POLICY ON INTERNAL CONTROL POLICY

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Mervyn Wilkins
5 years ago
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POLICY ON INTERNAL CONTROL POLICY GEPL Capital Private Limited, a Company incorporated under the Companies Act, 1956 and having its registered office at D-21, Dhanraj Mahal, C.S.

Vivek Gupta, who has done his MBA in finance and worked with Kotak Securities before starting stock broking company viz. GEPL Capital.

1 POLICY ON INTERNAL CONTROL POLICY GEPL Capital Private Limited, a Company incorporated under the Companies Act, 1956 and having its registered office at D-21, Dhanraj Mahal, C.S.M Marg, Colaba, Mumbai GEPL Capital is incorporated on 26 th September, 1997 as a Private Limited Company. Background : The Company is promoted by Mr. Vivek Gupta, who has done his MBA in finance and worked with Kotak Securities before starting stock broking company viz. GEPL Capital. GEPL Capital is a member of the Bombay Stock Exchange, Mumbai (BSE) and National Stock Exchange of India (NSE). GEPL Capital Pvt. Ltd. is a one-stop financial services firm which offers a range of services from equity, debt and depository services. These services are offered to clients ranging from retail, high net worth individuals, corporate and institutions. POLICIES & PROCEDURE Client Registration, Documents Maintenance Opening of Client account is through RM, Sub-Broker, AP (Reminiser), introduce by staff of GEPL and referral Clients. Before we open any trading account we follow all the due diligence as per the guidelines by SEBI and Exchanges, which includes in person verification, income details, net worth of the Client etc. We currently retain the form in H.O on a quarterly basis and earlier quarter shifted/ transferred to our Godown situated at kalabadevi, which has all sort of security and check system. While opening the account we have a team of 6 people in KYC department whom we have segregated into Checker, Maker & in person verification. We are maintaining the documents duly filled in the prescribed format for all our Clients.

2 We have 3 people involved in this maker checker process for verification of Documents and forms, maker does the entry part and checker verifies the details along with the form and documents and sends the same for activation. We do this by taking following measures. We do in person verification of the client; verify all his documents with original, collect appropriate margin. We do enquire about the annual income for individual client and for non individual we ask for balance sheet. Also we verify and do the in person verification about his status by seeing his office or residence. Records are maintained at the Head Office Level and the forms are sent to our office go down at Kalbadevi and arranged there serially. We conduct internal KYC audit and checked the forms. We send along with the statement of account an income disclosure form annually and ask client to provide all details as mentioned in the form and send it back to us with proof such as recent salary slips or audited Balancesheet. Brokerage Charged Brokerage charge shall be applicable as per the KYC form and tariff sheet signed by the Client while opening trading account. At the time of account opening the scheme of tariff, charges shall be explained in elaborate manner to the Client. Sales Practices followed by the Trading Member We have dedicated Sales Personnel who look after the Marketing and sales process. It is still in a struggling stage and hence we have not launched any promotional schemes yet. Closure of Client accounts/ In closure of account we do insist client to give letter for the same. in case of one client want to shift from one place to another we facilitate the same. Page 2 of 9

3 Dormant accounts In case of dormant account (six month) and Incase of very old dormant a/c (1 years old), If any account is dormant for more than 1 years and suddenly client wants to trade then we ask client to provide all documents as per updated KYC or exchange Circulars and also the reason for nontrading, after verifications of all his documents and replies, if found genuine then only we allow clients to trade. We received letter from client for deactivation of accounts and intimate the same to client after deactivation. Branch send request letter received from client to transfer his/her account from one branch to another branch to HO and in HO after confirmation with the same client we allow to transfer client from one branch to another branch. Order Receipt and Execution All Orders routed through Neat/Odin are monitored by our risk department and after their confirmation about client s financial and margin status order get executed. We have telephonic recording system for receipt of order and maintained the said record in machine and increased the hardisk capacity to store increase data and also transfer the same record in tape and maintained the said tape in safe custody forever. We do the telephonic trade confirmation every day; send physical client contract note and e-contract note every day. We don t exercise discretionary power to execute client orders. Sending Contract Notes, Daily Margin statement, Quarterly Statement of Accounts to clients. We process contract note in HO offices and branches take printout and dispatch the same at their end and maintained PODs and duplicate copies. We don t outsource this work. We send Contract note margin statement & quarterly statement of Accounts physically and maintained POD, only at the request of client we also send them Electronic contract note. We have full fledge dispatched department and they maintained all PODs on daily basis, maintained files for the same and entered all details in soft copy also. Page 3 of 9

4 The Contract Note unique number shall start from 1 st trading day Financial Year. We maintained all duplicate copies of contract note send to client by filing the same in Box file. We have fully comply with all compliance related issue of electronic contract notes, maintenance of log report, client consent and copy of contract notes in non-tamper able form. Any changes in respect of Mobile number/ ID shall be recorded in the master once the consent letter for the changes is obtained in physical from the Clients. Collection of pay in, margin, limits setting for exposures & turnover for clients, terminals, branches & sub-broker level As per RMS policy, Margin in Cash segment will be on the basis of volume of client however same will be discretionary to collect the margin from clients. Initial Margin is collected on upfront basis. MTM Margin is to be collected on T+1 day. Collection and reporting of MTM Margin in F & O Segment will be done as per Exchange reporting requirements and family adjustment. In case Client level funding in Cash Segment will be reported as required by Exchange. We are accepting margin in the form of cash and collateral. Limit Setting for exposures & turnover for clients, terminals, branches & sub broker level. Limits shall be monitored on daily basis, taking following criteria s: Turnover,Exposure, past trends, Location, Deposit/Collateral. Trading in illiquid scrip shall not be permitted. On detection of such trading, the risk manager shall use his discretion to shutdown the terminal after intimating branch manager and sub broker. We do collect margin from the client. In some case we have to consider his family running balances, collateral, running balances for setting the limit for exposure. Page 4 of 9

5 We have ODIN which has a facility to block the client as well as restrict to use overexposure. We have a dedicated Risk monitoring team of 8 people who monitor the exposure, limit, etc. Segregation of funds and securities of clients System of pay in and pay out of funds from / to clients: - pay in and pay out of the clients funds are made as per the rules & regulations of the exchange however some of the cases we retain pay out funds due to instruction of the clients to keep credit to enable buy the security. We shall maintain separate Client Bank account, Settlement Bank account, Separate Client Beneficiary, Exchange dues account and own account; wherein the client funds and securities are deposited in the respective client accounts only. Separate Own Beneficiary Account are maintained Not to undertake system of funding facility to the clients. At the time of client payout on the settlement day; the creditors are been paid as per the settlement cycle and until Creditors instruct to hold the amount or adjust the same for margin obligation or for some buying opportunity. In case if the client have a debit balance then the shares are transferred to their Beneficiary account. In case of proprietary transaction; separate own account is maintained which is distinguish from the client bank and client beneficiary account. In terms of shares and Funds pay-in and pay-out the required shares and funds are been transferred from Own to pool account and Client Bank account respectively. In no circumstances the shares of one client is used for meeting the others clients Payin or Margin obligation. We have maintained separate Client Margin account, wherein the client transfers the shares towards the margin obligation or for additional position in Derivatives segment. Client s funds/collaterals shall Page 5 of 9

6 not to be used for any other purpose than meeting the respective client s margin requirements/pay-ins. If we collect the margin amount from clients than same we are crediting in clients ledger. We ensure that client collateral is not used for any purposes other than meeting the client s margin requirements / pay-ins. We maintain records to ensure proper audit trail of use of client collateral. Funds of Client having credit balance shall not be used for funding of the Client having debit balance and Client having funds/collaterals shall not be used as margin for proprietary trade. No trade is allowed if debit balance continues for one week Monitoring of debit balances Allotment, Surrender of Trading terminals No fresh trade is allowed unless old dues are recovered. Clients of Sub-brokers and Authorized Persons are handled by them and us both. We have system of monitoring client debit balances on a daily and online basis. We have dedicated resources to monitor the debtors as well as asking for the margin cheque. Clients are followed up by tele-calling, sending SMS s and s and remarks are noted for each client. We have a system of sending client confirmations quarterly (calendar quarter) by 15th of the following month. The confirmations are sending in hard copy physically and through (whatever possible) with the 30 days clause in it. If any sub-broker is registration we get then we allot the terminal as per guideline of the exchange and uploading the data to the exchange. Till now no surrender of terminal has taken place. In case of Branch when we setup any branch we give the terminal after completion of the norm set by the exchange. Opening & Closing of branches /subbroker offices For opening new branches we first do the L&L agreement after assessment of the potential place. Page 6 of 9

7 After all administration formalities and work we open the branch. In case of closure we clear all the dues of the landlord if any. Intimate the client for closure or shifting of the branch. Payment, Receipt of funds from /to clients. Third Party Payment Policy We have dedicated Risk Management team and Debtor management team who look after collection of the cheque. Once the cheque gets collected then all log entry for the same has been done and finally accounts team enters the detail in our back office software. After that we send to the bank for clearance. In case of payment we generate the payment settlement wise and due wise. Some cheque we give hand delivered, some courier and some cheque we do through RTGS/NEFT transfer. Generally third party payment is not given to any client strictly. No payment is made through demand draft or pay order. If RTGS / NEFT payment is made, details are verified with back office. Checking the records with the Client in the barred list. Before opening the client account it is also verified that the client is not a part of the Debarred list. This will help us in not opening erroneously account of a debarred client or entity. The list used are Client Acceptance Policy Receipt, Delivery of Securities from / to clients Square off of positions / html Client give the instruction slip to the DP and we get the shares on payin date for payin same way as per the master we transfer the shares on the payout date to the client as per exchange and SEBI norms. Clients were informed that its position is surpassing the particular circuit limit or MTM limit through Phone call, sms and other means of communication. Page 7 of 9

8 Liquidation of securities without consent of clients We even say we you are enable to give the amount on time the position will have to be sq-up. All the position if outstanding we insist the client to sq-up. Policy for Internal shortages Policy is as per the exchange. Transfer of Trades Trades are done only on the exchange platform and if any trades need to be transfer become of wrong punching code it is done in the exchange platform System. Investor Redressal Mechanism PMLA The register of complaints is centrally maintained as well as branch wise. Also the id for customer care has been mention in the Web page namely As per PMLA policy. SYSTEMS Capacity of Systems with reference to volume Connectivity to Exchange & / to branches / sub-brokers / clients Trading system is capable of handling at least 50,000 trades / per day. Exchange Through Exchange VSATs, Lease Lines Branches (Sub Brokers) VPN VSATs, Point to Point lease lines, Broad band Internet. Clients Sometimes the clients are also getting directly connected to our trading system (ODIN DIET). They are connecting through internet. Page 8 of 9

9 Backup in case of disruption of Connectivity Exchange connectivity VSAT and Lease line dual backup Branches (Sub Brokers) VSAT / P2P lease line, backup is broad band internet. Sd/- Vivek I. Gupta Director Page 9 of 9

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