N O T I C E
Dated :October 04, 2017
Trading Members are hereby informed that the Exchange has received a Circular from SEBI vide Ref. No.CIR/HO/MIRSD/MIRSD2/CIR/P/2017/108, Dated September 26, 2017 regarding Prevention of Unauthorised Trading by Stock Brokers. The contents of the said circular are reproduced hereunder for information of trading members.
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CIRCULAR
CIR/HO/MIRSD/MIRSD2/CIR/P/2017/108 September
26, 2017
To
All recognized Stock Exchanges,
Dear Sir / Madam,
Sub: Prevention of Unauthorised Trading by Stock Brokers
I. SEBI in the past has taken
several steps to tackle the menace of “Unauthorized Trades” viz
Periodic Running Account Settlement, Post transactions SMS/email by
exchanges/Depositories, Ticker on broker/DP websites etc. It was observed that
in spite of measures taken, a considerable proportion of investor complaints is
of the nature of “Unauthorized Trades”.
II. The current regulatory
requirements in commodity derivative markets require that “The members shall
execute the trade of clients only after keeping evidence of the client placing
such order; it could be, interalia, in the form of
sound recording.” There are no such requirements in Equity, Equity
Derivative and Currency Derivative Market side.
III.
To further strengthen regulatory provisions against un-authorized trades and
also to harmonise the requirements across markets, it
has now been decided that all brokers shall execute trades of clients only
after keeping evidence of the client placing such order, it could be, inter
alia, in the form of:
a.
Physical record written & signed by client,
b.
Telephone recording,
c.
Email from authorized email id,
d.
Log for internet transactions,
e.
Record of SMS messages,
f. Any other legally verifiable
record.
When
dispute arises, the burden of proof will be on the broker to produce the above
records for the disputed trades.
IV. Further, wherever the order
instructions are received from clients through the telephone, the stock broker
shall mandatorily use telephone recording system to record the instructions and
maintain telephone recordings as part of its records.
V. This circular shall be effective
with effect from 1st January
2018.
VI.
The Stock Exchanges are directed to:
a.
bring the provisions of this circular to the notice of the Stock Brokers and
also disseminate the same on their websites.
b.
make necessary amendments to the relevant bye-laws, rules and regulations for
the implementation of the above directions in co-ordination with one another to
achieve uniformity in approach.
c.
communicate to SEBI, the status of the implementation of the provisions of this
circular in their Monthly Development Reports.
VII. This circular is issued in
exercise of powers conferred under Section 11(1) of the Securities and Exchange
Board of India Act, 1992 to protect the interest of investors in securities and
to promote the development of and to regulate the securities market.
Yours faithfully,
Debashis
Bandyopadhyay
General
Manager
Trading
Members are requested to take note of the aforesaid guidelines of SEBI and act
accordingly.
M.A.V. Raju
General
Manager