Recent SEBI / Exchange / FMC / Depository Circulars applicable to Stock Brokers / Commodity Brokers / Depository Participants

Transcription

1 Recent SEBI / Exchange / FMC / Depository s applicable to Stock Brokers / Commodity Brokers / Depository Participants Summary of Recent s of SEBI / NSE / BSE Sr. Reference 1. NSE/CMPT/ /12/2011 Client Margin Changes in item no 14 and 15 of consolidated circular no Reporting F&O NSE/F&O/19140 dated October 14, Segment Item no. 14 Sign off date it means date up to which member may report of client margin to CC. Member can upload client margin reporting file up to T+5 working days. In case of any error in the file, member can rectify up to T+5 working days with incremental batch no. Item 15 - Short / non-reporting of client margin - The penalty shall be payable within 10 working days of last working day of the trading month. Note - was effective from 15 th December CMPT19587 Client Margin Reporting - NS 2. NSE/CMPT/ /12/2011 Client Margin Reporting CD Segment Changes in item no 13 and 14 of consolidated circular no NSE/CD/19141 dated October 14, Item no. 13 Sign off date it means date up to which member may report of client margin to CC. Member can upload client margin reporting file up to T+5 working days. In case of any error in the file, member can rectify up to T+5 working days with incremental batch no. CD Client Margin Reporting CD Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 1

2 Reference Item 15 - Short / non-reporting of client margin - If short collection of margin from clients is caused due to movement of 1% or more in the currency pair - USD-INR only, based on the close to close settlement price of the near month currency futures contract on a given day, (day T), then, the penalty for short collection shall be imposed only if the shortfall continues to T+2 day. The penalty shall be payable within 10 working days of last working day of the trading month. Note - was effective from 15 th December NSE/INSP/19583 BSE Notice /12/ /12/2011 Clarification on Margin collection and Reporting Based on representations received from investors and members, Stock Exchanges in consultation with SEBI, issued 1) Clarification regarding margin collection and reporting by members. 2) A format of daily margin statement which stipulates minimum information to be provided to clients. Clarification on Margin collection and 4. NSE/FATAX/ /12/2011 Intimation of clarification regarding service tax on delayed payment charges collected by the service provider in respect of Stock Clarification received from Service Tax Department for Service Tax on delay payment charges collected by the stock broker. Clarification was issued by the Commissioner of Service Tax I, Mumbai, vide Trade Notice 09/ dated November 2, Clarification DPC received by the broker are not includible in taxable value as Clarification of Service Tax on DPC.p Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 2

3 Reference Broker s services same are not charges for providing taxable services. Such charges are on account of delay in making payment by service recipient to the service provider and are in nature of a penal charge for not making the payment within stipulated time. DPC would not be includible in Gross value charged only if these charges are shown separately in the account statement / invoice / bill, etc. 5. NSE/INSP/ /01/2012 List of violations and applicable penalties (CM, WDM, F&O and CD Segments) This circular provide the followings: I) List of common violations and the applicable penalties as decided by the relevant authority. II) Details of escalation of penalties in case of repeat violations observed (during inspections conducted in last three financial years) Note: Penalties are indicative in nature and could undergo change in specific cases depending on frequency and gravity of the violations. List of violations and applicable penalties N 6. SEBI : MIRSD/Cir- 23/2011 NSE NSE/INSP/ /12/ /12/2011 The Securities and Exchange Board of India (KYC Registration Agency) Regulations, 2011 SEBI has formulated the KYC Registration Agency (KRA) Regulations, which have been notified vide notification no. LAD-NRO/GN/ /29/36772 dated December 2, The Regulations cover the registration of KRAs, functions and responsibilities of the KRAs and intermediaries, code of conduct, data security, etc. KRA Regulation zip An intermediary shall perform the initial KYC of its clients and upload the details to KRA. If the client approaches another intermediary, intermediary can verify and download the client s Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 3

4 Reference details from the system of the KRA. The basic motive was to avoid duplication of KYC process. 7. SEBI : MIRSD/Cir- 26 /2011 NSE : NSE/INSP/19654 BSE Notice /12/ /12/ /12/2011 Guidelines in pursuance of the SEBI KYC Registration Agency (KRA) Regulations, 2011 and for In- Person Verification (IPV) With a view to implement SEBI KRA Regulations, 2011, SEBI issued guidelines for Intermediaries and KRAs: Guidelines for Intermediaries (Brief): 1. After doing initial KYC of the client, an intermediary shall upload the KYC information of the system of KRA and also submit the hard copy within 10 working days from the date of execution of documents by client and maintain the proof of dispatch. 2. In case of incomplete form, KRA shall return to intermediary who in turn shall forward promptly require documents to KRA. Guidelines for KRA and for In-Person Ver 3. For existing clients, data may be uploaded provided they are in conformity with the SEBI circulars dated 05/10/ Intermediary shall maintain the Electronic records of the KYCs and keeping physical records would not be necessary. 5. The intermediary shall have adequate internal controls to ensure the security / authenticity of data uploaded by it. Guidelines for KRAs (Brief): 1. KRA system shall provide KYC information in data and image form to the intermediary. 2. KRA shall send a letter to the client within 10 working days of the Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 4

5 Reference receipt of the Initial / updated KYC documents from intermediary, confirming the details thereof and maintain the proof of dispatch. 3. KRA shall have a system in place to prevent the duplication of entry in the system with other KRA s. 4. KRA shall maintain the audit trail of the upload / download / modification etc made by the intermediaries. 5. KRA shall ensure that, system audit is carried out annually by independent Chartered Accountants. 6. A client can start trading as soon as initial KYC is done while other remaining process of KRA is in progress. In-Person Verification (IPV): SEBI has streamlined and harmonized the IPV requirements for all the intermediaries in line with uniformity brought by SEBI in KYC procedure across intermediaries. 1. Intermediary shall ensure that the details like, name of the person doing IPV, his designation, organization with his signatures and date are recorded on the KYC form at the time of IPV. 2. The IPV carried out by one SEBI registered intermediary can be relied upon by another intermediary. 3. In case of Stock brokers, their sub-brokers or Authorised Persons can perform the IPV. Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 5

6 Reference 4. In case of Mutual Funds, their AMCs and the distributors who comply with the certification process of NISM, AMFI and have undergone the process of Know Your Distributor (KYD), can perform the IPV. In case, client approach directly, they may also rely upon the IPV performed by the scheduled commercial banks. Applicability: 1. All new client accounts opened from January For accounts opened between 01/01/ /01/2012, KYC details may be uploaded and hard copy shall be submitted to KRA by 15th February For client registered from 01/02/2012, the intermediaries shall continue to follow the requirement of sending the same within 10 working days. 8. NSE/INSP/ /02/2012 Applicability of KYC & KRA Regulations SEBI has clarified that circulars relating to KYC and KRA regulations are applicable for all the clients of stock brokers / depository participants, without any exemption to any category of clients like institutions or FIIs. Applicability of KYC & KRA Regulations - NS 9. NSE/INSP/20162 BSE Notice /02/ /03/2012 KRA Registration- DOTEX INTERNATIONAL LIMITED SEBI has informed that M/s. Dotex International Limited (a wholly owned subsidiary of National Stock Exchange of India Limited), has been granted certificate of registration as a KRA on February 28, KRA Registration - Dotex International L Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 6

7 Reference 10. NSE/MEM/ /11/2011 Requirement of The requirement for NCFM certification in Capital Market Segment NCFM Certification is changed as under: in the Capital Market Segment NCFM certification would now be required only for the Branch Manager NEAT ID on each Tap IP per connectivity of the Trading Member. The requirement of valid NCFM certification shall continue to be applicable for Corporate Manager ID. Requirement of NCFM Certification in 11. BSE Notice /12/2011 Requirement of certification in the Cash Segment In case of Cash Segment, certification would now be required by one user per connectivity basis. Certification could be from BSE s Certification on Securities Market i.e. BCSM certificate or the NISM approved bodies certificates. Requirement of certification in the Ca X X X X X Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 7

8 Reference 1. MCX/MEM/044/2012 NCDEX/COMPLIANCE- 006/2012/052 02/02/ /02/2012 Summary of Recent s issued by FMC/MCX/NCDEX Market Access through Authorised Persons Revise Guidelines The FMC vide its letter no. 06/03/2008 MKT II dated 11 th January 2012, has issued amendments to the Regulatory Framework for Market Access through Authorised Persons in Commodity Future Markets. As per recent amendments, now the Co-operative society shall be eligible to be appointed as AP. Market_Access_thro ugh_authorised_pers 2. FMC/4/2012/C/0014 MCX/COMP/052/2012 NCDEX/COMPLIANCE- 005/2012/050 02/02/ /02/ /02/2012 Quarterly settlement of account of client by member As per this circular, members are required to settle the accounts of their clients on quarterly basis. In case, a client is having an open position on settlement date, members may retain the requisite funds to meet the margin obligations for the next 3 trading days to avoid the square off position due to such settlement. Quarterly Settlement of account of client by While settling the accounts, member shall send a statement of accounts containing an extract from the clients ledger of funds for that quarter. Such periodic settlement is not necessary for the client given margin in the form of collaterals, BG, FDR and other collaterals. For such settlement, there should not be any inter client adjustments. Timing difference between two settlements should not be Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 8

9 Reference more than 90 days. Penalty of Rs. 5000/- shall be levied for every such non settlement of client account on quarterly basis. Note: The circular is effective from 1 st April MCX/COMP/469/2011 NCDEX/LEGAL- 001/2012/002 22/12/ /01/2012 Common / Uniform CRF / Process The Forward Markets Commission (FMC) has prescribed the uniform and common client registration forms including Member Client Agreement, Risk Disclosure Document and Know your Client form, pursuant to the demand from Members as well as participants in commodity futures market Common Uniform Client Registr With the introduction of common Client Registration Documents, the client will be required to fill in only one set of documents across multiple National Commodity Exchanges. List of Mandatory documents to be obtained from the client: 1. KYC application form 2. Uniform Risk Disclosure Document 3. Rights and Obligations of Members, Authorized Persons and Clients 4. Do s and Don ts for the clients 5. A tariff sheet specifying various charges 6. List of documents which are voluntary and Nonvoluntary in nature 7. Information on contact details of senior officials and Investor Grievance cell of the Member Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 9

10 Reference Note: circular is effective for all new clients registered from 01 st April NCDEX/COMPLIANCE- 001/2012/001 02/01/2012 Collection of Margins from the Clients As per this circular, members are once again directed by the FMC to collect upfront margins deposits from the clients. Members are requested to comply with the same and stop funding on behalf of the clients, otherwise penalty would be levied by the FMC / Exchange Collection of Margins from the Clien X X X X X Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 10

11 Summary of Recent CDSL Communiqués Sr. Communiqué Date /02/2012 Concurrent Audit of Additional Check point relating to checking of authorization for debit Risk Prone Areas of DP Operations transactions pertaining to government securities has been added in Monthly Concurrent Audit of Risk prone areas of DP Operations. The following check point has been added under Execution of Instruction Slips. Whether all debit transactions pertaining to government securities have been executed only after receipt of authorization from the BO? The effective date to conduct verification was 1 st Feb DP-2832-Concurrent -Audit-of-Risk-Prone-A /02/2012 Amendments to CDSL's DP Operating Instructions Amendment to Chapter 6 - Settlements In case the account holder cannot come in person to collect the fresh DIS booklet (in case no requisition slips or requisition slip lost by the BO), the DIS may be couriered / mailed to the correspondence address of the BO. The DP should maintain record of dispatch. Amendment to Chapter 12 Fees, Charges and Deposits Exit charges for withdrawal within five years of initial registration If any DP submits a request for withdrawal within five years of its date of initial registration as a DP, an exit fee of 12,500/- for each unexpired quarter till expiry of its registration will be charged. Amendment to Chapter 18 Mutual Fund Units Restatementization - Procedure The original MF-RRF will shall be retained with the DP and need not be sent to AMC/ RTA. The RRN shall be accessed by AMC/RTA electronically. DP-2847-Amendment s-cdsl-dp-op-inst-c Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 11

12 Communiqué Date /02/2012 Amendments to CDSL's DP Operating Instructions /01/2012 Verification of copies of documents with their corresponding original /12/2011 Amendments to CDSL's DP Operating Instructions CDSL has amended Chapter 15: Change in DP Name and Registered Office Address. CDSL has revised its document requirement list for effecting change in Name of DP and change in Registered Office Address of DP. CDSL has clarified that persons who can carry out IPV as per para 3 of the SEBI dated December 23, 2011 may also carry out verification of documents with the originals. CDSL has amended Chapter 10: Account Closure. Now, DP can enter Account Closure Request in CDSL System within 7 days of receipt of the closure request. Earlier only 2 days were allowed to enter Account Closure Request in CDSL System. DP-2857-Amendment s-cdsl-dp-op-inst-c DP-2806-Verificationwith-Original-Documen DP-2770-Amendment s-cdsl-dp-op-inst-c X X X X X Compiled by CA. Hiren N. Mehta WIRC 10/03/2012 Page 12