SEBI Call Recording Mandate: A Guide for Stockbrokers

To stop unauthorized trading practices, it has been made mandatory for you as a stockbroker to record your calls with clients. This serves as evidence of the client placing that order.

The mandate is detailed in SEBI circular CIR/HO/MIRSD/MIRSD2/CIR/P/2017/108, dated September 21, 2017.

“Further, wherever the order instructions are received from clients through the telephone, the stockbroker mandatorily uses a telephone recording system to record the instructions and maintain telephone recordings as part of its records.” – SEBI

Key Compliance Requirements

Evidence of such orders can also be kept in the form of:

• Physical records written and signed by the client
• Email from an authorized email ID
• Logs of internet transactions
• SMS logs
• Any other legally verifiable record

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“When a dispute arises, the burden of proof will be on the broker to produce the above records for the disputed trades,” SEBI said in a notification.

This rule came into effect from 1st January 2018. Earlier, this rule was proposed by SEBI in 2013 but was deferred due to opposition from brokerage associations.

Currently, the regulatory requirements in commodity derivative markets require the brokers to execute the trade only after keeping proof of the trader placing such an order in the form of a sound recording.

Now, sound / call recording has been made mandatory for stockbrokers as well, due to a considerable proportion of investor complaints about ‘unauthorized trades’ on their accounts without proper information from their brokers.

Penalties for Non-Compliance

Failure to comply with SEBI’s call recording mandate can lead to significant penalties. While the circular does not specify exact fines, non-compliance can result in enforcement actions under the SEBI Act, 1992.

These actions can range from monetary penalties and warnings to suspension or cancellation of the brokerage's registration in cases of repeated or severe violations.

Data Retention and Privacy

SEBI requires that these records be maintained for a specified retention period, typically aligning with the period during which a client can raise a dispute. It is best practice to retain recordings for a minimum of three to five years.

You must also ensure the secure storage of these recordings to maintain client privacy and comply with data protection regulations. Your system should have access controls to prevent unauthorized access or tampering.

How MyOperator Ensures Your Brokerage is Compliant

MyOperator provides call center software that consists of a call recording facility for stockbrokers at an economical price and zero capital expenditure.

You will get an automated record of all your call recordings in one place, and you can access them from anywhere, anytime.

Another feature offered by MyOperator is the ability to keep a record of all your SMS logs in one place. This, along with a toll-free number,  serves as legally verifiable evidence of the orders placed by your client.

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