Can a practicing chartered accountant deal in derivative?

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Querist : Anonymous

Querist : Anonymous (Querist)

16 September 2013 Can a practicing chartered accountant deal in derivative?

Ganeshbabu K

Ganeshbabu K (Expert)
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17 September 2013 i have seen persons who are doing derivative business and stock trading

Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2013 Whats the legal position ?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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18 July 2024 Yes, a practicing Chartered Accountant (CA) can deal in derivatives, but there are certain legal and ethical considerations that need to be understood and followed:

1. **Legal Position**: As per the Chartered Accountants Act, 1949 and the regulations issued by the Institute of Chartered Accountants of India (ICAI), there is no explicit prohibition on CAs engaging in trading or dealing in derivatives. However, CAs are required to adhere to the code of ethics and professional conduct prescribed by the ICAI.

2. **Ethical Considerations**: The ICAI's Code of Ethics mandates that CAs should not engage in any activity that brings disrepute to the profession or compromises their independence and objectivity. Therefore, if a CA engages in derivatives trading, they must ensure that it does not conflict with their professional responsibilities, such as auditing or providing advisory services to clients.

3. **Disclosure and Transparency**: If a CA plans to trade in derivatives, it is important to maintain transparency and disclose such activities, especially if they could potentially impact their independence or objectivity in performing professional services.

4. **Client Considerations**: CAs who provide services to clients, especially in financial advisory or auditing roles, need to consider how their personal trading activities, including derivatives trading, might affect their clients' perception of independence or objectivity.

5. **Regulatory Compliance**: CAs must comply with all applicable laws and regulations related to derivatives trading, including those prescribed by market regulators such as the Securities and Exchange Board of India (SEBI).

In conclusion, while there is no direct prohibition on CAs trading in derivatives, they must exercise caution and ensure that their trading activities do not compromise their professional integrity, independence, or objectivity. It's advisable for CAs to seek guidance from the ICAI or legal advisors if they have specific questions or concerns regarding derivatives trading in relation to their professional practice.

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