Internal control. 1. Details. Date of starting of business : 29/06/2010 Background of company

Transcription

1 Internal control 1. Details Date of starting of business : 29/06/2010 Background of company Market-Hub Stock Broking Pvt. Ltd. was founded in June 2008 with the objective of providing convenient retail broking and depository services at affordable cost with quality of service, ethical and transparent business practices. Company is located at International Trade Centre Majura Gate in the heart of Surat City with fully equipped adequate latest infrastructures & technology in well furnished office. Company is a member of National Stock Exchange of India Limited (NSE) in Cash & Derivative Segment, Bombay Stock Exchange Limited (BSE) Cash Segment & Depository Participant of Central Depository Services (India) Limited (CDSL). Company is promoted by innovative, enthusiastic and energetic directors with knowledge of capital market and experience of providing capital market services as a sub-broker since Company is lead by: 1. Mr. Pradip S. Kanani 2. Mr. Vijay D. Kananai 3. Mr. Hemantbhai Khakhkhar All the Directors have ability of different management skill to enhance good business opportunity & the growth of the company as well as Client & Employee. Also all the directors are coming from well reputed business community with highly cultured and able to maintain high code of conducts in the professional as well as individual life. Company has focused on offering range of financial products & services such as Portfolio Management, Wealth Management, Mutual Fund services, Life Insurance and General Insurance business using cutting-edge technology, latest infrastructure, Hiring professionals & experienced employee and setup channel of sub broker & branches across country. 2. Client Code Modification: Reasons for the modification of client codes : Error in punching of Codes

2 TRANSFER OF TRADES: Ratio of modification of client codes done at Head office vis-à-vis other offices : Not allowed at other office, modification done only at head office. Details of authorized representatives for approval of client code modification w.r.t. error trades. : Compliance Office Mr. Pradip S. Patel Measures taken to reduce the modification of client codes. : Very less modifications are done. Whether the trades have been modified only for the objective criteria allowed by the Exchange? Yes Whether securities taken into ERROR A/c are liquidated in the same A/c? N.A. If there is mistake in inputting the client code while doing the sauda, we make the necessary changes in client code within the time allowed by the exchange only after taking the permission of the Designated Director. 3. PMLA: Policy attached Compliance w.r.t. Principal Officer and adoption of written policy. Yes Measures taken with regard to Anti money laundering Act Yes System of keeping a check on Volume of trading done by the client is in proportion to his financial details as disclosed in the KYC. Yes Alerts for the same generated or not? No Any Suspicious Transaction Report (STR) sent to FIU No Risk categorization of clients. Yes 4. Introduction/Registration of clients This is first stage of contact with the client. It is very important to take adequate details from the clients to maintain a record of the details of the clients. Company registers client by obtaining the Client Registration From which is foremost requirement of exchange. In this form the basic details of the clients are obtained i.e. A. Name of client: Which is used for identify the client. B. Residential Address is taken with the address proof which is the document specified by exchange i.e Ration Card, Pass Port, Voters ID or Driving License. C. Also taking photo identity proof of Passport, Voter Ids, and Driving License Copy. D. Photograph of client in case of Individual. E. For Corporate client Board Resolution, Memorandum of association & article of association of company, Share holding pattern, Details of Authorised Persons and Directors. F. Pan card of all Clients, all these document form part of KYC Norms which is will be taken from all the clients.

3 G. Bank Details of the client along with the proof of the same i.e. Xerox of the bank pass book or canceled Cheque with sign the bank so that company can keep track of the third party payment i.e. amount paid through other persons account. H. DP accounts details which are to giving & taking delivery of securities. Proof of the DP Account holder name will be taken. This is also for not third party delivery of the security i.e. security of client given to other persons or taking delivery of other persons. Client broker agreement is executed at the time of client registration. It is as per the format prescribed by the exchange. This will cover all the responsibilities, Rights & Liabilities of client & member. INTERNET TRADING: Prior permission in regards of IBT facility is duly taken from the Exchange. In case any client wishes to opt for the IBT facility than IBT and ITORS agreement is dully executed before providing such facility to clients. 5 Funds: The cheques from the clients will only be accepted from the accounts for which the client has submitted the proof to the company. In case of any receipt from the accounts for which the proof is not available the same will be demanded from the clients otherwise reversed the same amount in same bank account. Third party cheques will not be accepted from the client. Payments for the payouts will only be made to the clients and not to any third party Client Bank Account will be used only for the purpose of receiving and paying funds from the clients. For the payments of expenses the business account will be used. Fund Transfers between all the bank accounts will be allowed as per requirements Collection of Pay-in Funds & Securities: Clients are required to make Securities/Funds pay in on T+1 day. Such information will be sent to Client through SMS & on daily basis. All pay in related reports & complete ledger is also available at back office system & we have given individual login to our entire client with password to view such report any time after eod of T day. If any shortage in funds & securities on eod of T+1 will be inform over phone individually. 6. BOLT Terminal We allot trading terminals either to our authorized employees or sub-brokers. Whenever, a trading terminal is not required by the person to whom it is allotted, we surrender the terminal to the Exchange.

4 All certificates against which the terminal is issue are kept safely in the custody of Compliance Officer. The details of the said certificate is kept in excel format too and same is verified periodically in regards of expiry of the same. 7. Contract Notes As a Trading Member of Exchange, we are required to issue Contract Notes to all our constituents for all trades executed by them in the format as may be prescribed by the Exchanges / SEBI from time to time with all relevant details as required therein to be filed in, and issued in such manner and within such time as specified by the Exchange. It is to be ensured that the Contract Notes are issued within 24 hours of the execution of the contract. This Contract Note is issue to the clients through the ECN on their respective ID as consent received from the same. In case of clients who does not opt for ECN facility than the Contract Note is to be either handed over or posted to their respective address. A contract note shall be signed by any one of the Company s Authorized signatory. Names of these authorized signatories will be printed on the Contract Notes. Contract note shall be time stamped with the time of receipt of order and the time of execution of order. The contract notes shall be numbered with unique running serial number commencing from one which shall be reset only at the beginning of every financial year (viz April to March). We are having Trading Codes in Contract Notes which consist of Individual Client Code as per UCI. By using software Dealing Office address would be printed on the Contract Notes. In case of any problem rubber stamp is to be used to have Dealing Office address on Contact Notes. Contract Notes will indicate total brokerage charged to the Client. If authorized by the Client contract notes may be issued by us in electronic form, in such format as may be prescribed by the Exchanges from time to time, duly authenticated by means of a digital signature/s as specified in the Information Technology Act, 2000 and the Rules made there under. While issuing Contract Note ECN log for the same is maintain along with the delivery report. In case of contract note send physically than duplicate copy of the same is maintained along with POD. 8. Securities:

5 The company will maintain client s securities in a designated account called the Client Beneficiary Account. The securities of the company will be kept in a separate demat account termed as Own Beneficiary Account. The clients and own securities will not be mixed with each other. The shares from the clients will only be accepted from the accounts for which the client has submitted the demat proof to the company. In case of any receipt from the accounts for which the proof is not available the same will be demanded from the clients. Third party delivery will not be accepted from the client. Delivery for the payouts will only be made to the clients and not to any third party. Auto pay-in and pay-out is done for the clients having Demat A/c. with us. And client having DP A/c with other DPs then securities are received and transferred in / from pool A/c for pay-in and pay-out from respective client DP A/c. For the purpose of holding clients securities separate client beneficiary account is maintained. Further the register of securities of clients separate as client wise and scrip wise is maintained in electronic form. If client having debit balance the shares are hold at client beneficiary A/c. as running A/c authorization taken from client otherwise transferred to respective clients DP A/c. While opening the client account the details of the clients along with DP details are mapped in the Back-office software. When receiving of transferring the securities from the demat details other than mention by the client than the alert for the same is generated by the system. 9. Statements of Accounts & Daily Margin Statement Whether statement of accounts for funds and securities are issued on monthly or quarterly basis. Yes Whether statement of accounts is issued from the branches/sub-broker s office/authorized persons office. If yes, the procedure followed for issuance and the maintenance of the duplicates and proof of delivery. NA Whether statement of accounts are issued physically or digitally? Digitally Whether daily margin statement is issued as per prescribed format? The mode of sending the same to the clients? Yes The statement of accounts will be sent to the clients on a quarterly basis within one month of the end of the relevant quarter as it will help avoid discrepancies in future. 10. Execution of POA (Power of attorney) (if applicable) - Please specify in whose name POA has been taken : Trading member Process adopted for execution of POA If client desire to opted for POA for his/her demat account, then client has to fill up POA & submit trading member with his/her signature.

6 11. Opening & closing of branches We have a centralized system for the back office and accounting procedures. The branches are under direct control of the management. 12. Closure of client accounts / dormat account A. Deregistering a Client: The Stock Broker may, at its absolute discretion, decide to deregister a particular client. The illustrative circumstances, under which The Stock Broker may deregister client, are given below: SEBI or any other regulatory body has passed an order against such client, prohibiting or suspending such client from participating in the securities market or has levied any penalty on the client. If a client is charged for or convicted for violation of any law, rule, regulation, guideline by any Exchange, Depository, Self Regulated Organization, Regulator, Judicial body or Quasi Judicial body. Such client is suspected of indulging in illegal or criminal activities including fraud or money laundering. Such client s name appears in the UN list of prohibiting entities or SEBI debarred list. Such client s account has been lying dormant for a long time or client is not traceable. Such client has declared insolvent or any legal proceedings to declare him/her as such have been intended. Such client has been irregular in fulfilling obligations towards margin or settlement dues. Such client has a tainted reputation and any business relationship with such clients is likely to tarnish the reputation of the Stock Broker or may act as detriment to the Stock Broker prospects. If the actions of the client are such that create grounds for suspicion or are prima facie illegal or improper or may appear to disturb the normal functioning of the market or appear to be manipulative or deceptive in nature, either alone or in conjunction with others. On the death/lunacy or other disability of the Client; If there is a reasonable apprehension that the Client is unable to pay its debts or the Client has admitted its inability to pay its debts to the stock broker or any other person. If the Client is in breach of any term, condition or covenant of the broker client agreement. If the Client has made any material misrepresentation of facts, including (without limitation) in relation to Security.

7 B. Treatment of inactive accounts: Client account will be considered as inactive if the client does not trade for a period of six month. The working shall be done at the beginning of every month and those clients who have not executed any transaction in the preceding 6 months shall be treated as inactive. The Client has to make written request or from his designated id for reactivation of his/her/its account. 13. Receiving and Execution of Orders The stock broker may from time to time impose and vary limits on the orders that the client can place through the stock broker s trading system (including exposure limits, turnover limits, limits as to the number, value and/or kind of securities in respect of which orders can be placed etc). 14. Portfolio Manager NA Whether Trading Member acting as a portfolio manager? No Procedure for client registration, order execution, contract notes issuance and settlement mechanism followed for the same. NA Whether any of the client of the TM is acting as a portfolio manager? NA 15. Brokerage Charged: We don t have any brokerage schemes Brokerage schemes provided to the clients? NA Elaborate on the schemes provided? NA INVESTOR REDRESSAL MECHANISM: To resolve the complaints/grievances of our clients, we have deputed compliance officer for the same, who is obliged to resolve the same within 24 hours, failing which, the client can approach the Director of the Company for further action.