Inactive Clients Policy
Client account will be considered as inactive if the client dose not trade for period of one year. Calculation will be done at the beginning of every month and those clients who have not traded even a single time will be considered as inactive, the shares/credit ledger balance if any will be transferred to the client within one week of the identifying the client as inactive. The client has to make written request for reactivation of their account.
Policy on Pre-Funded Instruments/ Electronic Fund Transfer
With reference to NSE Circular No. NSE/INSP/2011/118 dated June 9, 2011 on the drafted policy on Pre-funded Instrument/Electronic Fund Transfer which has been approved by Board /Management/ key Personnel’s are given hereunder:
- We instruct our office bearers to check properly the instrument received from clients before depositing the same into bank.
- If on checking, the instrument is identified as Pay Order/DD, then a suitable reason/classification is required to be obtained from the client.
- The details of the instrument must be tallied with the detail provided by the clients in KYC before entering into back office software.
- In case of mismatch is identified, it should be reported to department head/ management/ key personnel’s for taking appropriate action
- Clients who make the payment through pre-fund instrument will be advised to avoid it or not to use this route by educating them the Exchange and PMLA rules & byelaws in this regard.
- Payment received through Electronic Fund Transfer have to be properly checked with the details available in bank statement like payee A/c No., payee name etc. and in case of non – availability of the detail in bank statement then it will be asked from the client to confirm the payment detail through e-mail or SMS.
- In addition to above circulars, issued by Exchange from time to time has to be followed for proper compliance on this matter.
Risk Management Policy
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.
Policies and Internal Procedures to Identify and Avoid or to Deal or Manage Actual or Potential Conflict of Interest
Securities & Exchange Board of India (SEBI) vide its circular no. CIR/MIRSD/5/2013 dated August 27, 2013 laid down general guidelines for dealing with conflict of interest of intermediaries, recognized stock exchanges, recognized Clearing Corporation, depositories and their associated person in securities market.
As per the said circular, the policy is as mentioned below:
- We at all times maintain high standards of integrity in the conduct of its business.
- We shall ensure to give fair treatment of its clients and not discriminate amongst them.
- We shall ensure that any personal interest as well as any person dealing for or on behalf of us does not, at any time conflict with its duty towards to their clients and client’s interest always takes primacy in their advice, investment decisions and transactions.
- 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.
- 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.
- 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.
- Not deal in securities while in possession of material non published information, i.e. while dealing with the clients, our employees or our Sub-Broker / Authorised Person shall not communicate to the clients about unpublished information about the companies.
- Not to communicate the material non-published information while dealing in securities on behalf of others.
- Not in any way contribute to manipulate the demand for or supply of securities in the market or to influence prices of securities.
- Not have an incentive structure that encourages sale of products not suiting the risk profile of their clients.
- Not share information received from clients or pertaining to them, obtained as a result of their dealings, for their personal interest.
The above policy shall be review and revised at the regular interval of time not later than 6 months.
Error Account Policy
- The modification to the client code is to be done only in exceptional cases and not as a routine policy.
- The reason for modification has to be ascertained and analyzed and genuineness is to be established and also it’s impact on the clients should be studied before the modification. If voice recording is in practice, the same is being studied.
- Normally as a principle, we are permitted to change client codes of non-institutional clients only for the following objective criteria;
a. Error due to communication and/or punching or typing such that the original client
b. Modification within relatives (Relative for this purpose would mean ‘Relative’ as code/name and the modified client code/name are similar to each other. (As defined under section 6 the Companies Act, 1956).
- For easy identification of error account, we register a fresh client code as “ERROR” in the UCC database of the Exchange for the account which is classified as error account.
- We will inform the Exchange (through BEFS), by end of day, the reasons for modification of client codes of non-institutional trades based on the aforesaid objective criteria.
- Therefore it is imperative that the issue should be reported to the senior level Manager/Director and only with his approval, the modification should be carried after being satisfied that it is genuine, the same is required to be done to protect the interests.
- Hence the facility to modify the client codes should be available only at the Corporate Manager level and should not be given to the branches/franchise/sub-brokers.
- Training program should be conducted to all the Dealers and they should be explained how code modifications can be misused and what steps should be taken to avoid the same. It also should be explained that code modifications should not be encouraged to the clients except for cases like ‘punching errors’/’typing errors’.