Policy on Management of Conflict of Interests Index 1. Introduction 2. Policies and Internal Procedures to Identify and avoid or to Deal or manage actual or potential Conflict of Interest 3. Internal code of conduct governing operations 4. Standards of appropriate conduct in the performance of the activities, 5. Communication of policies, procedures and code to all concerned 6. Implementation and Review of policy of management on Conflict of Interest 1. Introduction SEBI vide its circular no. CIR/MIRSD/5/2013 dated August 27, 2013 issued a General Guidelines for dealing with Conflicts of Interest of Intermediaries, Recognised Stock Exchanges, Recognised Clearing Corporations, Depositories and their Associated Persons in Securities Market. SEBI decided to put in place comprehensive guidelines to collectively cover such entities and their associated persons, for elimination / avoidance of their conflict of interest and educating the Associated Persons as defined in Securities and Exchange Board of India (Certification of Associated Persons in the Securities Markets) Regulations, 2007 for the compliance of the guidelines. SEBI advised to lay down, with active involvement of senior management, policies and internal procedures to identify and avoid or to deal or manage actual or potential conflict of interest, develop an internal code of conduct governing operations and formulate standards of appropriate conduct in the performance of their activities, and ensure to communicate such policies, procedures and code to all concerned; SEBI guidelines intends Intermediaries and their Associated Persons to comply with the following - high standards of integrity in the conduct of business; - fair treatment of clients and no discrimination amongst them; - avoidance of conflict of personal interest with the client and primacy of clients interest; - appropriate disclosure to the clients of possible source or potential areas of conflict of interest; - reducing the opportunities for conflict through prescriptive measures; - appropriate restrictions on transactions in securities while handling a mandate of issuer or client; - not to deal in securities while in possession of material non published information; - not to communicate the material non published information - not to manipulate the demand for, or supply of, or to influence prices of, securities. - not to have an incentive structure that encourages sale of products not suiting the risk profile of the clients; - not to share client information for the personal interest; This document sets out the Policy on management of Conflict of Interest for CPR Capital Services Ltd., with intent to define a policy and procedure for dealing with Conflict of Interest and to effectively manage any conflicts of interest that may arise in carrying out its business. Senior Management is responsible for ensuring that the Company s systems, controls and procedures are adequate to identify and manage conflicts of interest. 2. Policies and Internal Procedures to Identify and avoid or to deal or manage actual or potential Conflict of Interest Policy and the objectives CPR Capital Services Ltd. policy on Conflict of Interest is defined as under- In order to strive for achieving management of conflict of interests, CPR CAPITAL SERVICES LTD. shall endeavor- - To promote high standards of integrity in the conduct of business 1
Policy on Management of Conflict of Interests - To ensure fairness of dealing with clients - To guide for identification, elimination or management of conflict of interest situations - To provide a mechanism for review and assessment of the policy(ies) on conflict of interests The conflict of interest policy aims to ensure that the Company s clients are treated fairly and at the highest level of integrity and that their interests are protected at all times. It also aims to identify conflicts of interest between: - The Company and a Client - Relevant Person and a Client - A Company of the Group and a Client - Two or more Clients of the Company in the course of providing services to these Clients - A Company service provider and a Client In addition it aims to prevent conflicts of interest from adversely affecting the interest of its Client. CPR CAPITAL SERVICES LTD. Conflicts of Interest Policy sets out how: - The Company will identify circumstances which may give rise to conflicts of interest entailing a material risk of damage to our Clients interests; - The Company has established appropriate mechanisms and systems to manage those conflicts; - The Company maintains systems designed to prevent damage to our Clients interests through identified conflicts. Intermediary and Associated Person Securities and Exchange Board of India (Certification of Associated Persons in the Securities Markets) Regulations, 2007 defines the term intermediaries" and "associated persons". Accordingly, intermediary means an entity registered under SEBI Act and includes any person required to obtain any membership or approval from a stock exchange or a self-regulatory organization; and associated person means a principal or employee of an intermediary or an agent or distributor or other natural person engaged in the securities business and includes an employee of a foreign institutional investor or a foreign venture capital investor working in India; Conflict of Interest Conflicts of Interest can be defined in many ways, including any situation in which an individual or corporation (either private or governmental) is in a position to exploit a professional or official capacity in some way for their personal or corporate benefit. A conflict of interest is a manifestation of the moral hazard problem, particularly when a financial institution provides multiple services and the potentially competing interests of those services may lead to a concealment of information or dissemination of misleading information. A conflict of interest exists when a party to a transaction could potentially make gain from taking actions that are detrimental to the other party in the transaction. Identification of Conflicts of Interests The Company shall take adequate steps to identify conflicts of interest. In identifying conflicts of interest, the Company will take into account situations where the Company or an employee or a Relevant Person: - Is likely to make a financial gain, or avoid a financial loss, at the expense of the Client; - Has an interest in the outcome of a service provided to the Client or of a transaction carried out on behalf of the Client, which is distinct from the Client s interest in that outcome; - Has a financial or other incentive to favour the interest of one Client over another; - Carries out the same business as the Client; or - Receives from a person other than a Client an inducement in relation to a service provided to a Client, in the form of monies, goods or services, other than the standard commission or fee for that service. 2
Policy on Management of Conflict of Interests Potential Conflict of Interest In order to avoid, manage or deal with conflict of interest with the intermediary or the Associated Persons, it is important to identify the possible areas of conflict of interest. CPR CAPITAL SERVICES LTD. lists out the following potential conflict of interest that may affect the company. i. Directorships or other employment; ii. interests in business enterprises or professional practices; iii. Share ownership; iv. Beneficial interests in trusts; v. Personal Account Trading; vi. Professional associations or relationships with other organizations; vii. Personal associations with other groups or organizations, or family relationships; viii. Front running; ix. Rebates; x. Kickbacks; xi. Commission; xii. Where the company carries on the same business as a client; xiii. Where the company designs, markets or recommends a product or service without properly considering all our other products and services and the interest of all our clients; xiv. Where the company has a financial or other incentive to favour the interest of another client or group of clients over the interests of a client; xv. Where the company has an interest in the outcome of a service provided to, or of a transaction carried out on behalf of, a client which is distinct from that client s interest in that outcome; xvi. Where the company is likely to make a financial gain or avoid a financial loss at the expense of a client; and xvii. Where the company receives, or will receive, from the person other than a client an inducement in relation to the service provided to that client in the form of monies, goods or services, other than the standard commission or fee for that service; Measures to avoid or to deal or manage actual or potential Conflict of Interests Should a conflict of interest arise, it needs to be managed promptly and fairly. The Company puts in place following arrangements to ensure that: i. There is a clear distinction between the different departments operations; ii. No single person will gather conflicting information, thus counterfeiting or hiding information from investors is minimized; iii. The Company s employees are prohibited from investing in a financial instrument for which they have access to non-public or confidential information; iv. Transactions by the Company s employees are neither performed nor executed by themselves. v. Employees sign a contract of employment including confidentiality clauses. No associated person may disclose inside information to others, except disclosures made in accordance with the Company's policies and procedures, to other Company personnel or persons outside the Company who have a valid business reason for receiving such information; vi. Each department will control the flow of information where, otherwise, the risk of conflict of interest may harm the interest of a Client; vii. Relevant information is recorded promptly in a secure environment to enable identification and management of conflicts of interests; viii. Adequate records are maintained of the services and activities of the Company where a conflict of interest has been identified; ix. In certain jurisdictions appropriate disclosure may be made to the Client in a clear, fair and not misleading manner to enable the Client to make an informed decision; 3
Policy on Management of Conflict of Interests x. There is a periodic review of the adequacy of the Company s systems and controls. xi. Employees are required to avoid conflicts of interest with activities they undertake outside CPR CAPITAL SERVICES LTD.. Information barriers The Company respects the confidentiality of information it receives regarding its Clients and operates a Need to Know approach and complies with all applicable laws in respect of the handling of that information. Access to confidential information is restricted to those who have a proper requirement for the information consistent with the legitimate interest of a Client of the Company. The Company operates internal organizational arrangements to avoid conflicts of interest by controlling, managing or restricting, as deemed appropriate, the flow of confidential information between different areas of business or within a specific division or department. In particular, Chinese Walls are a key tool for conflict of interest prevention, avoiding insider dealing and market manipulation risks. Furthermore, Chinese Walls can involve separation of premises, personnel, reporting lines, files and IT-systems and controlled procedures for the movement of personnel and information between the Company and any other part of the Company. The Company maintains permanent information barriers between different departments. Disclosure to clients of possible source or potential areas of conflict of interest (COI): i. CPR CAPITAL SERVICES LTD. or its associated persons should, in writing, disclose to a client any COI in respect of that client including a. Measures taken to avoid or mitigate the conflict; b. Any ownership interest or financial interest that the provider or representative may be or become eligible for; c. The nature of the relationship or arrangements with a third party that gives rise to a COI in sufficient detail to enable the client to understand the exact nature of the COI. ii. CPR CAPITAL SERVICES LTD. or its associated persons should, in writing, inform a client of the policy on Management of Conflict of Interest and how it may be accessed. iii. Intimation of an actual or potential COI should be made to a person with responsibility for the issue or area, such as the relevant management team, head of the department or key individual. iv. In accordance with an employee s obligation to act in the best interest of CPR CAPITAL SERVICES LTD., it is not permissible for employees to engage in conduct that would amount to a COI with CPR CAPITAL SERVICES LTD.. v. Staff that fail to disclose a potential or actual COI in accordance with this policy may be liable to disciplinary procedures. vi. Where a conflict arises CPR CAPITAL SERVICES LTD. or its Associated Persons will, if it is aware of it, disclose it to a client prior to undertaking trading activity for that client or, if the company does not believe that disclosure is appropriate, to manage the conflict, the company may opt not to proceed with the transaction or matter giving rise to the conflict. vii. Where there is no other way of managing a conflict, or where the measures in place do not sufficiently protect Clients interests, the conflict will be disclosed to allow the Client to make an informed decision on whether to continue using our service in the situation concerned. viii. CPR CAPITAL SERVICES LTD. may decline to act for a Client in cases where we believe a conflict of interest cannot be managed in any other way. Policies and procedures The Company has developed and implemented policies and procedures throughout its business to prevent or manage potential conflicts of interest. Our employees receive guidance and training in these policies and procedures, and they are subject to monitoring and review processes. Procedure to comply with the policy i. Every staff member must have a copy of the Policy on management of Conflicts of Interest. 4
Policy on Management of Conflict of Interests ii. iii. iv. If a potential COI arises, the transaction must first be discussed with management before entering into the transaction. All new employees shall be required to declare their outside interests when they join the firm. All staff maintaining personal trading accounts outside of the company are required to instruct their broker to send copy contract notes and periodic statements to the company for reconciliation purposes. Inducements The Company does not offer, solicit or accept any inducements, other than the following: - the fee, commission or benefit which is disclosed to a client, prior to the provision of the relevant service; and - it is designed to enhance the quality of the relevant service to a client and in line with the Company s duty to act in the best interests of a client. - Proper fees for the provision of investment services, such as custody costs, settlement and exchange fees, regulatory levies or legal fees, and which cannot give rise to conflicts with the Company s duties to act honestly, fairly and professionally in accordance with the best interests of its clients. Consequences of non-compliance with the policy - Non-compliance with this policy and the procedures described in it may be considered to be misconduct and may be subject to disciplinary action 3. Internal code of conduct governing operations CPR CAPITAL SERVICES LTD. and Associated Persons shall abide by the Code of Conduct contained in the Schedule II of the Securities and Exchange Board of India (Stock-Brokers and Sub-Brokers) Regulations, 1992, as amended, for accomplishment of the objectives of the SEBI Code. 4. Standards of appropriate conduct in the performance of the activities, CPR CAPITAL SERVICES LTD. and its Associated Persons shall adopt the following standards of appropriate conduct in the performance of the activities. i. To place the client s interests first: Placing the client s interests first is a hallmark of professionalism, requiring CPR CAPITAL SERVICES LTD. and its Associated Persons to act honestly and not place personal gain or advantage before the client s interests. ii. To provide business services with integrity: Integrity requires honesty and sincerity in all business matters. CPR CAPITAL SERVICES LTD. and its Associated Persons are placed in positions of trust by clients, and the ultimate source of that trust is the CPR CAPITAL SERVICES LTD. and its Associated Persons personal integrity, both in the letter and the spirit. iii. To provide business services objectively: Objectivity requires intellectual honesty and impartiality. Regardless of the services delivered or the capacity in which CPR CAPITAL SERVICES LTD. and its Associated Persons functions, objectivity requires CPR CAPITAL SERVICES LTD. and its Associated Persons to ensure the integrity of their work, manage conflicts and exercise sound commercial and professional judgment. iv. To be fair and reasonable in all business relationships & to disclose and manage conflicts of interest: Fairness requires providing clients what they are due, owed or should expect from a business relationship, and includes honesty and disclosure of material conflicts of interest. It involves managing one s own feelings, prejudices and desires to achieve a proper balance of interests. Fairness is treating others in the same manner that you would want to be treated. v. To act in a manner that demonstrates exemplary professional conduct: Professionalism requires behaving with dignity and showing respect and courtesy to clients, fellow business associates, and others in business-related activities, and complying with appropriate rules, regulations and business requirements. Professionalism requires CPR CAPITAL SERVICES LTD. and its Associated Persons, individually and in cooperation with peers, to enhance and maintain the CPR CAPITAL SERVICES LTD. s public image and its ability to serve the public interest. vi. To maintain the abilities, skills and knowledge necessary to provide business services competently: Competence requires attaining and maintaining an adequate level of abilities, skills and knowledge in the
5
Policy on Management of Conflict of Interests vii. viii. provision of business services. Competence requires CPR CAPITAL SERVICES LTD. and its Associated Persons to make a continuing commitment to learning and business services improvement. To protect the confidentiality of all client information: Confidentiality requires client information to be protected and maintained in such a manner that allows access only to those who are authorized. A relationship of trust and confidence with the client can only be built on the understanding that the client s information will not be disclosed inappropriately. To provide business services diligently: Diligence requires fulfilling business commitments in a timely and thorough manner, and taking due care in planning, supervising and delivering business services. 5. Communication of policies, procedures and code to all concerned This Policy on management of Conflict of Interest offers general guidance in addition to CPR CAPITAL SERVICES LTD. policies and procedures and is not meant to replace any of those policies or procedures and shall be made available through CPR CAPITAL SERVICES LTD. CPR CAPITAL SERVICES LTD. expects all its Associated persons, employees, to adhere to this policy. The Board of Directors of ASE Capital Markets Ltd. reserves the right to amend, supplement or discontinue this policy and the matters addressed herein, without prior notice, at any time. 6. Implementation and Review of policy of management on Conflict of Interest This policy shall come into effect from the date of approval of the Board of Directors of the company for its implementation so as to provide necessary guidance enabling identification, elimination or management of conflict of interest situations and that the same shall be reviewed and assessed annually by the company management. 5
Policy on Management of Conflict of Interests (Ref: Approved in the Board meeting held on 27.12.2013) Securities and Exchange Board of India CIRCULAR CIR/MIRSD/5/2013 August 27, 2013 To Registered Intermediaries Recognised Stock Exchanges Recognised Clearing Corporations Depositories Sir/ Madam, Sub: General Guidelines for dealing with Conflicts of Interest of Intermediaries, Recognised Stock Exchanges, Recognised Clearing Corporations, Depositories and their Associated Persons in Securities Market. 1. All intermediaries, recognised stock exchanges, recognised clearing corporations and depositories (hereinafter collectively referred to as "such entities") are presently governed by the provisions for avoidance of conflict of interest as mandated in the respective regulations read with relevant circulars issued from time to time by SEBI. On the lines of Principle 8 of the International Organisation of Securities Commissions (IOSCO) Objectives and Principles of Securities Regulations, it has been decided to put in place comprehensive guidelines to collectively cover such entities and their associated persons, for elimination of their conflict of interest, as detailed hereunder. 2. Such entities shall adhere to these guidelines for avoiding or dealing with or managing conflict of interest. They shall be responsible for educating their associated persons for compliance of these guidelines. 3. For the purpose of these guidelines "intermediaries" and "associated persons" have the same meaning as defined in Securities and Exchange Board of India (Certification of Associated Persons in the Securities Markets) Regulations, 2007. 4. Such entities and their associated persons shall, i. lay down, with active involvement of senior management, policies and internal procedures to identify and avoid or to deal or manage actual or potential conflict of interest, develop an internal code of conduct governing operations and formulate standards of appropriate conduct in the performance of their activities, and ensure to communicate such policies, procedures and code to all concerned; ii. at all times maintain high standards of integrity in the conduct of their business; iii. ensure fair treatment of their clients and not discriminate amongst them; 7
Policy on Management of Conflict of Interests (Ref: Approved in the Board meeting held on 27.12.2013) iv. ensure that their personal interest does not, at any time conflict with their duty to their clients and client s interest always takes primacy in their advice, investment decisions and transactions; v. make appropriate disclosure to the clients of possible source or potential areas of conflict of interest which would impair their ability to render fair, objective and unbiased services; vi. endeavor to reduce opportunities for conflict through prescriptive measures such as through information barriers to block or hinder the flow of information from one department/ unit to another, etc.; vii. place appropriate restrictions on transactions in securities while handling a mandate of issuer or client in respect of such security so as to avoid any conflict; viii. not deal in securities while in possession of material non published information; ix. not to communicate the material non published information while dealing in securities on behalf of others; x. not in any way contribute to manipulate the demand for or supply of securities in the market or to influence prices of securities; xi. not have an incentive structure that encourages sale of products not suiting the risk profile of their clients; xii. not share information received from clients or pertaining to them, obtained as a result of their dealings, for their personal interest; 5. The Boards of such entities shall put in place systems for implementation of this circular and provide necessary guidance enabling identification, elimination or management of conflict of interest situations. The Boards shall review the compliance of this circular periodically. 6. Such entities shall conduct assessment of their existing policies on conflict of interest in a time bound manner, not later than 6 months from the date of this circular and bring them in line with the requirements of these guidelines. 7. The said guidelines shall be in addition to the provisions, if any, contained in respective regulations/ circulars issued by the Board from time to time regarding dealing with conflict of interest, in respect of such entities. 8. This circular is issued in exercise of powers conferred under Sections 11 of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 9. This circular is available on SEBI website (www.sebi.gov.in) under the categories Legal Framework and Circulars. 8
RISK MANAGEMENT & INTERNAL CONTROL POLICY ADOPTED BY CPR Capital Services Ltd. FOR CASH, F&O AND CDS SEGMENT Risk based approach:- Classification of both the new and existing clients into high, medium or low risk category depending on parameters such as the customer s background, type of business relationship, transactions etc. Application of each of the client due diligence measures on a risk sensitive basis and adoption of an enhanced customer due diligence process for high risk categories of customers and vice-á-versa. Limit Setting:- Limits shall be monitored on daily basis, taking following criteria s: Turnover, Exposure, past trends, Location, Deposit/Collateral. Margins:- Margin must be collected on all derivative trades. Client level margin will be at management discretion in cash segment. Criteria to collect margin will be on the basis of volume of client and Past history of clients. Same client should not figure in default list in more than 5 days in a month Trading:- 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 Pay-in Of Fund & Stock:- Third party pay-in of securities & fund will not be accepted. Same way pay out of shares and fund will be directly done to client account only. No securities belonging to one client be used/transferred for Own purpose or for other client. Collections:- Cash will not be accepted under any circumstances except cheque bouncing. Collection of cheques from clients must be done by T+2 days except clients who have authorized us to have running account balance. All sticky client codes are brought in the knowledge of management regularly. Employee Trading:- The employees who are directly involved in trading activities of the company are not allowed to trade on his/her own account. But sometimes if an employee wish to take delivery of security, he/she is allowed only after prior approval of the management.
Redressal Mechanism for Investor Grievance policy Redressal Mechanism for Investor Grievance The Client is encouraged to register all complaints against the Broker vide letter, phone call or through email on email id provided on the website for such purpose. Upon receipt of the complaint, the complaint is entered into a register and tracked till its completion. The Compliance department will take note of the same and discuss the issue with the employee against whom the complaint is directed. If the issue can be resolved at the Employee level it is done so and the Employee will then talk to the Client and resolve the matter. If the issue cannot be resolved at the Employee level, then the Top Management will come into the picture and resolve the issue directly with the Client. If the complaint is against the management policy, then the Management will discuss the same and give its recommendation and resolve the issue with the Client. If the issue still cannot be resolved with the Client at the Management level, then the issue can be taken up with the Arbitration Committee of the Exchange.
POLICY FOR PRE-FUNDED INSTRUMENTS It s a Master Policy of the Company for the acceptance of Pre-funded Instruments. This policy is subject to the rules and regulations of the SEBI and Exchanges from time to time. The objective of the policy is to prevent acceptance of third party funds and to prescribe process to deal with instruments issued by third party when received. As a part of our internal control policy we are strictly restricting Demand Drafts/Pay Orders/Banker s Cheques for the receipt of funds from the clients to avoid third party pay-in to client accounts. In any exceptional case of payment by Demand Drafts /Pay Order/Banker s Cheque, self declaration from the clients is not sufficient. Such funds from the clients through pre-funded instruments shall be accepted after the following conditions as per SEBI circular no. CIR/ MIRSD/03/2011 dated 9th June 2011 & NSE circular no. NSE/INSP/2011/118 dated 9th June 2011 has been complied: In case of acceptance of pre-funded instruments of Rs.50,000/- or more, per day per client, such as, Pay Order, Demand Draft, and Banker s Cheque etc shall be accompanied by Bank s Certification. The mode of certification shall be as follows: i. Certificate from the issuing bank on its letterhead or on a plain paper with the seal of the issuing bank. ii. Iii Iv Certified copy of the requisition slip (portion which is retained by the bank) to issue the instrument. Certified copy of the passbook/bank statement for the account debited to issue the instrument. Authentication of the bank account-number debited and name of the account holder by the issuing bank on the reverse of the instrument. Only the Executive Director or Managing Director can give the approval for acceptance Pre-funded Instruments and only then credit should be given.
INACTIVE ACCOUNTS/DORMANT ACCOUNTS INACTIVE ACCOUNT POLICY: Where no transaction has taken place in client s account (Trading/Demat) during the last 6 months from the date of last transaction, then it will beconsidered as inactive / dormant account. CONSEQUANCES OF INACTIVE ACCOUNT: On a client being declared inactive, (1) The client s funds and security account shall be settled. (2) In case the demat account/bank account details are not available and the client is not contactable, the securities/funds are transferred into a separate account of CPR Capital Services Ltd. India and held till such time (3) The account of the client shall be locked and the client shall not be permitted to execute a fresh transaction in the account. CLIENT DECLARED INACTIVE VOLUNTARILY: A client may write to CPR Capital Services Ltd. stating that he wishes to transfer his account into an inactive status, based on which the account will be marked as such. CLIENT DECLARED INACTIVE BY PASSAGE OF TIME: Any client who has not traded continually for a period of 5 years and has also not renewed his running account authorization for 5 continuous years will automatically be moved to the inactive category. CLIENT DECLARED INACTIVE BY LAW: Any client will be moved to the inactive category if required by law. 3 PROCEDURE TO ACTIVATE THE LOCKED CLIENT ACCOUNT: _ An e-mail request to reactive the account and process the transaction. Such e-mail request shall be sent only from the e-mail id of the Client registered with CPR Capital Services Ltd.; Or _ A written request to reactive the account and process the transaction duly signed by Client and submitted to CPR Capital Services Ltd.; Or _ A telephonic request to reactive the account and process the transaction. Such telephonic request shall be at the specified number of CPR Capital Services Ltd. for which voice recording is active.further the request shall be processed only after the client provides additionalidentification as required. The above stated policy may vary depending on various rules, regulations and bye laws as may beprescribed by SEBI, exchanges or any other authority or as per Internal Policy of CPR Capital Services Ltd. from time to time. This Policy for dormant accounts is over and above the transaction monitoring in Dormant Account as per anti Money Loundering Policy of the Company.
9
POLICY FOR UNAUHENTICATED NEWS Circulated by SEBI Registered Market Intermediaries through various modes of communication Pursuant to SEBI Circular Cir/ ISD/1/2011 dated March 23, 2011 It has been observed by SEBI that unauthenticated news related to various scrips are circulated in blogs/chat forums/e-mail etc. by employees of Broking Houses/Other Intermediaries without adequate caution as mandated in the Code of Conduct for Stock Brokers and respective Regulations of various intermediaries registered with SEBI. Damage can be caused by circulation of unauthenticated news or rumors. It is a wellestablished fact that market rumors can do considerable damage to the normal functioning and behavior of the market and distort the price discovery mechanisms. In view of the above, internal code of conduct and controls is specified as under Employees/temporary staff/voluntary workers etc. employed/working with CPR Capital Services Ltd. will not encourage or circulate rumors or unverified information obtained from client, industry, any trade or any other sources without verification. All access to Blogs/Chat forums/messenger sites etc. should will restricted and will be after the permission and under the supervision of the Compliance Officer. Logs for any usage of such Blogs/Chat forums/messenger sites (called by any nomenclature) shall be treated as records and the same should be maintained as specified by the respective Regulations which govern the functioning of the Market Intermediaries Employees are directed that any market related news received by them either in their official mail/personal mail/blog or in any other manner, should be forwarded only after the same has been seen and approved by the Compliance Officer. If an employee fails to do so, he/she shall be deemed to have violated the various provisions contained in SEBI Act/Rules/Regulations etc. and shall be liable for actions.
POLICY ON SETTING OF LIMITS FOR TERMINALS Scope of the Policy: This policy covers the procedure and checks in place for allotting limits to each direct and CTCL / IML terminals. Defining of Limits: The following limits shall be defined for each terminal: Quantity Limit for each order Value Limit for each order User value limit for each user ID User quantity limit for each user ID Branch value limit for each Branch ID Spread Order Quantity and Value Limit (Derivatives & Currency Derivatives segment) Market Price Protection Percentage Procedure for setting of Limits: CPR Capital Services Ltd follows the practice of setting of limits at each level namely Admin, Branch Manager, CTCL / IML and Dealer. The limits have been set each level are reviewing the historical data of peak utilization at respective levels. Limits are reviewed on a regular basis and if required revised post consultation of LOB head and Risk Manager during the day. The Limits utilization are continuously monitored during the day. Any request of upward revision in limits by dealer is done post receipt of specific consent of Team Leader/Branch Head and after necessary risk assessment Limit Setting for Direct Terminals: We are not providing any direct terminals to the dealer. Any provision for direct terminals in case of downtime in CTCL facility is considered post consultation with prior approval of necessary limits from LOB/Authorized person/rms Head. Checks in place: Limits of terminals will be defined and reassigned on daily basis only after analyzing past trading history and assessment of risk. Terminals limits will be set up by the Front Office official designated at Corporate Office. Direct terminals will be allotted on exceptional basis only. No user/ branch will be provided unlimited limit. Review of process and maintenance of records: The Risk Management team at Corporate Office shall be responsible for maintenance of records as prescribed by regulators and demonstrating the adequacy of system to auditors and exchanges. The Compliance Officer may review the process on test check basis. The Compliance officer shall issue a certificate to the exchange on quarterly basis
INSIDER TRADING POLICY The Securities & Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, was amended on 22nd February 2002 (hereinafter referred to as Regulations ) in terms of which a Stock Broker is required, inter alia, to frame a Code of Conduct for Prevention of Insider Trading by Employees of a Stock Broker, including its Directors. In line with the said Regulations, the following Code of Conduct (hereinafter referred to as the Code ) has been adopted by M/s. CPR Capital Services Ltd. DIRECTOR CPR Capital Services Ltd has appointed a Compliance Officer who reports to the Directors. The Compliance Officer shall be responsible for setting Policies and Procedures and monitoring the Rules & Regulations for the preservation of "Price Sensitive Information", pre-clearing of all Designated Employees and their Dependents Trades (directly or through respective Department heads as decided by the CPR Capital Services Ltd). Monitoring of Trades and the Implementation of the Code of Conduct under the overall Supervision of the Directors. The Compliance Officer shall maintain a record of all CPR Capital Services Ltd Employees and any Changes done in the Employees List from time to time & help to understand any Clarifications regarding SEBI (Prohibition of Insider Trading) Regulations, 1992 and CPR Capital Services Ltd Code. Prevention of Price Sensitive Information Employees / Directors shall maintain the Confidentiality of all Price Sensitive Information & must not pass such Information directly or indirectly by way of making a Recommendation for the Purchase or Sale of Securities Price Sensitive Information is to be handled on a "Need to Know" basis, i.e. Price Sensitive Information should be disclosed only to those within CPR Capital Services Ltd, who need the Information to discharge their Duty and whose Possession of such Information will not give rise to a Conflict of Interest or Appearance of Misuse of the Information. All Files of CPR Capital Services Ltd, containing Confidential Information shall be kept Secure & all computer files must have Adequate Security of Login and Password, etc To prevent the Misuse of Confidential Information, AADSSBL separates those Areas which routinely have access to Confidential Information, considered "Inside Areas" from those Areas which deal with Sale / Marketing / Investment Advise or other Departments providing Support Services, considered "Public Areas". The Employees in Inside Area may be physically segregated from Employees in Public Area. The Employees in the Inside Area shall not communicate any Price Sensitive Information to anyone in Public Area. Prevention of Misuse of Price Sensitive Information Employees / Directors shall not use Price Sensitive Information to Buy or Sell Securities of any sort, whether for their Own Account, their Relative s Account, A CPR Capital Services Ltd s Account or a Client's Account. The Trading Restrictions shall apply for Trading in Securities. All Directors / Employees of CPR Capital Services Ltd, who intend to deal in the Securities of listed Companies where CPR Capital Services Ltd has some assignments shall pre-clear the Transactions as per the pre-dealing Procedure as described here below.
An Application may be made in such form as specify by CPR Capital Services Ltd in this regard, to the Compliance Officer indicating the Name and Estimated Number of Securities that the Employees / Director intends to deal in with details of Demat DP with which he has a Security Account, the Securities in such Depository Mode and any other details as may be prescribed by CPR Capital Services Ltd in his rule & regulations. An Undertaking shall be executed in favor of CPR Capital Services Ltd by such Employees / Directors incorporating, the following Clauses, as may be applicable (1) That the Employees / Director does not received any "Price Sensitive Information" at the time of signing the Undertaking (2) That in case the employees / director / partner receives "Price Sensitive Information" after the signing of the undertaking but before the execution of the transaction he/she shall inform the Compliance officer of the change in his position and that he/she would completely refrain from dealing in the securities of listed companies. (3) That he / she has not contravened the Code of Conduct for prevention of Insider Trading as specified by CPR Capital Services Ltd. Restricted / Grey (4) That he / she has made a Full and True Disclosure in the matter. In order to monitor above Procedures and Trading in Client Securities based on Inside Information, CPR Capital Services Ltd shall restrict Trading in certain Securities and designate such List as Restricted / Grey List. Security of a Listed Company shall be put on the Restricted / Grey List if CPR Capital Services Ltd is handling any Assignment for the Listed Company or preparing Appraisal Report. Any Security, which is being purchased or sold or is being considered for Purchase or Sale by CPR Capital Services Ltd on behalf of its Clients shall be put on the Restricted / Grey List. As the Restricted List itself is a Highly Confidential Information it shall not be communicated to anyone outside CPR Capital Services Ltd. The Restricted List shall be maintained & kept by Compliance Officer. Penalty for Contravention of the Code Any Employee / Director who trades in Securities or communicates any Information or counsels any Person Trading in Securities, will be treated as Contravention of the Code & conduct, may be penalized and appropriate Action may be taken by CPR Capital Services Ltd. Employees / Directors of CPR Capital Services Ltd, who violate the Code, may also be subject to Disciplinary Action by the Company. The Action by CPR Capital Services Ltd shall not preclude SEBI from taking any Action in case of Violation of SEBI (Prohibition of Insider Trading) Regulations, 1992 Information to SEBI in case of Violation of SEBI (Prohibition of Insider Trading) Regulations. In case of any violation observed by CPR Capital Services Ltd/ its Compliance Officer that there has been a Violation of these Regulations, CPR Capital Services Ltd shall inform the SEBI
10
INTERNAL POLICY w.r.t NISM SERIES VII-SECURITIES OPERATION & RISK MANAGEMENT(SORM) BRIEF SEBI issued Notification no. LAD-NRO/GN/2010-11/21/29390 dated December 10, 2010 according to which, following categories of associated persons associated with a registered stock broker/trading member/clearing member in any recognized stock exchanges, who are involved in, or deal with any of the following: a.assets or Funds of investors or clients b.redressal of investor grievances c.internal control or risk management d.activities having a bearing on operational risk Shall be required to have a valid certificate of NISM Series VII Securities Operation & Risk Management (SORM) from National Institute of Securities Market(NISM). NSE and BSE has also issued circulars requesting the members to comply with the requirement of said SEBI Notification. NEED FOR POLICY The Company being a stock broker of National Stock Exchange of India (NSE), provisions of the aforesaid requirement is applicable to all its employees involved in the activities as mentioned above. DEFINITION OF ASSOCIATED PERSON
Associated Person means a principal or employee of an intermediary or an agent or distributor or other natural person engaged in the securities business and includes an employee of a foreign institutional investor or a foreign venture capital investor working in India. INTERNAL POLICY w.r.t NISM SERIES VII-SECURITIES OPERATION & RISK MANAGEMENT (SORM) As required in the aforesaid notification of SEBI, All existing persons associated with the Company as on date of publication and engaged in deal with (a) Assets of funds of investors or clients (b) Redressal of investor grievances (c) Internal control or risk management (d) Activities having a bearing on operational risk Shall obtain the valid certification of NISM Series VII - Securities Operation and Risk Management (SORM) within two years from the date of such notification. Simultaneously, whenever the company employs any associated person specified as mentioned above, the said associated person shall obtain valid certification of NISM Series VII Securities Operation and Risk Management (SORM) within one year from the date of his /her employment. EXEMPTION Associated persons handling the basic clerical / elementary functions in the aforesaid specified areas shall be exempted from obtaining the certification of NISM Series VII - Securities operation and Risk Management (SORM). For this purpose, the company considers following activities as basic elementary lever / clerical level. Internal Control or Risk Management 1. Inwarding or collateral s / Cheques 2. Person performing market entries 3. Maker entry in the database
4. Photocopying, printouts, scanning of documents 5. Preparing of MIS 6. Sending of letters / reports to clients, Exchanges, SEBI 7. Attending Calls, etc. Redressal of Investor Grievances 1. Inwarding of complaints 2. Seeking documents from clients 3. Person performing maker entries 4. Maker entry in the database 5. Photocopying, printouts, scanning of documents 6. Preparing of MIS 7. Sending of letters / reports to clients, Exchanges, SEBI updation and data entry 8. Attending calls, etc Activities having a being on operational risk and dealing with assets of funds of investors of clients 1. Person performing maker entries 2. Maker entry in the database 3. Preparing of MIS 4. Generating of reports, Files 5. Photocopying, printouts, scanning of documents 6. Dispatching documents to clients 7. Sending of letters / reports to clients, Exchanges, SEBI 8. Attending calls, etc However, any of the work (as stated herein above) being performed by such persons, obtaining, NISM-SORM Certification shall be optional provided that they are supervised by his / her supervisor who shall have to obtain / continue to have NISM SORM Certification or such other prescribed certification at all times. In case of any query, employees are requested to obtain clarification from the Compliance Officer of the Company.