"There are many things that are already in place to ensure that your funds are safe. Here are a few key main things to remember:
1.) All brokers have to deposit a certain amount of money to be kept with the NSE and MCX to become members. This is to ensure capital adequacy and a minimum net worth policy.
Client funds have to be kept in a separate bank account. A broker cannot mix client and pro funds together in any way.
2.) Every year, the exchanges perform a thorough audit spanning several days. They check when funds came in from clients, how much is with the broker, what they were used for, and many other detailed compliance checks. We have passed their check every single year.
Our calls are on a recorded line. If the broker places an order on behalf of a client, he must have proof of doing that.
3.) Investor Protection Fund - Part of your transaction fees charged by the exchange go to this fund which is to help clients recover losses in case of electronic, systematic or other non-client related failures. This is maintained by the NSE/BSE/MCX."