|
Customer care : 9841198942 Live Support
|
|
|
POLICY FOR SURVEILLANCE
OBJECTIVE
The objective of this policy is to have in place an effective
market surveillance mechanism to ensure investor protection and
to safeguard the integrity of the markets. The goal of
surveillance is to spot adverse situations in the markets and to
pursue appropriate preventive actions to avoid disruption to the
markets. The fairness of the markets is closely linked to
investor protection and, in particular, to the prevention of
improper trading practices. This monitoring is required to
analyse the trading pattern of the clients in order to observe
whether any transaction (buying / selling) done intentionally,
which will have an abnormal effect on the price and / or volumes
of any share, which is against the fundamental objective of the
Securities Market.
BACKGROUND
National Stock Exchange vide circular no.
NSE/INVG/22908 dated March 7, 2013, intimated that the Exchange
would be downloading the following alerts based on the trading
activity of the client for facilitating the effective
surveillance mechanism and directed the stock brokers to frame a
surveillance policy for the same. The surveillance policy shall
cover the maintenance and disposition of alerts received from
exchanges/generated at our end
Sr.No
|
Transactional Alerts
|
Segment
|
1
|
Significant increase in client activity
|
Cash
|
2
|
Sudden trading activity in dormant account
|
Cash
|
3
|
Clients/Group of Client(s), deal in common scrips
|
Cash
|
4
|
Client(s)/Group of Client(s) is concentrated in a few
illiquid scrips
|
Cash
|
5
|
Client(s)/Group of Client(s) dealing in scrip in minimum
lot size
|
Cash
|
6
|
Client / Group of Client(s) Concentration in a scrip
|
Cash
|
7
|
Circular Trading
|
Cash
|
|
Pump and Dump (Pump-and-dump” involve the touting of a
|
|
|
company’s stock (typically small, so-called “microcap”
companies)
|
Cash
|
8
|
through false and misleading statements to the
marketplace.)
|
|
|
Wash Sales ( A wash sale is trading activity in which
shares of a
|
Cash &
|
|
security are sold at a loss and a substantially
identical security is
|
Derivatives
|
9
|
purchased)
|
|
|
|
Cash &
|
10
|
Reversal of Trades
|
Derivatives
|
|
Front Running (Execution of orders in a security for its
own
|
|
|
account by the member while taking advantage of advance
|
Cash
|
11
|
knowledge of orders from its customers)
|
|
|
Concentrated position in the Open Interest / High
Turnover
|
|
12
|
Concentration
|
Derivatives
|
13
|
Order book spoofing i.e. large orders away from market
|
|
Terms used in this Policy:
lerts: Referred as transactional alerts arising due to
sudden significant increase in client activity, sudden trading
activity in inactive/dormant accounts, clients/groups of clients
dealer in common scrips, illiquid scrips, minimum lot size/or
single scrip, large orders away from the market, concentrated
position in the open interest/high turnover concentration,
circular trading, pump and dump, wash sales, reversal of trades,
front running.
POLICY
Transactional alerts
In accordance with the circular no.NSE/INVG/22908 dated March 7,
2013 issued by National Stock Exchange and in order to maintain
the records of the transactional alerts received from exchanges
or generated at our end, the following steps would be taken to
review and dispose the alerts
1. Review the type of alert downloaded by exchange or generated
at our end.
2. Financial details of the client.
3. Past trading pattern of the clients/client group.
4. Bank/demat transaction details.
5. Other connected clients having common email/mobile
number/address or any other linkages etc.
6.Other publicly available information.
On receipt of the above information, analyse the alerts
generated and in case of any adverse findings/comments, the same
shall be communicated to the Exchange within 45 days from the
alert generation
In case analysis is taking time due to complexity, an extension
may be taken from the exchange to review the alert(s)
In order to have in-depth analysis of the above transactional
alerts, the following due diligence shall be taken
CLIENT(S) INFORMATION
Due Diligence of client(s) would be done on a continuous basis.
Client information should be updated at least once a year
through periodic review. Financial information also needs to be
updated for all active clients and the following relevant
documents pertaining to financial details to be obtained from
clients.
1. Copy of ITR Acknowledgement
2. Copy of Annual Accounts
3. Copy of Form 16 in case of salary income
4. Net worth certificate
5. Salary Slip
6. Bank account statement for last 6 months
7. Copy of demat account Holding statement.
8. Any other relevant documents substantiating ownership of
assets.
9. Self-declaration along with relevant supporting.
Addition/ Modification of any parameter (correspondence address,
contact details, email id, bank and beneficiary accounts)
relating to client should also be updated immediately in the UCI
database of exchange and the same shall be updated in back
office also.
Based on the above information/documents, identification of
groups / association amongst clients to identify multiple
accounts / common account / group of clients would be
established.
Groups to be formed on the basis of details of family/ group/
associate provided by clients during their registration or at
the time of periodic review and on the basis of any
authorization submitted by the client for adjustment of their
balances.
ANALYSIS
In order to analyze the trading activity of the Client(s) /
Group of Client(s) or scrips identified based on the alerts
received from the Exchange, the following information shall be
sought from clients:
Seek explanation from such identified Client(s) / Group of
Client(s) for entering into such transactions. Letter/ email to
be sent to client asking the client to confirm that client has
adhered to trading regulations and details may be sought
pertaining to funds and securities and other trading pattern.
Seek documentary evidence such as Bank Statement / Demat
Transaction Statement or any other documents to support the
statement provided by client. In case of funds, Bank statements
of the Client(s) / Group of Client(s) from where funds pay-in
have been met, to be sought. Sources of funds in the bank
statements to be verified. In case of securities, Demat account
statements of the Client(s) / Group of Client(s) from where
securities pay-in has been met, to be sought.
The period for such statements may be at least +/- 15 days from
the date of transactions to verify whether the funds /
securities for the settlement of such trades actually belongs to
the client for whom the trades were transacted.
After analyzing the documentary evidences, including the Bank /
Demat statement, the observations shall be recorded for such
identified transactions or Client(s) / Group of Client(s). In
case of adverse observations, the same will be reported to the
Exchange within 45 days of the alert generation. Extension of
the time period from the Exchange will be sought, if required.
In case the client does not cooperate or does not revert within
reasonable period, Exchange to be informed based on the
information available with the member.
MONITORING* AND REPORTING
The surveillance process shall be conducted under overall
supervision of its Compliance Officer and based on facts and
circumstances, he / she is required to take adequate precaution.
The Compliance Officer would be responsible for all surveillance
activities carried out by the Trading Member and for the record
maintenance and reporting of such activities. A quarterly review
shall be done by the Proprietor on the number of alerts pending
at the beginning of the quarter, generated during the quarter,
disposed off during the quarter and pending at the end of the
quarter. Reasons for pendency shall be discussed and appropriate
action would be taken. In case of any exception noticed during
the disposition of alerts, the same shall be put up to the
Board/Partners/Proprietor.
Internal auditor shall review this policy, its implementation,
effectiveness and review the alerts generated during the period
of audit. Internal auditor shall record the observations with
respect to the same in their report.
APPROVAL AUTHORITY
This policy has been approved by the Compliance Office, Ramesh
Bajaj.
REVIEW POLICY
This policy will be reviewed by the Proprietor, as and when
there are any changes introduced by any statutory authority or
as and when it is found necessary to change the policy due to
business needs.
POLICY COMMUNICATION
A copy of the approved policy shall be made available
to Compliance officer, Head of risk and Head of Operations.
|
|
|
|