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Compliance RequirementsCompliance Requirements

November 27, 2012 November 27, 2012

Client registration & KRA requirements

• Formalities rationalized (agreements, signatures, documents)• Availability of Nomination facility• One document across Exchanges & segments with KRA

(reduced costs)• Aadhaar Letter issued by UIDAI included as proof of identity,

address• Power of Attorney – specific and not general – to be used only

for purposes specified by SEBI

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Client registration & KRA requirements

KYC for Foreign investors •The Global Custodian or the Local Custodian may fill the KYC form and sign if authorized by investor•PAN of promoters holding control Partners/Trustees, whole time directors are not applicable•Custodian shall verify the SEBI registration details and provide certified copy of such verified certificate to the intermediary.•Date of commencement of business and Copy of the Board Resolution for investment in securities market need not be collected

Dealings with Clients

• In case of running account compulsory settlement to be done on monthly / quarterly basis as per client preference

• Retention of funds and securities at the time of settlement for margins and future trading as under:

Derivative market - 175% of margin requirement

Capital market – outstanding pay-in obligation of funds & securities & value of transactions on the day of settlement

• Issue statement of funds & securities along with retention details at the time of settlement

• FAQ issued to enable members to comply with requirements and to clarify issues

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Dealings with Clients

Funding to clients• If debit balance is due to client’s failure to pay

a) for less than (T+2)+5 trading days = no funding

b) for more than (T+2)+5 trading days and no further exposure is granted to client = no funding

c) for more than (T+2)+5 trading days and further exposure is granted to client = funding

• Delayed Payment Charges / interest for the funds deployed by the member may be charged at the rate consented by clients.

Online client code modification• Client Code Modification for Non institutional clients only for

genuine reasons• Fine levied to be 1% or 2% of the value of trades modified during

a month as may be applicable 5

Dealings with Clients

Emails / SMS alerts to clients•mobile number and / or email address of clients to be registered by members for their clients on UCI online•Exchange to provide the details of transactions via SMS / Email to investors

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Margins and Internal Risk Management

Margin reporting requirements

•Cheques collected on T day and deposited on T+1 working day considered towards margin collection•Funds available in accounts of specified relatives considered towards margin requirement of client•Member may report margin collected upfront to clearing corporation up-to T+5 day•For false reporting, fine equal to the amount of false reporting along with suspension for 1 day applicable•Short reporting now computed on client level•Member may recover short reporting charges levied by Exchange from client 7

Margins and Internal Risk Management

Limit setting for execution of orders•Trading Members shall inter alia put in place limits for:Quantity per orderValue per orderValue limit for each IDValue limit for each branch Security wise limit for each ID•Compliance officers shall submit a certificate to the Exchange on a quarterly basis regarding compliance of above•System Auditor shall confirm that the systems and system records are maintained as prescribed.

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OUTSOURCING OF ACTIVITIES•Core Activities not to be outsourced eg. execution of orders and monitoring of trading activities (RMS)•Compliance function

Other Obligations of the members while outsourcing activities•Prepare comprehensive policy for activities to be outsourced•Due diligence of third party and monitoring of performance•Written contract, terms of performance and confidentiality•Plans for disaster recovery and back up

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Margins and Internal Risk Management

PMLA Requirements

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PMLA Requirements

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• Verify the client’s identity using reliable, independent sources, documents, data or information.

• Ensure that no account is opened in a fictitious / benami name

• Classify the clients into low, medium and high risk category based on risk perception

• Clients of special category like NRI, HNI, Trust, NGO, PEP, Non face to face etc.to be classified as high risk clients and closely monitored

• Client transactions not to be disproportionate to their financial strength

• Identify suspicious transactions and file STR wherever required

QUERIES ?

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Thank You

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