• Stock trading with other people money in my own account

I am trading in stock market for last 8 years n earning good returns. Now my friends neighbour relatives want that they will deposit some money like 1 lac in my account i trade on their behalf in my account on profit sharing basis. I am also intersted in taking my trading to next level but want it to do it legally. Please advice. I am not intersted in managing other people accounts. I want to trade only in my account. Please advise what should be done. Small scale trading business i want to start please advice
Asked 7 months ago in Taxation from Ludhiana, Punjab


Managing other people account is not allowed by SEBI. You may just advise them as to what share they can purchase. I would not advise you to take money in your account. 


Regards s

Anilesh Tewari
Advocate, New Delhi
17403 Answers
280 Consultations

5.0 on 5.0

You can get franchise of some stock trading firm and start earning on commission basis from trading of Demat accounts open through your franchise.

Mohit Kapoor
Advocate, Rohtak
6572 Answers
2 Consultations

5.0 on 5.0

you should make it clear to your fiends , relatives that there is no guarantee returns 


2) they will have to bear losses too if any 


3) agreement should be entered into between you and your friends 


4) get agreement drafted by lawyer 

Ajay Sethi
Advocate, Mumbai
72059 Answers
4334 Consultations

5.0 on 5.0

You can do that but all the tax liabilities will be yours in that case

Prashant Nayak
Advocate, Mumbai
16701 Answers
30 Consultations

4.6 on 5.0

There are 2 aspects to your Question :


1. If you are taking money at a personal level of no prof of taking any money for any purpose then its solely depends on you.

2. Second,  doing it for a proper regulatory mechanism for that reply is:

a. You cant trade on their behalf in your account on profit sharing basis, its a violation of SEBI Act.\


You need to be a SEBI Registered Investment Advisor to manage the Accounts.


But as you said that you are not interested in managing other people accounts.


To sum up you can have personal arrangement with your relatives legally it is not allowed on papers.






Abhinav Sabharwal
Advocate, New Delhi
40 Answers

4.0 on 5.0

You need to sign MOU and all terms and conditions plus all risk of market and your neighbor will be sole concern responsibility about loss in the market.

Ganesh Kadam
Advocate, Pune
9026 Answers
74 Consultations

4.9 on 5.0

You requires a stock broker's license to do this. you can invest money of others in share market after obtaining trading license as broker from the stock exchange or sub-broker license from any broker agency. 

Mohammed Mujeeb
Advocate, Hyderabad
13837 Answers
6 Consultations

4.5 on 5.0

Such business not permissible without valid license. If you open your own account and start to buy and sell stocks on your own, no license is required. But others are taking risk to offer you money to trade on their behalf, at least no commission will be charge. 

Or still you want to do than it will be at their own risk and whatever income will generate, you will deduct this % of amount for your speculation service.

Yogendra Singh Rajawat
Advocate, Jaipur
16743 Answers
21 Consultations

4.6 on 5.0

Any profits or loss for your own trading account shall be your own responsibility, whereas seeing your growth the people around you might have become greedy about it hence they want to invest through you and to see profits.

However as you know that this is purely an indirect gamble hence there is no guarantee for any profits that too always.

If you keep suffering losses on other people money, they may lodge a criminal complaint against you with the police for cheating and you will be unnecessarily be tortured and troubled by police and criminal cases.

It is better you enter into an agreement on  a stamp paper and disclaim your responsibility agaisnt the losses that may incur due to fall in the prices or market volatility.

Even then on abundant caution you may try to avoid them by explaining them about the market risks, if they still want to go ahead then get an agreement in a carefully worded draft about the disclaimer clause and proceed after obtaining a legal opinion from your lawyer in the local to avoid embarrassing situations in future.




T Kalaiselvan
Advocate, Vellore
61997 Answers
800 Consultations

5.0 on 5.0

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