifiable record as compliance of requirements given in said SEBI Circular
SEBI in its reply has stated that placing the order through WhatsApp communication from the registered mobile number of the clients may be considered as legally verifiable record provided that the records/logs maintained by the broker are retrievable and legally verifiable for the purpose of any investigation or legal proceedings. In case of a dispute, the brokers shall establish the verifiability of such communication in accordance with law applicable for electronic evidence and also comply with other applicable provisions of the Master Circular.
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