Why have the stock exchanges asked investors not to deal with unregistered stock brokers?

Both and the NSE and BSE specifically asked investors to only deal with registered stockbrokers even as so-called brokers and advisors from far-flung places like Indore have been consistently targeting clients to trade amidst promises of hefty returns. Both have asked the investors not to transfer any funds or securities to any stock broker under any scheme that guaranteed or assured returns. Also clients must check registration.

The exchanges have specifically alerted investors not to fall prey to fraudsters sending e-mails and SMS messages luring gullible investors to trade in stocks or securities via something similar to ponzi schemes offering pyramid returns. In fact, exchanges have also cautioned about dealing in unregulated derivative products like difference contracts and binary options, which are not permitted under the current exchange rules.