Internal Control Policy – Broking Operations


benefit_bullet Registration of Clients:

  1. The clients are not procured in the standard way of marketing viz; sending people or staff members with target for selling the products in the market, distributing pamplets in the town, offering various types of discount schemes or incentive for attracting more number of clients, etc. Those clients having recommendation / introduction of an existing account holder or an employee or a person associated with the company is eligible to register for trading activity with us.
  2. The process of registering a client for trading activity is begun by filling in the “Know Your Client” (KYC) form and the Central KYC Registration (CKYC) form, along with the Client Registration form as per the format prescribed by SEBI/Stock Exchanges. In case the client’s KYC / CKYC procedure is already completed, the same is to be verified appropriately.4. In the KYC / CKYC procedure, the client has to provide their full name and permanent address for communication and PAN details. The client has also to submit photocopies of their PAN card, proof of identity and proof of address. Along with these details, one recent passport size colour photograph is to be affixed at the given place and signed across as well as at given places.
  3. In the Client Registration form, the client has to provide details pertaining to their bank account, depository account, income details, trading preference i.e. the Exchanges and segments where they wish to trade in, and various other details. Besides, they also have to sign and execute various mandatory documents as prescribed by the Exchange/SEBI viz; the Rights and Obligations, Risk Disclosure Document, Guidance note and Policy & Procedures. Further, in case the client is availing any other additional facilities, then documents pertaining to the same are also to be signed and executed under the Non-Mandatory section.Along with the client registration form the client has to submit photocopy of the cheque leaf of their bank account as well as the client master of their depository account (in case the demat account is held with other DP).
  4. If the client is holding a Demat account with our own DP, then the demat details of the client is verified by us accordingly.The Trading Member receives the above documents and verifies the supporting proofs with the originals and accepts it only if the same are as per the requirement.Besides, the PAN card submitted by the client is also verified on the prescribed website to ensure the authenticity of the same.
  5. Once the application form is found to be okay, the ‘In-person Verification’ (IPV) of the account holder is conducted by one of the designated staff member. Application for client registrations is received at various locations where our branch offices are located. However, in order to ensure full and complete compliance of all the rule and regulations prescribed by SEBI / Exchange, the processing of the applications are done at the Head Office only.On receiving the above, the full set of documents are then sent to the back office for further processing, where the documents are once again verified to ensure full and complete compliance with regards to the KYC / CKYC norms.
  6. The back-office staff verifies the name of the client with the list of ‘Debarred Entities’ to ensure that the client’s name does not figure in the said list.The financial details of the clients are also verified in accordance with the PMLA act, as per the requirement of SEBI.Thereafter, the client details, as mentioned in the KYC / CKYC form is entered in to the respective software of the KYC / CKYC which is then uploaded on to the system along with the scanned copies of all the documents.
  7. In accordance to circular no.MIRSD/Cir-23/2011 dated 02.12.2011 and CIR/MIRSD/4/2013, dated March 28, 2013, both issued by the Securities and Exchange Board of India, the KYC details of the client is electronically uploaded onto the KRA (KYC Registration Agency) system and the complete set of KYC of the client is then scanned and forwarded to the KRA for maintaining the same in electronic form at their end.The CKYC data is also electronically uploaded on to its online system along with the scanned copies of all the prescribed supporting documents as per the guidelines issued by SEBI vide its Circular no.CIR/MIRSD/66/2016, dated July 21, 2016
  8. After entering all the KYC / CKYC data, the client details are then entered into our back-office software.Thereafter, the same is once again verified with the KYC / CKYC forms and this data is uploaded to the Exchange through the internet.The confirmation of receipt of this data is received from the Exchange immediately on the same day. However, in case of any rejection, it is immediately rectified and resolved by uploading the correct data.Once the confirmation receipt is received from the Exchange, this data is then mapped with the NEST software – our trading platform, after which the client registration process is complete.
  9. The client is then informed of the client registration code generated against their application by sending a Client Welcome Kit consisting of the Client Master along with the copies of the documents signed and executed by the client with us. This Welcome kit is sent to all the clients by Post / Courier.Confirmation of the client registration is also done by our Executives who visit the clients’ place for verification and inform them of the same if possible or verification through video call is to be done by our executives.

benefit_bullet Receiving, validating & entering the orders of clients in the trading platform:

  1. For executing the orders of the clients the trading platform used is NEST.Usually, most of the clients place their orders for trading in shares either through telephonic communication or by personally visiting any of our offices.All the orders are received through verbal communication only. However, all the orders received over telephone are being digitally recorded for any further reference to the same.
  2. Internet Based Trading facility is also being provided by us to our clients as per their requirement for trading in NSE and BSE. This facility is being provided by us through ‘NOW’ a platform provided by the National Stock Exchange of India Limited.The orders received during the day are entered in the trading platform for which an order file is generated.
  3. Similarly, for all the trades executed through the trading platform during the day, a trade file is generated.At the end of the trading session, once the trade file is generated, this file is uploaded in our back-office software.After uploading the trade file in the back-office software, the trades are then informed as well as confirmed with the respective clients for validating the trades.

benefit_bullet Contract Notes and statements:

  1. Once the trade confirmation files are received from the respective Exchanges and the records are duly updated in the system, the file for printing Contract Note cum bills is to be generated at the Head Office.Thereafter, files pertaining to each branch offices are to be sent to the respective branch through email. The contract note cum bill for the clients traded at the HO is to be sent via email.If the e-mail id of the respective client is not available or the mail is bounced back for any reason then such clients are being issued contract notes in physical format as well. The contract notes cum bills are in the combined format, as prescribed by SEBI.
  2. These contract notes cum bills, alongwith the daily margin statements are to be sent through electronic modeto clients within the time limit as prescribed by SEBI/Exchange i.e. within 24 hours. In some cases, clients collect it from our office where their dealing has taken place. Acknowledgment for the above is to be maintained.
  3. The transaction details of the clients are disseminated on our website. In order to view these details the client has to log in by using a secured user ID and password. By this, the client can view all his trades as well as payment details from our website.Besides, the statement of account for funds as well as securities, are to be sent to the clients by email once in every quarter or when the account of the client is settled during the quarter, as per the prescribed guidelines. Records for dispaching is to be maintained towards supporting proof of the same.

benefit_bullet Collection and Release of Payments to Clients:

  1. When the client is provided with the bill and contract for their trades, the payment for the same, as per the amount mentioned in the bill, is either collected from the client or given to the client, as the case may be.In case, if the payment is to be released to the client, the same is done on the pay-out of the trade settlement, but only after receiving the delivery of securities from the client for their respective trades.
  2. Some of the clients have availed the facility of maintaining a running account for a period of either one month or one quarter. Accordingly any or all credits/debits lying in their trading account are kept in abeyance for adjustment against any further trade to be conducted by them in future. Such instruction has been given for their individual operational convenience only. However, these accounts are settled atleast once a month / quarter as per the time limit availed by the client in the aforesaid facility.In case of any debit balance in a client’s account regular follow-up is done by the Executives to ensure that such debit balance does not remain outstanding for more than two days and to fulfill the margin requirement.
  3. All dividends are being paid to the respective clients immediately on receipt of the same. A separate Dividend Ledger is being maintained for this purpose.The details of the dividend received and paid to the respective clients along with their dates are mentioned in the said ledger.

benefit_bullet Collection and maintenance of Margins:

  1. With reference to the SEBI circulars CIR/HO/MIRSD/DOP/CIR/P/2019/139 & CIR/HO/MIRSD/DOP/CIR/P/2020/146, every trading member has to maintain initial margin deposit as per the requirement of the Exchange which may vary time to time for the smooth working on daily basis. Margin money is usually collected by PRSSB in monetary form by way of cheque or as collateral (securities). This margin is collected on the trading day itself. Exposure Limit is fixed on the basis of the funds and value after haircut of the securities provided by the client for margin.
  2. Each and every client registered with PRSSB needs to provide initial margin deposit by way of online payment/cheque or securities. On clearance of the cheque/securities in the account of the client, they will be able to put buy or sell orders through PRSSB’s trading platform.
  3. RMS department is monitoring for collection and maintenance of margins for all segments of both exchanges.

benefit_bullet Monitoring of Branches / Authorised Person (APs) / DP Operations etc.:

  1. Any New branch office / Authorised Person(APs)is opened only after conducting a suitable survey of the location and its surrounding market. Only if it is feasible, the approval for opening is granted.Closing of a branch / Authorised Persons is done only after informing their clients well in advance i.e. atleast 30 days prior to the closing and also providing them the alternate option of shifting their account to the nearest branch or the head office, as per their convenience.
  2. The activities of all our branch offices / Authorised Persons are being monitored by us on a regular basis.It is ensured that the branches /Authorised Persons also follow all the rules and regulations issued by the Exchange from time to time.All the branch offices /Authorised Persons have been informed to strictly adhere to the various norms issued by the Exchange.Regular inspection of the branch / Authorised Persons is being carried out.Besides, regular interaction of the branch / Authorised Persons with the head office also helps in various types of trouble shooting.
  3. The DP operation is also being carried out as per the prescribed Rules and regulations of NSDL / SEBI.A procedure manual has been prepared for the DP operation wherein all the activities have been demarcated very clearly and specifically.The exposure limit of the terminals at the branch office / Authorised person office is set in accordance to the pre-set guidelines of the company. Various factors like the trading pattern, financial discipline, risk factor, etc. are considered in determining the limit at the branch office / Authorised Person office.A branch or the sub-broker or the AuthorisedPerson is allotted additional terminal only on receiving a specific request from such branch / Authorisedpersons office and after studying the feasibility of such requirement.

benefit_bullet Operations & Compliance requirements:

  1. The broking activity of NSE as well as BSE is being conducted within the prescribed rules and regulations.All compliance requirements are being fulfilled.A Principal Officer and a Compliance Officer has been designated for taking care of the operational as well as compliance requirement.
  2. Eachday, the concerned designated person checks for new circulars and notices being released by the Exchanges.All the circulars and notices, as well as various other intimations received from the Exchange are read carefully and understood by the designated person and the information of the same is passed on to all the concerned immediately.Details of all such circulars and notices are also being provided as well as explained to all the concerned staff members of each department in order to ensure full and complete compliance from the grass root level.
  3. Suitable training is provided frequently to all the staff members at the Head Office as well as at the Branch / Authorised person’s office to ensure that all relevant procedures, as being prescribed the the SEBI / Exchanges from time to time are followed at each and every level and the compliance of all the procedures are being taken care of appropriately.
  4. The activities of all the staff members are being monitored on a regular basis and appropriate evaluation is also being done to ensure efficiency of the staff member and also to ensure proper compliance.The staff is also encouraged, from time to time, to appear for the NISM courses so as to keep them abreast of the current requirements.

benefit_bullet Auto Pay-in facility:

  1. Those clients who have registered with us for their transactions on the Stock Exchanges and have also opened their corresponding Demat account with our DP, are being offered the facility of ‘Auto Pay-in’.This facility is being offered for the convenience of the client as they need not submit physical delivery instruction slip towards any of their market trades undertaken through us on any of the Stock Exchanges. The delivery of securities sold by these clients are automatically debited from their designated demat account held with our DP and transferred to our designated Pool account.
  2. For obtaining the Auto pay-in facility, the concerned client has to duly execute with our company a limited Power of Attorney (PoA) authorising us to automatically debit their concerned Demat account associated with the registered trading code, the specific securities sold by them on a particular day on any of the Exchanges. The associated Demat account should be held with our own Depository Participant.This PoA has been prepared by us in the standard format under the guidelines prescribed by SEBI/Stock Exchanges. The PoA is obtained in the name of our company only. PRSSB do not obtain PoA for any purpose other than those mentioned above nor for any other Demat or Bank account of the client. It is limited in nature and can be revoked at any time, by which the aforesaid facility will also cease to be offered to such clients.