Dated: 6th April 2009



Sub: Internal Audit for stock brokers/trading members/clearing members



This is further to Exchange Notice October 29, 2008 wherein all the stock brokers/trading members/clearing members were directed to carry out complete internal audit on a half yearly basis by chartered accountants, company secretaries or cost and management accountants who are in practice and who do not have any conflict of interest. It was also informed that, the first internal audit period would be from October 1, 2008 to March 31, 2009.


Further, on the basis of SEBI letter No. MIRSD/DPS-I/PG/158174/09 dated March 23, 2009, the applicability, scope/guidelines of audit, format of audit report, audit certificate and the time limit for submission of audit report are given as Annexure 1, 2 and 3.


All stock brokers/trading members/clearing members are advised to ensure compliance with the above requirements.


Members are advised to submit the Audit Reports to the Surveillance Department of the Exchange on 4th Floor of the Exchange at 7, Lyons Range, Kolkata.


In case of any queries / clarification, the members may contact Manager Surveillance and DGM Surveillance.



Company Secretary and Financial Controller

Annexure – 1








Trading Members (Stock Brokers) and Clearing members are required to appoint an internal auditor for carrying out complete internal audit in all segments of the Exchange in which they are enabled for trading/clearing (wherein atleast a one/single trade have been executed or cleared by them) and submit a report to the Exchange on half yearly basis. The first half year period would start from October 01, 2008.


Who can conduct internal audit


Internal audit is required to be carried out by any Chartered Accountant, Company Secretary or Cost and Management Accountant who is in practice and who does not have any conflict of interest.


Scope/Purpose of Audit


The purpose of audit should be


(a)    to ensure that the books of account, records and documents have been maintained in the manner required under Securities Exchange Board of India Act, 1992, Securities Contracts (Regulation) Act, 1956, SEBI (Stock brokers and Sub-brokers) Regulations, 1992, Securities Contracts (Regulation) Rules, 1957, circulars issued by SEBI & Exchange, Bye laws of the Exchange including agreements, data security and insurance in respect of operations of trading member/clearing member.

(b)    to ascertain whether adequate internal control systems, procedures and safeguards have been established and are being followed by the intermediary to fulfill its obligations under Securities and Exchange Board of India Act, 1992, Securities Contracts (Regulation) Act, 1956, SEBI (Stock brokers and Sub-brokers) Regulations, 1992, Securities Contracts (Regulation) Rules, 1957, circulars issued by SEBI & Exchange, Bye laws of the Exchanges and with respect to data security and insurance in respect of operations of trading member/clearing member.

(c)    to ascertain whether any circumstances exist which would render the intermediary unfit or ineligible for dealing in securities market.

(d)    to ascertain whether the provisions of the securities laws and the directions and/or circulars issued there under by SEBI/Exchange have been complied with

(e)    to ascertain, whether the provision of Bye-laws, notices, circulars, instructions or orders issued by stock exchanges have been complied with

(f)      to inquire suo motu into such matters as may be deemed fit by the auditor in the interest of investors or the securities market




Submission of internal audit report


Internal auditor would submit the audit report to the Proprietor/Partners/Board of respective trading/clearing member.  In case the trading member is a partnership firm or corporate entity, the report would be placed before the meeting of its management committee/Board of Directors.  In all cases, the trading member shall forward the audit report along with para-wise/point wise comments to respective stock exchanges within 3 months from the end of the relevant half year audit period. The audit report may be combined across segments and activity (trading/clearing) for respective Exchanges.


The initial internal audit should be for the period commencing from October 1, 2008 till March 31, 2009 and the audit report together with para-wise/point wise comments should be submitted to the Exchange within 30th June 2009 and the subsequent audit reports with comments should be submitted to the Stock Exchange within 3 months from the end of relevant half year audit period.



Non-compliance relating to internal audit by the members


Non-submission of internal audit report as per the aforesaid guidelines shall be treated as non-compliance and suitable disciplinary action may be initiated against the concerned member/s. Where, in the opinion of the Exchange, the quality of the reporting is not satisfactory or the audit is not carried out in accordance with the aforesaid guidelines, the Exchange reserves the right to advise the concerned member/s to change the auditors and/or submit revised reports.


Annexure – 2


Areas to be covered in internal audit and areas on which comments needs to be incorporated in the report are given below


1. Client registration and documentation

Execution of KYC, MCA/TPA, and RDD – checks and balances in place

Whether KYC, MCA/TPA, RDD are executed in the prescribed formats & the same is executed before execution of trades for the client?


Whether UCC is allotted to the client & the same is uploaded to the Exchange with PAN                                                         


Whether all fields in KYC including client’s financial details are filled in properly?


Whether proper proof of identity, PAN and proof of address are taken with KYC form?                                                                                                  


Whether any contravening clauses are included in MCA/TPA?                                                                                                   


Whether in person verification of clients is done by the employees of the trading member only?


Whether date of verification, name and signature of the official who has done in-person verification and the member’s stamp incorporated in the client registration form?


Whether copies of all the documents executed by client are given to the respective clients?


Whether change in address, bank account or demat account is carried out on receipt of written request along with documentary proof from the respective client?


Whether client details including financial details are reviewed periodically and updated?

Verification of formats of KYC, MCA/TPA and RDD and attachments including proof of identity and address, as prescribed by SEBI/BSE

Verification that Contradictory clauses are not mentioned in KYC, MCA/TPA and RDD

Systems and procedures put in place by member for verification of PAN before opening account

Procedure followed by the member for informing UCC to the clients & uploading to the Exchange 

Mechanism to ensure financial details of clients

Procedure adopted for in person verification of clients

Procedure adopted by relationship managers, if any, for procuring new clients

Delivery of copies of client registration documents to the clients

Storage of client registration documents and retrieval mechanism

Procedure adopted for obtaining clients’ consent for electronic contract notes

Periodic review of client related information and updation of the same in system

Verification of RDD/KYC/MCA/TPA of different types of clients

Acquaintance procedure for new clients

Applicable SEBI Circulars.


SEBI circular no. SMDRP/Policy/Cir-39/2001 dated July 18, 2001

SEBI circular no. SEBI/MIRSD/DPS-1/Cir-31/2004, dated August 26, 2004 & Regulation-7 D

SEBI circular no. MRD/DoP/SE/Cir- 35/2004 dated October 26, 2004

SEBI circular no. MRD/DoP/Cir- 05/2007 dated April 27, 2007

MIRSD/DPS-III / 130466 / 2008 dated July 02, 2008



2. Order management and risk management systems 

Procedure adopted for receipt of orders from clients

Whether checks are in place to ensure that no unauthorized orders are executed from any of the terminals?


Whether control reports like orders executed away from market price, client-wise / scrip-wise / terminal-wise volumes / exposures are generated to monitor any manipulation or unwarranted activity?


In case of dormant accounts, are there any checks in place to ensure that in case the account is reactivated whether it is operated by the respective client only?


Whether initial and other margins are collected from respective clients in the prescribed form of funds, fixed deposit receipts, bank guarantees and approved securities with appropriate haircut?


Whether the member has a proper system for reporting the correct client margin collection, in Derivatives segment?


Verify whether the margin reported by the member to the Exchange in Derivatives segment is actually collected and available in the books of accounts of the member. In case of any irregularity observed, mention the instances wherein wrong reporting of margin collected from clients/trading members was observed.


Whether Risk Management System (RMS) includes policy on margin collection from clients/trading member  and the RMS is documented?


Whether proper systems are in place to ensure timely collection for pay-in from the respective client as per settlement schedule?


Whether proper monitoring mechanism is in place to review long outstanding debit balances in clients’ accounts and recovery of the same?



Whether member has reported details of client funding, if any, to the exchange within prescribed time limit?


What are the sources of funds in case client funding is observed?


Whether all the institutional trades are routed through custodians by following Straight Through Processing (STP) ?


What are the reasons for institutional trades not being routed through custodians? Whether any specific pattern is observed for the same?


Whether member has obtained prior approval from the exchange before providing terminal to the clients under DMA facility?


Whether member has complied with regulatory requirements related to. DMA?


Mechanism for order management and execution

Procedure adopted for setting Limits at client level / Terminal level/Dealer level

Policy on Margin collection mechanism and the modes of margin money

Procedure adopted for reporting of client margin collection to Clearing House


Review of process adopted for monitoring / recovery of   long outstanding debit balances

Procedure adopted for calculation & reporting client funding

Procedure for monitoring institutional trades not routed through custodians 

Procedure adopted for providing Direct Market Access (DMA) facility 

Applicable SEBI Circulars.


SEBI circular no. MRD/DoP/SE/Cir-07/2005 dated February 23, 2005

SEBI circular no. MRD/DoP/SE/Cir- 17/2005 dated September 02, 2005

Exchange Notice no. 20040420-12 dated April 20, 2004.

Exchange notice no. 20080417-24 dated April 17, 2008.

Exchange Notice No. 20051216-8 dated December 16, 2005




3. Contract notes, Client margin details and Statement of accounts

Procedure adopted for issuance of contract notes

Whether contract notes are sent within 24 hours of execution of trades and margin details are sent daily to respective clients and proof of delivery / dispatch is maintained?


Whether all prescribed details including name and signature of authorised signatory, dealing office details and brokerage are contained in contract note?


In case contract notes and margin details are sent in electronic form, whether log is maintained? Whether trail of bounced mails is maintained and physical delivery is ensured in case of bounce mails?


Whether member has complied with regulatory requirements related to. Electronic Contract Notes(ECN)?


Whether complete statement of accounts for funds and securities are issued on a quarterly basis to clients, with error reporting clause? Whether proof of sending the same is maintained?


Verification of format of contract notes issued

Verification of copy of contract note with Proof of dispatch/register of dispatch/logs maintained

Adherence to electronic contract note norms, if applicable

Procedure adopted for sending statement of accounts

Contents & periodicity of statement of accounts of funds and securities

Procedure adopted for sending margin details to clients

Procedure for maintaining acknowledgement / proof of delivery of contract notes/statement of accounts/margin details to the clients

Applicable SEBI Circulars.

Clause B(2) of Code of conduct for Stock Brokers specified under Regulation 7

SMD-1/23341 dated November 18, 1993

SMD (B)/104/22775/93 dated October 29, 1993

SMD/MDP/CIR/043/96 dated August 5, 1996

MRD/DoP/SE/Cir-20/2005 dated September 08, 2005

SEBI/DNPD/143542 /Cir-43/08 dated November 06, 2008



4. Dealing with clients’ funds and securities

Verification of details of cash receipts from / payments to clients, if any, observed during the audit period are to be given (mentioning any specific branch involved). 

Whether cash dealings with clients are done by branches / sub brokers?


Whether banker’s cheque / demand draft are accompanied with written request from the respective client? 


Whether pay-in or pay-out is received from or delivered to respective clients only?


Whether any instances were observed wherein pay-in / pay out was received from / made to account other than the respective client account?  Whether   systems are in place to ensure compliance in this regard by the member?


Whether collaterals of clients were pledged with banks / other entities for raising funds? If yes, details of such instances observed are to be given.


Whether funds raised by pledging client securities were utilised for respective client only? List of instances to be provided in case of non-utilisation of proceeds for respective client?


Whether client’s funds / securities are transferred to respective clients accounts within one working day of after the pay-out of the settlement?


Whether any instance of misutilisation of clients’ funds or securities is observed? If yes, give complete details of such instances


Whether bank book and register of securities are in alignment with bank statements and transaction statements provided by banks and depositories?


Whether dividend and other corporate benefits received on behalf of clients is paid/credited/passed on to the respective clients account ?


Verification of internal controls adopted by the member while accepting banker’s cheque / demand draft from clients

Procedure for ensuring that receipts and payment of funds/securities are from/to respective client only

Periodic Reconciliation of books of accounts

Verification of following books of accounts/records

-          Register of Securities

-          Bank Statements

-          Depository accounts maintained by member

-          Client ledgers

-          Cash Book

-          Bank Book

-          Details of records of client securities pledged, if any.

-          Underlying for any overdraft/loan account.

Applicable SEBI Circulars.

SEBI circular no. SEBI/MRD/SE/Cir- 33/2003/27/08 dated August 27, 2003

Code of conduct for Stock Brokers specified under Regulation 7 of SEBI (Stock Brokers and Sub brokers) Regulations, 1992.

SEBI circular no. MRD/DoP/SE/Cir-11/2008 dated April 17, 2008



5. Banking and Demat account operations

Procedure for segregation of own and clients’ funds and securities (in separate accounts)

Whether member maintains separate bank accounts for clients funds & own funds. Also, whether maintains separate beneficiary accounts for clients’ securities & own securities?


Whether clients funds and securities are segregated from own funds and securities?


Are there any instances of use of client beneficiary account or client bank account for unauthorised purposes? In case of any irregularity observed, mention the instances in detail.

Internal controls for use of client bank and  client beneficiary accounts only for authorized purposes.

Applicable SEBI Circulars.

SEBI circular no.  SMD/SED/CIR/93/23321 dated November 18, 1993.


6. Terminal operations and systems

Procedure and policy adopted by member before allotment of trading terminals

Whether terminals are provided by the member in his head office, branch office or the office of sub broker?


Whether any unauthorized terminal is observed to be allotted? If yes, give complete details.


Whether periodic audit of systems and software is conducted by certified systems auditor?


Whether terminals are operated by approved persons/approved users with valid BCSM certification?


Whether correct User name, login id, terminal location are reported to the Exchange?


Whether internal controls are in place to ensure that the certification of approved users has not expired?


Whether prior permission is obtained by member for providing IML?  Whether member has complied with applicable provision of IML?


Whether updated version of software is used?


Whether back up facilities are in place and followed?


Whether broker has got his system audit done & submitted the system audit report to the Exchange within prescribed time limit?


Verification of terminals and its users, at the audit place.



Verification of certification of the approved users.

Due diligence adopted for password security

Procedure in place for audit of systems and software

Periodic updating of version and back up mechanism

System adopted for data storage, security and access

Verification of logs from server

Applicable SEBI Circulars.

SEBI circular no. SMDRP/Policy/Cir-49/2001 dated October 22, 2001

SEBI/MRD/SE/15958/2003 August 22, 2003

Exchange Notice No.20070517-26 dated May 17, 2007


7. Management of branches / sub brokers and internal control

System and Policy followed for opening / closing of branch

Whether survey is conducted by the member for opening / closing of branches?


In case of closure, whether advance notice of the same is sent to clients? Proof of the same.


Whether there is monitoring mechanism to identify sudden increase / decrease in client level turnover from any specific branch?


Whether periodic inspection of branch / sub broker is conducted and reports are maintained? What is the follow-up mechanism?


Whether unregistered intermediation is observed?


Whether the member has shared commission/brokerage with entities with whom trading members are forbidden to do business / another trading member / employee in the employment of another trading member?


Whether internal controls exists and are sufficient to cover the risks at the members end?


Whether Stock broker indemnity policy with standard cover/clauses has been taken?


Procedure adopted to inform the same to clients

Periodicity and procedure adopted for inspection of branches / sub brokers

Reporting mechanism and mode of informing the inspection observations to branches / sub brokers

Follow up action plan

Policy of fixing of roles and responsibilities of officials in head office, branches and sub-brokers office

Process laid out so as to prevent unregistered intermediation

Documentation of Internal controls   and  Comments on Internal controls in place


Verification of Stock broker indemnity insurance policy

Sharing of commission/brokerage

Applicable SEBI Circulars.

Section 12 of SEBI Act

SEBI circular no. SMD/SED/RCG/270/96 dated January 19, 1996

SEBI circular no. SMD/Policy/CIR-3/98 dated January 16, 1998

SEBI circular no. Sub-Brok/Cir/02/2001 dated January 15, 2001

Regulation 18B of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992

SEBI circular no. SMD/POLICY/CIRCULAR/3- 97 dated March 31, 1997.



8. Investor grievance  handling

Mechanism to monitor complaints lodged with branches/sub-brokers

What is the system to report complaints received by branches / sub brokers to the head office?


Whether complaints are received from specific branch/sub-broker?


Whether complaints register includes complete details of investor complaints?


What is the procedure adopted to resolve complaints?


Whether specific action plan is framed by the member in respect of long pending complaints?


Whether designated  email id  for investor grievances is created and informed to the investors ?


What is the periodicity of monitoring investor complaints?


Whether complaints of substantial amount is escalated to the top management ?


Maintenance of complaints register

Redressal mechanism for complaints registered against the member

Comment on complaints pending for long period

Verification of investor grievance register and email id

Internal control for verification of complaints received through the designated email –id

Applicable SEBI Circulars.


SEBI circular no. MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006

Clause 1(d) of Regulation 12A


9. Maintenance of Books of Accounts

Prescribed books of accounts, registers and records are maintained Exchange wise, with the required details and for the stipulated period as per regulatory requirement







Whether prescribed books of accounts, registers and records are maintained Exchange wise, with the required details and for the stipulated period as per regulatory requirement?


Whether exchange wise separate books of accounts are maintained?


Whether member has dealt with any suspended /defaulter /expelled member and/or prohibited entity?


Whether prior approval has been obtained by member for change in shareholding/directors/constitution?


Whether prior approval has been obtained in case the member has dealt with another member of the Exchange?


Whether member has intimated the Exchange in case of they have dealt with member of another stock exchange?


Whether advertisements are issued after prior permission of the Exchange?


Whether member maintains and updates client master in its back office?


Whether financial reports of the member has been analysed? Comments on the same.


Verification of books of accounts and other records

Internal controls on the process for taking approval of the Exchange


Analysis of financial reports


Applicable Regulations & SEBI Circulars

Rule 15 of Securities Contract Regulation Rules 1957

Regulation 17(1) & 18 of SEBI (Stock Broker Sub-broker) Regulation 1992

Rule 4 (c) of SEBI (Stock Brokers and Sub Brokers) Rules, 1992

Clause C(4)  & C (5) of Regulation 7

SEBI Circular No. SMDRP/Policy/Cir-49/2001 dated October 22, 2001

SEBI circular no. MIRSD/MSS/Cir- 30/ 13289/03 dated July 09, 2003

SEBI circular no. SEBI/MIRSD/Cir-06/2004 dated January 13, 2004

SEBI circular no. MIRSD-DR 1/SRP/Cir- 43/28408/04 dated December 15, 2004

SEBI circular no. SEBI/MRD/SE/Cir-15/2005 dated August 4, 2005



10. Systems & Procedures pertaining to Prevention of Money Laundering Act (PMLA), 2002

Customer acceptance policy and customer due diligence measures 


What is the process adopted by member to verify the identity of the customer and/or the person on whose behalf a transaction is being conducted ?


Whether any account was opened in fictitious name/benami account ?


What checks and balances are in place to ensure that the identity of the client does not match with any person having criminal background or is not banned in any other manner?


What are the factors of Risk perception having regard to client's location, address, nature of business activity, trading turnover and the manner of making payments so that the clients can be classified in to "High Risk", " Medium Risk"," Low Risk" category?


Whether details of appointment of Principal Officer and change in Principal officer, if any is intimated to FIU-India?


Whether member has adopted and implemented written guidelines prescribed under PMLA, 2002?


Whether member has adequate system to generate alerts for suspicious transactions?


As per provisions of Prevention of Money Laundering Act, 2002 whether record of transactions, its nature and its value are maintained?


Walk through of the process

Process of generation and monitoring alerts

System in place that allows continuous monitoring of transactions

Process for identifying STR (Suspicious Transaction Report) and reporting the same to FIU-India filed



Processes for verification of alerts with KYC details

Applicable SEBI Circulars.

SEBI circular no. ISD/CIR/RR/AML/1/06 dated January 18, 2006

SEBI circular no. ISD/CIR/RR/AML/2/06 dated March 20, 2006

SEBI circular no. ISD/AML/CIR-1/2008 dated December 19, 2008

SEBI letter no. ISD/SR/AK/AML/150847/2009 dated January 15, 2009


11. Transfer of trades

Transfer of trades in the back office




Whether any trades were transferred from one client code to another client code or from client code to pro or vice-versa  in the back office of the member?


Whether any pattern was observed in case, transfer trades carried out at member’s back office

Verification of trade files downloaded by the Exchange with sauda register/back-office file of member (based on which contract notes are generated)

Internal controls for transfer of trades

Applicable SEBI Circulars.

SEBI circular no. SEBI/MRD/SE/Cir- 32/2003/27/08 dated August 27, 2003



12. Margin Trading

Verification of agreements                                                                 

Whether member has obtained specific approval from the exchange, in case he is providing margin trading facility to his clients?


Whether member has complied with regulatory requirements related to margin trading?

Records of funding



Applicable SEBI Circulars.

SEBI circular no. SEBI/MRD/SE/SU/Cir-15/04 dated March 19, 2004




13. Proprietary Trading

Verification of  ids enabled for pro


If member is doing pro trading, whether member has disclosed this information to his clients?


If member is doing pro trading from multiple locations, whether member has obtained prior approval from the Exchange in this regard?

Process for approval of Exchange

Applicable SEBI Circulars.

SEBI circular no. SEBI/MRD/SE/Cir-32/2003/27/08 dated August 27, 2003

SEBI letter no. SEBI/MRD/SE/Cir-42/2003 dated November 19, 2003



14. Internet Trading

Process of approval from Exchange


Verification of internet agreements

Whether member has obtained specific approval from the exchange, in case he is providing internet trading facility to his clients?


Whether member has complied with regulatory requirements related to internet trading?


Whether broker has got his system audit done & submitted the system audit report to the Exchange within prescribed time limit?


Procedure followed for user id and password

Internal controls for internet trading

Applicable SEBI Circulars.

SEBI Circular no. SMDRP/POLICY/CIR-06/2000 dated January 31, 2000

Exchange Notice No. 47315 /2000 dated April 17, 2000


15. Operations of Professional Clearing member/ Members  clearing trades of other trading members

Verification of execution of trading -clearing member (TM-CM) agreements/Custodial Participant agreements

Whether TM-CM agreements are executed in prescribed formats with trading member?


Whether Clearing member custodial participant agreements are executed in prescribed formats ?


Whether statement of accounts has been sent to trading member/custodial participants/?


Whether clearing members had collected appropriate and adequate margins in prescribed forms from respective trading members?


Whether Margin collection reported to Exchange is in accordance with margins actually collected from trading member ?


Whether exposure allowed to trading members were based on requisite margins available with the clearing member?


Whether interest is charged to the trading member? If yes, what is the basis of interest with complete details like percentage of interest, periodicity of interest charged

Verification of issuance of statement of accounts to trading members/custodial participants


16. Securities Lending & Borrowing Scheme

Process of approval from Exchange


Whether member has obtained specific approval from the exchange?


Whether member has complied with regulatory requirements related to SLBS ?


Verification of SLBS agreement

Applicable SEBI Circulars.

SEBI circular no. MRD/DoP/SE/Dep/Cir- 14 /2007 dated the December 20, 2007

SEBI circular no. MRD/DoP/SE/Cir- 31 /2008 dated October 31, 2008




Points to be noted


The guidelines prescribed hereunder do not limit the scope of the internal audit. The points mentioned are only indicative in nature and not exhaustive. This has been prepared based on the regulatory requirement (as per relevant acts, rules, regulations and circulars) which keep on developing from time to time. The auditors should peruse them and update the scope of the audit.


The report shall also include the following.

1.      If any major significant deviations and deviations of recurring nature are observed, the same should be reported separately in the covering page of the audit report. If auditors observations are in the nature of a deviation or a recommendation, the member’s response should be sought and recorded in the report.

2.      Comments by auditor on the status of compliance in respect of deviations reported in the last audit report,

3.      Improvements brought about in the operations between the last audit and the current audit.

4.      In case the member has been inspected in the relevant half year by the Exchange / SEBI, comments by the auditor on whether the member has complied with the observations made in the Exchange/SEBI inspection report are to be included in the audit report.

5.      A statement by the auditor that the provisions of SCRA 1956, SEBI Act 1992, SEBI (Stock Brokers and Sub-brokers) Regulations 1992, Rules, Bye laws, Regulations and circulars of SEBI, agreements, Bye laws of  Exchange, circulars of Clearing House, data security and insurance have been covered in the audit.

6.      Auditor shall specifically declare about direct / indirect interest in or relationship with the member or its share holders / directors / partners / proprietors / management, if any and also confirm that they do not perceive any conflict of interest in such relationship / interest while conducting internal audit of the said member.

7.      Membership number allotted by the affiliated professional body should be quoted at the bottom of the report as provided in the format.

8.      Observations in the report should be quantified giving instance wise details, details of segment and activity ( trading  or clearing) for which such violations are observed.


Annexure - 3




We have examined the relevant books of accounts, records and documents maintained by M/s. _______________, (name of the trading/clearing member) bearing SEBI registration number ______________________) a member of the Calcutta Stock Exchange Association Ltd., / National Stock Exchange of India Limited / Bombay Stock Exchange Ltd. / MCX-Stock Exchange /other Stock Exchange, for the following segments to fulfill the internal audit requirement as prescribed by SEBI vide circulars dated August 22, 2008 & October 21, 2008, for the half year ended_____________________.



(Cash Segment/Derivatives Segment / Debt Segment /Currency Derivatives/Securities Lending & Borrowing segment)

Activity (Trading/Clearing/Trading and Clearing)

SEBI registration number





The purpose of this audit is to examine that the processes, procedures followed and the operations carried out by the Trading Member/Clearing Member are as per the applicable Acts, Rules, Regulations, Bye-laws and Circulars prescribed by SEBI and the Stock Exchange.


We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of this internal audit. In our opinion proper books of accounts, records & documents, as per the regulatory requirement have been maintained by the member, so far as it appears from examination of the books.


We have conducted the audit within the framework provided by SEBI/Stock Exchange for the purpose of this internal audit.  


To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud / non-compliance /violation by the member is observed during the course of this audit.


Based on the scrutiny of relevant books of accounts, records and documents, we certify that the member has complied with the relevant provisions of SEBI Act, 1992, Securities Contracts (Regulation) Act 1956, Securities Contracts (Regulation) Rules 1957, SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 and various circulars of SEBI. The member has complied with the Rules, Bye-laws, Regulations of BSE / NSE / MCX-SE and various circulars issued by the Stock Exchange and Clearing Corporation/Clearing House.


We declare that we do not have any direct / indirect interest in or relationship with the member or its directors / partners / proprietors / management and also confirm that we do not perceive any conflict of interest in such relationship / interest while conducting internal audit of the member.


In our opinion and to the best of our information and according to the explanations given to us by the proprietor/partner(s)/director(s)/compliance officer, the Report provided by us as per the Annexure and subject to our observations, which covers the entire scope of the audit, is true and correct.



Company Secretary / Cost and Management Accountant / Chartered Accountant

(Seal & Signature)



(Name of the Proprietor / Partner)


Membership no. / CP. No.