Trade cautiously in illiquid stocks: BSE advises brokers

Leading bourse BSE has asked brokers to take extra caution while trading in illiquid securities on behalf of their clients.
The move comes after the exchange received complaints that callers impersonating as registered clients of trading members place orders for illiquid stocks with them by providing the required details, BSE said in a circular.
BSE advised trading members to exercise "extra caution" and due-diligence at their end while executing trades on behalf of their clients.
Illiquid stocks are those that cannot be sold easily because they see limited trading. These stocks pose higher risks to investors because it is difficult to find buyers for them as compared to frequently traded shares.

"The trading members are requested to perform additional due-diligence while dealing in illiquid securities at their end such as devising appropriate cross-verification mechanism with the registered clients so as to confirm the authenticity before placing orders in illiquid securities," BSE said.