Power of Attorney in online broking is not mandatory but it is a convenience. There is a reason why online brokers ask for Power of Attorney. When you sell shares, the shares need to be debited from your demat account. Normally, you give a signed Debit Instruction Slip (DIS) and based on this DIS, the broker gives instruction to the DP to debit the account. However, when the broker and the DP are the same, this can be simplified through power of attorney.

When you give a power of attorney, the debit to your demat account, when you sell shares, happens automatically and you don’t need to give a separate DIS each time. This power of attorney is more for convenience than for anything else. You can choose not to give power of attorney to the broker but then the onus is on you as the trader to ensure that the signed DIS reaches your broker on time as otherwise it will lead to short delivery and result in huge penalties. As an investor, there are certain basic precautions that you must take when you give power of attorney. Here is what you can do.

· Regularly verify your ledger and demat account to ensure that all transactions are authorized by you and in the event of any mismatch, immediately highlight the same and also escalate the issue if required.

· To the extent possible, avoid trading on margin using shares as collateral. When you do that you expose yourself to risk. Insist on transferring your shares into your demat account on T+2 date and use cash margins to trade.

· Avoid leaving shares or cash in the broker pool account for too long and if you are not using the cash as margin then ask for the funds to be transferred into your registered bank account.

Such basic precautions can go a long way in making things simpler and safer for you.