Do you know who owns the money you invested in the stock market? Do you know what happens if a job goes bankrupt?
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| Stock broker |
What happens with the money you invest in stocks?
Friends, have you ever wondered where your money will go if your stock broker goes bankrupt.
If your stock broker goes bankrupt, you should approach this company immediately, or you can switch your Demet account to another broker. But you have to do this within three years. If you invest more than 25 lakhs in the stock market, there is no chance of getting it back.
Your shares are held in a demat account, a digital account that stores your securities in a depository. Depository is Central Depository Services (India) Limited (CDSL) or National Securities Depository Limited (NSTL). Your stock broker does not have direct access to your demat account or your shares. They only act as an intermediary to execute your buy and sell orders. So, even if your broker goes bust, your shares are safe and secure.
How do you receive money from stock investments?
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| Depository |
Your money is held in a trading account, which is the account your broker uses to buy and sell stocks on your behalf. If your broker goes bankrupt, the court will appoint a trustee to oversee the broker's assets and liabilities. The trustee will check the broker's records and transfer your trading account and funds to another registered broker. You can continue trading with the new broker or withdraw your money as you wish.
If there is any delay or discrepancy in your trading account or money transfer, you can claim compensation from the Investor Protection Fund (IPF), a fund set up by SEBI to protect investors from broker defaults. Depending on the nature and extent of your claim, IPF will reimburse you up to a certain limit. To be eligible for compensation, you must file your claim within three years of the broker's default.
I hope this information helps you understand what happens to your stock and money when your broker goes bankrupt.