Clarification regarding certain posts on Social Media claiming loss due to Trading on Dhan

Dear All,

This post is a clarification regarding certain tweets / information shared by a Client on Social Media and within the Trading Community. With this regard, the said Client has suffered losses in trading and claims that the same should be compensated by Dhan.

Clients of Stock Broking platforms have a right to Grievance Redressal if they are not satisfied with response provided by the Customer Care team or Grievance Redressal mechanism at the Stock Broker; and seek further clarification & support from Stock Exchanges or even directly with SEBI. The Client in this case, has already raised the concern with SEBI - which inturn has shared the same with Stock Exchange (NSE).

As the Client has chosen to escalate the matter via SCORES to SEBI, our compliance team has reviewed the concerns raised and have submitted all details of the incident along with trade details with the Regulator. We will further communicate with the Client via the Grievance Redressal mechanism selected by the Client. Any conclusion from the Exchange / Regulator is binding on us and the same shall be abided by us.

It is important to understand that as a regulated and responsible entity, we have to rely on the details and data that is available to us and act accordingly. As this post has been widely circulated on Social Media, we would like to further clarify the following:

  • On trading day (1st July 2024) the Client held a weekend overnight position which opened positively when markets opened at 9:15 AM. The Client had logged in to our platform early morning by 7:14 AM on the same day.
  • Order No 1, 2 & 3: Client posted the first order by 9:22 AM when the markets had turned against and the position was already negative (in loss). The next set of orders (Second & Third order) were also placed when the Client was in loss.
  • These three orders were rejected as the freeze limit changed with effect to NSE Circular NSE/FAOP/62670 dated 28th June 2024 and by this time the Client was explicitly aware about the rejection of orders and the reason for rejection.
  • It is to be noted that all three orders of the Client were placed as Limit Orders, placed at a price that was far away from the LTP (in two of the three instances, at open high price and even higher than the day’s high price). Even if these orders were placed successfully, they would not have been executed as they were far away from LTP.
  • Order No 4: After understanding that the freeze limits have changed, which is evident by the Rejection Messages on Order No 1, 2 & 3, Client further placed limit orders that were placed successfully and were later canceled by the Client.
  • Order No 5: Client further placed more orders to buy within the freeze quantity limit and thereby increase the Position by Quantity and averaging the Loss, which were executed by the exchange successfully.
  • Order No. 6: Client placed sell orders to exit the position, which were successfully placed on the exchanges. Client kept these orders active for more than 60 minutes, and later canceled them by own.
  • Post the same, the Client held on to the positions till the end of the day.

Order placement times by the Client:

  • Order 1: at 9:22 AM (limit order way above LTP, rejected)
  • Order 2: at 9:48 AM (limit order way above LTP, rejected)
  • Order 3: at 9:51 AM (limit order way above LTP, rejected)
  • Order 4: at 9:52 AM (placed successfully and canceled by Client at 9:53 AM)
  • Order 5: at 9:53 AM (placed successfully and executed, added more quantity to average position)
  • Order 6: at 10:11 AM (placed successfully, and later canceled by Client at 11:14 AM)
  • Client had the rest of the trading day from 11:14 AM to 3:20 PM available to square-off the positions, however chose to hold on to the positions.

Client reached out to our Customer Care at 10:18 AM and was fully aware of the rejection reasons, and also placed orders successfully to increase position. Our Customer Care executive informed the Client the reason for rejection, which was possibly misunderstood by the Client that the circular was implemented incorrectly.

Was the Client responded by Customer Care at Dhan?

Yes, the Client spoke with our Customer Care on the same day, the first being at 10:18 AM and later as well. The Client’s position was already at loss by then; and the Client escalated further to the Head of Customer Care by 03:06 PM and wrote to the Regulator via SCORES by 08:47 PM on the same day.

Was the Client’s concern reviewed by Senior Authorities at Dhan?

Customer Care executives have addressed and stated the facts of the incident to Client each time the Client connected with our Customer Care. The Client also connected with Grievance, Escalation, Compliance teams including Founder of Dhan who evaluated the details and advised the Client to connect with Exchange since the Client was not satisfied with the response given by the Broker.

Would the Client be profitable on this trade, had this not happened in the first place?

No. From the time the Client attempted to square-off the position, it was already in loss. The loss could have been minimized had the Client exited it through-out the day, via ways that are available on the app, web or even by connecting to our call and trade desk.

Was Client fully aware and well versed with Trading in Stock Markets?

Yes, the Client is well versed with Trading and has been trading on the platform for nearly two years and has executed 1500+ trades across multiple indices, including trading in positions, above freeze limits and across multiple contracts and expiries. During the period in which the Client has traded, instances like change in freeze quantity limits have happened multiple times across multiple indices.

Has Dhan compensated Clients for losses in the Past?

Yes we have. In a few scenarios we have been guided by the Grievance Redressal framework in place which was proven with sufficient data, logs and incident reports that Clients made loss for no fault of theirs. In such cases, Dhan has compensated its Clients in the past.

Should Dhan compensate for the losses of the said Client?

We have data, logs, and information that suggest details countering the claims made by the Client. We have communicated the same to the Client through all channels and multiple instances of communication.

What is the next course of action?

Client has escalated the incident with the Regulator on the same day itself. We have shared all the details of the incident as part of the Grievance Redressal process and will continue communication with the Exchange / Regulator regarding the same. We will go by the final decision and guidance as we receive it.

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Dhan is committed to provide an incredible Trading and Investing Experience to its Clients. We strive hard to build and offer the very best Product, Technology and Customer Experience for all our Clients.

As a Financial Institution, we are responsible for managing our Client’s Securities, Funds and also Trust. This is our attempt to provide a clear and transparent account of the situation, ensuring that all facts are accurately presented, backed by data and understood by our Clients and the wider trading community.

Trading involves inherent risks, and it is crucial for traders to stay informed about the rules and regulations governing the market. We emphasize the importance of staying updated on changes, such as adjustments in freeze quantities, lot sizes, changes of expiry dates or other regulatory amendments that affect trading to make informed decisions.

We appreciate the support and trust our Clients place in us and remain committed to maintaining the highest standards of integrity and transparency. We encourage our Clients to reach out to our Customer Care or Compliance Teams for any concerns or clarifications they may need.

Thank you for your understanding and continued support.

Sincerely,
The Dhan Team

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