The Securities and Exchange Board on Saturday asked stock brokers body Association of National Exchanges Members of India (ANMI) to come out with a code of ethics in a year's time.
"The brokers association should come out with a sort of document detailing the code of ethics," Sebi chairman CB Bhave said while addressing a convention of ANMI in Kolkata on Saturday.
Bhave said the code should include what constituted mis-selling of financial products. Sebi felt that brokers encourage clients in margin trading and derivatives without explaining the impact, while high leveraging should be discouraged.
"We receive complaints from investors about getting highly leveraged and we believe many of them don't fully understand what leveraging means," Bhave said, adding "we would like to know what guidance you give to your clients."
In response to an ANMI member's suggestion for a threshold limit for margin trading, Bhave said it should be debated among the broking community which should come out with a suggestion.
Bhave declined to speak about Sebi barring 14 insurance companies from selling Ulip without its approval. He also did not give details on the investigation on mis-selling of mutual fund by banks and brokers.
On the issue of stamp duty he said the matter would be looked into after the committee on it submits its report. He admitted that it would not be an easy task as stamp duty is a state affair.