MASTER CIRCULAR
SEBI/HO/MRD/MRD-PoD-1/P/CIR/2024/168 December 03, 2024
To,
All Depositories
Dear Sir / Madam,
Subject: Master Circular for Depositories
1. Securities and Exchange Board of India (SEBI), from time to time, has been issuing
various circulars/directions to Depositories. Further, a Master Circular in the form
of a compilation of all the relevant circulars was issued on October 06, 2023. In
order to enable the users to have access to all the applicable circulars/directions
pertaining to depositories at one place, this Master Circular for Depositories has been
prepared.
2. This Master Circular shall come into force from the date of its issuance. This Master
Circular covers the relevant applicable circulars/communications pertaining to
depositories issued by SEBI upto September 30, 2024. References to the
Statutes/Regulations which now stand repealed have been suitably updated in the
Master Circular. The list of circulars rescinded vide the instant circular is also
updated in the Schedule-A to this circular.
3. Notwithstanding such rescission:
a) anything done or any action taken or purported to have been done or taken
under the rescinded circulars, including registrations or approvals granted, fees
collected, registration or approval suspended or cancelled, any inspection or
investigation or enquiry or adjudication commenced or show-cause notice
issued, prior to such rescission, shall be deemed to have been done or taken
under the corresponding provisions of this Master Circular;
b) any application made to SEBI under the rescinded circulars, prior to such
rescission, and pending before it shall be deemed to have been made under the
corresponding provisions of this Master Circular;
c) the previous operation of the rescinded circulars or anything duly done or
suffered thereunder, any right, privilege, obligation or liability acquired, accrued
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or incurred under the rescinded circulars, any penalty, incurred in respect of any
violation committed against the rescinded circulars, or any investigation, legal
proceeding or remedy in respect of any such right, privilege, obligation, liability,
penalty as aforesaid, shall remain unaffected as if the rescinded circulars have
never been rescinded.
4. The Master Circular consists of four sections i.e. (1)Beneficial Owner (BO) Accounts,
(2)Depository Participants (DP) Related, (3)Issuer related and (4)Depositories
Related. Efforts have been made to include provisions of circulars/communications
relevant to each sections. However, cross referencing of circulars/communications
amongst the sections may exist. Users may refer to other sections also for compliance
to provisions applicable to them.
5. Words and expressions used but not defined in this Circular shall have the same
meanings as may be defined in Securities Contracts (Regulation) Act, 1956 or the
Securities and Exchange Board of India Act, 1992 or the Depositories Act, 1996 or
Regulations made thereunder i.e. Securities Contracts (Regulation) (Stock Exchanges
and Clearing Corporations) Regulations, 2018, SEBI (Depositories and Participants)
Regulations, 2018, PIT Regulations, SEBI (Prohibition of Fraudulent and Unfair
Trade Practices relating to Securities Market) Regulations, 2003, unless the context
requires otherwise.
6. This Master 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 interests of
investors in securities and to promote the development of, and to regulate the
securities market.
7. This Master Circular is available on the SEBI website at https://www.sebi.gov.in/
under the category “LegalMaster Circulars”.
Yours faithfully
Vishal Shukla
General Manager
Market Regulation Department
Email: vishals@sebi.gov.in
Phone 022-26449959
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Table of Contents
Section - 1: Beneficial Owner (BO) Accounts
1.1 Opening of BO Account by non-body corporates
1.1.1 Proof of Identity (PoI)
1.1.2 Proof of Address (PoA)
1.1.3 Clarification on voluntary adaptation of Aadhaar based e-KYC process
1.1.4 Common and simplified norms for processing investor’s service requests by
RTAs and norms for furnishing PAN, KYC details and Nomination
1.1.5 SARAL Account Opening Form for resident individuals
1.1.6 Uniform Know Your Client (KYC) Requirements for the Securities Markets
1.1.7 Acceptance of third party address as correspondence address
1.2 Exemptions from and clarifications relating to mandatory requirement of PAN
1.3 Simplification of demat account opening process
1.4 Guidelines for online closure of demat accounts
1.5 Guidelines on Identification of Beneficial Ownership
1.6 Opening of demat account in case of HUF
1.7 Operation of minor’s demat account
1.8 Facility for a Basic Services Demat Account (BSDA)
1.9 Change of Name in the Beneficial Owner (BO) Account
1.10 Fees/Charges to be paid by BO
1.11 Framework for automated deactivation of trading and demat accounts in cases of
inadequate KYCs
1.12 Safeguards to address the concerns of the investors on transfer of securities in
dematerialized mode
1.13 Delivery Instruction Slip (DIS) Issuance and Processing
1.14 Nomination for Eligible Trading and Demat Accounts
1.15 Transmission of shares
1.16 Simplification of procedure and standardization of formats of documents for
transmission of securities
1.17 Mode of Operation and Transmission of Securities in Joint Demat Accounts
1.18 Execution of Power of Attorney (PoA) by the Client in favour of the Stock Broker/ Stock
Broker and Depository Participant
1.19 Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for transfer of securities
towards deliveries / settlement obligations and pledging / re-pledging of securities
1.20 SMS alerts for demat accounts operated by Power of Attorney
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1.21 Exemption from sending quarterly statements of transactions by depository participants
(DPs) to clients in respect of demat accounts with no transactions and no security
balances
1.22 Discontinuation of sending transaction statements by depository participants to clients
1.23 Exemption to Depository Participants (DPs) from providing hard copies of transaction
statements to BOs
1.24 Consolidated Account Statement (CAS) for all securities assets
1.25 Generation and Dispatch of Consolidated Account Statement
1.26 Redressal of investor grievances through SCORES platform & Procedure for filing
investor grievances using SCORES
1.27 Framework for the process of accreditation of investors for the purpose of Innovators
Growth Platform
1.28 Common Application Form for Foreign Portfolio Investors
Section - 2: Depository Participants (DP) Related
2.1 Online Registration Mechanism for Securities Market Intermediaries
2.2 Supervision of branches of depository participants
2.3 Incentivisation to Depositories Participants (DPs)
2.4 Guidelines on Outsourcing of Activities by Intermediaries
2.5 Implementation of the Multilateral Competent Authority Agreement and Foreign
Account Tax Compliance Act
2.6 Interest and Dividend information reporting in case of Custodial Accounts Rule
114G(1)(e) of the Income Tax Rules, 1962
2.7 Printing of Grievances Redressal Mechanism on Delivery Instruction Form Book
2.8 Operationalization of Central KYC Records Registry (CKYCR)
2.9 Rollout of Legal Entity Template
2.10 e-KYC Authentication facility under section 11A of the Prevention of Money
Laundering Act, 2002 by Entities in the securities market for Resident Investors and
Entities permitted to undertake e-KYC Aadhaar Authentication service of UIDAI in
Securities Market
2.11 The Securities and Exchange Board of India (KYC Registration Agency) Regulations,
2011
2.12 Guidelines in pursuance of the SEBI KYC Registration Agency (KRA) Regulations, 2011
and for In-Person Verification (IPV)
2.13 Clarification on Know Your Client (KYC) Process and Use of Technology for KYC
2.14 Simplification and Rationalization of Trading Account Opening Process
2.15 Recording of Non Disposal Undertaking(NDU)in the Depository System
2.16 Recording of all types of Encumbrances in Depository system
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2.17 Cyber Security & Cyber Resilience framework for Depository Participants
2.18 Standard Operating Procedure (SOP) for handling cyber security incidents of
intermediaries and Categorisation of Intermediaries
2.19 CERT-In Advisory "Preventing Data Breaches / Data Leaks"
2.20 Reporting for Artificial Intelligence (AI) and Machine Learning (ML) applications and
systems offered and used by market intermediaries
2.21 Flashing a link to SCORES on the dashboard of Demat Accounts
2.22 Displaying of information regarding SEBI Complaint Redress System (SCORES) in the
website
2.23 Block Mechanism in demat account of clients undertaking sale transactions
2.24 Validation of Instructions for Pay-In of Securities from Client demat account to Trading
Member (TM) Pool Account against obligations received from the Clearing
Corporations
2.25 Monitoring and Periodical Reporting of the Compliance with The Requirements
Pertaining to ‘Security and Covenant Monitoring’ System Hosted by Depositories
2.26 Maintenance of a website by depository participants
2.27 Advisory for SEBI Regulated Entities (REs) regarding Cybersecurity best practices
2.28 Combating Financing of Terrorism (CFT) under Unlawful Activities (Prevention) Act,
1967 – Directions to Stock Exchanges, Depositories and all Registered Intermediaries
2.29 Framework For Adoption of Cloud Services by SEBI Regulated Entities (REs)
2.30 Cyber Security Operations Center for SEBI registered intermediaries
Section - 3: Issuer related
3.1 Charges to be paid by Issuers
3.2 Activation of International Securities Identification Number (ISIN) in case of IPOs
and additional issue of shares/ securities
3.3 Streamlining the Process of Rights Issue
3.4 Registrar and Share Transfer Agents
3.5 American Depository Receipts (ADRs)/Global Depository Receipts
3.6 Framework for issue of Depository Receipts (DRs)
3.7 Redemption of Indian Depository Receipts (IDRs) into Underlying Equity Shares
3.8 Electronic Clearing System (ECS) facility
3.8.1 Use of ECS for refund in public/ rights issues
3.8.2 Usage of electronic payment modes for making cash payment to the investors
3.9 Withdrawal by issuers from the depository
3.10 Further issue of shares under Section 43 of Companies Act and the Companies (Share
Capital and Debentures) Rules, 2014
3.11 Redressal of investor grievances through SCORES platform
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3.12 Streamlining issuance of SCORES Authentication for SEBI registered intermediaries
3.13 Clarification on applicability of regulation 40(1) of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 to open offers, buybacks and delisting
of securities of listed entities
3.14 Streamlining the Process for Acquisition of Shares pursuant to Tender-Offers made
for Takeovers, Buy Back and Delisting of Securities
3.15 Non-compliance with the Minimum Public Shareholding (MPS) requirements
3.16 Non-compliance with certain provisions of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 and the Standard Operating Procedure
for suspension and revocation of trading of specified securities
3.17 Investor grievances redressal mechanism – Handling of SCORES complaints by
stock exchanges and Standard Operating Procedure for non-redressal of grievances
by listed companies
3.18 Automation of Continual Disclosures under Regulation 7(2) of SEBI (Prohibition of
Insider Trading) Regulations, 2015 - System driven disclosures
3.19 A Trading Window closure period under Clause 4 of Schedule B read with
Regulation 9 of SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT
Regulations”) – Framework for restricting trading by Designated Persons (“DPs”) by
freezing PAN at security level
3.20 Reconciliation of Share Capital Audit
3.21 Streamlining the Process of Public Issue of Equity Shares and convertibles
Section - 4: Depositories Related
4.1 Online Registration Mechanism and Filing System for Depositories
4.2 Activity schedule for depositories for T+2 rolling Settlement
4.3 Introduction of T+1 rolling settlement on an optional basis
4.4 Settlement of transactions in case of holidays
4.5 Deadline time for accepting non pay-in related instructions
4.6 Approval of amendments to Bye Laws / Rules of Stock Exchanges and Depositories
4.7 Periodical Report – Grant of prior approval to Depository Participants
4.8 Preservation of Records
4.9 Participation as Financial Information Providers in Account Aggregator framework
4.10 Facilitating transaction in Mutual Fund schemes through the Stock Exchange
Infrastructure
4.11 Discontinuation of usage of pool accounts for transactions in units of Mutual Funds
on the Stock Exchange Platforms
4.12 RTA inter-operable Platform for enhancing investors’ experience in Mutual Fund
transactions / service requests
4.13 Pledge of Shares through depository system
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4.14 Margin obligations to be given by way of Pledge/ Re-pledge in the Depository
System
4.15 Foreign investments in infrastructure companies in securities markets
4.16 Designated e-mail ID for regulatory communication with SEBI
4.17 Designated e-mail ID for redressal of investor complaints
4.18 Redressal of complaints against Stock Exchanges and Depositories through SEBI
Complaints Redress System (SCORES)
4.19 Limitation period for filing an arbitration reference
4.20 Disclosure of investor complaints and arbitration details on Depository website
4.21 Disclosure of Complaints against the Depositories
4.22 Disclosure of regulatory orders and arbitration awards on Depository website
4.23 Disclosure of Investor Charter for Depositories and Depositor Participants
4.24 Guideline for websites of depositories
4.25 Arbitration / Appellate Arbitration fees on the remanded back matter for fresh
arbitration proceedings
4.26 Establishment of connectivity by Clearing House / Clearing Corporation (CH/CC)
with the Depository – Clarification
4.27 Issue of Master Circular by Stock Exchanges, Clearing Corporations and Depositories
4.28 Principles of Financial Market Infrastructures (PFMIs)
4.29 System and Network Audit of Market Infrastructure Institutions (MIIs)
4.29A Advisory on System and Network audit of MIIs
4.30 Testing Framework for the Information Technology (IT) systems of the Market
Infrastructure Institutions (MIIs)
4.31 Guidelines for Business Continuity Plan (BCP) and Disaster Recovery(DR)
4.32 IT (Information Technology) Governance for Depositories
4.33 Guidelines for inspection of Depository Participants (DPs) by Depositories
4.34 Dissemination of information on action taken against Trading Members/Depository
Participants on the website of Stock Exchanges / Depositories
4.35 Activity of Demat of warehouse receipts
4.36 Voting rights in respect of securities held in pool account
4.37 e-Voting Facility Provided by Listed Entities
4.38 Risk Management Policy at the Depositories
4.39 Code of Conduct & Institutional mechanism for prevention of Fraud or Market
Abuse
4.40 Outsourcing by Depositories
4.41 Cyber Security and Cyber Resilience framework of Depositories
4.42 Recommendations of high powered steering Committee
4.43 Database for Distinctive Number (DN) of Shares
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4.44 Ticker on Website - For Investor awareness
4.45 Separate mobile number/ email id for the clients of Depository Participants (DPs)
4.46 Comprehensive guidelines for Investor Protection Fund (IPF) and Investor Services
Fund (ISF) at Stock Exchanges and Depositories
4.47 Enhanced Supervision of Depository Participant
4.48 Amendment pursuant to comprehensive review of Grievance Redressal Mechanism
4.49 Investor Grievance Redressal Mechanism
4.50 Digital Mode of Payment
4.51 Framework for Innovation Sandbox
4.52 Revised Framework for Innovation Sandbox
4.53 Framework for Regulatory Sandbox
4.54 Monitoring of Foreign Investment limits in listed Indian companies
4.55 Disclosure of performance of CRAs on Stock Exchange and Depository website
4.56 Handling of Clients’ Securities by Trading Members/Clearing Members
4.57 Early Warning Mechanism to prevent diversion of client securities
4.58 Standard Operating Procedure in the cases of Trading Member / Clearing Member
leading to default
4.59 Mapping of Unique Client Code (UCC) with demat account of the clients
4.60 Reporting for Artificial Intelligence(AI) and Machine Learning (ML) applications and
systems offered and used by Market Infrastructure Institutions (MIIs)
4.61 Measures to expedite Dematerialisation of securities
4.62 Capacity Planning Framework for the Depositories
4.63 Trading supported by Blocked Amount in Secondary Market
4.64 Enhanced Due Diligence for Dematerialization of Physical Securities
4.65 Framework For Adoption Of Cloud Services By SEBI Regulated Entities (REs)
4.66 Committees at Market Infrastructure Institutions (MIIs)
4.67 Exemption from clubbing of investment limit for foreign Government agencies and
its related entities and Write-off of shares held by FPIs
4.68 Stealing of Customers data registered with NSE/ BSE
4.69 Advisory regarding remote access and telecommuting
4.70 Standard Operating Procedure (SOP) for Reporting of Technical Glitches by MIIs and
Imposition of “Financial Disincentive
4.71 Standard Operating Procedure for handling of Stock Exchange Outage and extension
of trading hours thereof
4.72 Standard Operating Procedure (SOP) for Reporting of Cyber Security Incidents/
breaches/ deficiencies by MIIs and Imposition of “Financial Disincentive”
4.73 Implementation of Cyber Capability Index
4.74 Advisory for SEBI Regulated Entities (REs) regarding Cybersecurity best practices
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4.75 Norms for Scheme of Arrangement by unlisted Stock Exchanges, Clearing
Corporations and Depositories
4.76 Procedures for ensuring compliance with Securities Contracts (Regulation) (Stock
Exchanges and Clearing Corporations) Regulations, 2018 (SECC Regulations) by
Listed Stock Exchanges
4.77 Measures to strengthen tracking and reporting of delay in pay-in/pay-out for rolling
settlement
4.78 Advisory on Security Patch Management Policy
4.79 Strengthening Resiliency of Websites of Stock Exchanges, Clearing Corporations and
Depositories (MIIs)
4.80 Bolstering Cyber Resiliency
4.81 Advisory on Cyber Audit and VAPT
4.82 Comprehensive Review of Cyber Security at Stock Exchanges, Clearing Corporations
and Depositories (MIIs)
4.83 Activity schedule for depositories for T+2 rolling Settlement
4.84 Advisories related to Technology
4.85 Wind-Down Plan of Depositories
4.86 Charges levied by Market Infrastructure Institutions – True to label
Annexures
List of Circulars & Communications
Schedule A
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Section 1: Beneficial Owner (BO) Accounts
1.1 Opening of BO Account by non-body corporates
1.1.1 Proof of Identity (PoI)
1.1.1.1 Permanent Account Number (PAN) to be the sole identification number for
all transactions in the securities market1
With effect from July 02, 2007, PAN is the sole identification number for all
transactions in the securities market, irrespective of the amount of transaction.
A copy of the PAN card with photograph may be accepted as Proof of Identity.
In this regard, intermediaries shall:-
a. Put necessary systems in place so that the databases of the clients and their
transactions are linked to the PAN details of the client.
b. Build necessary infrastructure to enable accessibility and query based on
PAN thereby enabling retrieval of all the details of the clients.
c. The registered intermediary shall verify the PAN of their clients online at
Income Tax website without insisting on the original or copy of PAN card.
d. The link to verify the PAN details on the website of the Income Tax
Department i.e.
http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp2.
1.1.1.2 PAN as the sole identification number for all transactions in the securities
market3
1.1.1.2.1 It has been decided to discontinue with the requirement of Unique
Identification Number (UIN) under the SEBI (Central Database of market
Participants Regulations), 2003 (MAPIN regulations)/circulars.
1.1.1.3 List of documents admissible as Proof of Identity4
Please refer SEBI Master Circular on Know Your Client(KYC) norms for the
securities market dated October 12, 2023.
1.1.2 Proof of Address (PoA)4
1.1.2.1 Please refer SEBI Master Circular on Know Your Client(KYC) norms for the
securities market dated October 12, 2023.
1 Reference: SEBI Circular MRD/DoP/Cir-5/2007 dated April 27, 2007
2 Income Tax Department since changed the link for verification to:
https://eportal.incometax.gov.in/iec/foservices/
3 Reference: SEBI Circular MRD/DoP/Cir-08/2007 dated June 25, 2007
4 Reference: SEBI Circular SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated October 12,
2023
10
1.1.2.2 DP shall ensure that all documents pertaining to proof of identity and proof of
address are collected from all the account holders.5 Submission of the aforesaid
documents is the minimum requirement for opening a BO Account. DPs must
verify the copy of the aforementioned documents with the original before
accepting the same as valid. While opening a BO Account, DPs shall exercise due
diligence6 while establishing the identity of the person to ensure the safety and
integrity of the depository system.
1.1.3 Clarification on voluntary adaptation of Aadhaar based e-KYC process7
SEBI has enabled Aadhaar based e-KYC service offered by UIDAI for KYC
verification. Intermediaries have sought clarifications from SEBI on certain
operational aspects of the same. It is clarified that for accessing the details enabling
client identification and authentication from UIDAI based on client authorisation, on
voluntary basis, intermediaries who utilize the services of KYC Service Agencies
(KSAs) would be registered as KYC User Agencies (KUA) with UIDAI.8
i. For entering into account based relationship, the client may provide the following
information to the intermediary:
a) Name
b) Aadhaar number
c) Permanent Account Number (PAN)
ii. The above information can be provided by the client electronically including
through any web enabled device.
iii. The intermediary shall perform verification of the client with UIDAI through
biometric authentication (fingerprint or iris scanning). Mutual Funds can also
perform verification of the client with UIDAI through One Time password (OTP)
received on client’s mobile number or on e-mail address registered with UIDAI
provided, the amount invested by the client does not exceed INR 50,000 per financial
year per Mutual Fund and payment for the same is made through electronic transfer
from the client’s bank account registered with that Mutual Fund.
iv. PAN of such client is to be verified from the income tax website.
v. After due validation of Aadhaar number provided by the client, the intermediary
(acting as KUA) shall receive the KYC information about the client from UIDAI
through KSA.
vi. The information downloaded from UIDAI shall be considered as sufficient
information for the purpose of KYC verification. The intermediary shall upload this
5 Reference: SEBI Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004
6 Reference: SEBI Circular Point 5 of part II on ‘Customer Due Diligence’ of Master SEBI Circular
no. ISD/AML/CIR-1/2008 dated December 19, 2008
7 Reference: SEBI Circular SEBI/MIRSD/09/2013 dated October 08, 2013
8 Reference: SEBI Circular CIR/MIRSD/29/2016 dated January 22, 2016
11
KYC information on the KRA system in terms of Securities and Exchange Board of
India {KYC (Know Your Client) Registration Agency} Regulations, 2011 (“KRA
Regulations”).
vii. In case material difference is observed either in the name (as observed in the PAN
vis-a-vis Aadhaar) or photograph in Aadhaar is not clear, the intermediary shall
carry out additional due diligence and maintain a record of the additional
documents sought pursuant to such due diligence.
viii. The records of KYC information so received shall be maintained by the intermediary
as per the SEBI Act, Regulations and various circulars issued thereunder.
ix. Further reference could also be made with SEBI Circular No.
SEBI/HO/MIRSD/SECFATF/P/CIR/2024/41 dated May 14, 2024 and
SEBI/HO/MIRSD/SECFATF/P/CIR/2024/79 dated June 06, 2024
1.1.4 Common and simplified norms for processing investor’s service requests by RTAs and
norms for furnishing PAN, KYC details and Nomination 9
Kindly refer para titled ‘Common and Simplified Norms for processing investor's
service request by RTAs and norms for furnishing PAN, KYC details and Nomination’
of https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-
registrars-to-an-issue-and-share-transfer-agents_83226.html dated May 07, 2024
(Master Circular for Registrars to an Issue and Share Transfer Agents)
1.1.5 SARAL Account Opening Form for resident individuals10
1.1.5.1 It is gathered that a majority of new investors in the securities market begin with
participation in the cash segment without obtaining various other facilities such as
internet trading, margin trading, derivative trading and use of power of attorney.
The account opening process can be simplified for such individual investors. With
a view to encourage their participation, it is, therefore, decided that such individual
investors can open a trading account and demat account by filling up a simplified
Account Opening Form ('AOF') termed as 'SARAL AOF' given at Annexure 1.
1.1.5.2 This form will be separately available with the intermediaries and can also be
downloaded from the Exchanges' and Depositories' website. The investors who
open account through SARAL AOF will also have the option to obtain other
facilities, whenever they require, on furnishing of additional information as per
prescribed regulations/circulars.
1.1.5.3 The standard set of documents viz. Rights and Obligations document, Uniform
Risk Disclosure Document and Guidance Note and documentary proof related to
identity and address as specified under Para 2.14, Para 1.1.1 and Para 1.1.2 shall
9 Reference: SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/37 dated March 16,
2023
10 Reference: SEBI Circular MIRSD/1/2015 dated March 04, 2015
12
continue to remain applicable. It is further clarified that the provisions laid down
under the PMLA, Prevention of Money Laundering (“PML”) Rules 2005, SEBI
Master Circular on Guidelines on Anti-Money Laundering (AML) Standards and
Combating the Financing of Terrorism (CFT) /Obligations of Securities Market
Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules
framed there under dated February 03, 2023 shall also continue to remain
applicable for set of individual investors mentioned in Para 1.1.5.1 above.
1.1.5.4 For these set of individual investors, it has been decided to simplify the
requirement of submission of ‘proof of address’. The matter has been examined in
the light of amendment to the PML Rules, 2005 and accordingly, the requirement
of submission of ‘proof of address’ is as follows:
1.1.5.4.1 Henceforth, individual investor may submit only one documentary
proof of address (either residence/correspondence or permanent) while
opening a trading account and / or demat account or while undergoing
updation.
1.1.5.4.2 In case the proof of address furnished by the said investor is not the
address where the investor is currently residing, the intermediary may
take a declaration of the residence/correspondence address on which
all correspondence will be made by the intermediary with the investor.
No proof is required to be submitted for such
correspondence/residence address. In the event of change in this
address due to relocation or any other reason, investor may intimate the
new address for correspondence to the intermediary within two weeks
of such a change. The residence/ correspondence address and any such
change thereof may be verified by the intermediary through ‘positive
confirmation’ such as
(i) acknowledgment of receipt Welcome Kit/ dispatch of
contract notes / any periodical statement, etc.
(ii) telephonic conversation;
(iii) visits, etc.
1.1.6 Uniform Know Your Client (KYC) Requirements for the Securities Markets 11
1.1.6.1 In case of stock brokers (and also for the stock brokers who are depository
participants), the account opening process for investors has been simplified vide
Para 2.14, KYC form capturing the basic details about the client has been prescribed
as Part I of the account opening form and additional information specific to dealing
in the stock exchange(s) are obtained in Part II of the form.
11 Reference: SEBI Circular MIRSD/SE/Cir-21/2011 dated October 05, 2011
13
1.1.6.2 With a view to bring about uniformity in securities markets, it has also been decided
that the same KYC form and supporting documents shall also be used by all
captioned SEBI registered intermediaries. The KYC form as given in Annexure 2
shall be filled by an investor at the account opening stage while dealing with any of
the above intermediaries. Additional details specific to the area of activity of the
intermediary being obtained now but not covered in the KYC form shall also be
obtained from the investors in Part II of the account opening form.
1.1.6.3 The additional information (Part II) shall be prescribed by depositories for their
depository participants and by Association of Mutual Funds in India (“AMFI”) for
all mutual funds. The portfolio managers, venture capital funds, and collective
investment schemes shall capture the additional information specific to their area of
activities, as considered appropriate by them. The intermediaries shall also continue
to abide by circulars issued by SEBI from time to time for prevention of money
laundering.
1.1.6.4 Please also refer SEBI Circular Nos. SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169
dated October 12, 2023, SEBI/HO/MIRSD/SECFATF/P/CIR/2024/41 dated May 14,
2024 and SEBI/HO/MIRSD/SECFATF/P/CIR/2024/79 dated June 06, 2024
1.1.7 Acceptance of third party address as correspondence address12
1.1.7.1 SEBI has no objection to a BO authorizing the capture of an address of a third party
as a correspondence address, provided that the DP ensures that all prescribed KYC
norms are fulfilled for the third party also. The DP shall obtain proof of identity
and proof of address for the third party. The DP shall also ensure that customer
due diligence norms as specified in Rule 9 of PML Rules, 2005 are complied with
in respect of the third party.
1.1.7.2 The depository participant should further ensure that the statement of transactions
and holding are sent to the BO’s permanent address at least once in a year.
1.1.7.3 However, the above provision shall not apply in case of PMS (Portfolio
Management Services) clients.
1.2 Exemptions from and clarifications relating to mandatory requirement of PAN
1.2.1 Mandatory requirement of Permanent Account Number (PAN)13
The demat accounts for which PAN details have not been verified are “suspended for
debit” until the same is verified with the DP. With effect from August 16, 2010 such
PAN non-compliant demat accounts were also "suspended for credit" other than the
credits arising out of automatic corporate actions. It was clarified that other credits
12 Reference: SEBI Circular CIR/MRD/DP/37/2010 dated December 14, 2010
13 Reference: SEBI Circular MRD/DP/22/2010dated July 29, 2010
14
including credits from IPO/FPO/Rights issue, off-market transactions or any
secondary market transactions would not be allowed into such accounts.
1.2.2 Central and State Government and officials appointed by Courts14
PAN card may not be insisted upon in case of transactions undertaken on behalf of
Central Government and/or State Government and where transactions are
conducted by officials appointed by Courts e.g. Official liquidator, Court receiver
etc.15
However DPs, before implementing the above exemption, shall verify the veracity of
the claim of the organizations by collecting sufficient documentary evidence in
support of their claim for such an exemption.
1.2.3 Investors in Sikkim16
Investors residing in the state of Sikkim are exempted from the mandatory
requirement of furnishing PAN card details for their demat accounts.17 DPs shall
verify the veracity of the claim of the investors that they are residents of Sikkim, by
collecting sufficient documentary evidence in support of their address.
1.2.4 UN entities and multilateral agencies exempt from paying taxes/ filing tax returns
in India18
UN entities/ multilateral agencies exempt from paying taxes/filing tax returns in
India are also exempt from the mandatory requirement of submitting their PAN card
details, subject to the DPs collecting documentary evidence in support of such claims.
1.2.5 FPIs/Institutional Clients19
Custodians shall verify the PAN card details of institutional clients with the original
PAN card and provide duly certified copies of such verified PAN details to the
brokers. This requirement is applicable in respect of institutional clients, namely,
FPIs, MFs, VCFs, FVCIs, Scheduled Commercial Banks, Multilateral and Bilateral
Development Financial Institutions, State Industrial Development Corporations,
Insurance Companies registered with IRDA and Public Financial Institution as
defined under section 2(72) of the Companies Act, 2013.
1.2.6 HUF, Association of Persons (AoP), Partnership Firm, unregistered Trust,
Registered Trust, Corporate Bodies, minors, etc.16
14 Reference: SEBI Circular MRD/DoP/Cir-20/2008 dated June 30, 2008
15 Reference: Rule 114C (1)(c) of Income Tax Rules
16 Reference: SEBI Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006
17 Reference: Hon’ble High Court of Sikkim judgment dated March 31, 2006
18 Reference: SEBI Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006
19 Reference: SEBI Circular MRD/DoP/Dep/SE/Cir-13/06 dated September 26, 2006
15
a) The BO account shall be in the name of natural persons, PAN card details of the
respective, HUF, AoP, Partnership Firm, Unregistered Trust, etc. shall be
obtained.
b) As regards Registered Trust, Corporate Bodies and minors, PAN of the
respective entities shall be obtained when accounts are opened in their respective
names.
In case of minors, account shall be obtained in the name of minor but operated
through guardian and PAN shall be obtained of minor as well as guardian.
1.2.7 Difference in the name of investors.16
DPs can collect the PAN card proof as submitted by the account holder subject to the
DPs verifying the veracity of the claim of such investors where minor differences are
observed in the name mentioned on the PAN card by collecting sufficient
documentary evidence in support of the identity of the investors.20
1.2.8 NRI/PIOs21
Citizens of India residing outside India, foreign citizens and other persons (like
companies/ trusts/ firms) having no office of their own in India may obtain PAN
card based on the copy of their passport as ID proof and a copy of passport/ bank
account in the country of residence as address proof, based on the Directorate of
Income Tax (Systems) guidelines.22
1.3 Simplification of demat account opening process23
1.3.1 SEBI has taken a number of steps in the recent past to simplify the account opening
and KYC process in the securities markets. In continuation of the efforts in the same
direction, it has now been decided in consultation with both the depositories and
associations of stock brokers and DPs to further simplify and rationalize the demat
account opening process.
1.3.2 The existing Beneficial Owner-Depository Participant Agreements shall be replaced
with a common document “Rights and Obligations of the Beneficial Owner and
Depository Participant” (Annexure 3) . The document annexed herewith shall be
mandatory and binding on all the existing and new clients and DPs. This will
harmonize the account opening process for trading as well as demat account. This
will also rationalize the number of signatures by the investor, which he is required
to affix at present on a number of pages.
20 Reference: SEBI Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004
21 Reference: SEBI Circular MRD/DoP/Dep/SE/Cir-17/06 dated October 27, 2006
22 Reference: Income Tax (Systems) PAN SEBI Circular No. 4 dated October 11, 2006
23 Reference: SEBI Circular SEBI/MIRSD/ 12/2013 dated December 04, 2013
16
1.3.3 The DP shall provide a copy of Rights and Obligations Document to the BO and shall
take an acknowledgement of the same. They shall ensure that any clause in any
voluntary document neither dilutes the responsibility of the depository participant
nor it shall be in conflict with any of the clauses in this document, rules, bye-laws,
regulations, notices, guidelines and circulars issued by SEBI and the depositories
from time to time. Any such clause introduced in the existing as well as new
documents shall stand null and void.
1.3.4 In consultation with market participants, with a view to simplify the account
opening kit, SEBI has decided that DP shall make available this document “Rights
and Obligations of the Beneficial Owner and Depository Participant” to the clients,
either in electronic or physical form, depending upon the preference of the client as
part of account opening kit. In case the documents are made available in electronic
form, DP shall maintain the logs of the same. It is also reiterated that
Depositories/DP shall continue to make the aforesaid document available on their
website and keep the clients informed about the same.24
1.4 Guidelines for online closure of demat accounts25
1.4.1 Depositories are advised to issue guidelines under Para 1.4.4 to their participants
offering online account opening, informing them to make available the facility for
online closure of demat accounts from August 01, 2021.
1.4.2 Deleted.
1.4.3 Depositories shall also advise their participants to inform their clients regarding the
availability of facility for online closure of demat accounts through emails, SMS,
weekly / fortnightly / monthly newsletters etc. The procedure for online closure of
demat accounts shall be prescribed in such communications.
1.4.4 Client shall be entitled to close the demat account through online mode without
mandatorily giving any reasons to the DP. Clients shall not be restricted from
requesting, through online mode or offline mode, for the closure of demat account
maintained with the DP, subject to the compliance requirements as stipulated by
SEBI / Depository from time to time.
1.4.4.1 Online closure of demat accounts shall be made available for the clients who
have opened their accounts offline or online, by the DPs that provide various
Depository related services in online mode. Those DPs which do not provide any
services online and do not open accounts online may not be required to offer
online closure of demat accounts.
1.4.4.2 Account closure for account with balance shall be done only through web portal
/ app of DP through secured access by way of client specific user ID and
24 Reference: SEBI Circular CIR/MIRSD/64/2016 dated July 12, 2016
25 Reference: SEBI MIRSD email dated July 15, 2021
17
password (in case of internet clients) and the request send through emails, SMS,
other messaging apps, etc. shall not be entertained by the DP. As the KYC
process requires e-sign post which demat accounts can be opened by the DP, for
online closure of accounts with balance also, client shall be required to e-sign the
form (using Aadhaar based online electronic signature service) to be verified by
the DP in accordance with guidelines as stipulated by SEBI / Depositories from
time to time.
1.4.4.3 In case of clients having demat accounts with nil balances can be closed by the
DPs on the basis of emails received from the registered email ID of the demat
account holder.
1.4.4.4 Once the application for closure of demat account is received, the DP shall
intimate to the client on registered email id and / or mobile number (on both if
available) about the receipt of closure request. A confirmation regarding the
request made shall be sought from the client by way of OTP sent on the email id
and / or mobile number updated in its source account (to be closed account).
1.4.4.5 The request for demat account closure shall include target account details (in
case of request for closure of demat account having security balances is made)
where the client intends to shift the securities.
1.4.4.6 Client would have to upload the scan / photograph of his / her signature
alongwith Client Master Report (CMR) of the target account digitally signed by
official of the target DP (CMR applicable in case of account having security
balances). Filled Account Closure form alongwith uploaded ink-signature of the
client and CMR as uploaded, would be displayed in one single file to the client,
subsequent to which, client shall then be required to e-sign the form (using
Aadhaar based online electronic signature service) alongwith the documents
and submit the same for further processing. The requirement of obtaining a CMR
will be exempted if the DP is able to verify the target demat account details (i.e.
sole holder’s name and PAN should match perfectly) directly from the
Depository electronically.
1.4.4.7 If the DP authorises the request received, the account will get closed in the
Depository system. If the DP rejects the client requests received, the DP shall
inform the reason for such rejection to the client.
1.4.4.8 In case the target account of the client specified in the account closure form is not
its own account i.e. not the same PAN both in source and target accounts, as per
the extant requirements, it will be necessary for the client to submit an off-market
transfer instruction delivery instruction slip for execution of such transfers along
with the requirement of entering OTP as provided by the Depository.
1.4.4.9 After the closure of demat account by the DP, the same shall be intimated to the
client through electronic mode enclosing the CMR & Transaction cum Holding
18
Statement of the closed account.
1.4.4.10 DP shall maintain and store system logs of the closure instructions and e-signed
electronic requests (uneditable) received in electronic form in a secured manner
and the same shall be subject to 100% internal audit.
1.4.4.11 Notwithstanding any such closure of demat account, all rights, liabilities and
obligations of the parties arising out of or in respect of transactions entered into
prior to the closure of demat account shall continue to subsist and vest in / be
binding on the respective parties or his / its respective heirs, executors,
administrators, legal representatives or successors, as the case may be.
1.4.4.12 The above process shall be applicable in case of individual client accounts with
single holder (without pledge/freeze/pending demat requests balances) and the
closure requests accepted through above mechanism shall be considered as a
valid client request and DPs / Depository shall not be held liable for acting on
such requests.
1.4.4.13 Depositories shall put in place a complaint redressal mechanism for dealing with
complaints related to online closure of demat accounts.
1.5 Guidelines on Identification of Beneficial Ownership26
(A) For Clients other than Individuals or Trusts , (B) For client which is a trust , (C)
Exemption in case of listed companies, please refer framework for Identification of
Beneficial Ownership SEBI Circular SEBI/HO/MIRSD/SEC-FATF/P/CIR/2023/0170
dated October 13, 2023 and Clients due diligence measures under SEBI Master Circular
SEBI/HO/MIRSD/MIRSD-SEC-5/P/CIR/2023/022 dated February 03, 2023 and
amendments thereto dated June 16, 2023 .
(D)Applicability for foreign investors:
Intermediaries dealing with foreign investors’ viz., Foreign Portfolio Investors, Sub
Accounts and Qualified Foreign Investors, may be guided by the clarifications issued
vide SEBI circular CIR/MIRSD/11/2012 dated September 5, 2012, for the purpose of
identification of beneficial ownership of the client.
1.6 Opening of demat account in case of HUF27
It is noted that as per law, in case of HUF, shares can be held in the name of Existing
Karta on behalf of HUF. Therefore, HUF demat accounts can be opened in the name of
Existing Karta but not in the name of Deceased Karta and HUF entity.
26 Reference: SEBI Circular CIR/MIRSD/2/2013 dated January 24, 2013
27 Reference: SEBI Letter SEBI/HO/MRD/DP/OW/2016/25739/1 & 25740/1 dated September 14,
2016 and SEBI Letter MRD/DSA1/OW/4946/2018 and 4947/2018 dated February 14, 2018
19
After examining the issues regarding difference in opening of HUF demat account and
procedure adopted in the event of death of Karta of HUF, it has been decided that
opening of HUF demat account and procedure adopted in the event of death of Karta of
HUF shall be as per the following guidelines28:
1.6.1 Opening of HUF Demat Account
a) The Demat account shall be opened in the name of HUF entity as the name of
entity appears on the PAN Card. The BO account should also mention the
name of the Karta of the HUF. The PAN details of both the HUF entity and
Karta of HUF shall be submitted to the DP.
1.6.2 Death of Karta
a) In the event of death of Karta of HUF, the name of the deceased Karta in the
BO account shall be replaced by the new Karta of the HUF who in such a case
shall be eldest coparcener in the HUF or a coparcener who is appointed as
Karta by an agreement reached amongst all the coparceners of the HUF29.
b) The new Karta shall submit the new list of members, a notarized copy of death
certificate of the deceased Karta and a no objection from the surviving
members of the HUF for him/her to act as Karta of the HUF.
c) In the event of death of Karta of HUF, the existing BO account need not to be
closed and the same account may continue. The death of Karta shall not mean
that the securities lying in the BO account of the HUF is deemed to have
divided among coparceners as if the partition has taken place.
1.6.3 Partition of HUF
a) A total or partial partition shall be recognized only if a claim to that effect is
made by one or more coparceners.
b) An intimation of a total or partial partition shall be accompanied by a signed
letter mentioning the names of the members and their confirmation of a
partition having taken place.
c) In case of partial partition of the HUF, if desired by one or more coparceners,
the new Karta shall transfer shares to the said coparceners who seek partition
and the BO account of the HUF shall continue. The account of such
coparceners shall be treated as their individual accounts.
28 Reference: SEBI Letter SEBI/HO/MRD/DP/OW/2016/25739/1 & 25740/1 dated September
14, 2016
29 Reference: SEBI Circular SEBI/HO/MRD/MRD-POD-2/P/CIR/2022/114 dated August 26,
2022
20
d) In case of full partition of the HUF, the shares shall be divided amongst all the
coparceners in the manner specified by the applicant subject to fulfilment of
Para 1.6.3 (c) above and the HUF account shall cease to exist.
1.7 Operation of minor’s demat account30
Under The Hindu Minority and Guardianship Act, 1956, permission of Court is required
in the case of transfer by a natural guardian of immovable property of a minor. However,
shares are not immovable properly. Section 2(7) of Sale of Goods Act, 1930 includes
shares within the definition of "goods''. Neither the Indian Contract Act, 1872 nor the
Sale of Goods Act, 1930 provide for transfer by sale or otherwise by guardian /natural
guardian of goods/movable property in the name of minor to the effect that permission
of court is required in the matter of such transfer. In the case of accounts of minor in
banks also, the guardian is entitled to open, operate and even close the account also. The
DP account can, therefore, be operated by a natural guardian without any order from
the court though the same is neither expressly permitted nor prohibited.
1.8 Facility for a Basic Services Demat Account (BSDA)31
1.8.1 Facility for a Basic Services Demat Account (BSDA) Please refer SEBI Circular
SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/91 dated June 28, 2024.
1.8.2 Eligibility for BSDA Please refer SEBI Circular SEBI/HO/MIRSD/MIRSD-
PoD1/P/CIR/2024/91 dated June 28, 2024.
1.8.3 Option to open BSDA Please refer SEBI Circular SEBI/HO/MIRSD/MIRSD-
PoD1/P/CIR/2024/91 dated June 28, 2024
1.8.4 Charges Please refer SEBI Circular SEBI/HO/MIRSD/MIRSD-
PoD1/P/CIR/2024/91 dated June 28, 2024
1.8.5 Holding Statement32&33:
a. DP shall send at least one annual statement of holding through email in
respect of accounts with no transaction and nil balance even after the account
has remained in such state for one year. However, where an investor does not
wish to receive the holding statement through email, option shall be given to
the investor to receive the same in physical form at the registered address.
30 Reference: SEBI Letter SEBI SMDRP/NSDL/4615 /2000 dated March 13, 2000
31 Reference: SEBI Circular CIR/MRD/DP/22/2012 dated August 27, 2012
32 Reference: SEBI Circular CIR/MRD/DP/21/2014 dated July 01, 2014
33 Reference: SEBI Circular SEBI/HO/MRD-Pod2/CIR/P/2024/93 dated July 01, 2024
21
b. One annual statement of holding shall be sent in respect of remaining
accounts through email unless specifically opted by the investor to receive the
same in physical form.
1.8.6 Rationalisation of services with respect to regular accounts.34
In partial modification of the earlier directions, the following rationalisation
measures shall be available for regular demat accounts:
i. Accounts with zero balance and nil transactions during the year: DP shall send
at least one annual statement of holding through email in respect of accounts
with no transaction and nil balance even after the account has remained in such
state for one year.
ii. Accounts which become zero balance during the year: For such accounts, no
transaction statement may be sent for the duration when the balance remains nil.
However, an annual statement of holding shall be sent to the BO through email.
iii. Accounts with credit balance: For accounts with credit balance but no
transactions during the year, half yearly statement of holding for the year shall
be sent to the BO through email.
In all above three scenarios, the BO shall be given the option to receive the
statements in physical form.
1.9 Change of Name in the Beneficial Owner (BO) Account35
1.9.1 In order to simplify the procedure of change of name in individual Beneficial
Owner’s (BO) account, it has been decided that an individual BO may be allowed to
change his/ her name, subject to the submission of following documents at the time
of change of name of the individual in the BO account.
i. In case of change in name on account of marriage following documents shall be
submitted:
Marriage Certificate or copy of Passport showing husband’s name or publication
of name change in official gazette.
ii. In case of change in name on account of reasons other than marriage Publication
of name change in official gazette.
In case of change of name of an individual residing in the State of Karnataka and
Punjab, for reasons other than marriage, the same may be allowed for the
individual in the BO account subject to the submission of following documents36:
a) Request letter for change of name;
34 Reference: SEBI Circular SEBI/HO/MRD-Pod2/CIR/P/2024/93 dated July 01, 2024
35 Reference: SEBI Circular CIR/MRD/DP/27/2012 dated November 01, 2012
36 Reference: SEBI Circular CIR/MRD/DP/158/2018 dated December 27, 2018
22
b) Sworn affidavit executed before the Notary Public/ Magistrate of First Class/
Executive Magistrate mentioning the reason for change of name and his
complete address;
c) Paper publication in one local newspaper and one national newspaper; and
d) KYC in changed name
iii. In case of change in father’s name:
Publication of name change in official gazette
1.9.2 The Depository Participants (DPs) shall collect the self-attested copies of above
documents and maintain the same in their records after verifying with the original
document.
1.10 Fees/Charges to be paid by BO
1.10.1 Account opening, custody and credit of securities37
i. No investor shall pay any charge towards opening of a Beneficial Owner (BO)
Account except for statutory charges as applicable;
ii. No investor shall pay any charge for credit of securities into his/her BO account;
and
iii. No custody charge shall be levied on any investor who is opening a BO account.
1.10.2 Account Closure38
No Account closure charges shall be levied on BO on the closure of any account.
1.10.3 Transfer of a BO Account39
No charges shall be levied by a depository on any DP and by a DP on any BO when
the BO transfers all the securities lying in his account to another branch of the same
DP or to another DP under the same depository or another depository, provided the
BO Account(s) at transferee DP and at transferor DP are one and the same, i.e.
identical in all respects. In case the BO Account at transferor DP is a joint account,
the BO Account at transferee DP should also be a joint account in the same sequence
of ownership.
1.10.4 Account Maintenance Charges collected upfront on annual/ half yearly basis on
demat accounts40
i. In the event of closing of the demat account or shifting of the demat account from
one DP to another, the AMC collected upfront on annual/half yearly basis by
the DP, shall be refunded by the DP to the BO for the balance of the quarter/s.
37 Reference: SEBI Circular MRD/DoP /SE/Dep/Cir-4/2005 dated January 28, 2005
38 Reference: SEBI Circular D&CC/FITTC/CIR - 12/2002 dated October 30, 2002
39 Reference: SEBI Circular MRD/DoP/Dep/Cir-22 /05 dated November 9, 2005
40 Reference: SEBI Circular MRD/DP/20/2010 dated July 1, 2010
23
For instance, in case annual AMC has been paid by the BO and if the BO
closes/shifts his account in the first quarter, he shall be refunded the amount of
the balance 3 quarters i.e. 3/4th of the AMC. Likewise, if a BO closes/shifts his
account in the third quarter, he shall be refunded the amount for the balance one
quarter i.e. 1/4th of the AMC.
ii. For the purpose of the above requirement the year shall begin from the date of
opening of the account in quarterly rests.
iii. The above requirements shall be applicable to all existing and new accounts held
with DPs which collect annual/half yearly upfront AMC. It is clarified that the
above requirements shall not be applicable to those DPs who collect quarterly/
monthly AMC.
1.10.5 Dissemination of tariff/charge structure of DPs on the website of depositories 41
i. DPs shall submit to their depository the tariff/charge structure every year, latest
by 30th April, and also inform the depository the changes in their tariff/charge
structure as and when they are effected with a view to enabling the BOs to have
a comparative analysis of the tariff/charge structure of various DPs.
ii. For this purpose depositories shall put in place necessary systems and
procedures including formats, periodicity, etc. for collection of necessary data
from the DPs and dissemination of the same on their website which would
enable the investors to have a comparative analysis of the tariff/charge structure
of various DPs.
1.11 Framework for automated deactivation of trading and demat accounts in cases of
inadequate KYCs42
1.11.1 SEBI has, vide various circulars issued from time to time, mandated that addresses
form a critical part of the KYC procedures. Thus, every address recorded for the
purpose of compliance with KYC procedure has to be accurate. An intermediary has
to update the address from time to time. However, it has been observed that in some
cases accurate/updated addresses of clients are not maintained. This is borne out of
the fact that when SEBI issues any notices, etc. during the course of any enforcement
proceedings on such addresses, the same remain unserved.
1.11.2 To ensure that the client furnishes accurate/updated details of address and to ensure
that KYC details are correct, the following framework involving stock exchanges
(except Commodity Derivatives Exchanges) and depositories (hereinafter
collectively referred to as “the MIIs”) is proposed
1.11.2.1 Where SEBI instructs MIIs to serve any Show Cause Notice (“SCN”) or order
issued by SEBI, the MIIs shall arrange to physically deliver the same to the
41 Reference: SEBI Circular MRD/Dep/Cir- 20/06 dated December 11, 2006
42 Reference: SEBI Circular SEBI/HO/EFD1/EFD1_DRA4/P/CIR/2022/104 dated July 29, 2022
24
entity. The MIIs shall forward the signed acknowledgement of its receipt by the
concerned addressee or its authorized representative to SEBI within a period
of 30 working days from the date of receipt of such instructions from SEBI. If
none of the MIIs are –
a. able to deliver the SCN or order, as the case may be, at any of the
addresses mentioned in the KYC records linked to any trading/demat
account of the entity; and
b. obtain a signed acknowledgement of its receipt from the entity or its
authorized representative,
then all MIIs shall deactivate all trading and demat accounts i.e. implement a
restraint/freeze on debit and credit (except for corporate actions) of all trading
and demat accounts of the entity based on the entity’s Permanent Account
Number (PAN), within 5 working days from the last unsuccessful delivery
report. MIIs shall send an email/SMS to the entity before deactivation. It is
clarified that if one of the MIIs is able to deliver the SCN or order, as the case
may be, to the entity and obtain signed acknowledgement, then none of the
accounts of the entity shall be deactivated. However, the MIIs, through their
registered intermediaries, shall ensure that the KYC records linked to all
accounts held by the entity, are updated, accurate and confirm the new KYC
details to the concerned KYC Registration Agency (KRA).
1.11.2.2 Pending pay-in and pay-out obligations and open positions may be permitted
to be settled, squared off or closed out, as the case may be, while enforcing the
deactivation of trading/demat accounts of such entities.
1.11.2.3 MIIs shall ensure that they communicate the details of the deactivation along
with reasons thereof to the respective registered intermediary. They shall also
ensure that the reasons for the deactivation are displayed in a clear and
unambiguous manner, when the entity attempts to transact using his
trading/demat account.
1.11.2.4 Subject to the above, the MIIs shall ensure that the deactivated accounts are not
used for dealing in securities market in any manner whatsoever.
1.11.2.5 The concerned entity may place a request to the registered intermediaries with
which the entity holds a trading/demat account, seeking re-activation of
trading/demat accounts along with –
a. the correct proof of address; and,
b. signed acknowledgement of receipt of the SCN or order, as the case may
be, issued by SEBI referred to in Para 1.11.2.1.
1.11.2.6 The registered intermediary shall update the KYC records as per the extant
norms and forward the copy of the signed acknowledgement of receipt of the
SCN or order, as the case may be, to the concerned MII for re-activation of the
25
trading/demat account.
1.11.2.7 The concerned MII shall re-activate all trading accounts/demat accounts of the
entity after ensuring that –
a. the entity has provided a signed acknowledgement of receipt of the SCN /
order passed by SEBI; and,
b. confirmation is received from the registered intermediary that the KYC
records are compliant with the extant norms.
The concerned MII shall also inform the above to all other MIIs for
reactivation of trading/ demat accounts. The signed acknowledgement
shall be forwarded by the registered intermediary to the MII within 2
working days from the date of its receipt from the entity and the MII shall
in turn forward it to SEBI within 2 working days of its receipt.
1.11.2.8 The process of reactivating the accounts by the MIIs shall not exceed more than
5 working days after receipt of request from the entity along with all the
documents mentioned in Para 1.11.2.5.
1.11.2.9 The framework would also apply to joint accounts. However, before
deactivating the joint accounts, MIIs shall endeavor to contact the entity
through the co-holders for delivery of SCN / order simultaneously by
following the same process outlined above.
1.11.2.10 The MIIs may deviate from the above provisions in appropriate cases, where
the compliance with the framework is hampered due to factors beyond the
control of the entity. In such cases, the MIIs shall record the reasons for
deviating from the mandate of the framework and communicate the same to
SEBI within 2 working days of such deviation.
1.11.2.11 MIIs shall have a mechanism for exchange of information and coordination
amongst themselves for the purpose of implementing the framework described
above. MIIs shall submit a consolidated report indicating status of requests
forwarded by SEBI, on a monthly basis.
1.11.2.12 MIIs shall advise their registered intermediaries to ensure updation of KYC
records at regular intervals as per the extant norms. This framework shall be in
addition to and not in derogation of any Circular issued by SEBI or the MIIs
with respect to KYC requirements or Unique Client Code norms.
1.11.2.13 An Illustration covering different scenarios is as follows:
Illustration:
Scenarios: Delivery failure, deactivation of accounts and reactivation of accounts.
SEBI advises the exchanges and depositories to serve the SCN on August 01, 2022. For
the sake of simplicity, it is assumed that the entity has accounts with BSE, NSE, NSDL
and CDSL with each account having different addresses* and that all calendar days are
26
working days. The following table depicts the course of action that would be taken by
the MIIs depending on the circumstances.
Action BSE NSE NSDL CDSL
Physical delivery BSE makes NSE NSDL CDSL
of SCN multiple attempts the attempts the attempts the
attempts on service on service on service on
different August 15, August 16, August 16,
addresses from 2022 and the 2022 and the 2022 and the
August 1, 2022 to delivery delivery delivery
August 25, 2022 becomes becomes becomes
and the delivery unsuccessfu unsuccessfu unsuccessfu
at all locations l. l. l.
becomes
unsuccessful.
Sharing of The The details The details The details
information on detail of of of
delivery status s of unsuccessful unsuccessfu unsuccessfu unsuccessfu
delivery shall be l l l
shared with all delivery delivery delivery
the other MIIs on shall be shall be shall be
August 25, 2022. shared with shared with shared with
all the other all the other all the other
MIIs on MIIs on MIIs on
August 15, August 16, August 16,
2022. 2022. 2022.
Implementing Freeze shall be implemented by MIIs by August 30, 2022 as the
freeze on debit last date of unsuccessful delivery is August 25, 2022. Before
and credit of deactivation of the accounts, the MIIs shall once again reach out
trading/demat to the entity through email/SMS. Pursuant to the
accounts (within implementation of freeze, the reasons for the same shall be
5 working days informed to the concerned intermediary and also displayed to
from the last the entity when an attempt is made to transact through his
unsuccessful trading/demat account.
delivery report)
Submission of The entity NA NA NA
updated KYC by submits updated
the entity KYC and the
signed
27
acknowledgeme
nt to the
registered
intermediary of
BSE through
which it is
registered, on
October 01, 2022.
The intermediary
shall intimate the
same to BSE
immediately. The
registered
intermediary
shall also confirm
the updated KYC
details to the
concerned KRA.
Action BSE NSE NSDL CDSL
Re-activation of BSE shall re- All the demat and trading accounts shall be
demat and activate the re-activated within October 06, 2022.
trading accounts accounts and
(within 5 inform all the
working days other MIIs within
from the date of October 06, 2022
request by the as the date of
entity) submission of
request by the
entity was
October 01, 2022.
Forwarding of Signed NA NA NA
signed acknowledgeme
acknowledgeme nt shall be
nt forwarded to BSE
to MII within 2 by the registered
working days intermediary
from date of within October
receipt by the 03, 2022 as the
28
intermediary date of receipt of
signed
acknowledgeme
nt by the
intermediary was
October 01, 2022.
Forwarding of In case the signed NA NA NA
signed acknowledgment
acknowledgeme is received by
nt to SEBI within BSE on October
2 working days 10, 2022, the same
from the date of shall be
receipt by MII forwarded to
SEBI within
October 12, 2022.
*-In cases where the same address is available across the MIIs, the MIIs shall co-ordinate
among themselves and share the information to avoid duplication of efforts.
1.12 Safeguards to address the concerns of the investors on transfer of securities in
dematerialized mode43&44
Following safeguards shall be put in place to address the concerns of the investors
arising out of transfer of securities from the BO Accounts:
1.12.1 The depositories shall give more emphasis on investor education particularly with
regard to careful preservation of Delivery Instruction Slip (“DIS”) by the BOs. The
Depositories may advise the BOs not to leave “blank or signed” DIS with the
Depository Participants (DPs) or any other person/entity.
1.12.2 The DPs shall not accept pre-signed DIS with blank columns from the BO(s).
1.12.3 If the DIS booklet is lost / stolen / not traceable by the BO, the same must be
intimated to the DP immediately by the BO in writing. On receipt of such intimation,
the DP shall cancel the unused DIS of the said booklet
1.12.4 The DP shall also ensure that a new DIS booklet is issued only on the strength of the
DIS instruction request slip (contained in the previous booklet) duly complete in all
respects, unless the request for fresh booklet is due to loss, etc..
43 Reference: SEBI Circular SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007 and SEBI
Circular SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008
44 Reference:SEBI Circular SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/18 dated March 20,2024
29
Further, in case the request for issuance of the DIS booklet is received in an
inactive/dormant account, the DIS booklet shall be delivered at the registered
address of the BO as per the DP records. This shall help ensure the genuineness of
the BO’s request for issuance of DIS. Such issuance of DIS shall be authorized by the
Compliance Officer or any other designated senior official of the DP.
Explanation:
1. An inactive/dormant account refers to an account where no transaction has taken place for
a continuous period of 12 months.
2. Further, a credit in the demat account through purchase of securities and voluntary
corporate action (such as subscribing to rights issues/ systematic investment plans (SIPs) of
mutual funds, etc.) may be considered as a transaction for assessing the dormancy. However,
any credit due to involuntary corporate action (such as bonus, split, etc.) may not be
considered as transaction for assessing the dormancy.
1.12.5 The DPs shall not issue more than 10 loose DIS to one account holder in a financial
year (April to March). The loose DIS can be issued only if the BO(s) come in person
and sign the loose DIS in the presence of an authorised DP official.
1.12.6 The DPs shall put in place appropriate checks and balances with regard to
verification of signatures of the BOs while processing the DIS.
1.12.7 The DPs shall cross check with the BOs under exceptional circumstances before
acting upon the DIS.
1.12.8 The DPs shall mandatorily verify with a BO before acting upon the DIS, in case of an
inactive/dormant account, whenever any security in such account is transferred at
a time. Such verification by DPs shall require a recorded phone call on registered
number of BO by the authorized official of the DP and shall be additionally
authorised by the Compliance officer or any other designated senior official of the
DP. The authorized official of the DP verifying such transactions with the BO, shall
record the details of the process, date, time, etc., of the verification on the instruction
slip under his/her signature.
However, in case of active accounts, such verification may be made mandatory only
if the BO account has 5 or more International Securities Identification Number
(ISINs) and all such ISIN balances are transferred at a time. The authorized official
of the DP verifying such transactions with the BO, shall record the details of the
process, date, time, etc., of the verification on the instruction slip under his signature.
Such verifications shall be additionally authorized by the Compliance Officer or any
other designated senior official of the DP.
30
1.13 Delivery Instruction Slip (DIS) Issuance and Processing45
Standardization of DIS
i. Depositories shall ensure that the DIS is standardized across all DPs in terms of:
a) Serial Numbering of DIS so as to enable system level checks by the depositories.
b) Layout and size of DIS so as to facilitate scanning and easy retrievability of
records
ii. The DIS must bear a pre-printed serial number, DP ID, and a pre-printed/pre
stamped Beneficial Owner (BO) ID. The depositories shall prescribe a standard
method of serial numbering and ensure that serial numbers issued by a DP are
unique within the DP-ID.
iii. DPs shall ensure that
a) same DIS shall not be used for giving both market and off-market instructions
b) a single DIS shall not be used for transactions with multiple execution dates.
Monitoring of DIS
iv. Upon issuance of DIS booklets or loose slips to BO, the DPs shall make available
immediately the following details of the DIS to the depository system electronically:
a) the DIS serial number
b) BO ID
c) date of issuance, and
d) any other relevant details as decided by the depository
v. At the time of execution of DIS, DPs shall enter the serial number of DIS in the
depository system for validation. The depositories shall make provisions in their
systems to facilitate the same.
vi. In respect of all the transfer instructions on a DIS, Depositories shall validate the
serial number of DIS and shall ensure that no instructions accompanied by a used
DIS or unissued DIS are processed.
Scanning of DIS
vii. DPs shall scan every DIS executed during a day along with all Annexures/
Computer printouts, if any, by the end of the next working day in the manner
specified by the depository.
viii. The depositories shall ensure that their DPs have adequate infrastructure, systems
and processes to implement scanning, storage and transfer of the scanned DIS in
the manner specified by the depositories.
ix. The depositories shall ensure that the systems set up by the DPs maintain proper
records of all scanned DIS images including audit trails for changes made, if any
45 Reference: SEBI Circular SEBI/MRD/DOP/01/2014 dated January 07, 2014
31
and put in place adequate checks and procedures to prevent unauthorized changes
to scanned DIS.
x. Depositories shall utilize the archived scanned images for off-site inspection.
xi. Above provisions shall not be applicable for the instructions received from the
clients by the DPs electronically in a manner approved by the Depository.
xii. Once a new DIS booklet is issued to a BO as per above provisions, old DIS issued to
such a BO shall not be accepted by the DP. A period of one month may be given for
receipt of DIS by the BOs. The DPs may accept old DIS during this transit period.46
All the measures listed above under the head 'Monitoring of DIS' shall be made
applicable to the DIS issued as per the provisions of this circular.
 Acceptance of Delivery Instructions through Online Portal of Depository
Participants47:
While accepting delivery instructions through online portal of Depository
Participants, Depositories need to ensure that investors' authentication is being
carried-out by them, through Password/TPIN, along-with OTP, both generated at
Depositories end, for each transaction.
 Acceptance of Delivery Instruction through Online Portal of Intermediaries48
1. Towards safeguarding the interest of the investors and market eco-system, it is
decided that in case Depositories intend to permit acceptance of Delivery Instruction
through Online Portal of intermediaries, they need to ensure that risk entailed by
introducing such system are curtailed. Towards this end, Depositories need to
incorporate necessary risk containment measures, including the following:
a) e-DIS facility: The facility of e-DIS has to be true to its label and should: -
i. Necessarily capture all details that are otherwise being captured in
physical DIS, including settlement number and actual quantity to be
transferred in case of on-market transfers.
ii. be an instruction towards actual transfer of securities to meet obligation
for a single settlement number/date.
b) Pre-trade authorization/ mandate: If Depositories wish to continue providing
the facility of enabling receipt of pre-trade mandate from client, Depositories
should ensure the following:
i. The mandate should be received from client authorizing the concerned
intermediary to transfer specific securities for meeting on-market
settlement obligation only.
46 Reference: SEBI Circular CIR/MRD/DP/22/2014 dated July 04, 2014
47 Reference: SEBI Letter MRD2/DDAP/OW/P/2020/19443/1 dated November 13, 2020
48 Reference: SEBI Letter SEBI/HO/MRD2/DDAP/OW/P/2021/1632/1 dated January 20, 2021
32
ii. Such mandate should necessarily pertain to a single settlement
number/settlement date.
iii. Client shall be required to authorize each mandate valid for a single
settlement number / settlement date, by way of OTP and PIN/password,
both generated at Depositories end.
iv. Prior to executing actual transfer of securities based on details provided
by intermediary, Depositories need to match and confirm the same with
mandate provided by client as well as client-wise net delivery obligation
arising from the trades executed on exchanges, as provided by Clearing
Corporation to Depositories for each settlement date.
v. Securities transferred on the basis of mandate provided by client should
be credited only to client's trading member pool account.
vi. Intermediary providing this facility have enabled its client to revoke /
cancel the mandate provided by them.
vii. Depositories shall take necessary steps to safeguard themselves from any
liability arising under Section 16 of Depositories Act, 1996, for losses, if
any, to the beneficiary owner on account of providing this facility.
In addition, within the specified timeline, Depositories need to
communicate to Stock Brokers/DPs providing this facility to ensure that
mandate provided by client adheres to requirement specified in
Annexure 4.
c) Depository shall ensure they have taken all risk containment measures while
permitting intermediaries to provide e-DIS facility and pre-trade
authorization/mandate, including cyber-security related measures.
d) Depository shall make necessary amendments to its bye-laws/business
rules/operating instruction of Depositories for implementation of above
directions.
e) Further, the requirement for Depositories to carry-out authentication based on
Password/TPIN, along-with OTP, both generated at Depositories end for each
transaction/ e-DIS transfer instruction/pre-trade mandate, shall continue to
apply.
2. Implementation:
a. No new intermediary shall be permitted to provide e-DIS / mandate facility,
until Depositories ensure necessary checks and balances are in place, including
implementation of above directions.
b. Further, for existing Intermediaries to continue providing e-DIS/mandate
facility, Depositories need to ensure that necessary checks and balances are in
place, including implementation of the above directions
33
3. Depositories are further advised to place before their respective Boards the
measures taken by the Depository towards incorporating the directions as stated
above. Further, a compliance report, along-with comments of the board of
Depository, with regard to implementation of abovementioned SEBI directions
shall be submitted to SEBI.
1.14 Nomination for Eligible Trading and Demat Accounts49
1.14.1 Section 72 of Companies Act, 2013 provides for nomination by a holder of securities.
1.14.2 Investors opening new demat account(s) on or after October 01, 2021, shall have the
choice of providing nomination or opting out nomination, as follows;
a. The format for nomination form is given in Annexure 5
b. Opt out of nomination through ‘Declaration Form’, as provided in
Annexure 6
These forms at Annexure 5 or 6, would also be applicable for any subsequent
change/withdrawal of nomination.
1.14.3 In this regard, DPs shall activate new Demat accounts from October 01, 2021, only
upon receipt of above formats.
1.14.4 The nomination and Declaration form shall be signed under wet signature of the
account holder(s) and witness shall not be required. However, if the account
holder(s) affixes thumb impression (instead of wet signature), then witness signature
shall be required in the forms.
1.14.5 The on-line nomination and Declaration form may also be signed using e-Sign
facility and in that case witness will not be required.
1.14.6 DPs shall ensure that adequate systems are in place including for providing for eSign
facility and also take all necessary steps to maintain confidentiality and safety of
client records.
1.14.7 Non-submission of ‘choice of nomination’ shall not result in freezing of Demat
Accounts as well as Mutual Fund Folios.
1.14.8 Securityholders holding securities in physical form shall be eligible for receipt of any
payment including dividend, interest or redemption payment as well as to lodge
grievance or avail any service request from the RTA even if 'choice of nomination' is
not submitted by these securityholders.
1.14.9 Payments including dividend, interest or redemption payment withheld presently
by the Listed Companies/RTAs, only for want of ‘choice of nomination’ shall be
processed accordingly.
49 Reference: SEBI Circular SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601 dated July 23, 2021 and
SEBI Circular SEBI/HO/MIRSD/POD-1/P/CIR/2024/81 dated June 10,2024
34
1.14.10 All new investors/unitholders shall continue to be required to mandatorily provide
the 'Choice of Nomination' for demat accounts/ MF Folios (except for jointly held
Demat Accounts and Mutual Fund Folios).
1.14.11Further, to encourage the existing investors to provide 'choice of nomination', a
popup shall be provided on web/mobile application/platform to the investors by
Depositories and Depository Participants while logging into the Demat Account and
by AMCs (including MF RTAs, other platforms providing online execution services)
while logging into their MF account. This pop-up may be shown only to those clients
whose MF Folios/demat account(s) do not have 'choice of nomination'.
1.14.12DPs shall encourage their clients to update ‘choice of nomination’ by sending a
communication on fortnightly basis by way of emails and SMS to all such demat
accounts wherein the ‘choice of nomination’ is not captured. The communication
shall provide guidance through which the client can provide his/her ‘choice of
nomination’.
1.14.13On the basis of representations received from various stakeholders, it has been
decided that50:
a. existing investors who have not submitted nomination details and intend to
submit their nomination or opt out of nomination (not to nominate any one)
may also be allowed to do so by way of two factor authentication (2FA) login
on the internet trading platform for Depository Participants providing such
services.
1.15 Transmission of shares51
The depositories may permit upto three nominees with respect to a demat account.
1.16 Simplification of procedure and standardization of formats of documents for
transmission of securities52
Please refer SEBI Master Circular SEBI/HO/MIRSD/PoD1/CIR/2024/37 dated May
07, 2024
1.17 Mode of Operation and Transmission of Securities in Joint Demat Accounts53
1.17.1 In order to streamline the process of operation and make the transmission of
securities more efficient and investor friendly in demat accounts with joint holding,
50 Reference: SEBI Circular SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/23 dated February
24, 2022
51 Reference: SEBI Letter MRD//DP/OW/23881/2015 dated August 24, 2015 regarding multiple
nominations in demat accounts
52 Reference: SEBI Circular SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/65 dated May 18,
2022 and SEBI Master Circular SEBI/HO/MIRSD/PoD1/CIR/2024/37 dated May 07, 2024
53 Reference: SEBI Letter MRD2/DDAP/OW/P/2021/8568/1 dated April 09, 2021 and letter
SEBI/HO/MIRSD/POD-1/OW/P?2024/20944/1 dated June 26, 2024.
35
it has been decided to incorporate the following changes:
Mode of Operation
i. The account holders having joint accounts may opt for any of the following
modes of operation of the account by submitting a specific instruction at the
time of demat account opening or at a later date duly signed by all account
holders:
a. 'Jointly'
b. 'Anyone of the holders or survivor(s)'
ii. The mode of operation mentioned at Para 1.17.1 (i) (a) and (b) above may be
used only for the following transactions:
a. Transfer of securities including Inter-Depository Transfer.
b. Pledge / hypothecation / margin pledge / margin re-pledge (creation,
closure and invocation, and confirmation thereof, as applicable).
c. Freeze/unfreeze account and/or the ISIN and/or specific number of
securities
However, for all other transactions at joint account level, the mode of operation
shall be as mentioned at Para 1.17.1 (i) (a) above.
iii. All existing joint account holders may also opt for one of the modes of operation
mentioned at Para 1.17.1 (i).
iv. Where the account holders have opted for operation by any one holder, the
instructions above should be duly signed by any one of the holders of the joint
account.
v. With regard to all transactions undertaken in the client demat account,
signature of one of the client account holders as per the mandate of operation
given by the joint account holders shall discharge the Participant in full vis-à-
vis all account holders.
vi. Each client account holder in the demat account is jointly and severally liable
towards the Participant for all the commitments entered into by
himself/herself or by any other client account holder or authorized
representative (within the limits of power).
vii. Any account holder may opt out from the facility as mentioned at Para 1.17.1 (i)
by giving signed written request to the Participant and upon receipt of such a
request by Participant, the Participant shall change the mode of operation to
'jointly'.
viii. In case of a joint account, all communications shall be sent to the first holder
and shall be deemed to have been duly sent to all client account holders.
Participant shall give an option to all joint account holders that communication
will be sent to all joint account holders in electronic mode, if desired by account
holders.
36
ix. This arrangement of mode of operation shall not expire on the death of one of
the client holders, if the surviving account holders choose the option to
continue with the same account by deletion of deceased's name. Depository
shall retain an audit trail in the system to record the deletion of the client
holders due to death.
x. In the event of the death of any of the joint holders, the liability of the Participant
shall be discharged provided the Participant:
a. Exercises due care and caution in establishing the identity of the survivor(s)
and the fact of death of the joint demat account holder, through appropriate
documentary evidence;
b. Reasonably satisfies itself that there is no order from any competent court
brought to its notice restraining the transmission of the deceased's
securities; and
c. Makes it clear to the survivor(s) that he/she would be receiving the
securities of the deceased as a trustee of the legal heirs of the deceased
demat account holder.
1.18 Execution of Power of Attorney (PoA) by the Client in favour of the Stock Broker/ Stock
Broker and Depository Participant54
Kindly refer para titled ‘Execution of Power of Attorney (PoA) by the Client in favour of
the Stock Broker/ Stock Broker and Depository Participant’ of
https://www.sebi.gov.in/legal/master-circulars/aug-2024/master-circular-for-stock-
brokers_85605.html dated August 09, 2024 (Master circular for Stock Brokers)
1.19 Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for transfer of securities
towards deliveries / settlement obligations and pledging / re-pledging of securities55
Kindly refer para titled ‘Execution of Demat Debit and Pledge Instruction (DDPI) for
transfer of securities towards deliveries / settlement obligations and pledging / re-
pledging of securities’ of https://www.sebi.gov.in/legal/master-circulars/aug-2024/master-circular-
for-stock-brokers_85605.html dated August 09, 2024 (Master circular for Stock Brokers)
1.20 SMS alerts for demat accounts operated by Power of Attorney56
Subscription to SMS Alert facility for depository accounts operated through Power of
Attorney (POA) would be mandatory except in case of accounts held by non-individuals,
54 Reference: SEBI Circular CIR/MRD/DMS/13/2010 dated April 23,
2010, CIR/MRD/DMS/28/2010 dated August 31, 2010 and
SEBI/HO/MIRSD/DOP/CIR/P/2020/158 dated August 27, 2020
55 Reference: SEBI Circular SEBI/HO/MIRSD/DoP/P/CIR/2022/44 dated April 04, 2022 and
SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/137 dated October 06, 2022
56 Reference: SEBI Letter SEBI/MRD/DEP/VM/169784 /09 dated July 15, 2009
37
foreign nationals, and NRIs.
1.21 Exemption from sending quarterly statements of transactions by depository
participants (DPs) to clients in respect of demat accounts with no transactions and no
security balances57
1.21.1 SEBI has provided exemption to DPs from sending quarterly transaction statements
to the clients in respect of demat accounts with no transactions and no security
balances subject to the following conditions:
1.21.1.1 Client is informed in advance that it will not be receiving Transaction
Statements for such accounts till there are any transactions or security holdings
in the demat account.
1.21.1.2 KYC and PAN requirement in respect of all such depository accounts are
complied.
1.21.1.3 No Annual Maintenance Charges are levied for such an account.
1.21.1.4 Information which is required to be disseminated by Participants by way of a
note in the Transaction Statements will be required to be communicated to such
Clients separately.
1.21.1.5 The Internal Auditor of the Participant shall comment in its internal audit report
on compliance of the aforesaid requirements.
1.22 Discontinuation of sending transaction statements by depository participants to
clients58
SEBI has allowed discontinuation of sending transaction statements by depository
participants to clients subject to the following conditions:
1.22.1 Transaction statements were returned undelivered on three consecutive occasions.
1.22.2 The DP maintains proof that the transaction statements were returned undelivered.
1.22.3 The transaction statements were returned undelivered for the reasons which clearly
establish that the client no longer resides at the given address (i.e. party shifted,
etc.) and not for other reasons (i.e. residence/office closed, address incorrect,
address incomplete, etc.).
1.22.4 The DP informs such clients through alternative means (such as outbound call, SMS
or email) that their transaction statements are returned undelivered and they need
to communicate the proper (new) address.
1.22.5 The DP ensures that on receipt of request for address modification from the client
as per the stipulated procedure, the dispatch of transaction statements is
57 Reference: SEBI Letter MRD/CDSL/VM/155773/2009 dated February 27, 2009,
MRD/DoP/NSDL/VM/168994 /2009 dated July 07, 2009 and MRD/CDSL/VM/168989 /2009
dated July 07, 2009
58 Reference: SEBI Letter MRD/NSDL/VM/158886 /2009 dated March 30, 2009
38
immediately started. Further, the DP ensures that transaction statements that were
not delivered and dispatched due to discontinuation are also dispatched
immediately without any additional cost to the clients.
1.23 Exemption to Depository Participants (DPs) from providing hard copies of transaction
statements to BOs59
DPs are permitted to provide transaction statements and other documents to the BOs
under Digital signature, as governed under the Information Technology Act, 2000,
subject to the DP entering into a legally enforceable arrangement with the BO for the said
purpose. While such practice in the aforesaid manner shall be deemed to be in
compliance of the provisions of the Regulation 60 of Securities and Exchange Board of
India (Depositories & Participants) Regulations, 2018 (“DP Regulations”); if the BO is
still desirous of receiving statements in hard copy, DPs shall be duty bound to provide
the same.
1.24 Consolidated Account Statement (CAS) for all securities assets60
1.24.1 It has been decided to enable a single consolidated view of all the investments of
an investor in Mutual Funds (MF) and securities held in demat form with the
Depositories.
1.24.2 The Depositories and the Asset Management Companies (AMCs)/ MF-RTAs shall
put in place systems to facilitate generation and dispatch of single Consolidated
Account Statements (CAS) for investors having MF investments and holding demat
accounts. AMCs/ RTAs shall share the requisite information with the Depositories
on monthly basis to enable generation of CAS.
1.24.3 Consolidation of account statement shall be done on the basis of PAN. In case of
multiple holding, it shall be PAN of the first holder and pattern of holding. Based
on the PANs provided by the AMCs/MF-RTAs, the Depositories shall match their
PAN database to determine the common PANs and allocate the PANs among
themselves for the purpose of sending CAS. For PANs which are common between
depositories and AMCs, the Depositories shall send the CAS. In other cases (i.e.
PANs with no demat account and only MF units holding), the AMCs/ MF-RTAs
shall continue to send the CAS to their unit holders as is being done presently in
compliance with the Regulation 36(4) of the Securities and Exchange Board of India
(Mutual Funds) Regulations, 1996 (“Mutual Fund Regulations”).
1.24.4 In case investors have multiple accounts across the two depositories, the depository
having the demat account which has been opened earlier shall be the default
depository which will consolidate details across depositories and MF investments
59 Reference: SEBI Circular MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004
60 Reference: SEBI Circular CIR/MRD/DP/31/2014 dated November 12, 2014
39
and dispatch the CAS to the investor. However, option shall be given to the demat
account holder by the default depository to choose the depository through which
the investor wishes to receive the CAS.
1.24.5 The CAS shall be generated on a monthly basis. The AMCs /MF-RTAs shall
provide the data with respect to the common PANs to the depositories within three
days from the month end. The depositories shall then consolidate and dispatch the
CAS within ten days from the month end.
1.24.6 The CAS shall be dispatched by email to all the investors whose email addresses are
registered with the Depositories and AMCs/MF-RTAs. However, where an investor
does not wish to receive CAS through email, option shall be given to the investor to
receive the CAS in physical form at the address registered with the Depositories and
the AMCs/MF-RTAs. The depositories shall also intimate the investor on quarterly
basis through the SMS mode specifying the email id on which the CAS is being
sent61.
1.24.7 A proper grievance redressal mechanism shall be put in place by the depositories
and the AMCs/MF-RTAs which shall also be communicated to the investors
through CAS. AMCs/MF-RTAs would be accountable for the authenticity of the
information provided through CAS in respect of MF investments and timely
sharing of such information with Depositories. The Depositories would be
responsible for the timely dispatch of CAS to the investors serviced by them and
the demat account information.
1.24.8 The depositories and the AMCs/ MF-RTAs shall ensure data integrity and
confidentiality in respect of the shared information. The depositories shall utilise
the shared data only for the purpose of providing CAS and shall not share the same
with their DPs. Where Depositories are required to share such information with
unregulated entities like third party printers, the depositories shall enter into
necessary data confidentiality agreements with them.
1.24.9 The CAS shall be implemented from the month of March 2015 with respect to the
transactions carried out during the month of February 2015.
1.24.10 If an investor does not wish to receive CAS, an option shall be given to the investor
to indicate negative consent. Depositories shall accordingly inform investors in
their statements from the month of January 2015 about the facility of CAS and give
them information on how to opt out of the facility if they do not wish to avail it.
1.24.11 Where such an option is exercised, the concerned depository shall inform the
AMC/MF-RTA accordingly and the data with respect to the said investor shall not
be shared by the AMC/MF-RTA with the depository.
1.24.12 If there is any transaction in any of the demat accounts of the investor or in any of
61 Reference: SEBI Circular SEBI/HO/MRD-PoD2/CIR/P/2024/93 dated July 01, 2024
40
his mutual fund folios, then CAS shall be sent to that investor through email on
monthly basis. In case there is no transaction in any of the mutual fund and demat
accounts then CAS with holding details shall be sent to the investors by email on
half yearly basis. However, where an investor does not wish to receive CAS through
email, option shall be given to the investor to receive the CAS in physical form at the
address registered with the Depositories and the AMCs/MF-RTAs.62
1.24.13 Further, the holding statement dispatched by the DPs to their BOs with respect to
the dormant demat accounts with balances shall also be dispatched half-yearly.
1.24.14 The dispatch of CAS by the depositories to BOs would constitute compliance by
the Depository Participants with requirement under Regulation 60 of DP
Regulations, to provide statements of account to the BOs as also compliance by the
MFs with the requirement under Regulation 36(4) of the Mutual Funds
Regulations.
1.25 Generation and Dispatch of Consolidated Account Statement63
1.25.1 It is noted that depositories are providing CAS to all investors having a demat
account and mutual fund holdings in statement of account (SOA) form only. Further,
in scenarios where investor is having mutual fund holdings in demat form or having
only demat account with no mutual fund holdings, no consolidation is happening
across depositories and depositories are providing separate holding statements for
themselves.
1.25.2 In this regard, it is felt that extending the requirement of generation and dispatch of
CAS to abovementioned scenarios will truly enable a single consolidated view of all
the investments of investor in mutual fund and securities held in demat form with
the depositories.
1.25.3 In view of the above, depositories are advised to coordinate with each other so as to
provide for generation and dispatch of CAS for the above mentioned scenarios.
1.25.4 Further, all the other provisions and modalities with regards to generation and
dispatch of CAS will remain the same as prescribed in Para 1.24 above.
1.26 Redressal of investor grievances through SEBI Complaints Redress System (SCORES)
platform64 & Procedure for filing and redressal of investor grievances using SCORES65
Kindly refer SEBI Circular SEBI/HO/OIAE/IGRD/P/CIR/202 dated November 07,
2022 (Master Circular on the redressal of investor grievances through the SEBI
62 Reference: SEBI Circular SEBI/HO/MRD-PoD2/CIR/P/2024/93 dated July 01, 2024
63 Reference: SEBI Letter SEBl/HO/MRD/SEC-2/P/OW/2023/00001730411 dated April 28,
2023
64 Reference: SEBI Circular CIR/OIAE/1/2014 dated December 18, 2014
65 Reference: SEBI Circular SEBI/HO/OIAE/IGRD/CIR/P/2018/58 dated March 26, 2018
41
Complaints Redress System (SCORES) platform) and SEBI Circular
SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2023/191 dated December 20,2023
1.27 Framework for the process of accreditation of investors for the purpose of Innovators
Growth Platform66
Kindly refer para titled ‘Framework for the process of recognition of investors for the
purpose of Innovators Growth Platform’ of SEBI Circular SEBI/HO/CFD/PoD-
2/P/CIR/2023/00094 dated June 21, 2023 (Master Circular for Issue of Capital and
Disclosure Requirements)
1.28 Common Application Form for Foreign Portfolio Investors67
Kindly refer para titled ‘Guidance for Processing of FPI applications by DDPs’ of
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-circular-for-
foreign-portfolio-investors-designated-depository-participants-and-eligible-foreign-
investors-_83689.html dated May 30, 2024 (Master Circular for Foreign Portfolio
Investors, Designated Depository Participants and Eligible Foreign Investors)
66 Reference: SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2019/67 dated May 22, 2019
67 Reference: SEBI Circular IMD/FPI&C/CIR/P/2020/022 dated February 04, 2020
42
Section 2: Depository Participants Related
2.1 Online Registration Mechanism for Securities Market Intermediaries68
Kindly refer para titled ‘Online Registration Mechanism for Securities Market
Intermediaries’ of https://www.sebi.gov.in/legal/master-circulars/aug-2024/master-circular-for-
stock-brokers_85605.html dated August 09, 2024 (Master circular for Stock Brokers)
2.2 Supervision of branches of DPs69
2.2.1 To ensure compliance with Regulation 63 of the DP Regulations, and Clause 19 of
the Code of Conduct for Participants contained in the Third Schedule to the DP
Regulations the DP shall ensure that it has satisfactory internal control procedure
in place, inclusive of their branch offices. DPs are therefore required in terms of
these provisions to put in place appropriate mechanisms to ensure that their
branches are carrying on the operations in compliance with the applicable
regulations, bye-laws, etc. DPs are also required to put in place suitable internal
control systems to ensure that all branches exercise due diligence in opening
accounts, complying with KYC requirements, in ensuring systems safety in
complying with client instructions, manner of uploading client instructions, in
verifying signatures and maintaining client records, etc. DPs shall also ensure that
the branches are suitably integrated.
2.2.2 Depositories shall examine the adequacy of the above mechanisms during their
inspections of DPs. The Depositories shall also carry out surprise inspections/
checks of the DP branches apart from the regular inspection of the DPs.
Depositories shall also put in place appropriate mechanisms for monitoring
opening of branches by DPs.
2.3 Incentivisation to Depository Participants (DPs)70
2.3.1 In order to compensate the DPs towards the cost of opening and maintaining Basic
Services Demat Accounts (BSDA), the depositories shall pay an incentive of Rs.
100/- for every new BSDA opened by their participants in other than the top 15
cities. The name of the top 15 cities is given in following table:
Top 15 Cities
Sr. Name of the City
No.
1. MUMBAI
2. DELHI
3. AHMEDABAD
68 Reference: SEBI Circular SEBI/HO/MIRSD/MIRSD1/CIR/P/2017/38 dated May 02, 2017
69 Reference: SEBI Circular MIRSD/DPS-III/Cir-9/07 dated July 3, 2007
70 Reference: SEBI Circular CIR/MRD/DP/18/2015 dated December 09, 2015
43
4. BANGALORE
5. CHENNAI
6. PUNE
7. KOLKATA
8. THANE
9. HYDERABAD
10. SURAT
11. JAIPUR
12. VADODARA
13. SECUNDARABAD
14. RAJKOT
15. INDORE
2.3.2 The incentive shall be provided at the end of the financial year only with respect to
the new BSDA opened during the financial year and which displayed at least one
credit in the account during the Financial Year.
2.3.3 Further to the above, in order to incentivize the DPs to promote holdings in the
BSDA, the depositories may pay an amount of Rs. 2 per folio per ISIN to the
respective depository participant (DP), in respect of the ISIN positions held in Basic
Service Demat Accounts (BSDA). This incentive may be provided with respect to
all the BSDA in the depository system.
2.3.4 The reimbursement to DPs shall be made on an annual basis at the end of the
financial year. The depositories shall set aside 20% of the incremental revenue
received from the Issuers to manage the aforementioned incentive schemes. Any
surplus after reimbursement of DPs may be utilized by the depositories to
incentivize the DPs for promoting financial inclusion, encouraging investors to
hold Mutual Fund Units in demat account and familiarizing the investors on the
OFS mechanism, etc.
2.3.5 The incentive scheme may be reviewed after a period of two years.
2.4 Guidelines on Outsourcing of Activities by Intermediaries71
2.4.1 SEBI Regulations for various intermediaries require that they shall render at all
times high standards of service and exercise due diligence and ensure proper care
in their operations.
2.4.2 It has been observed that often the intermediaries resort to outsourcing with a view
to reduce costs, and at times, for strategic reasons.
71 Reference: SEBI Circular CIR/MIRSD/24/2011 dated December 15, 2011 and SEBI Circular
SEBI/HO/ MIRSD/POD-1/P/CIR/2024/110 dated August 09,2024
44
2.4.3 Outsourcing may be defined as the use of one or more than one third party – either
within or outside the group - by a registered intermediary to perform the activities
associated with services which the intermediary offers.
2.4.4 Principles for Outsourcing
The risks associated with outsourcing may be operational risk, reputational risk,
legal risk, country risk, strategic risk, exit-strategy risk, counter party risk,
concentration and systemic risk. In order to address the concerns arising from the
outsourcing of activities by intermediaries based on the principles advocated by
the IOSCO and the experience of Indian markets, SEBI had prepared a concept
paper on outsourcing of activities related to services offered by intermediaries.
Based on the feedback received on the discussion paper and also discussion held
with various intermediaries, stock exchanges and depositories, the principles for
outsourcing by intermediaries have been framed. The principles for outsourcing
are given below at Para 2.4.7 to Para 2.4.14. These principles shall be followed by
all intermediaries registered with SEBI.
2.4.5 Activities that shall not be Outsourced
The intermediaries desirous of outsourcing their activities shall not, however,
outsource their core business activities and compliance functions. A few examples
of core business activities may be – execution of orders and monitoring of trading
activities of clients in case of stock brokers; dematerialisation of securities in case of
depository participants; investment related activities in case of Mutual Funds and
Portfolio Managers. Regarding Know Your Client (KYC) requirements, the
intermediaries shall comply with the provisions of KRA Regulations and
Guidelines issued thereunder from time to time.
2.4.6 Other Obligations
i. Reporting To Financial Intelligence Unit (FIU) - The intermediaries shall be
responsible for reporting of any suspicious transactions / reports to FIU or any
other competent authority in respect of activities carried out by the third parties.
ii. Need for Self-Assessment of existing Outsourcing Arrangements – In view of
the changing business activities and complexities of various financial products,
intermediaries shall conduct a self-assessment of their existing outsourcing
arrangements within a time bound plan* and bring them in line with the
requirements of the guidelines/principles
*not later than six months from the date of issuance of original circular i.e. December 15, 2011
PRINCIPLES FOR OUTSOURCING FOR INTERMEDIARIES
2.4.7 An intermediary seeking to outsource activities shall have in place a
comprehensive policy to guide the assessment of whether and how those activities
can be appropriately outsourced. The Board / partners (as the case may be)
45
{hereinafter referred to as the “the Board”} of the intermediary shall have the
responsibility for the outsourcing policy and related overall responsibility for
activities undertaken under that policy.
2.4.7.1 The policy shall cover activities or the nature of activities that can be outsourced,
the authorities who can approve outsourcing of such activities, and the selection
of third party to whom it can be outsourced. For example, an activity shall not
be outsourced if it would impair the supervisory authority’s right to assess, or
its ability to supervise the business of the intermediary. The policy shall be based
on an evaluation of risk concentrations, limits on the acceptable overall level of
outsourced activities, risks arising from outsourcing multiple activities to the
same entity, etc.
2.4.7.2 The Board shall mandate a regular review of outsourcing policy for such
activities in the wake of changing business environment. It shall also have
overall responsibility for ensuring that all ongoing outsourcing decisions taken
by the intermediary and the activities undertaken by the third-party, are in
keeping with its outsourcing policy.
2.4.8 The intermediary shall establish a comprehensive outsourcing risk management
programme to address the outsourced activities and the relationship with the third
party.
2.4.8.1 An intermediary shall make an assessment of outsourcing risk which depends
on several factors, including the scope and materiality of the outsourced activity,
etc. The factors that could help in considering materiality in a risk management
programme include-
2.4.8.1.1 The impact of failure of a third party to adequately perform the activity on
the financial, reputational and operational performance of the intermediary
and on the investors / clients;
2.4.8.1.2 Ability of the intermediary to cope up with the work, in case of non-
performance or failure by a third party by having suitable back-up
arrangements;
2.4.8.1.3 Regulatory status of the third party, including its fitness and probity status;
2.4.8.1.4 Situations involving conflict of interest between the intermediary and the
third party and the measures put in place by the intermediary to address
such potential conflicts, etc.
2.4.8.2 While there shall not be any prohibition on a group entity / associate of the
intermediary to act as the third party, systems shall be put in place to have an
arm’s length distance between the intermediary and the third party in terms of
infrastructure, manpower, decision-making, record keeping, etc. for avoidance
of potential conflict of interests. Necessary disclosures in this regard shall be
made as part of the contractual agreement. It shall be kept in mind that the risk
46
management practices expected to be adopted by an intermediary while
outsourcing to a related party or an associate would be identical to those
followed while outsourcing to an unrelated party.
2.4.8.3 The records relating to all activities outsourced shall be preserved centrally so
that the same is readily accessible for review by the Board of the intermediary
and / or its senior management, as and when needed. Such records shall be
regularly updated and may also form part of the corporate governance review
by the management of the intermediary.
2.4.8.4 Regular reviews by internal or external auditors of the outsourcing policies, risk
management system and requirements of the regulator shall be mandated by the
Board wherever felt necessary. The intermediary shall review the financial and
operational capabilities of the third party in order to assess its ability to continue
to meet its outsourcing obligations.
2.4.9 The intermediary shall ensure that outsourcing arrangements neither diminish its
ability to fulfil its obligations to customers and regulators, nor impede effective
supervision by the regulators.
2.4.9.1 The intermediary shall be fully liable and accountable for the activities that are
being outsourced to the same extent as if the service were provided in-house.
2.4.9.2 Outsourcing arrangements shall not affect the rights of an investor or client
against the intermediary in any manner. The intermediary shall be liable to the
investors for the loss incurred by them due to the failure of the third party and
also be responsible for redressal of the grievances received from investors arising
out of activities rendered by the third party.
2.4.9.3 The facilities / premises / data that are involved in carrying out the outsourced
activity by the service provider shall be deemed to be those of the registered
intermediary. The intermediary itself and Regulator or the persons authorized
by it shall have the right to access the same at any point of time.
2.4.9.4 Outsourcing arrangements shall not impair the ability of SEBI/SRO or auditors
to exercise its regulatory responsibilities such as supervision/inspection of the
intermediary.
2.4.10 The intermediary shall conduct appropriate due diligence in selecting the third
party and in monitoring of its performance.
2.4.10.1 It is important that the intermediary exercises due care, skill, and diligence in the
selection of the third party to ensure that the third party has the ability and
capacity to undertake the provision of the service effectively.
2.4.10.2 The due diligence undertaken by an intermediary shall include assessment of:
2.4.10.2.1 third party’s resources and capabilities, including financial soundness, to
perform the outsourcing work within the timelines fixed;
47
2.4.10.2.2 compatibility of the practices and systems of the third party with the
intermediary’s requirements and objectives;
2.4.10.2.3 market feedback of the prospective third party’s business reputation and
track record of their services rendered in the past;
2.4.10.2.4 level of concentration of the outsourced arrangements with a single third
party; and
2.4.10.2.5 the environment of the foreign country where the third party is located.
2.4.11 Outsourcing relationships shall be governed by written contracts / agreements /
terms and conditions (as deemed appropriate) {hereinafter referred to as
“contract”} that clearly describe all material aspects of the outsourcing
arrangement, including the rights, responsibilities and expectations of the parties
to the contract, client confidentiality issues, termination procedures, etc.
2.4.11.1 Outsourcing arrangements shall be governed by a clearly defined and legally
binding written contract between the intermediary and each of the third parties,
the nature and detail of which shall be appropriate to the materiality of the
outsourced activity in relation to the ongoing business of the intermediary.
2.4.11.2 Care shall be taken to ensure that the outsourcing contract:
2.4.11.2.1 clearly defines what activities are going to be outsourced, including
appropriate service and performance levels;
2.4.11.2.2 provides for mutual rights, obligations and responsibilities of the
intermediary and the third party, including indemnity by the parties;
2.4.11.2.3 provides for the liability of the third party to the intermediary for
unsatisfactory performance/other breach of the contract
2.4.11.2.4 provides for the continuous monitoring and assessment by the
intermediary of the third party so that any necessary corrective measures
can be taken up immediately, i.e., the contract shall enable the intermediary
to retain an appropriate level of control over the outsourcing and the right
to intervene with appropriate measures to meet legal and regulatory
obligations;
2.4.11.2.5 includes, where necessary, conditions of sub-contracting by the third-
party, i.e. the contract shall enable intermediary to maintain a similar
control over the risks when a third party outsources to further third parties
as in the original direct outsourcing;
2.4.11.2.6 has unambiguous confidentiality clauses to ensure protection of
proprietary and customer data during the tenure of the contract and also
after the expiry of the contract;
2.4.11.2.7 specifies the responsibilities of the third party with respect to the IT
security and contingency plans, insurance cover, business continuity and
disaster recovery plans, force majeure clause, etc.;
48
2.4.11.2.8 provides for preservation of the documents and data by third party ;
2.4.11.2.9 provides for the mechanisms to resolve disputes arising from
implementation of the outsourcing contract;
2.4.11.2.10 provides for termination of the contract, termination rights, transfer of
information and exit strategies;
2.4.11.2.11 addresses additional issues arising from country risks and potential
obstacles in exercising oversight and management of the arrangements
when intermediary outsources its activities to foreign third party. For
example, the contract shall include choice-of-law provisions and agreement
covenants and jurisdictional covenants that provide for adjudication of
disputes between the parties under the laws of a specific jurisdiction;
2.4.11.2.12 neither prevents nor impedes the intermediary from meeting its respective
regulatory obligations, nor the regulator from exercising its regulatory
powers; and
2.4.11.2.13 provides for the intermediary and /or the regulator or the persons
authorized by it to have the ability to inspect, access all books, records and
information relevant to the outsourced activity with the third party.
2.4.12 The intermediary and its third parties shall establish and maintain contingency
plans, including a plan for disaster recovery and periodic testing of backup
facilities.
2.4.12.1 Specific contingency plans shall be separately developed for each outsourcing
arrangement, as is done in individual business lines.
2.4.12.2 An intermediary shall take appropriate steps to assess and address the potential
consequence of a business disruption or other problems at the third party level.
Notably, it shall consider contingency plans at the third party; co-ordination of
contingency plans at both the intermediary and the third party; and contingency
plans of the intermediary in the event of non-performance by the third party.
2.4.12.3 To ensure business continuity, robust information technology security is a
necessity. A breakdown in the IT capacity may impair the ability of the
intermediary to fulfil its obligations to other market
participants/clients/regulators and could undermine the privacy interests of its
customers, harm the intermediary’s reputation, and may ultimately impact on
its overall operational risk profile. Intermediaries shall, therefore, seek to ensure
that third party maintains appropriate IT security and robust disaster recovery
capabilities.
2.4.12.4 Periodic tests of the critical security procedures and systems and review of the
backup facilities shall be undertaken by the intermediary to confirm the
adequacy of the third party’s systems.
49
2.4.13 The intermediary shall take appropriate steps to require that third parties protect
confidential information of both the intermediary and its customers from
intentional or inadvertent disclosure to unauthorised persons.
2.4.13.1 An intermediary that engages in outsourcing is expected to take appropriate
steps to protect its proprietary and confidential customer information and
ensure that it is not misused or misappropriated.
2.4.13.2 The intermediary shall prevail upon the third party to ensure that the employees
of the third party have limited access to the data handled and only on a “need to
know” basis and the third party shall have adequate checks and balances to
ensure the same.
2.4.13.3 In cases where the third party is providing similar services to multiple entities,
the intermediary shall ensure that adequate care is taken by the third party to
build safeguards for data security and confidentiality.
2.4.14 Potential risks posed where the outsourced activities of multiple intermediaries are
concentrated with a limited number of third parties.
2.4.14.1 In instances, where the third party acts as an outsourcing agent for multiple
intermediaries, it is the duty of the third party and the intermediary to ensure
that strong safeguards are put in place so that there is no co-mingling of
information /documents, records and assets.
2.5 Implementation of the Multilateral Competent Authority Agreement and Foreign
Account Tax Compliance Act72&73
Kindly refer para titled ‘Implementation of the Multilateral Competent Authority
Agreement and Foreign Account Tax Compliance Act’ of
https://www.sebi.gov.in/legal/master-circulars/aug-2024/master-circular-for-
stock-brokers_85605.html dated August 09, 2024 (Master circular for Stock Brokers)
2.6 Interest and Dividend information reporting in case of Custodial Accounts Rule
114G(1)(e) of the Income Tax Rules, 196274
2.6.1 In terms of Rule 114G(1)(e)(i) of Income Tax Rules, 1962 issued under Section
285BA of Income Tax Act, 1961 following information is required to be reported by
reporting financial institution in the case of reportable custodial account: -
(i) the total gross amount of interest, the total gross amount of dividends, and the total
gross amount of other income generated with respect to the assets held in the account, in
each case paid or credited to the account (or with respect to the account) during the
calendar year;
72 Reference: SEBI Circular CIR/MIRSD/2/2015 dated August 26, 2015
73 Reference: SEBI Circular SEBI/HO/ MIRSD/POD-1/P/CIR/2024/110 dated August 09,2024
74 Reference: SEBI Circular CIR/HO/MIRSD/MIRSD2/CIR/P/2017/59 dated June 15, 2017
50
2.6.2 In respect of the above it has been decided in consultation with Central Board of
Direct Taxes, Department of Revenue, Ministry of Finance that:-
2.6.2.1 Depositories shall provide additional field in the depository system to the RTAs
whereby the RTAs can incorporate the details of corporate action viz.
dividend/interest in rupee terms per unit of the security at the time of setting
up of corporate action. Depositories shall make available such information to
DPs to enable them to do necessary reporting.
2.6.2.2 The reporting with respect to dividend/interest is to be done by DPs on
‘entitlement’ basis and not on the basis of actual payment received by the demat
account holder.
2.6.2.3 If a demat account is identified as a ‘reportable account’ during a calendar year
by the DP, the reporting under Rule 114G (1) (e) is to be done for the dividend
/interest entitlements during the entire calendar year i.e. including the period
of the calendar year before identification of such account as a ‘reportable
account’ by the DP.
2.7 Printing of Grievances Redressal Mechanism on Delivery Instruction Form Book 75
To promote investor awareness regarding mechanism for redressing investor
grievances, the information placed below shall be printed on the inside back cover of
the Delivery Instruction Form (DIF) Book issued by all Depository Participants.
In case you have grievances against a listed company or intermediary registered
with SEBI, you should first approach the concerned company or intermediary
against whom you have grievance. If you are not satisfied with their response,
you may approach SEBI or other regulatory bodies. You can approach SEBI for
following type of grievances.
Listed Companies Brokers and stock exchanges
 Refund / Allotment/ Bonus/ Dividend/  Stock Brokers
Rights/ Redemption/ Interest  Sub brokers
 Prelisting offer documents (shares)  Portfolio managers
 Prelisting offer documents (debentures  Stock exchanges
and bonds)
 Delisting of Securities
 Buyback of Securities
 Takeover and Restructuring
75 Reference: SEBI Circular CIR/MRD/DP/DA/25/2012 dated September 21, 2012
51
 Corporate Governance and Listing
conditions
Registrar and Transfer Agents Other entities
Collective Investment Schemes
Mutual Funds
Debenture Trustees
Merchant Bankers
Depository and Depository Participants
Bankers to Issue
Credit Rating Agencies
Information to SEBI:
Custodian of Securities
 Price Manipulation
Foreign Institutional Investors
 Insider trading
Underwriters
Venture Capital Funds
KYC Registration Agency(KRA)
Alternative Investment Fund
You can file your complaints online at https://scores.sebi.gov.in/ or alternately
send your complaints to Office of Investor Assistance and Education of SEBI at
Mumbai or Regional Offices at the following addresses:
Address of SEBI Offices
 Office of Investor Assistance and Education, SEBI Bhavan,
Plot No.C4-A, 'G' Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051
Tel: 022-26449188 / 26449199 /26449000/40459000
(https://scores.sebi.gov.in/)
 SEBI, Northern Regional Office, NBCC Complex, Office Tower-1,
8th Floor, Plate B, East Kidwai Nagar,
New-Delhi-110023Tel.Board: +91-011-69012998
E-mail : sebinro@sebi.gov.in
 SEBI, Eastern Regional Office, L&T Chambers, 3rd Floor, 16, Camac Street,
Kolkata - 700 016 Tel: 033-23023000. (sebiero@sebi.gov.in)
 SEBI, Southern Regional Office, 7th Floor, Overseas Towers, 756-L, Anna Salai
Chennai 600 0102 Tel: 044-24674000/ 24674150 (sebisro@sebi.gov.in)
 SEBI, Ahmedabad Regional Office, SEBI Western Regional Office,
Panchvati 1st Lane, Gulbai Tekra Road,
52
Ahmedabad-380006,Gujarat
Tel.Board: 079-27467018-20
E-mail : sebiwro@sebi.gov.in)
For more information visit our website - http://scores.gov.in
2.8 Central KYC Records Registry (CKYCR)76
Please refer SEBI circular SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated October
12, 2023
2.9 Rollout of Legal Entity Template76
Please refer SEBI circular SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated October
12, 2023
2.10 e-KYC Authentication facility under section 11A of the Prevention of Money
Laundering Act, 2002 by Entities in the securities market for Resident Investors77 and
Entities permitted to undertake e-KYC Aadhaar Authentication service of UIDAI in
Securities Market78
Please refer SEBI circular SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated October
12, 2023
2.11 The Securities and Exchange Board of India (KYC Registration Agency) Regulations,
201179
SEBI has formulated the KRA Regulations, which have been notified vide notification
No. LAD-NRO/GN/2011-12/29/36772 dated December 2, 2011. The KRA
Regulations cover the registration of KRAs, functions and responsibilities of the KRAs
and intermediaries, code of conduct, data security, etc. A copy of the same is attached
below:
76 Reference: SEBI Circular CIR/MIRSD/ 66/2016 dated July 21, 2016;Central KYC Registry
Circular CKYC/2020/01 dated January 10, 2020 and
SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 October 12, 2023
76Reference: SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2021/31 dated March 10, 2021 and
SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 October 12, 2023
77 Reference: SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2019/123 dated November 05, 2019
78 Reference: SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/80 dated May 12, 2020; SEBI
Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/167 dated September 08, 2020; SEBI Circular
SEBI/HO/MIRSD/SEC-5/P/CIR/2022/99 dated July 20, 2022; SEBI Circular
SEBI/HO/MIRSD/SEC-5/P/CIR/2023/0026 dated February 08, 2023
79 Reference: SEBI Circular MIRSD/Cir-23/2011 dated December 02, 2011
53
Enclosure: Copy of KRA Regulations
2.12 Guidelines in pursuance of the SEBI KYC Registration Agency (KRA) Regulations,
2011 and for In-Person Verification (IPV)80
With a view to implement the KRA Regulations effectively, the guidelines for
intermediaries, KRAs have been issued by SEBI Master Circular on Know Your client
norms for Securities Market i.e. SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169
dated October 12, 2023:
2.12.1 Guidelines for Intermediaries:
2.12.1.1 Please refer SEBI Master Circular on Know Your client norms for Securities
Market i.e. SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated October
12, 2023 .81
2.12.2 Guidelines for KRAs:
2.12.2.1 Please refer SEBI Master Circular on Know Your client norms for Securities
Market i.e. SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated October
12, 2023.
2.12.3 In-Person Verification (IPV): 82
Please refer SEBI Master Circular on Know Your client norms for Securities Market i.e.
SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated October 12, 2023.
2.13 Clarification on Know Your Client (KYC) Process and Use of Technology for KYC83
Please refer SEBI Master Circular on Know Your client norms for Securities
Market i.e. SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 dated October
12, 2023
Mobile and email is verified through One Time Password (OTP) or other
verifiable mechanism. The mobile number/s of investor accepted as part of
KYC should preferably be the one seeded with Aadhaar. (the RI shall ensure
to meet the requirements of the mobile number and email as detailed under
Section 33 namely ‘SMS and E-mail alerts to investors by Stock Exchanges’ of
SEBI Master Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/110 dated August 09,
2024)
80 Reference: SEBI Circular MIRSD/Cir- 26 /2011 dated December 23, 2011
81 Reference: KYC Registration Agency (Amendment) Regulations, 2013 vide Notification No.
LAD-NRO/GN/2012-13/35/6998 dated March 22, 2013
82 Reference: SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/73 dated April 24, 2020
83 Reference: SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/73 dated April 24, 2020
54
2.14 Simplification and Rationalization of Trading Account Opening Process 84
Kindly refer para titled ‘Simplification and Rationalization of Trading Account
Opening Process’ of https://www.sebi.gov.in/legal/master-circulars/aug-
2024/master-circular-for-stock-brokers_85605.html brokers dated August 09, 2024
(Master circular for Stock Brokers)
2.15 Recording of Non Disposal Undertaking (NDU) in the Depository System85
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011 (“SAST Regulations”), requires promoters of a
company to disclose details of their encumbered shares including NDUs by promoters
which are covered under the scope of disclosures of 'Encumbrances'.
It has been observed that some shareholders, primarily promoters, enter into non-
disposal agreements/non-disposal undertaking (NDU) for borrowing funds from
various lenders. NDUs are typically undertakings given by a shareholder not to
transfer or otherwise alienate the securities and are in the nature of negative lien given
in favour of another party, usually a lender.
In order to enable the shareholders to record the NDUs in the depository system, it
has been decided to permit the depositories to offer a system for capturing and
recording the NDUs
In this regard, the depositories are advised the following:
2.15.1 Depositories shall develop a separate module/ transaction type in their system
for recording NDUs.
2.15.2 Both parties to the NDU shall have a demat account with the same depository
and be KYC compliant.
2.15.3 Pursuant to entering the NDU, the Beneficial Owner (BO) along with the other
party shall make an application through the participant (where the BO holds
his securities) to the depository, for the purpose of recording the NDU
transaction.
2.15.4 The application shall necessarily include details of BO ID, PAN, email-id,
signature(s), name of the entity in whose favor such NDU is entered and the
quantity of securities. Such entity in whose favor NDU is entered shall also
authorize the participant of the BO holding the shares, to access the signatures
as recorded in that entity’s demat account.
2.15.5 The participant after being satisfied that the securities are available for NDU
shall record the NDU and freeze for debit the requisite quantity of securities
under NDU in the depository system.
84 Reference: SEBI Circular CIR/MIRSD/16/2011 dated August 22, 2011
85 Reference: SEBI Circular CIR/MRD/DP/56/2017 dated June14, 2017
55
2.15.6 The depositories shall make suitable provisions for capturing the details of BO
ID and PAN of the entity in whose favor such NDU is entered by the
participant. The depositories shall also make available to the said participant,
the details of authorized signatories as recorded in the demat account of the
entity in whose favor such NDU is entered.
2.15.7 On creation of freeze in the depository system, the depository/ participant of
the BO holding shares, shall inform both parties of the NDU regarding creation
of freeze under NDU.
2.15.8 The depositories shall make suitable provisions for capturing the details of
company/ promoters if they are part of the NDU.
2.15.9 In case if the participant does not create the NDU, it shall intimate the same to
the parties of the NDU along with the reasons thereof.
2.15.10 Once the freeze for debits is created under the NDU for a particular quantity of
shares, the depository shall not facilitate or effect any transfer, pledge,
hypothecation, lending, rematerialisation or in any manner alienate or
otherwise allow dealing in the shares held under NDU till receipt of
instructions from both parties for the cancellation of NDU.
2.15.11 The entry of NDU made as per Para 2.15.5 above may be cancelled by the
depository/participant of the BO through unfreeze of specified quantity if
parties to the NDU jointly make such application to the depository through the
participant of the BO.
2.15.12 On unfreeze of shares upon termination/cancellation of NDU, the depository
shall inform both parties of the NDU in the form and manner agreed upon at
the time of creating the freeze. The unfreeze shall be effected in the depository
system after a cooling period of 2 clear business days but no later than 4 clear
business days.
2.15.13 The freeze and unfreeze instructions executed by the Participant for recording
NDUs will be subject to 100% concurrent audit.
2.15.14 The DPs shall not facilitate or be a party to any NDU outside the depository
system as outlined herein.
2.16 Recording of all types of Encumbrances in Depository system86
2.16.1 The SAST Regulations requires promoters of a company to disclose details of their
encumbered shares. Apart from pledge, hypothecation and non-disposal
undertakings(NDUs), there is no framework to capture the details of other types of
encumbrances in the depository system.
2.16.2 In this regard, Depositories shall put in place a system for capturing and recording
all types of encumbrances, which are specified under Regulation 28(3) of the SAST
86 Reference: SEBI Circular SEBI/HO/MRD2/DDAP/CIR/P/2020/137 dated July 24, 2020
56
Regulations, as amended from time to time. Towards this end, Depositories shall
follow processes and other norms similar to that stipulated for the purpose of
capturing and recording NDUs in Depository system. This is apart from pledge
and hypothecation, whose processes and specific norms are separately provided in
DP Regulations and circulars issued thereon. Further:
2.16.2.1 All types of encumbrances as defined under Regulation 28(3) of SAST
Regulations shall necessarily be recorded in the depository system.87
2.16.2.2 The depositories shall capture details of the ultimate lender along with
name of the trustee acting on behalf of such ultimate lender such as banks,
NBFCs, etc. In case of issuance of debentures, name of the debenture issuer
shall be captured in the depository system.
2.16.2.3 The depositories shall now capture the reasons for encumbrances in the
depository system.
2.16.3 The freeze and unfreeze instructions executed by the Participant for recording all
encumbrances will be subject to 100% concurrent audit.
2.16.4 The Depository Participant shall not facilitate or be party to any type of
encumbrance outside the Depository system as outlined herein.
2.17 Cyber Security & Cyber Resilience framework for Depository Participant88
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity and
Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs) for necessary
compliance in respect of Depository Participants.
2.18 Standard Operating Procedure (SOP) for handling cyber security incidents of
intermediaries and Categorisation of Intermediaries89
The following Standard Operating Procedure (SOP) needs to be complied with by
DPs:
2.18.1 DPs to have their own cyber security incident handling process
document, SOP in place.
87 Reference: SEBI Circular SEBI/HO/CFD/DCR-3/P/CIR/2022/27 dated March 07, 2022
88 Reference: SEBI Circular SEBI/HO/MIRSD/CIR/PB/2018/147 dated December 03, 2018 &
SEBI Circular SEBI/HO/MIRSD/TPD/P/CIR/2022/80 dated June 07, 2022
SEBI Circular CIR/HO/MIRSD/DOS2/CIR/PB/2019/038 dated March 15, 2019 - in Para 7,
the words “Internal Technology Committee” stands replaced as “Technology Committee”.
Reference: SEBI Circular SEBI/HO/MIRSD/TPD/P/CIR/2022/93 dated June 30, 2022
Reference: SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2019/109 dated October 15, 2019
89 Reference: SEBI MIRSD email dated April 16, 2021
57
2.18.2 DPs to examine the incident and classify the incident High / Medium /
Low as per their cyber security incident handling document. Decide
Action / Response for the incident based on severity.
2.18.3 Report incident to Indian Computer Emergency Response Team (CERT-
In).
2.18.4 DPs to provide the reference details of the reported incident to the
respective depository and SEBI. They also need to provide details
regarding whether CERT-In team is in touch with the DP for any
assistance. If not reported to CERT-In, they should submit the reasons for
the same to the depository and SEBI. DPs to communicate with CERT-In
/ MHA / Cybercrime police for further assistance.
2.18.5 DPs to submit details whether they have registered complaint with law
enforcement agencies such as Police or cyber security cell. If yes, details
need to be provided to MIIs and SEBI. If not, reason for not registering
complaint should also be provided to MIIs and SEBI.
In addition to the above, the depositories are also requested to categorise their
participants into three categories as per the details tabulated below:
Category Type of Frequency of Frequency Parameters that may be
of Intermediaries Penetration of PT to be considered
Intermed Testing to be conducted
iaries conducted by through
SEBI MIIs
Set-A Depository Will be - Top DPs in terms of number
(High Participants conducted of demat accounts.
Impact) on yearly The list shall also include
basis. intermediaries
having significant online
presence like: Zerodha, ICICI
direct, Upstox, HDFC
securities, Kotak securities,
Sharekhan, etc.erodha, ICICI
direct, Upstox, HDFC
securities, Kotak securities,
Sharekhan, etc.
The list is to be reviewed on
yearly basis and the revised
list shall be submitted to SEBI
in first week of April.
The parameters listed above
are indicative and
58
Depositories may include any
other relevant parameter(s) to
categorise their participants
under Set A.
For categorising participants
under Set A, depositories may
arrive at a suitable percentage
for parameters identified.
Set-B Depository For DPs For categorising members /
(Mediu Participants - coming participants under Set B,
m under the depositories may arrive at a
Impact) purview of suitable percentage for
Depositorie parameters identified.
s , risk The list is to be reviewed on
based audit yearly basis and the revised
/ PT will be list shall be submitted to SEBI
conducted in first week of April.
by Depositories to define and
Depositorie communicate risk based
s once in a policy / approach for
year. conducting audit / PT for
their intermediaries
to Division of Supervision of
Market Intermediaries
Regulation and Supervision
Department (DoS-MIRSD)
and Chief Information
Security Officer (CISO) of
SEBI.
The audit / PT report of Set B
intermediaries shall be
submitted by Depositories
to DoS-MIRSD.
Set-C Depository - For DPs Depository to define and
(Low Participants coming communicate risk based
Impact) other than that under the policy / approach for
in Set-A and Set- purview of conducting audit / PT for
B. Depositorie their intermediaries to DoS-
s, risk based MIRSD and CISO SEBI.
The revised list audit / PT The audit / PT report of Set C
shall be will be DPs shall be submitted by
submitted to conducted Depositories to DoS-MIRSD.
59
SEBI in first by
week of April. Depositorie
s once in 2
years.
Depositories shall communicate the above to their participants and inform SEBI.
The details as per Para 2.18.4 and Para 2.18.5 above, shall be submitted to Division
Chiefs (in-charge of divisions at the time of submission) of DOS-MIRSD and CISO
of SEBI.
The list of depository participants, categorised as Set A, Set B, Set C, shall be sent to
Division Chiefs (in-charge of divisions at the time of submission) of DoS-MIRSD and
CISO of SEBI, along with the criteria decided by depositories to categorise
participants. The revised list every year (in first week of April) shall also be
submitted to Division Chiefs (in-charge of divisions at the time of submission) of
DoS-MIRSD and CISO of SEBI.
2.19 CERT-In Advisory "Preventing Data Breaches / Data Leaks"90
In view of the rising incidents of data breaches / data leaks, CERT-In has issued an
Advisory Dated January 20, 2021 w.r.t. "Preventing Data Breaches / Data Leaks",
wherein following relevant aspects have been detailed:
2.19.1 Common causes of data breach / data leak,
2.19.2 Best practices to prevent data breaches,
2.19.3 Steps to be taken when organisation/entity is affected by a data
breach/data leak,
2.19.4 Best practices for individual users to safeguard against data breaches
All Depositories are hereby advised to issue this advisory to their participants to
prevent data breaches / data leaks in future.
All Depositories are also advised to instruct their participants to continue to adhere
to cyber security guidelines/advisories issued by SEBI in the past and follow best
industry practices and comply with other guidelines issued by CERT-In and NCIIPC
from time to time.
2.20 Reporting for Artificial Intelligence (AI) and Machine Learning (ML) applications
and systems offered and used by market intermediaries91
Background
2.20.1 There is increasing usage of AI (Artificial Intelligence) and ML (Machine
Learning) as product offerings by market intermediaries and participants
90 Reference: SEBI MIRSD email dated March 02, 2022
91 Reference: SEBI Circular SEBI/HO/MIRSD/DOS2/CIR/P/2019/10 dated January 04, 2019
60
(e.g..: “robo advisors”) in investor and consumer facing products. SEBI is
conducting a survey and creating an inventory of the AI / ML landscape in
the Indian financial markets to gain an in-depth understanding of the
adoption of such technologies in the markets and to ensure preparedness for
any AI / ML policies that may arise in the future.
2.20.2 As most AI / ML systems are black boxes and their behaviour cannot be easily
quantified, it is imperative to ensure that any advertised financial benefit
owing to these technologies in investor facing financial products offered by
intermediaries should not constitute to misrepresentation.
Scope definition
2.20.3 Any set of applications/software/programs/executable/systems (computer
systems) –cumulatively called application and systems,
2.20.3.1 that are offered to investors (individuals and institutions) by market
intermediaries to facilitate investing and trading,
or
2.20.3.2 to disseminate investments strategies and advice,
or
2.20.3.3 to carry out compliance operations / activities,
where AI / ML is portrayed as a part of the public product offering or under
usage for compliance or management purposes, is included in the scope of
this section. Here, “AI” / “ML” refers to the terms “Artificial Intelligence”
and“ Machine Learning” used as a part of the product offerings. In order to
make the scope of this section inclusive of various AI and ML technologies
in use, the scope also covers Fin-Tech and Reg-Tech initiatives undertaken
by market participants that involves AI and ML
2.20.4 Technologies that are considered to be categorized as AI and ML technologies
in the scope of this section, are explained below:
Systems deemed to be based on AI and ML technology
Applications and Systems belonging but not limited to following categories
or a combination of these:
2.20.4.1 Natural Language Processing (NLP), sentiment analysis or text mining
systems that gather intelligence from unstructured data –In this case,
Voice to text, text to intelligence systems in any natural language will be
considered in scope. Eg: robo chat bots, big data intelligence gathering
systems.
2.20.4.2 Neural Networks or a modified form of it –In this case, any systems that
uses a number of nodes (physical or software simulated nodes)
mimicking natural neural networks of any scale, so as to carry out
61
learning from previous firing of the nodes will be considered in scope. Eg:
Recurrent Neural networks and Deep Learning Neural Networks
2.20.4.3 Machine learning through supervised, unsupervised learning or a
combination of both. In this case, any application or systems that carry
out knowledge representation to form a knowledge base of domain, by
learning and creating its outputs with real world input data and deciding
future outputs based upon the knowledge base. Eg: System based on
Decision tree, random forest, K mean, Markov decision process, Gradient
boosting Algorithms.
2.20.4.4 A system that uses statistical heuristics method instead of procedural
algorithms or the system/application applies clustering or categorization
algorithms to categorize data without a predefined set of categories
2.20.4.5 A system that uses a feedback mechanism to improve its parameters and
bases it subsequent execution steps on these parameters.
2.20.4.6 A system that does knowledge representation and maintains a knowledge
base
Regulatory requirements
2.20.5 All registered Depository Participants offering or using applications or
systems as defined in Para 2.20.4, should participate in the reporting process
by completing the AI/ML reporting form (See Annexure 15).
2.20.6 With effect from quarter ending March 2019, registered Depository
Participants using AI/ML based application or system as defined in Para
2.20.4, are required to fill in the form (Annexure 15) and make submissions
on yearly basis before June 30th ever year .
2.20.7 Depositories have to consolidate and compile a report, on AI/ML
applications and systems reported by registered Depository Participants in
the reporting format (Annexure 16) on yearly basis. The said report
(Annexure 16) shall be submitted in soft copy only at AI_DEP@sebi.gov.in
(for Depositories) to SEBI within 30 calendar days of the expiry of the due
date for Depository Participants. .
2.21 Flashing a link to SCORES on the dashboard of Demat Accounts92
2.21.1 A study was conducted under aegis of Quality Council of India (QCI) to
understand some of the root causes of grievances / complaints on securities market
related issues lodged on Centralised Public Grievance Redressal and Monitoring
System (CPGRAMS) portal and the measures suggested to address the issues
included providing a link to SCORES portal within Demat/Trading Account
Dashboard of the Clients/ investors to make it easier to lodge grievances.
92 Reference: SEBI Letter MIRSD2/DB/AEA/OW/2018/7292 dated March 07, 2018
62
2.21.2 The suggestion has been examined and it has been decided to implement the same.
Accordingly, depositories are advised to issue necessary directions to depository
participants to ensure that the Demat Account Dashboard of clients/investors
provides a link to SCORES portal.
2.22 Displaying of information regarding SEBI Complaint Redress System (SCORES) in the
website93
2.22.1 SEBI has commenced processing of complaints through SCORES since June, 2011.
2.22.2 With a view to make the complaint redressal mechanism through SCORES more
efficient, all Depository Participants are directed to display the following
information on their websites:
Filing complaints on SCORES – Easy & quick
a. Register on SCORES portal
b. Mandatory details for filing complaints on SCORES:
i. Name, PAN, Address, Mobile Number, Email ID
c. Benefits:
i. Effective communication
ii. Speedy redressal of the grievances
2.22.3 Further, all the Depository Participants to include procedure for filing of
complaints on SCORES and benefits for the same in the welcome kit to be given to
the investors at the time of their registration with them.
2.22.4 The Depositories are advised to bring the contents to the notice of Depository
Participants for necessary action.
2.23 Block Mechanism in demat account of clients undertaking sale transactions94
Kindly refer para titled ‘Block Mechanism in demat account of clients undertaking sale
transactions’ of https://www.sebi.gov.in/legal/master-circulars/aug-2024/master-
circular-for-stock-brokers_85605.html dated August 09, 2024 (Master circular for Stock
Brokers)
2.24 Validation of Instructions for Pay-In of Securities from Client demat account to
Trading Member (TM) Pool Account against obligations received from the Clearing
Corporations95
Kindly refer para titled ‘Validation of Instructions for Pay-In of Securities from Client
demat account to Trading Member (TM) Pool Account against obligations received
from the Clearing Corporations’ of https://www.sebi.gov.in/legal/master-
93 Reference: SEBI Letter SEBI/MIRSD/16742/2019 dated July 03, 2019
94 Reference: SEBI Circular SEBI/HO/MIRSD/DOP/P/CIR/2021/595 dated July 16, 2021, SEBI
Circular SEBI/HO/MIRSD/DoP/P/CIR/2022/109 dated August 18, 2022 & SEBI Circular
SEBI/HO/MIRSD/DoP/P/CIR/2022/143 dated October 27, 2022
95 Reference: SEBI Circular SEBI/HO/MIRSD/DoP/P/CIR/2022/119 dated September 19, 2022
63
circulars/aug-2024/master-circular-for-stock-brokers_85605.html dated August 09,
2024 (Master circular for Stock Brokers)
2.25 MONITORING AND PERIODICAL REPORTING OF THE COMPLIANCE WITH THE REQUIREMENTS
PERTAINING TO ‘SECURITY AND COVENANT MONITORING’ SYSTEM HOSTED BY
DEPOSITORIES96
2.25.1 Depositories shall ensure periodic monitoring regarding compliance with the
requirements of various provisions pertaining to ‘Security & Covenant
Monitoring System’ issued by SEBI from time to time, including circular
https://www.sebi.gov.in/legal/master-circulars/may-2024/master-
circular-for-debenture-trustees-dts-_83419.html dated May 16, 2024, and
shall also bring to the notice of SEBI, any instances of noncompliance, on a
quarterly basis, not later than one month from the end of the quarter, in the
format specified as under:
ISIN Stakeholders involved Reference to the Reasons/ Date of
& their status of provision of the remarks for compliance
compliance relevant circulars such non- / expected
pertaining to non- compliance date of
compliance compliance
<Name of the
Issuer>
<Name of the
Debenture Trustee>
<Name of the Credit
Rating Agency>
2.26 MAINTENANCE of a website by depository participants 97
2.26.1 Considering the advancement in technology and need to provide better services to
the investors, all DPs are mandated to maintain a designated website.
2.26.2 Such website shall mandatorily display the following information, in addition to
all such information, which have been mandated by SEBI/depositories from time
to time.
2.26.2.1 Basic details of the DP such as registration number, registered address of
Head Office and branches, if any.
2.26.2.2 Names and contact details such as email ids etc. of all key managerial
personnel (KMPs) including compliance officer.
96 Reference: SEBI Circular SEBI/HO/DDHS/RACPOD1/CIR/P/2023/0002 dated January 05,
2023
97 Reference: SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/30 dated February
15, 2023
64
2.26.2.3 Step-by-step procedures for opening an account, filing a complaint on a
designated email id, and finding out the status of the complaint, etc.
2.26.2.4 Details of Authorized Persons.
2.26.3 Any modification in the URL to the website of a DP shall be reported to the
depositories within 3 days of such change.
2.27 Advisory for SEBI Regulated Entities (REs) regarding Cybersecurity best practices98
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity and
Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs) for necessary
compliance in respect of Depository Participants. Kindly refer
https://www.sebi.gov.in/legal/circulars/aug-2024/cybersecurity-and-cyber-
resilience-framework-cscrf-for-sebi-regulated-entities-res-_85964.html dated August
20, 2024.
2.28 Combating Financing Of Terrorism (CFT) under Unlawful Activities (Prevention) Act,
1967 – Directions to Stock Exchanges, Depositories and all Registered Intermediaries
Kindly refer SEBI Circular SEBI/HO/MIRSD/MIRSD-SEC-5/P/CIR/2023/022 dated
February 03, 2023 (Guidelines on Anti-Money Laundering (AML) Standards and
Combating the Financing of Terrorism (CFT) /Obligations of Securities Market
Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules framed
thereunder)
2.29 Framework for Adoption of Cloud Services by SEBI Regulated Entities (REs)99
Kindly refer SEBI Circular SEBI/HO/ITD/ITD_VAPT/P/CIR/2023/033 dated March
06, 2023 on Adoption Of Cloud Services by SEBI Regulated Entities for necessary
compliance in respect of Depository Participants.
2.30 Cyber Security Operations Center for SEBI registered intermediaries100
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity and
Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs) for necessary
compliance in respect of Depository Participants. Kindly refer
https://www.sebi.gov.in/legal/circulars/aug-2024/cybersecurity-and-cyber-
resilience-framework-cscrf-for-sebi-regulated-entities-res-_85964.html dated August
20, 2024.
98 Reference: SEBI Circular SEBI/HO/ITD/ITD_VAPT/P/CIR/2023/032 dated February 22, 2023
99 Reference: SEBI Circular SEBI/HO/ITD/ITD_VAPT/P/CIR/2023/033 dated March 06, 2023
100 Reference: SEBI Circular CIR/MRD/CSC/151/2018 dated December 14, 2018
65
SECTION 3: Issuer Related
3.1 Charges to be paid by Issuers 101
3.1.1 Depositories may levy and collect the charges towards custody from the issuers, on
the basis of average no. of folios (ISIN position) during the previous financial year,
as per the details given below:
3.1.1.1 Issuers to pay @ Rs.11.00 (*) per folio (ISIN position) in the respective
depositories, subject to a minimum as mentioned below:
Annual Custodial Fee
Nominal value of admitted securities
payable by an Issuer to
(Rs.)
each Depository (Rs.)(*)
Upto Rs. 2.5 crore (applicable only for issuer 5,000
of unlisted shares)
Upto 5 crore 9,000
Above 5 crore and upto 10 crore 22,500
Above 10 crore and upto 20 crore 45,000
Above 20 crore 75,000
* Plus GST as applicable
3.1.2 The average no. of folios (ISIN positions) for an Issuer may be arrived at by dividing
the total number of folios for the entire financial year by the total number of working
days in the said financial year.
3.1.3 Temporary ISIN shall not be considered for the purpose of computing the annual
issuer charges.
If the issuer fails to make the payment, Depositories may charge penal interest
subject to a maximum of 12% per annum
3.2 Activation of ISIN in case of IPO and additional issue of shares/ securities
3.2.1 Depositories shall activate the ISINs only on the date of commencement of trading
on the stock exchanges in case of IPOs for both the equity and debt securities.102
3.2.2 Further, in order to curtail the transfer of additional issue of shares/ securities
including by way of further public offerings, rights issue, preferential allotment,
bonus issue etc of the listed company, prior to receipt of final listing / trading
101 Reference: SEBI Circular SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005, SEBI
Circular MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009, SEBI Circular CIR/MRD/
DP/05/2011 dated April 27, 2011 and SEBI Circular CIR/MRD/DP/18/2015 dated December
09, 2015
102 Reference: SEBI Circular SEBI/MRD/DEP/Cir-2/06 dated January 19, 2006 and SEBI Circular
CIR/MRD/DP/ 21 /2012 dated August 02, 2012 and DDHS email dated February 20, 2020
66
approval, the depositories shall devise a mechanism so that such new securities
created shall be frozen till the time final listing/ trading permission is granted by the
exchange.103
3.2.3 In order to achieve the above, the Depositories are advised to allot such additional
shares/securities under a new temporary ISIN which shall be kept frozen. Upon
receipt of the final listing/ trading permission from the exchange for such additional
shares/ securities, the shares/securities credited in the new temporary ISIN shall be
debited and the same would get credited in the pre existing ISIN for the said security.
Thereafter, the additional securities shall be available for trading.
3.2.4 The stock exchanges are advised to provide the details to the depositories whenever
final listing / trading permission is given to securities. Further, in case of issuance of
equity shares by a company, listed on multiple stock exchanges, the concerned stock
exchanges shall synchronize their effective dates of listing / trading approvals and
intimate the same to depositories in advance.
3.2.5 In similar lines, depositories are advised to follow similar process as provided above
even in case of units of REITs/InvITs as securities of a listed company.
3.3 Streamlining the Process of Rights Issue104
Kindly refer para titled ‘Streamlining the process of Rights Issue’ of SEBI Circular
SEBI/HO/CFD/PoD-2/P/CIR/2023/00094 dated June 21, 2023 (Master Circular for
Issue of Capital and Disclosure Requirements)
3.4 Registrar and Share Transfer Agent
3.4.1 Appointment of a single agency for share registry work105
All work related to share registry pertaining in terms of both physical and electronic
shares shall be maintained at a single point i.e. either in-house by the company or by
a SEBI registered Registrar and Transfer Agent.
3.4.2 Inter-Depository transfers106
In case of inter-Depository transfers of securities, the Registrars shall communicate
the confirmation of such transfers within two hours, failing which such transfers
shall be deemed to have been confirmed. The Registrars shall not reject inter-
Depository transfers except where
i. A Depository does not have adequate balance of securities in its account or
ii. there is mismatch of transfer requests from the Depositories.
103 Reference: SEBI Circular CIR/MRD/DP/24/2012 dated September 11, 2012
104 Reference: SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2020/13 dated January 22, 2020
105 Reference: SEBI Circular D&CC/FITTC/Cir-15/2002 dated December 27, 2002
106 Reference: SEBI Circular SMDRP/Policy/Cir-28/99 dated August 23, 1999
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3.4.3 Common Registrars and Share Transfer agents107
Every company shall appoint the same Registrars and Share Transfer agents for both
the depositories.
3.4.4 Dematerialisation requests108
3.4.4.1 Registrars and Share Transfer agents shall accept partial dematerialisation
requests and will not reject or return the entire dematerialization request where
only a part of the request had to be rejected. In cases where a DP has already
sent information about dematerialisation electronically to a Registrar but
physical shares have not yet been delivered, the Registrar shall accept the
demat request and carry out dematerialization on an indemnity given by the
DP and proof of dispatch of document given by DP.
3.4.4.2 The above provision shall be applicable to all the securities like scrips, bonds,
debentures, debenture stock or other marketable securities eligible to be held
in dematerialised form in a depository as defined in Regulation 42 of the DP
Regulations.
3.5 American Depository Receipts (ADRs)/Global Depository Receipts (GDRs)
3.5.1 Delivery of underlying shares of GDRs/ADRs in dematerialised form109
Underlying shares of GDRs/ADRs shall be compulsorily delivered in
dematerialised form. Pursuant to RBI directions in this regard, a non-resident holder
of ADRs/GDRs issued by a company registered in India, on surrender of such
ADRs/GDRs, can acquire the underlying shares when such shares are released by
the Indian Custodian of the ADR/GDR issue. Further, the company whose shares
are so released, or a Depository shall enter in the register or books, wherein such
securities are registered or inscribed, an address outside India of the non-resident
holder of shares.
3.5.2 Tracking of underlying shares of GDRs/ADRs110
To ensure easy tracking of the underlying shares released on conversion of the
“depositories receipts” all such shares shall be credited to a separate Depository
Receipts (DRs) account of the respective investor. In this regard, Depositories shall
ensure that the following information is provided to the domestic custodian holding
the underlying shares on a regular basis:
i. Total number of shares at the beginning of the month
107 Reference: SEBI Circular SMDRP/Policy/Cir-28/99 dated August 23, 1999
108 Reference: SEBI Letter D&CC/ 1099 / 2002 dated November 01, 2002
109 Reference: SEBI Circular SMDRP/Policy/Cir-9/99 dated May 6, 1999
110 Reference: SEBI Circular D&CC/FITTC/Cir-09/2002 dated July 4, 2002 and SEBI Circular
D&CC/FITTC/Cir-10/2002 dated September 25, 2002
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ii. Number of shares transferred into the account (credited) during the month
iii. Number of shares transferred out of the account (debited) during the month.
iv. Balance at the end of the month.
This service can be availed of only by foreign investors other than the OCBs.
3.6 Framework for issue of Depository Receipts (DRs)111
3.6.1 Reference is drawn to Section 41 of the Companies Act, 2013, Companies (Issue of
Global Depository Receipts) Rules, 2014 (‘GDR Rules’), the Depository Receipts
Scheme, 2014 (‘DR Scheme’), Reserve Bank of India (‘RBI’) notification dated
December 15, 2014, Central Government notification dated September 18, 2019 and
Central Government notification dated October 07, 2019.
3.6.2 Only ‘a company incorporated in India and listed on a Recognized Stock Exchange
in India’ (‘Listed Company’) may issue Permissible Securities or their holders may
transfer Permissible Securities, for the purpose of issue of DR, subject to compliance
with the following requirements:
Eligibility
3.6.2.1 Listed Company is in compliance with the requirements prescribed under LODR
Regulations and any amendments thereof.
3.6.2.2 Listed company shall be eligible to issue Permissible Securities, for the purpose
of issue of DRs, if:
3.6.2.2.1 the Listed Company, any of its promoters, promoter group or directors or
selling shareholders are not debarred from accessing the capital market by
SEBI;
3.6.2.2.2 any of the promoters or directors of the Listed Company is a promoter or
director of any other company which is not debarred from accessing the
capital market by SEBI;
3.6.2.2.3 the listed company or any of its promoters or directors is not a wilful
defaulter;
3.6.2.2.4 any of its promoters or directors is not a fugitive economic offender.
3.6.2.3 Existing holders shall be eligible to transfer Permissible Securities, for the
purpose of issue of DRs, if:
3.6.2.3.1 the Listed Company or the holder transferring Permissible Securities are
not debarred from accessing the capital market by SEBI;
3.6.2.3.2 the Listed Company or the holder transferring Permissible Securities is not
a wilful defaulter;
3.6.2.3.3 the holder transferring Permissible Securities or any of the promoters or
directors of the Listed Company are not a fugitive economic offender.
111 Reference: SEBI Circular SEBI/HO/MRD/DOP1/CIR/P/2019/106 dated October 10, 2019, and
SEBI Circular SEBI/HO/MRD/DCAP/CIR/P/2020/190 dated October 01, 2020
69
Explanation 1: The restrictions at Para 3.6.2.2 and Para 3.6.2.3 above shall not
apply to the persons or entities mentioned therein, who were debarred in the
past by SEBI and the period of debarment is already over as on the date of filing
of the document as referred at Para 3.6.2.13
Explanation 2: DR means a foreign currency denominated instrument, listed on
an international exchange, issued by a foreign depository in a permissible
jurisdiction on the back of permissible securities issued or transferred to a
domestic custodian and includes ‘global depository receipt’ as defined in section
2(44) of the Companies Act, 2013.
Explanation 3: ‘Foreign Depository’ means a person which:
a) is not prohibited from acquiring permissible securities;
b) is regulated in any of the Permissible Jurisdiction as defined here; and
c) has legal capacity to issue DRs in the Permissible Jurisdiction where
issue of DRs is proposed.
Explanation 4: ‘transfer of permissible securities by existing holders’ means
deposit of existing Permissible Securities of the Listed Company with a Domestic
Custodian, for the purpose of issue of DRs, pursuant to formal agreement(s)
among the Listed Company and the Foreign Depository. For this purpose, the
Listed Company may also enter into arrangement(s) with, Indian Depository,
Domestic Custodian and existing Permissible Securities holder(s), as may be
necessary.
3.6.2.4 For the purpose of an initial issue and listing of DRs, pursuant to ‘transfer by
existing holders’, the Listed Company shall provide an opportunity to its equity
shareholders to tender their shares for participation in such listing of DRs.
3.6.2.5 Subsequent issue and listing of DRs, pursuant to ‘transfer by existing
shareholders’ may take place subject to the limits approved pursuant to a special
resolution in terms of GDR Rules.
3.6.2.6 A company proposing to make a public offer and list on a Recognized Stock
Exchange, and also simultaneously proposing to issue Permissible Securities or
transfer Permissible Securities of existing holders, for the purpose of issue of DRs
and listing such DRs on an International Exchange, may seek in-principle and
final approval from Recognized Stock Exchange as well as International
Exchange. However, such issue or transfer of Permissible Securities for the
purpose of issue of DRs shall be subsequent to, the receipt of trading approval
from the Recognized Stock Exchange for the public offer.
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Permissible Jurisdictions and International Exchanges
3.6.2.7 Listed Company shall be permitted to issue Permissible Securities or transfer
Permissible Securities of existing holders, for the purpose of issue of DRs, only
in Permissible Jurisdictions and said DRs shall be listed on any of the specified
International Exchange(s) of the Permissible Jurisdiction.
Explanation 1: ‘Permissible Jurisdiction’ shall mean jurisdictions as may be
notified by the Central Government from time to time, pursuant to notification
no. G.S.R. 669(E) dated September 18, 2019 in respect of sub-rule 1 of rule 9 of
Prevention of Money-Laundering (Maintenance of Records) Rules, 2005.
Explanation 2: ‘International Exchange(s)’ shall mean exchange(s) as may be
notified by SEBI from time to time.
Note112: The Central Government vide notification dated November 28, 2019,
notified the list of Permissible Jurisdictions in pursuance of notification dated
September 18, 2019. Accordingly, a list of Permissible Jurisdictions and
International Exchange(s) is placed below:
List of Permissible Jurisdictions and International Exchanges
1. United States of America - NASDAQ, NYSE
2. Japan - Tokyo Stock Exchange
3. South Korea - Korea Exchange Inc.
4. United Kingdom excluding British Overseas Territories- London Stock
Exchange
5. France - Euronext Paris
6. Germany - Frankfurt Stock Exchange
7. Canada - Toronto Stock Exchange
8. International Financial Services Centre in India - India International
Exchange, NSE International Exchange
3.6.2.8 Listing of DRs on specified International Exchange shall meet the highest
applicable level / standards for such listing by foreign issuers.
Explanation: Examples of DR listing programs that would qualify for the
aforesaid criteria:
Issuer-sponsored Level III ADR programs listed on Nasdaq or the NYSE, DRs listed
on the Main Board of the Hong Kong Stock Exchange, Global Depositary Receipts
admitted to the Standard Segment of the Official List of the FCA and to trading on
the London Stock Exchange.
112 Reference: SEBI Circular SEBI/HO/MRD2/DCAP/CIR/P/2019/146 dated November 28, 2019
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Obligations of Listed Company
3.6.2.9 Listed Company shall ensure compliance with extant laws relating to issuance
of DRs, including, requirements prescribed here, the Companies Act, 2013, the
Foreign Exchange Management Act, 1999 (‘FEMA’), Prevention of Money-
Laundering Act, 2002, and rules and regulations made thereunder. For this
purpose, Listed Company may also enter into necessary arrangements with
Custodian, Indian Depository and Foreign Depository.
3.6.2.10 Listed Company shall ensure that DRs are issued only with Permissible
Securities as the underlying.
Explanation: ‘Permissible Securities’ shall mean equity shares and debt
securities, which are in dematerialized form and rank pari passu with the
securities issued and listed on a Recognized Stock Exchange.
3.6.2.11 Listed Company shall ensure that the aggregate of Permissible Securities which
may be issued or transferred for the purpose of issue of DRs, along with
Permissible Securities already held by persons resident outside India, shall not
exceed the limit on foreign holding of such Permissible Securities under the
applicable regulations of FEMA:
Provided that within the above limit, the maximum of aggregate of Permissible
Securities which may be issued by the Listed Company or transferred by the
existing holders, for the purpose of issue of DRs, shall be such that the Listed
Company is able to ensure compliance with the minimum public shareholding
requirement, after excluding the Permissible Securities held by the depository
for the purpose of issue of DRs.
3.6.2.12 Listed Company shall ensure that the agreement entered with the Foreign
Depository, for the purpose of issue of DRs, provides that the Permissible holder,
including its Beneficial Owner(s), shall ensure compliance with holding limits
prescribed under Para 3.6.2.19
A. The onus of identification of NRIs holders, who are issued DRs in terms
employee benefit scheme, would lie with the listed company. The listed
company shall provide the information of such NRI DR holders to the
designated depository for the purpose of monitoring of limits113
3.6.2.13 Listed Company shall, through an intermediary, file with SEBI and the
Recognized Stock Exchange(s), a copy of the initial document, by whatever name
called, for initial issue of DRs issued on the back of Permissible Securities.
3.6.2.13.1 SEBI shall endeavor to forward its comments, if any, to the Recognized
Stock Exchange(s) within a period of 7 working days from the receipt of the
113 Reference: SEBI Circular SEBI/HO/MRD2/DCAP/CIR/P/2020/243 dated December 18, 2020
72
document and in the event of no comments being issued by SEBI within
such period, it shall be deemed that SEBI does not have comments to offer.
3.6.2.13.2 Recognized Stock Exchange(s) shall take into consideration the comments
of SEBI while granting in-principle approval to the Listed Company and
decide on the approval within 15 working days of receipt of application
and required documents.
Further, final document for such initial issue shall be filed with Recognized Stock
Exchange(s) and SEBI for record purpose.
3.6.2.14 Listed Company shall ensure that any public disclosures made by the Listed
Company on International Exchange(s) in compliance with the requirements of
the Permissible Jurisdiction where the DRs are listed or of the International
Exchange(s), are also filed with the Recognized Stock Exchange as soon as
reasonably possible but not later than twenty-four hours from the date of filing.
Permissible holder 114
3.6.2.15 Permissible holder means a holder of DR, including its Beneficial Owner(s),
satisfying the following conditions:
a. who is not a person resident in India;
b. who is not a Non-Resident Indian (NRI)
Provided that the restriction under this Clause shall not apply in case of issue of
DRs to NRIs, pursuant to share based employee benefit schemes which are
implemented by a company in terms of SEBI (Share Based Employee Benefits)
Regulations 2014;
Provided further that the restriction under this Clause shall also not apply in
case of issue of DRs by the company to NRIs pursuant to a bonus issue or a rights
issue;
Explanation 1: For the purpose of this Circular, ‘Beneficial Owner’ shall have the
same meaning as provided in proviso to sub-rule 1 of rule 9 of Prevention of
Money Laundering (Maintenance of Records) Rules, 2005, as amended by the
Central Government vide notification no.G.S.R.669(E) dated September 18, 2019.
Explanation 2: The Permissible holder, including its Beneficial Owner(s), shall
be responsible for ensuring compliance with this requirement.
Explanation 3: Except as permitted under the provisos above, NRIs shall neither
subscribe to any further issue of DRs nor make any further acquisition of DRs
(including of DRs issued prior to October 10, 2019).
114 Reference: SEBI Circular SEBI/HO/MRD2/DCAP/CIR/P/2020/243 dated December 18, 2020
73
Voting rights
3.6.2.16 Listed Company shall ensure that the agreement entered between the holder of
DRs, the Listed Company and the Depository provides that the voting rights on
Permissible Securities, if any, shall be exercised by the DR holder through the
Foreign Depository pursuant to voting instruction only from such DR holder.
Pricing
3.6.2.17 In case of a simultaneous listing of, Permissible Securities on Recognised Stock
Exchange(s) pursuant to a public offer / preferential allotment / qualified
institutions placement under ICDR Regulations, and DRs on the International
Exchange, the price of issue or transfer of Permissible Securities, for the purpose
of issue of DRs by Foreign Depository, shall not be less than the price for the
public offer / preferential allotment / qualified institutions placement to
domestic investors under the applicable laws.
3.6.2.18 Where Permissible Securities are issued by a Listed Company or ‘transferred by
the existing holders’, for the purpose of issue of DRs by the Foreign Depository,
the same shall be issued at a price, not less than the price applicable to a
corresponding mode of issue of such Permissible Securities to domestic investors
under the applicable laws.
Obligations of Indian Depository, Foreign Depository and Domestic Custodian
3.6.2.19 Indian Depositories, in consultation with each other, shall develop a system to
ensure that aggregate holding of DR holders along with their holding, if any,
through offshore derivative instruments and holding as a Foreign Portfolio
Investor belonging to same investor group shall not exceed the limit on foreign
holding under the FEMA and applicable SEBI Regulations. For this purpose,
Indian Depositories shall have necessary arrangement with the Domestic
Custodian and / or Foreign Depository.
Explanation- For the purposes of above para, the term ‘investor group’ shall
have the meaning as prescribed to such term in the Securities and Exchange
Board of India (Foreign Portfolio Investors) Regulations, 2019 or amendments
thereof.
The Broad operational guidelines for the above purpose are given under
3.6.2.19.1 to 3.6.2.19.6.
Indian Depositories, in consultation with each other and market participants,
may prescribe the formats and other details, as may be necessary to
operationalize the same.
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Broad Operational Guidelines
3.6.2.19.1 Listed Company shall appoint one of the Indian Depository as the
Designated Depository for the purpose of monitoring of limits in respect
of Depository Receipts.
3.6.2.19.2 The Designated Depository in co-ordination with Domestic Custodian,
other Depository and Foreign Depository (if required) shall compute,
monitor and disseminate the Depository Receipts (DRs) information as
prescribed in the framework. The said information shall be disseminated
on website of both the Indian Depositories. For this purpose, the
Designated Depository shall act as a Lead Depository and the other
depository shall act as a Feed Depository.
3.6.2.19.3 Domestic Custodian shall:
3.6.2.19.3.1 Provide one-time details of DRs in the format and manner as may be
prescribed by the Indian Depositories.
3.6.2.19.3.2 Provide the requisite information as may be prescribed by Designated
Depository for the purpose of computation of information in respect
of Depository Receipts as and when requested.
3.6.2.19.3.3 Ensure that the underlying permissible securities, pertaining to a
listed company, against which DRs are issued in the Permissible
Jurisdiction, are held in a demat account, under a separate Type &
Sub-Type as prescribed by the Indian Depositories for the purpose of
issue of DRs.
3.6.2.19.3.4 Provide certificate / declaration / information, to the Designated
Depository in the prescribed format upon termination/cancellation
of DR program. For this, the issuer or Foreign Depository shall be
required to report such termination / cancellation to the Domestic
Custodian.
3.6.2.19.4 Procedure for the purpose of monitoring of limits
3.6.2.19.4.1 The Designated Depository shall forward the list of such companies
(ISINs) for which it will be monitoring the DR issuance to Feed
Depository. For any addition or deletion of ISINs, the Designated
Depository shall communicate to the Feed Depository regarding the
same through Incremental information sent on a periodic basis.
3.6.2.19.4.2 Feed Depository shall provide the ISIN wise demat holdings of
investors tagged with separate sub-type to the Designated Depository
on a daily basis.
3.6.2.19.4.3 The Designated Depository shall ascertain the details of holdings
pertaining to Foreign Depository lying under demat account(s)
tagged under such separate Type & Sub-Type as well as other
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investors with ‘DR’ sub type held at both depositories and consolidate
such holdings to arrive at the outstanding Permissible Securities
against which the DRs are outstanding.
3.6.2.19.4.4 Calculation of headroom i.e. ‘the limit up to which Permissible
Securities can be converted to DRs’, may be undertaken in the
following manner:
Particulars
Number of DRs originally issued including corporate
(A)
action
Outstanding Permissible Securities against which the
(B)
DRs are outstanding
Re-issuance approval granted by Domestic Custodian
(C)
(unutilized) at End of Day
Headroom = the limit up to which Permissible Securities can be
A – (B + C) converted to DRs
3.6.2.19.4.5 The Indian Depositories shall exchange with each other their
respective list of companies, for dissemination of DR headroom
related information, which shall be consolidated by both depositories
and thereafter published on their respective websites.
3.6.2.19.5 Re-issuance mechanism
3.6.2.19.5.1 For the purpose of re-issuance of permissible securities, a Foreign
Investor shall request SEBI registered Broker with requisite quantity
of securities (based on available headroom) required for re-issuance
of depository receipts which shall be forwarded to the Domestic
Custodian.
3.6.2.19.5.2 Based on last available headroom disseminated by Designated
Depository, the Domestic Custodian shall grant approval (T- day
where T is date of approval granted by Domestic Custodian) to such
request received from SEBI registered Broker for re-issuance purpose
which shall be valid for a period of 3 trading days (T+3) from the date
of approval of request granted by Domestic Custodian.
3.6.2.19.5.3 The Domestic Custodian shall report such request approvals along
with requisite quantity granted to Designated Depository on same
day (i.e. T day) and based on which the Designated Depository shall
block the quantity for the purpose of calculation of Headroom.
3.6.2.19.5.4 The Domestic Custodian shall report the status of utilisation of such
approved request to the Designated Depository upon receipt of
securities in the demat account of Foreign Depository for the purpose
of calculation of Headroom. The domestic custodian shall report the
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final utilisation status of such approved request with respect to
receipt of securities on D+1 basis (where D is a date of credit of
security in the Foreign Depository’s account) before such time as may
be prescribed by Designated Depository. In case of non-receipt of
securities within the specified timeline, Custodian shall unblock the
requisite quantity of approval granted and report the same to
Designated Depository.
3.6.2.19.6 Monitoring of Investor group limits
3.6.2.19.6.1 FPI shall report the details of all such FPIs forming part of the same
investor group as well as Offshore Derivative Instruments (ODI)
subscribers and/or DR holders having common ownership, directly
or indirectly, of more than fifty percent or on the basis of common
control, to its Designated Depository Participant (DDP). The investor
group may appoint one such FPI to act as a Nodal entity for reporting
the aforesaid grouping information to its DDP in the format enclosed
at Annexure 17. Further, such Nodal FPI shall report the investment
holding in the underlying Indian security as held by ODI subscriber
and / or as DR holder, including securities held in the Depository
Receipt account upon conversion (‘DR conversion’ account), to its
Domestic Custodian on a monthly basis (by the 10th of every month)
in the format enclosed at Annexure 18. Similarly, the FPIs who do not
belong to the same investor group shall report such investment
holding details in the underlying Indian security as ODI subscriber
and / or as DR holder, including securities held in the ‘DR
conversion’ account, to its Custodian in the aforesaid format on a
monthly basis (by 10th of the month).
3.6.2.19.6.2 The DDP shall report FPI grouping information as reported by Nodal
FPI to such Indian Depository (by 17th of the month) where FPI group
demat accounts are held in the manner and format as specified by
such Indian Depository. Similarly, the Custodian of Nodal entity
(who also happen to be the DDP) shall report the investment holdings
in the underlying Indian security as held by the ODI subscriber and /
or DR holder in respect of the aforesaid FPI group on monthly basis
to such Indian Depository (by 17th of the month) where FPI group
demat accounts are held in the manner and format as specified by
such Indian Depository.
3.6.2.19.6.3 The Depository which monitors the FPI group limits shall club the
investment pertaining to DR holding, ODI holding and FPI holding
of same investor group and monitor the investment limits as
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applicable to FPI group in a Listed Indian company on a monthly
basis. However, in respect of FPIs which do not belong to the same
investor group, responsibility of monitoring the investment limits of
FPI shall be with the respective DDP / Custodian. The Custodian of
such FPIs not forming part of investor group shall club the investment
as held by FPIs as well as investment as held by such FPI in the
capacity of ODI subscriber and / or DR holder and monitor the
investment limits as applicable to single FPI. In case where the
investment holding breaches the prescribed limits, the Indian
Depository / Custodian, as the case may be, shall advise the
concerned investor / investor group, to divest the excess holding
within 5 trading days similar to requirement prescribed under SEBI
Circular dated November 05, 2019 on ‘Operational Guidelines for
FPIs & DDPs under SEBI (Foreign Portfolio Investors), Regulations
2019 and for Eligible Foreign Investors.
3.6.2.20 Domestic Custodian shall maintain records in respect of, and report to, Indian
depositories all transactions in the nature of issue and cancellation of depository
receipts, for the purpose of monitoring limits.
3.6.2.21 Indian Depositories shall coordinate among themselves and with Domestic
Custodian to disseminate:
(a) the outstanding Permissible Securities against which the DRs are
outstanding; and,
(b) the limit up to which Permissible Securities can be converted to DRs.
3.6.2.22 The Foreign Depository shall not issue or pre-release the DRs unless the
Domestic Custodian has confirmed the receipt of underlying Permissible
Securities.
3.6.3 Words and expressions used and not defined here but defined in the DR Scheme,
Securities Contracts (Regulation) Act, 1956 or the Securities and Exchange Board of
India Act, 1992 or the Depositories Act, 1996 or the Companies Act, 2013 or the
Reserve Bank of India Act, 1934 or the Foreign Exchange Management Act, 1999 or
Prevention of Money-Laundering Act, 2002, and rules and regulations made
thereunder shall have the meanings respectively assigned to them, as the case may
be, in those Acts, unless the context requires otherwise.
Power to remove difficulties
3.6.4 In case of any difficulties in the application or interpretation or to relax strict
enforcement of the aforesaid requirements, the Board may issue clarifications
through guidance notes or circulars after receipt of request from the issuer.
3.6.5 The above provisions shall be applicable only to DR issuance by a Listed Company
after the effective date i.e. October 10, 2019.
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3.7 Redemption of Indian Depository Receipts (IDRs) into Underlying Equity Shares115
Kindly refer para titled ‘Disclosure norms for Indian Depository Receipts’ of SEBI
Circular SEBI/HO/CFD/PoD2/CIR/P/2023/120 dated July 11, 2023 (Master circular
for compliance with the provisions of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 by listed
entities)
3.8 Electronic Clearing System (ECS) facility
3.8.1 Use of ECS for refund in public/rights issues.116
For locations where facility of refund through ECS is available details of
applicants shall be taken directly from the database of the depositories in respect
of issues made completely in dematerialised form. Accordingly, DPs shall
maintain and update on real time basis the MICR (Magnetic Ink Character
Recognition) code of Bank branch of BOs and other bank details of the applicants
in the database of depositories. This is to ensure that the refunds through ECS are
made in a smooth manner and that there are no failed/wrong credits.
3.8.2 Updation of bank accounts details, MICR code and IFSC of bank branches by
Depository Participants (DPs)117
3.8.2.1 It has been informed by RBI that they have been receiving complaints from
managers to the issues that the funds routed through the electronic mode are
getting returned by destination banks because of incorrect or old account
numbers provided by beneficiary account holders.
3.8.2.2 RBI has stated that Investors will have to ensure through their DPs that
bank account particulars are updated in master record periodically, to
ensure that their refunds, dividend payments etc. reach the correct
account, without loss of time. RBI has also suggested incorporation of
Indian Financial System Code (IFSC) of customer's bank branches apart from
9 digit MICR code; since IFSC of bank's branches is used for remittance
through National Electronic Funds Transfer (NEFT).
3.8.2.3 It is advised that necessary action be taken in this matter to ensure that correct
account particulars of investors are available in the database of
depositories.
115 Reference: SEBI Circular CIR/CFD/DIL/10/2012 dated August 28, 2012 & SEBI Circular
CIR/CFD/DIL/6/2013 dated March 01, 2013
116 Reference: SEBI Circular SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006 & SEBI Circular
SEBI/CFD/DIL/DIP/29/2008/01/02 dated February 1, 2008
117 Reference: SEBI Letter MRD/DEP/PP/123624 /2008 dated April 23, 2008
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3.9 Withdrawal by issuers from the depository118
3.9.1 As regards voluntary withdrawal by issuers from the depository, it is informed
that listed companies may not be allowed to withdraw from the depository
system unless they delist their securities from the stock exchanges.
3.9.2 As regards companies under liquidation are concerned, it is informed that
deactivation of the ISIN may be only done in cases where companies have been
liquidated. In other cases, where companies are being liquidated, deactivation of
ISIN resulting in total freezing may not be desirable as it will disallow investors
to hold shares in dematerialized form
3.10 Further issue of shares under Section 43 of Companies Act and the Companies (Share
Capital and Debentures) Rules, 2014119
In all cases of shares issued by companies under Section 43(a) (ii) of Companies Act
2013 and the Companies (Share Capital and Debentures) Rules, 2014, separate ISIN
may be allotted to differentiate such shares from ordinary shares.
3.11 Redressal of investor grievances through SCORES platform120
Kindly refer SEBI Circular SEBI/HO/OIAE/IGRD/P/CIR/202 dated November 07,
2022 in respect of Master Circular on the redressal of investor grievances through the
SEBI Complaints Redress System (SCORES) platform.
3.12 Streamlining issuance of SCORES Authentication for SEBI registered
intermediaries121
Kindly refer para titled ‘SCORES Authentication for intermediaries and MIIs’ of SEBI
Circular SEBI/HO/OIAE/IGRD/P/CIR/202 dated November 07, 2022 (Master
Circular on the redressal of investor grievances through the SEBI Complaints Redress
System (SCORES) platform)
3.13 Clarification on applicability of regulation 40(1) of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 to open offers, buybacks and delisting of
securities of listed entities122
Kindly refer para titled ‘Tendering by shareholders holding securities in physical
form’ of SEBI Circular SEBI/HO/CFD/PoD-1/P/CIR/2023/31 dated February 16,
2023 (Master Circular for Substantial Acquisition of Shares and Takeovers)
118 Reference: SEBI Letter MRD/DoP/NSDL/VM/ 162378 /2009 dated May 06, 2009
119 Reference: SEBI Letter MRD/DoP/MC/141442 /2008 dated October 17, 2008
120 Reference: SEBI Circular CIR/OIAE/1/2014 dated December 18, 2014
121 Reference: SEBI Circular SEBI/HO/OIAE/IGRD/CIR/P/2019/86 dated August 02, 2019
122 Reference: SEBI Circular SEBI/HO/CFD/CMD1/CIR/P/2020/144 dated July 31, 2020
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3.14 Streamlining the Process for Acquisition of Shares pursuant to Tender-Offers made
for Takeovers, Buy Back and Delisting of Securities123
Kindly refer para titled ‘Procedure for tendering of shares and settlement through
stock exchange’ of SEBI Circular SEBI/HO/CFD/PoD-1/P/CIR/2023/31 dated
February 16, 2023 (Master Circular for Substantial Acquisition of Shares and
Takeovers)
3.15 Non-compliance with the Minimum Public Shareholding (MPS) requirements124
Kindly refer para titled ‘Non-compliance with the Minimum Public Shareholding
requirements’ of SEBI Circular SEBI/HO/CFD/PoD2/CIR/P/2023/120 dated July
11, 2023 (Master circular for compliance with the provisions of the Securities and
Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 by listed entities)
3.16 Non-compliance with certain provisions of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 and the Standard Operating Procedure
for suspension and revocation of trading of specified securities125
Kindly refer para titled ‘Non-compliance with certain provisions of the LODR
Regulations and the Standard Operating Procedure for suspension and revocation of
trading of specified securities’ of SEBI Circular
SEBI/HO/CFD/PoD2/CIR/P/2023/120 dated July 11, 2023 (Master Circular for
compliance with the provisions of the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 by listed entities)
3.17 Investor grievances redressal mechanism – Handling of SCORES complaints by stock
exchanges and Standard Operating Procedure for non-redressal of grievances by
listed companies126
Kindly refer para titled ‘Handling of complaints by stock exchanges against certain
listed companies’, ‘Action for failure to redress investor complaints by such listed
companies’ & ‘Action after redressal of investor grievance by such listed companies’
of SEBI Circular SEBI/HO/OIAE/IGRD/P/CIR/202 dated November 07, 2022
(Master Circular on the redressal of investor grievances through the SEBI Complaints
Redress System (SCORES) platform)
123 Reference: SEBI Circular CFD/DCR2/CIR/P/2016/131 dated December 09, 2016
124 Reference: SEBI Circular CFD/CMD/CIR/P/2017/115 dated October 10, 2017
125 Reference: SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2020/12 dated January 22, 2020
126 Reference: SEBI Circular SEBI/HO/OIAE/IGRD/CIR/P/2020/152 dated August 13, 2020
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3.18 Automation of Continual Disclosures under Regulation 7(2) of SEBI (Prohibition of
Insider Trading) Regulations, 2015 - System driven disclosures127
Kindly refer para titled ‘Automation of Continual Disclosures under Regulation 7(2)
of SEBI (Prohibition of Insider Trading) Regulations, 2015 -System driven disclosures’
of https://www.sebi.gov.in/legal/master-circulars/jul-2024/master-circular-on-
surveillance-of-securities-market_84680.html dated July 09, 2024 (Master Circular on
Surveillance of Securities Market)
3.19 A Trading Window closure period under Clause 4 of Schedule B read with Regulation
9 of SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”) –
Framework for restricting trading by Designated Persons (“DPs”) by freezing PAN at
security level128
Kindly refer para titled ‘Trading Window closure period under Clause 4 of Schedule
B read with Regulation 9 of PIT Regulations-Framework for restricting trading by
Designated Persons (“DPs”) by freezing Permanent Account Number (PAN) at
security level’ of https://www.sebi.gov.in/legal/master-circulars/jul-2024/master-
circular-on-surveillance-of-securities-market_84680.html
https://www.sebi.gov.in/legal/master-circulars/jul-2024/master-circular-on-
surveillance-of-securities-market_84680.html dated July 09, 2024 (Master Circular on
Surveillance of Securities Market)
3.20 Reconciliation of Share Capital Audit129
3.20.1 All the issuer companies shall subject themselves to a reconciliation of share capital
audit to be undertaken by a qualified Chartered Accountant or a Company Secretary,
for the purposes of reconciliation of the total admitted capital with both the
depositories and the total issued and listed capital. The audit shall cover the
following aspects and certify among others:
3.20.1.1 That the total of the shares held in NSDL, CDSL and in the physical form tally
with the issued / paid-up capital.
3.20.1.2 That the Register of Members (RoM) is updated.
3.20.1.3 That the dematerialisation requests have been confirmed within 21 days and
state the shares pending confirmation for more than 21 days from the date of
requests and reasons for delay.
3.20.1.4 The details of changes in share capital (due to rights, bonus, preferential issue,
IPO, buyback, capital reduction, amalgamation, de-merger etc) during the
127 Reference: SEBI Circular SEBI/HO/ISD/ISD/CIR/P/2020/168 dated September 09, 2020 & SEBI
Circular SEBI/HO/ISD/ISD/CIR/P/2021/578 dated June 16, 2021
128 Reference: SEBI Circular SEBI/HO/ISD/ISD-SEC-4/P/CIR/2022/107 dated August 05, 2022
129 Reference: SEBI Circular D&CC/FITTC/CIR – 16/2002 dated December 31, 2002 and SEBI
Circular CIR/MRD/DP/30/2010 dated September 06, 2010)
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quarter and certify in case of listed companies whether in-principle approval
for listing from all stock exchanges was obtained in respect of all further issues.
3.20.2 The issuer companies shall submit the audit report on a quarterly basis within 30
days of the end of each quarter to the stock exchange/s where they are listed. Any
difference observed in the admitted, issued and listed capital shall be immediately
brought to the notice of SEBI and both the Depositories by the stock exchanges. This
report shall also be placed before the Board of Directors of the issuer company.
3.20.3 Any non-compliance by the issuer company shall be viewed seriously and suitable
action shall be initiated under the Depositories Act, 1996 against the issuer company
and its Directors.
3.21 Streamlining the Process of Public Issue of Equity Shares and convertibles130
3.21.1 Kindly refer SEBI Circular SEBI/HO/CFD/PoD-2/P/CIR/2023/00094 dated June
21, 2023 (Master Circular for Issue of Capital and Disclosure Requirements)
3.21.2 Further the role of depositories in respect to the Process of Public Issue of Equity
Shares and convertibles is as follows:
3.21.2.1 Validation by Depositories
3.21.2.1.1 The details of investor viz. PAN, DP ID / Client ID, entered in the Stock
Exchange platform at the time of bidding, shall be validated by the Stock
Exchange/s with the Depositories on real time basis.
3.21.2.1.2 Stock Exchanges and Depositories shall put in place necessary
infrastructure for this purpose.
130 Reference: SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2018/138 dated November 01, 2018
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SECTION-4: Depositories Related
4.1 Online Registration Mechanism and Filing system for Depositories131
4.1.1 In order to ease the process of application for recognition / renewal, reporting and
other filings in terms of Securities and Exchange Board of India (Depositories and
Participants) Regulations, 2018 and other circulars issued from time to time, SEBI
has introduced a digital platform for online filings related to Depositories.
4.1.2 All applicants desirous of seeking registration as a Depository in terms of
Regulation 3 of the Securities and Exchange Board of India (Depositories and
Participants) Regulations, 2018, shall now submit their applications online, through
SEBI Intermediary Portal at https://siportal.sebi.gov.in.
4.1.3 The applicants would be required to upload scanned copy of relevant documents
such as any declaration or undertaking or notarised copy of documents as may be
prescribed in Securities and Exchange Board of India (Depositories and
Participants) Regulations 2018, and keep hard copy of the same to be furnished to
SEBI whenever required.
4.1.4 Further, all other filings including Annual Financial Statements and Returns, Rules,
Bye-laws, etc., shall also be submitted online.
4.1.5 The aforesaid online registration and filing system for Depositories is operational.
Recognised Depositories are advised to note the same for immediate compliance.
4.1.6 Link for SEBI Intermediary Portal is also available on SEBI website –
www.sebi.gov.in. In case of any queries and clarifications, users may refer to the
manual provided in the portal or contact the SEBI Portal helpline on 022-26449364
or may write at portalhelp@sebi.gov.in.
4.2 Activity schedule for depositories for T+2 rolling Settlement132- As on date, the activity
schedule for settlement is as per SEBI circular SEBI Circular
SEBI/HO/MRD2/DCAP/P/CIR/2021/628 dated September 07, 2021 (i.e. T+1) . The activity
schedule for T+2 settlement is mentioned under Para 4.83.
4.3 Introduction of T+1 rolling settlement on an optional basis 133
4.3.1 SEBI, vide circular no. SMD/POLICY/Cir - /03 dated February 6, 2003, shortened
the settlement cycle from T+3 rolling settlement to T+2 w.e.f. April 01, 2003.
4.3.2 SEBI has been receiving request from various stakeholders to further shorten the
settlement cycle. Based on discussions with Market Infrastructure Institutions
(Stock Exchanges, Clearing Corporations and Depositories), it has been decided to
provide flexibility to Stock Exchanges to offer either T+1 or T+2 settlement cycle.
131 Reference: SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2018/1 dated January 29, 2018
132 Reference: SEBI Circular DCC/FITTC/Cir-19/2003 dated March 4, 2003 and SEBI Circular
MRD/DoP/SE/Dep/Cir-18/2005 dated September 2, 2005
133 Reference: SEBI Circular SEBI/HO/MRD2/DCAP/P/CIR/2021/628 dated September 07, 2021
84
4.3.3 Accordingly, a Stock Exchange may choose to offer T+1 settlement cycle on any of
the scrips, after giving an advance notice of at least one month, regarding change
in the settlement cycle, to all stakeholders, including the public at large, and also
disseminating the same on its website.
4.3.4 After opting for T+1 settlement cycle for a scrip, the Stock Exchange shall have to
mandatorily continue with the same for a minimum period of 6 months. Thereafter,
in case, the Stock Exchange intends to switch back to T+2 settlement cycle, it shall
do so by giving 1-month advance notice to the market.
4.3.5 Any subsequent switch (from T+1 to T+2 or vice versa) shall be subject to minimum
period and notice period as mentioned in Para 4.3.4 above.
4.3.6 There shall be no netting between T+1 and T+2 settlements.
4.3.7 The settlement option for security shall be applicable to all types of transactions in
the security on that Stock Exchange. For example, if a security is placed under T+1
settlement on a Stock Exchange, the regular market deals as well as block deals will
follow the T+1 settlement cycle on that Stock Exchange.
4.3.8 The provisions of this circular shall come into force with effect from January 01,
2022.
4.4 Settlement of transactions in case of holidays134
4.4.1 Due to lack of uniformity of holidays and force majeure conditions which
necessitate sudden closure of one or more Stock Exchanges and banks in a
particular state, result in situations where multiple settlements have to be
completed by the Stock Exchanges on the working day immediately following the
day(s) of the closure of the banks. Accordingly, the Stock Exchanges/Depositories
are advised to follow the guidelines and adhere to the time line.
4.4.1.1 The Stock Exchanges shall clear and settle the trades on a sequential basis i.e., the
pay-in and the pay-out of the first settlement shall be completed before the
commencement of the pay-in and pay-out of the subsequent settlement/s.
4.4.1.2 The cash/securities pay out from the first settlement shall be made available to
the member for meeting his pay-in obligations for the subsequent settlement/s.
4.4.1.3 Further, in-order to meet his pay-in obligations for the subsequent settlement, the
member may need to move securities from one depository to another. The
Depositories shall, therefore, facilitate the inter-depository transfers within one
hour and before pay-in for the subsequent settlement begins.
4.4.1.4 The Stock Exchanges/Depositories shall follow a strict time schedule to ensure
that the settlements are completed on the same day.
4.4.1.5 The Clearing Corporation/Clearing House of the Stock Exchanges shall execute
Auto DO facility for all the settlements together, so as to make the funds and the
134 Reference: SEBI Circular SEBI/MRD/Policy/AT/Cir- 19/2004 dated April 21, 2004
85
securities available with the member on the same day for all the settlements,
thereby enabling the availability of the funds/securities at the client level by the
end of the same day.
4.5 Deadline time for accepting non pay-in related instructions135
4.5.1 The depositories are advised that any overrun of the time specified for 'spot
delivery contract' in the SCRA would result in the contract becoming illegal under
section 16 of the SCRA (unless it is put through the stock exchange). The Rights and
Obligations of the BO and DP cannot add anything to or subtract anything from
this position. However, it should be the responsibility of the DP to ensure that the
client's contract is not rendered illegal on account of delayed execution of the
delivery instruction.
4.5.2 Keeping the hardships to change all the existing Rights and Obligations of the BO
and DP to enforce the above into consideration, it is advised that suitable bye laws
can be made under section 26(2)(e) and (d) of Depositories Act, 1996 for imposing
such obligation on the DPs. Therefore, it is advised to amend/insert bye laws which
should expressly provide that the DPs shall execute the non pay-in related
instructions on the same day or on the next day of the instruction. Further, pending
such amendment, suitable instructions may be issued to DPs to adhere to such time
limit.
4.5.3 The above clause may be suitably incorporated in the Rights and Obligations of the
BO and DP while opening new accounts.
4.6 Approval of amendments to Bye Laws / Rules of Stock Exchanges and Depositories136
4.6.1 Depositories and exchanges shall submit the following information while seeking
SEBI approval for amendment to Bye Laws/ Rules/ Regulations and amendments
thereto:
4.6.1.1 The objective/purpose of amendments.
4.6.1.2 Whether the amendment is consequential to any directive/circulars/
guidelines from SEBI/ Government and the details thereof.
4.6.1.3 Whether such amendments necessitate any consequential amendments to any
other Bye Laws/ Rules/ Regulations.
4.6.1.4 The proceedings of the Governing Board or Governing Council, as the case
may be, wherein these proposed amendments were approved by the
Exchanges/ Depositories.
4.6.1.5 If documents other than Bye Laws/ Rules/ Regulations are sent for approval,
the justification and need for forwarding the same to SEBI, indicating whether
it forms a part of any Bye Law/ Rule/ Regulation.
135 Reference: SEBI Letter MRD/VSS/ARR/ 12255/2004 dated June 10, 2004
136 Reference: SEBI Circular LGL/Cir-2/2003 dated February 19, 2003
86
4.6.2 Further, all Exchanges shall ensure that requests for dispensation of the
requirement of pre-publication shall be accompanied with proper justification and
indicate how the public interest or interest of trade shall be served by such
dispensation of pre-publication.
4.7 Periodical Report – Grant of prior approval to Depository Participants137
4.7.1 The Depositories shall submit a periodical report to SEBI regarding the following
changes, as per the format (Annexure 19) and in accordance with the guidelines
given below:
4.7.1.1 Amalgamation, demerger, consolidation or any other kind of corporate
restructuring falling within the scope of Chapter XV of the Companies Act,
2013 or the corresponding provision of any other law for the time being in force;
4.7.1.2 Change in Director, including managing director/ whole-time director;
4.7.1.3 Change in shareholding not resulting in change in control;
4.7.1.4 Any other purpose as may be considered appropriate by the Depositories.
If there is no change during the relevant quarter, it shall be indicated in the report.
4.7.2 Guidelines to fill up the Annexure and sending the same to SEBI
4.7.2.1 A separate annexure shall be submitted for each "Type of change" as specified
in the format.
4.7.2.2 The report shall be signed by an authorized representative of the Depository
and the same shall be stamped.
4.7.2.3 The Depositories shall furnish the report to SEBI by 7th day of month following
the end of each quarter, starting with report for the quarter ending June 2011.
4.7.2.4 The report shall be submitted by e-mail at dp@sebi.gov.in. A hard copy of the
report shall also be submitted to SEBI.
4.8 Preservation of Records138
4.8.1 Depositories and Depository Participants (DPs) are required to preserve the
records and documents for a minimum period of 8 years.
4.8.2 Depositories and DPs shall preserve respective original forms of documents either
in physical form or an electronic record, copies of which have been taken by CBI,
Police or any other enforcement agency during the course of their investigation till
the trial is completed.
4.9 Participation as Financial Information Providers in Account Aggregator
framework139
137 Reference: SEBI Circular CIR/MIRSD/9/2011 dated June 17, 2011
138 Reference: SEBI Circular: MRD/DoP/DEP/Cir 20/2009 dated December 9, 2009 and
SEBI/HO/MRD2/DDAP/CIR/P/2020/153 dated August 18, 2020
139 Reference: SEBI Circular SEBI/HO/MRD/DCAP/P/CIR/2022/110 dated August 19, 2022
87
4.9.1 An Account Aggregator (AA), is a Reserve Bank of India (RBI) regulated Non-
Banking Finance Company (NBFC) that facilitates retrieval or collection of financial
information, pertaining to a customer, from Financial Information Providers
(“FIP”) on the basis of explicit consent of the customer. The financial information
shared through the Account Aggregator is not stored by the AA and it shall not be
the property of the AA. This information is not to be used in any other manner
except for the purpose of providing it to the customer or consented Financial
Information User (FIU). Thus, Account Aggregator facilitates consolidation,
organization, presentation of the financial information to the customer or FIU based
on the explicit consent of the customer.
4.9.2 RBI has issued Non-Banking Financial Company –Account Aggregator Master
Directions DNBR.PD.009/03.10.119/2016-17 dated September 02, 2016 for
compliance by every Non-Banking Financial Company (NBFC-Account
Aggregator) undertaking the business of AA.
4.9.3 Out of the list of entities mentioned as Financial Information Providers (FIPs) under
the Clause 3 (xi) of the Master Directions, the Asset Management Companies
(AMCs) through their Registrar and Transfer Agents (RTAs) and the Depositories
are inter-alia specified as Financial Information Providers (FIPs) for the purpose of
sharing of information. Thus, hereinafter the Depositories and AMCs (through
their RTAs) are referred as FIPs in the securities markets.
4.9.4 The FIPs in the securities market will provide the “Financial Information”, as
specified in Clause 3(ix) of the RBI Master Directions, to the customers and FIUs
who furnish the consent artefact (electronic consent as defined in RBI Master
Guidelines) through any of the Account Aggregators registered with RBI. Further,
FIPs in securities market shall enter into a contractual framework with the AAs,
and the same shall distinctly specify the following:
a. Rights and obligations of each party
b. Modalities of Dispute Resolution mechanism
4.9.5 The FIPs in the securities markets shall share the “Financial Information”
pertaining to securities markets, through the AA only on receipt of a valid consent
artefact from the customer through the Account Aggregator. The consent
architecture is detailed under Clause 6 of the RBI Master Directions. Further, the
FIPs in the securities markets shall also verify, through appropriate means, the
following in the consent artefact:
a. validity of consent
b. specified dates and usage; and
c. the credentials of the AA
88
4.9.6 Upon due verification of the consent artefact, the FIPs in the securities markets shall
digitally sign the financial information and securely transmit the same to the AA in
accordance with the terms contained in the consent artefact.
4.9.7 All responses of the FIPs in the securities markets shall be in real time.
4.9.8 To enable these data flows, the FIPs in the securities markets shall:
a. implement interfaces that will allow an AA to submit consent artefacts, and
authenticate each other, and would enable secure flow of financial
information to the AA;
b. adopt means to verify the consent including digital signatures, if any,
contained in the consent artefact;
c. implement means to digitally sign the financial information that is shared by
them about the customers;
d. maintain a log of all information sharing requests and the actions performed
by them pursuant to such requests.
4.9.9 The FIPs in the securities markets are expected to adopt the technical specifications
published by ReBIT, as updated from time to time and adopt required Information
Technology (IT) framework and interfaces to ensure secure data flows to AA. The
technology should also be scalable to cover any other AA as may be specified by
Reserve Bank of India in future.
4.9.10 There shall be adequate safeguards built in IT systems of FIPs in the securities
markets to ensure that it is protected against unauthorized access, alteration,
destruction, disclosure or dissemination of records and data.
4.9.11 The FIPs in the securities markets shall also abide by the code of conduct as
specified in the SEBI regulations applicable to them, including redressal of
grievances of the customers.
4.9.12 The FIPs in the securities markets shall continue to comply with all the regulatory
provisions under the SEBI Act, 1992, Depositories Act, 1996 and the regulations
framed thereunder.
4.9.13 The provisions of this circular shall come into force with effect from August 19,
2022.
4.9.14 The participation of depositories as FIPs in the AA ecosystem shall not impact the
existing mechanism as per circular CIR/MRD/DP31/2014 dated November 12,
2014 of issuances of Consolidated Account Statement to the investors by
depositories or AMCs/MF-RTAs providing consolidated information of the
mutual fund investments and holdings of investors in demat accounts.
4.9.15 The Financial Information Providers (FIPs) in securities market must disclose
prominently on their websites the names of the Account Aggregators through
which the FIP shares the information about assets held with respect to securities
markets with the customers and Financial Information Users (FIUs).
89
4.10 Facilitating transaction in Mutual Fund schemes through the Stock Exchange
Infrastructure140
Kindly refer para titled ‘Facilitating transactions in Mutual Fund schemes through the
Stock Exchange infrastructure’ of https://www.sebi.gov.in/legal/master-
circulars/jun-2024/master-circular-for-mutual-funds_84441.html dated June 27, 2024
(Master Circular for Mutual Funds)
4.11 Discontinuation of usage of pool accounts for transactions in units of Mutual Funds
on the Stock Exchange Platforms141
Kindly refer para titled ‘Discontinuation of usage of pool accounts for transactions in
units of Mutual Funds on the Stock Exchange Platforms’
ofhttps://www.sebi.gov.in/legal/master-circulars/jun-2024/master-circular-for-
mutual-funds_84441.html dated June 27, 2024 (Master Circular for Mutual Funds)
4.12 RTA inter-operable Platform for enhancing investors’ experience in Mutual Fund
transactions / service requests 142
Kindly refer para titled ‘RTA inter-operable Platform for enhancing investors’
experience in Mutual Fund transactions/service requests’ of
https://www.sebi.gov.in/legal/master-circulars/jun-2024/master-circular-for-
mutual-funds_84441.html dated June 27, 2024 (Master Circular for Mutual Funds)
4.13 Pledge of Shares through depository system143
4.13.1 Section 12 of the Depositories Act, 1996 and Regulation 79 of the Securities and
Exchange Board of India (Depositories and Participants) Regulations, 2018 (“DP
Regulations”) along with the relevant Bye Laws of the Depositories clearly
enumerate the manner of creating pledge. It is felt that there is a need to
communicate to the BOs that any procedure followed other than as specified under
the aforesaid provisions of law shall not be treated as pledge.
4.13.2 In order to clarify the same, the depositories are advised to issue a communiqué to
the DPs advising them to inform BOs about the procedure for pledging of shares
held in demat form as enumerated in the relevant sections of the Depositories Act,
140 Reference: SEBI Circular CIR/MRD/DSA/32/2013 dated October 04, 2013, SEBI Circular
CIR/MRD/DSA/33/2014 dated December 09, 2014, SEBI Circular
SEBI/HO/MRD/DSA/CIR/P/2016/113 dated October 19, 2016, SEBI Circular
SEBI/HO/MRD1/DSAP/CIR/P/2020/29 dated February 26, 2020, SEBI Circular
SEBI/IMD/CIR No. 11/183204/2009 dated November 13, 2009 and SEBI Circular
CIR/IMD/DF/17/2010 dated November 09, 2010
141 Reference: SEBI Circular SEBI/HO/IMD/IMD-IDOF5/P/CIR/2021/635 dated October 4, 2021
142 Reference: SEBI Circular SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/604 dated July 26, 2021
143 Reference: SEBI Letter MRD/DoP/MAS – OW/16723/2010 dated August 17, 2010
90
1996 and DP Regulations. Depositories may also advise DPs that an off-market
transfer of shares leads to change in ownership and cannot be treated as pledge.
Further, this issue may also be taken up in the investor awareness programs
wherein the manner of creation of pledge can be effectively communicated to the
BOs directly.
4.14 Margin obligations to be given by way of Pledge/ Re-pledge in the Depository
System144
Kindly refer para titled ‘Margin obligation to be given by way of Pledge/ Re-pledge
in the Depository System’ of https://www.sebi.gov.in/legal/master-circulars/aug-
2024/master-circular-for-stock-brokers_85605.html August 09, 2024 (Master circular
for Stock Brokers)
For the purpose of Section 41.4 of the above-mentioned circular, Depositories shall
provide a separate pledge type viz. ‘margin pledge’, for pledging client’s securities
as margin to the TM / CM.
4.15 Foreign investments in infrastructure companies in securities markets145
4.15.1 Pursuant to Government of India Policy, foreign investments in infrastructure
companies in the securities markets, namely Stock Exchanges, Depositories and
Clearing Corporations shall be as under:
4.15.1.1 Foreign investment shall be allowed in such companies with a separate
FDI and FPI cap as per the prevailing policy of GoI;
4.15.1.2 FDI shall be allowed subject to specific prior approval (if any) as per the
FDI policy of GoI;
4.15.1.3 FPI shall be allowed only through purchases in the secondary market;
Clarification146 - In respect of exchanges that are not listed, FPIs purchase of
shares of such exchanges can be through transactions outside of the exchange
provided it is not an initial allotment. However, if the exchange is listed,
transactions by FPIs should be done through the exchange.
4.15.1.4 FPI shall not seek and will not get representation on the Board of
Directors;
4.15.1.5 Foreign investors, including persons acting in concert, may hold equity
shares in a depository as per the limits specified under Regulation 21 (2)
144 Reference: SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/28 dated February 25, 2020,
SEBI/HO/MIRSD/DOP/CIR/P/2020/88 dated May 25, 2020,
SEBI/HO/MIRSD/DOP/CIR/P/2020/90 dated May 29, 2020,
SEBI/HO/MIRSD/DOP/CIR/P/2020/143 dated July 29, 2020 and
SEBI/HO/MIRSD/DoP/P/CIR/2022/44 dated April 04, 2022
145 Reference: SEBI Circular MRD/DSA/SE/Dep/Cust/Cir-23/06 dated December 22, 2006
146 Reference: SEBI Circular MRD/DSA/SE/Dep/Cust/CIR-30/08 dated October 23, 2008
91
of the Securities and Exchange Board of India (Depositories and
Participants) Regulation, 2018.
4.15.2 The aforesaid limits for foreign investment in respect of recognised Stock
Exchanges shall be subject to 5% shareholding limit as prescribed under the
Securities Contracts (Regulation) (Stock Exchanges And Clearing
Corporations) Regulations, 2018.
4.16 Designated e-mail ID for regulatory communication with SEBI147
Depositories shall create a designated e-mail id for regulatory communication and
inform it to SEBI. This e-mail id shall be exclusive and shall not be person-centric.
4.17 Designated e-mail ID for redressal of investor complaints148
4.17.1 Depositories and registered DPs shall designate an exclusive e-mail ID for the
grievance redressal division/compliance officer exclusively for registering
investor complaints.
4.17.2 The designated email ID and other relevant details shall be prominently
displayed on the websites and in the various
materials/pamphlets/advertisement campaigns initiated by the Depositories
and DPs for creating investor awareness.
4.18 Redressal of complaints against Depositories through SEBI Complaints Redress
System (SCORES)149
4.18.1 The complaints received by SEBI against Depositories shall be electronically sent
through SCORES. Depositories are advised to view the pending complaints at
http://scores.gov.in/admin and submit the Action Taken Report (ATR) along
with supporting documents electronically in SCORES. Updation of action taken
shall not be possible with physical ATRs. Hence, submission of physical ATR
shall not be accepted for complaints lodged in SCORES.
4.18.2 The Depositories shall do the following:
4.18.2.1 Indicate a contact person in case of SCORES, who is an employee heading
the complaint services division/cell/department. Contact detail (i.e. phone
no., email id, postal address) of the said contact person be made widely
available for e.g. on the websites of Depositories.
4.18.2.2 Address/redress the complaints within a period of 21 calendar days upon
receipt of complaint and keep the Board informed about the number and the
nature of redressal
147 Reference: SEBI Circular MIRSD/DPS- III/Cir-23/08 dated July 25, 2008
148 Reference: SEBI Circular MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006
149 Reference: SEBI Circular CIR/MRD/ICC/16/2012 dated June 15, 2012
92
4.18.2.3 Maintain a monthly record of the complaints which are not
addressed/redressed within 21 calendar days from the date of receipt of the
complaint/information, alongwith the reason for such pendency.
4.18.2.4 Upload/update the ATR on the SCORES. Failure to do so shall be
considered as non-redressal of the complaint and the complaint shall be
shown as pending.
4.19 Limitation period for filing an arbitration reference150
The provisions dealing with mediation, conciliation and arbitration have been
superseded with the introduction of Online Dispute Resolution (ODR) Mechanism.
Kindly refer https://www.sebi.gov.in/legal/master-circulars/dec-2023/master-
circular-for-online-resolution-of-disputes-in-the-indian-securities-
market_80236.html dated December 28, 2023 (Master circular for Online Resolution of
Disputes in the Indian Securities Market)
4.20 Disclosure of investor complaints and arbitration details on Depository website151
4.20.1 Depositories shall disclose the details of complaints lodged by Beneficiary
Owners (BO’s)/investors against Depository Participants (DPs) on their website.
The aforesaid disclosure shall also include details pertaining to penal action
against the DPs.
4.20.2 The format for the reports for the aforesaid disclosure consists of the following
reports:
4.20.2.1 Report 1A: Complaints received against DPs during current year
4.20.2.2 Report 1B: Redressal of Complaints received against DPs during previous
year
4.20.2.3 Report 1C: Redressal of Complaints received against DPs during current year
4.20.2.4 Report 2A152
4.20.2.5 Report 2B153
4.20.2.6 Report 3A: Penal Actions against DPs during previous year
4.20.2.7 Report 3B: Penal Actions against DPs during current year
4.20.2.8 Report 4A: Redressal of Complaints lodged by investors against Listed
Companies during previous year
150 Reference: SEBI Circular CIR/MRD/DP/4/2011 dated April 7, 2011
151 Reference: SEBI Circular SEBI/MRD/ OIAE/ Dep/ Cir- 4/2010 dated January 29, 2010
152 Repealed by SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/145 dated July 31, 2023
in respect of Master SEBI Circular for Online Resolution of Disputes in the Indian Securities
Market.
153 Repealed by SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/145 dated July 31, 2023
in respect of Master SEBI Circular for Online Resolution of Disputes in the Indian Securities
Market.
93
4.20.2.9 Report 4B: Redressal of Complaints lodged by investors against Listed
Companies during current year
4.20.3 Depositories are accordingly advised to
4.20.3.1 disclose details as per the aforesaid reports in their website on a continuous
basis
4.20.3.2 update the aforesaid reports on a quarterly basis, except the Report 1A, which
shall be updated on a weekly basis
The provisions dealing with mediation, conciliation and arbitration have been
superseded with the introduction of Online Dispute Resolution (ODR) Mechanism.
Kindly refer https://www.sebi.gov.in/legal/master-circulars/dec-2023/master-
circular-for-online-resolution-of-disputes-in-the-indian-securities-
market_80236.html dated December 28, 2023 (Master circular for Online Resolution of
Disputes in the Indian Securities Market)
94
Report 1A: Complaints received against Depository Participants (DPs)# during current year: Updated on mmm dd yyyy
(to be updated weekly) (In excel sheet)
Sl. Details of Complaint Status of Complaint
No. Date of Name of Type of SEBI Ref. Name of Status** Status Date of Name of Date of
Receipt Complainant Complaint* No. (if DP Date## Filing Arbitrator(s) Arbitration
applicable Arbitration Award
1
2
3
N
# including against its authorized persons, employees, etc.
## Status date is the date of resolution/reference to arbitration/finding it non-actionable. If under process, it is the date of
updation of this sheet. */** As per Table 1A below
95
Table 1A
** Status
Type *Complaint Type
Type Description
Type I Account Opening Related
I Non actionable
I a Denial in opening an account
I a Complaint incomplete
I b Account opened in another name than as requested
I b Outside the scope of Depository
I c Non receipt of Account Opening Kit
I c Pertains to non-responding company.
I d Delay in activation/ opening of account
II Resolved
I e Non Receipt of copy of DP Client Agreement/Schedule A
III Under Process
of Charges
IV Referred to Arbitration
V Forwarded to Company/RTA for
Type II Demat/Remat Related
appropriate action.
II a Delay in Dematerialisation request processing
II b Delay in Rematerialisation request processing
II c Delay in/ Non-Receipt of Original certificate after demat
rejection
II d Non Acceptance of demat/remat request
Type III Transaction Statement Related
III a Delay in/ Non-Receipt of Statements from DP
III b Discrepancy in Transaction statement
Type IV Improper Service Related
IV a Insistence on Power of Attorney in its favour
IV b Deactivation/ Freezing/ Suspension related
IV c Defreezing related
IV d Transmission Related
96
IV e Pledge Related
IV f SMS Related
IV g Non-updation of changes in account (address/
signatories/bank details/ PAN/ Nomination etc.)
Type V Charges Related
V a Wrong/ Excess Charges
V b Charges paid but not credited
V c Charges for Opening/closure of Account
Type VI Delivery Instruction Related(DIS )
VI a Non acceptance of DIS for transfer
VI b Delay in/ non Execution of DIS
VI c Delay in Issuance / Reissuance of DIS Booklet
Type VII Closure
VII a Non closure/ delay in closure of account
VII b Closure of a/c without intimation by DP
Type VIII Manipulation/ Unauthorised Action
VIII a Unauthorised Transaction in account
VIII b Manipulation
VIII c Unauthorised changes in account (address/
signatories/bank details/PAN etc.)
Type IX Company/ RTA related
IX a Action – Cash
97
IX b Action – Non–Cash
IX c Initial Public Offer/ Follow-on Public Offer Related
Type X Others
98
Report 1B: Redressal of Complaints received against Depository Participants (DPs) during previous year: Updated on
mmm dd yyyy (to be updated every quarter) (In excel sheet)
Sl. Nam Status of DP No. of No. of Of the Complaints received during previous year
No e of (active/inacti BOs Compl No. of Complaints
. the ve/ in account aints Resolved Non Arbitr Pendin No. of Decide Decided Pending
DP process of s at the receive through actiona ation g for Arbitrat d by by for
termination beginni d the ble** Advise redress ion the Arbitrat Redressal
/withdrawal) ng of against Depository d al with filed by Arbitr ors in with
the year the DP Deposi BOs ators favour of Arbitrator
* tory the BOs s
1
2
3
N
Total
*including against its authorized persons, employees, etc.
**Non actionable means the complaint that are incomplete / outside the scope of Depository
(Arrange the DPs in descending number of complaints filed against them during the period)
99
Report 1C: Redressal of Complaints received against Depository Participants (DPs) during current year: Updated on mmm dd yyyy
(to be updated every quarter) (In excel sheet)
Sl. Nam Status of No. of No. of Of the Complaints received during previous year
No e of DP BOs Compla No. of Complaints
. the (active/ina account ints Resolved Non Arbitr Pending No. of Decide Decided Pending
DP ctive/ in s at the receive through action ation for Arbitrat d by by for
process of beginni d the able** Advis redressal ion the Arbitrat Redressal
termination ng of against Depositor ed with filed by Arbitr ors in with
/withdraw the year the DP y Depositor BOs ators favour of Arbitrator
al) * y the BOs s
1
2
3
N
*including against authorized persons, employees, etc.
**Non actionable means the complaint that are incomplete / outside the scope of Depository
(Arrange the DPs in descending number of complaints filed against them during the period)
- 100 -
Report 2A: Details of Arbitration Proceedings (where BO is a party) during previous year - Repealed by
https://www.sebi.gov.in/legal/master-circulars/dec-2023/master-circular-for-online-resolution-of-disputes-in-the-indian-
securities-market_80236.html dated December 28, 2023 in respect of Master circular for Online Resolution of Disputes in the Indian
Securities Market.
Report 2B: Details of Arbitration Proceedings (where BO is a party) during current year - https://www.sebi.gov.in/legal/master-
circulars/dec-2023/master-circular-for-online-resolution-of-disputes-in-the-indian-securities-market_80236.html dated December 28,
2023 in respect of Master circular for Online Resolution of Disputes in the Indian Securities Market.
- 101 -
Report 3A: Penal Actions against Depository Participants (DPs) during previous year: Updated on mmm dd yyyy (to be updated
every quarter) (in excel sheet)
Sl. Name Registration No. of Action against DP, its authorized person and employees together
No. of DP No. Complaints No. of Penal Orders issued Monetary Penalties No. of Arbitration
received levied (Rs. lakh) Awards issued
For complaints For others For For against DP
complaints others
1
2
3
N
- 102 -
Report 3B: Penal Actions against Depository Participants (DPs) during current year: Updated on mmm dd yyyy (to be updated
every quarter) (in excel sheet)
Sl. Name Registration No. of Action against DP, its authorized person and employees together
No. of DP No. Complaints No. of Penal Orders issued Monetary Penalties No. of Arbitration
received levied (Rs. lakh) Awards issued
For complaints For others For For against DP
complaints others
1
2
3
N
- 103 -
Report 4A: Redressal of Complaints lodged by investors against Listed Companies during previous year: Updated on mmm dd
yyyy (to be updated every quarter) (In excel format)
Sl. No. Name of the Company No. of Complaints
Received Redressed through Non-Actionable* Pending for Redressal with Depository
Depository
1
2
3
N
Total
*Non actionable means the complaint that are incomplete / outside the scope of Depository
(Arrange the companies in descending number of complaints filed against them during the period)
- 104 -
Report 4B:Redressal of Complaints lodged by investors against Listed Companies during current year: Updated on mmm dd yyyy
(to be updated every quarter) (In excel format)
No. of Complaints
Sl. No. Name of the Company Redressed through
Received Non-Actionable* Pending for Redressal with Depository
Depository
1
2
3
N
Total
*Non actionable means the complaints that are incomplete / outside the scope of Depository
(Arrange the companies in descending number of complaints filed against them during the period)
- 105 -
4.21 Disclosure of Complaints against the Depositories154
4.21.1 In order to bring about transparency in the Investor Grievance Redressal
Mechanism, it has been decided that all the Depositories shall disclose on their
websites, the data on complaints received against them and redressal thereof,
latest by 7th of succeeding month, as per the format enclosed at Annexure 20
4.21.2 These disclosure requirements are in addition to those already mandated by SEBI
4.22 Disclosure of regulatory orders and arbitration awards on Depository website155
The provisions dealing with mediation, conciliation and arbitration have been
superseded with the introduction of Online Dispute Resolution (ODR) Mechanism.
Kindly refer https://www.sebi.gov.in/legal/master-circulars/dec-2023/master-
circular-for-online-resolution-of-disputes-in-the-indian-securities-
market_80236.html dated December 28, 2023 (Master circular for Online Resolution of
Disputes in the Indian Securities Market)
4.23 Disclosure of Investor Charter for Depositories and Depositor Participants156&157
4.23.1 In order to facilitate investor awareness about various activities such as
dematerialization/rematerialization of securities, transmission of securities,
settlement instruction, consolidated account statement, grievance redressal
mechanism etc., SEBI in November 2021 has formulated the Investor Charter for
Depositories and Depository Participants (DPs) containing the information for
investors on aforesaid issues and advised Depositories to disclose the same on
their respective websites.
4.23.2 In view of the recent developments in the securities market including
introduction of Online Dispute Resolution (ODR) platform and SCORES 2.0, it
is felt necessary to modify the Investor Charter for Depositories and DPs, inter-
alia, detailing the services provided to Investors, Rights of Investors, various
activities of Depository through DPs with timelines, Dos and DON’T’s for
Investors, Responsibilities of Investors, Code of Conduct for Depositories and
DPs and Grievance Redressal Mechanism which is placed at Annexure 21.
4.23.3 In this regard, Depositories are advised to publish Investor Charter on their
websites. Further, Depositories should ask DPs to bring to the notice of their
clients (existing as well as new clients) through disclosing the Investor Charter
154 Reference: SEBI Circular SEBI/HO/MRD1/MRD1_ICC1/P/CIR/2021/664 dated November 23,
2021
155 Reference: SEBI Circular SEBI/MRD/ DP/ 19/2010 dated June 10, 2010
156 Reference: SEBI Letter SEBl/HO/MlRSD/DOP/OW/P/2021/37347/1 dated December 15, 2021
157 Reference: SEBI Circular SEBI/HO/MRD/MRD-PoD-1/P/CIR/2024/66 dated May 29, 2024
106
on their respective websites, provide a copy of Investor Charter as a part of
account opening kit to the clients, through emails/letters etc.
4.23.4 Additionally, in order to bring about transparency in the Investor Grievance
Redressal Mechanism, it has been decided that all the DPs shall disclose on their
respective websites, the data on complaints received against them or against
issues dealt by them and redressal thereof, latest by 7th of succeeding month, as
per the format enclosed at Annexure 22 to this letter.
4.23.5 These disclosure requirements are in addition to those already mandated by
SEBI.
4.24 Guideline for websites of depositories158
4.24.1 This is with reference to the policy of website management of depositories.
4.24.2 As a good practice, the guidelines issued by National Informatics Centre for
Indian Government website, which is available at
https://guidelines.india.gov.in/ may be adopted by depositories.
4.24.3 Depositories are advised to comply with the aforesaid guidelines for their
website and mobile app.
4.25 Arbitration / Appellate Arbitration fees on the remanded back matter for fresh
arbitration proceedings159
The provisions dealing with mediation, conciliation and arbitration have been
superseded with the introduction of Online Dispute Resolution (ODR) Mechanism.
Kindly refer https://www.sebi.gov.in/legal/master-circulars/dec-2023/master-
circular-for-online-resolution-of-disputes-in-the-indian-securities-
market_80236.html dated December 28, 2023 (Master circular for Online Resolution of
Disputes in the Indian Securities Market)
4.26 Establishment of connectivity by Clearing House / Clearing Corporation (CH/CC)
with the Depository – Clarification160
4.26.1 On examination of the provisions of Regulations 35(a) and 45 of the Securities
and Exchange Board of India (Depositories and Participants) Regulations, it is
advised that registration of a CC/CH of a stock exchange as a DP with SEBI is
not mandatory and a pre-requisite for it to obtain connectivity with the
depositories. However, if the CC/CH of a stock exchange desires to function
as any other "Depository Participant", i.e. to open BO accounts for investors or
clearing member account, registration as DP with SEBI is mandatory.
158 Reference: SEBI Letter MRD/DSA/OW/11447/2/2019 dated May 8, 2019
159 Reference: SEBI Letter SEBI/MRD/ICC/OW/P/2018/27066/1 dated September 25, 2018
160 Reference: SEBI Letter MRD/DoP/ Dep/82334 /2006 dated December 14, 2006
107
4.26.2 In view of the above, Depositories are advised to provide continuous
electronic means of communication / connectivity to the CH/CC of the
Exchanges without insisting for a mandatory registration as DP with SEBI
with a condition that such entities would not be permitted to open BO
accounts for investors or clearing member account.
4.27 Issue of Master Circular by Stock Exchanges, Clearing Corporations and
Depositories161
4.27.1 Stock Exchanges, Clearing Corporations and Depositories (hereinafter collectively
referred to as ‘Market Infrastructure Institutions (MIIs)’) communicate with
market participants including investors on a regular basis by way of circulars,
directions, operating instructions, communiques or any other mode of
communication (hereinafter collectively referred to as ‘guidelines’) for necessary
compliance. This has led to a plethora of guidelines by the MIIs on various
subjects.
4.27.2 Due to the issuance of such guidelines of varied nature and based on the feedback
received from the market participants, to ensure that all market participants,
including investors, find all applicable provisions on a specific subject at a place,
the MIIs shall ensure the following:
4.27.2.1 Issue the respective Master Circulars consolidating all guidelines issued and
applicable as on March 31 of every year, segregated subject-wise.
4.27.2.2 Take due care to include only the relevant guidelines into the respective
Master Circular while reviewing all the existing guidelines on a particular
subject.
4.27.2.3 Such Master Circular shall not include the following:
4.27.2.3.1 Bye-laws, Rules and Regulations issued by MIIs.
4.27.2.3.2 Status of any compliance by the market participant
4.27.2.3.3 Actions taken against any entity.
4.27.2.4 Each Master Circular shall contain a list of all guidelines incorporated
therein as well as a provision rescinding all such guidelines with effect from
the date of implementation of the Master Circular. All such rescinded
guidelines shall be archived on the respective websites of the MIIs.
4.27.2.5 The Master Circulars shall contain a savings clause as under:
“Notwithstanding such rescission,
161 Reference: SEBI Circular SEBI/HO/MRD/POD 3/CIR/P/2023/58 dated April 20, 2023
108
a. Anything done or any action taken or purported to have been done or contemplated
under the rescinded guidelines before the commencement of this Master Circular
shall be deemed to have been done or taken or commenced or contemplated under
the corresponding provisions of the Master Circular or rescinded guidelines
whichever is applicable.
b. The previous operation of the rescinded guidelines or anything duly done or
suffered thereunder, any right, privilege, obligation or liability acquired, accrued or
incurred under the rescinded guidelines, any penalty, incurred in respect of any
violation committed against the rescinded guidelines, or any investigation, legal
proceeding or remedy in respect of any such right, privilege, obligation, liability,
penalty as aforesaid, shall remain unaffected as if the rescinded guidelines have
never been rescinded.”
4.27.3 MIIs shall update the Master Circular incorporating all guidelines issued during
the financial year, and issue the same on or before April 30 of each year.
4.28 Principles of Financial Market Infrastructures (PFMIs)162
4.28.1 To promote and sustain an efficient and robust global financial infrastructure, the
Committee on Payments and Settlement Systems (CPSS) and the International
Organization of Securities Commissions (IOSCO) published the Principles for
financial market infrastructures1 (PFMIs) on April 2012. They replace the three
existing sets of international standards set out in the Core Principles for
Systemically Important Payment Systems (CPSIPS); the Recommendations for
Securities Settlement Systems (RSSS); and the Recommendations for Central
Counterparties (RCCP). CPSS and IOSCO have strengthened and harmonised
these three sets of standards by raising minimum requirements, providing more
detailed guidance and broadening the scope of the standards to cover new risk-
management areas and new types of FMIs.
4.28.2 The PFMIs comprise 24 principles (Annexure 23) for Financial Market
Infrastructure to provide for effective regulation, supervision and oversight of
FMIs. They are designed to ensure that the infrastructure supporting global
financial markets is robust and well placed to withstand financial shocks.
4.28.3 Full, timely and consistent implementation of the PFMIs is fundamental to
ensuring the safety, soundness and efficiency of key FMIs and for supporting the
resilience of the global financial system. In addition, the PFMIs play an important
162 Reference: SEBI Circular SEBI/MRD/DRMNP/26/2013 dated September 04, 2013
109
part in the G20's mandate that all standardized over-the-counter (OTC)
derivatives should be centrally cleared. Global central clearing requirements
reinforce the importance of strong safeguards and consistent oversight of
derivatives CCPs in particular.
Financial Market Infrastructure (FMI)163
4.28.4 The Principles apply to systematically important FMI entities such as Central
Counterparty (CCP), Central Securities Depository (CSD)/ Securities
Settlement System (SSS), Payment and Settlement Systems (PSS) and Trade
Repository (TR) which are responsible for providing clearing, settlement and
recording of monetary and other financial transactions. The principles are
international standards set forth to –
4.28.4.1 Enhance safety and efficiency in payment, clearing, settlement, and
recording arrangements,
4.28.4.2 Reduce systemic risk.
4.28.4.3 Foster transparency and financial stability and
4.28.4.4 Promote protection of participants and investors.
4.28.5 The different categories of FMIs, as identified under PFMIs, are listed below -
4.28.5.1 Central Counterparties (CCP)
A central counterparty interposes itself between counterparties to contracts
traded in one or more financial markets, becoming the buyer to every seller and
the seller to every buyer and thereby ensuring the performance of open
contracts. A CCP becomes counterparty to trades with market participants
through novation, an open-offer system, or through an analogous legally
binding arrangement. CCPs have the potential to significantly reduce risks to
participants through the multilateral netting of trades and by imposing more
effective risk controls on all participants. For example, CCPs typically require
participants to provide collateral (in the form of initial margin and other
financial resources) to cover current and potential future exposures. CCPs may
also mutualise certain risks through devices such as default funds. As a result
of their potential to reduce risks to participants, CCPs also can reduce systemic
risk in the markets they serve.
4.28.5.2 Central Securities Depositories (CSD)
Central securities depository provides securities accounts, central safekeeping
services, and asset services, which may include the administration of corporate
actions and redemptions, and plays an important role in helping to ensure the
163 Reference: SEBI Circular SEBI/HO/MRD-PoD-3/P/CIR/2023/190 dated December 19, 2023
110
integrity of securities issues (that is, ensure that securities are not accidentally
or fraudulently created or destroyed or their details changed). A CSD can hold
securities either in physical form (but immobilised) or in dematerialised form
(that is, they exist only as electronic records). A CSD may maintain the
definitive record of legal ownership for a security; in some cases, however, a
separate securities registrar will serve this notary function.
4.28.5.3 Securities Settlement Systems (SSS)
A securities settlement system enables securities to be transferred and settled
by book entry according to a set of predetermined multilateral rules. Such
systems allow transfers of securities either free of payment or against payment.
When transfer is against payment, many systems provide delivery versus
payment (DvP), where delivery of the security occurs if and only if payment
occurs. An SSS may be organised to provide additional securities clearing and
settlement functions, such as the confirmation of trade and settlement
instructions.
4.28.5.4 Payment Systems (PSS)
A payment system is a set of instruments, procedures, and rules for the transfer
of funds between or among participants. The system includes the participants
and the entity operating the arrangement. Payment systems are typically based
on an agreement between or among participants and the operator of the
arrangement, and the transfer of funds is effected using an agreed-upon
operational infrastructure.
4.28.5.5 Trade Repositories (TR)
A trade repository is an entity that maintains a centralised electronic record
(database) of transaction data. TRs have emerged as a new type of FMI and
have recently grown in importance, particularly in the OTC derivatives market.
By centralising the collection, storage, and dissemination of data, a well-
designed TR that operates with effective risk controls can serve an important
role in enhancing the transparency of transaction information to relevant
authorities and the public, promoting financial stability, and supporting the
detection and prevention of market abuse. An important function of a TR is to
provide information that supports risk reduction, operational efficiency and
effectiveness, and cost savings for both individual entities and the market as a
whole. Such entities may include the principals to a trade, their agents, CCPs,
and other service providers offering complementary services, including central
111
settlement of payment obligations, electronic novation and affirmation,
portfolio compression and reconciliation, and collateral.
FMIs Regulated by SEBI
4.28.6 SEBI regulated Depositories and Clearing Corporations are FMIs. These
systemically important FMIs provide essential facilities and perform
systemically critical functions in the market and shall be required to comply
with the PFMIs specified by CPSS-IOSCO as applicable to them.
4.28.7 The issue of assessment of PFMI by SEBI regulated FMIs was deliberated in
Secondary Market Advisory Committee of SEBI (SMAC). Based on the
recommendations of SMAC, it has been decided that FMIs shall carry out self-
assessment on a periodic basis against the PFMIs and disclose the same on
their websites. For this purpose, the 24 principles for FMIs have been
classified as “quantitative” and “qualitative” and their applicability for
respective FMIs is as follows:
Principle Principle Classification Applicability on
No. FMIs i.e. CCs or
Depositories
CCs and
1 Legal basis Qualitative
Depositories
CCs and
2 Governance Qualitative
Depositories
Framework for the
comprehensive CCs and
3 Qualitative
management Depositories
of risks
4 Credit risk Quantitative CCs
5 Collateral Quantitative CCs
Quantitative
6 Margin CCs
7 Liquidity Risk Quantitative CCs
8 Settlement finality Qualitative CCs
112
Principle Principle Classification Applicability on
No. FMIs i.e. CCs or
Depositories
9 Money settlements Qualitative CCs
10 Physical deliveries Qualitative CCs
Central securities
11 Qualitative Depositories
depositories
Exchange-of-value Quantitative
12 CCs
settlement systems and Qualitative
Participant-default rules and CCs and
13 Qualitative
procedures Depositories
Quantitative
14 Segregation and portability CCs
and Qualitative
Quantitative CCs and
15 General business risk
and Qualitative Depositories
Custody and investment Quantitative CCs and
16*
risks and Qualitative Depositories
Quantitative CCs and
17* Operational risk
and Qualitative Depositories
Access and CCs and
18 Participation Qualitative Depositories
Requirements
Tiered participation Quantitative CCs and
19*
arrangements and Qualitative Depositories
CCs and
20 FMI links Qualitative
Depositories
CCs and
21 Efficiency and effectiveness Qualitative
Depositories
Communication procedures CCs and
22 Qualitative
and standards Depositories
Disclosure of rules, key CCs and
23 procedures, and market Qualitative Depositories
data
Disclosure of market data by
24 Not Applicable
trade repositories
* For these PFMI principles, Depositories have to make Qualitative Disclosures only.
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5. The periodicity of self-assessment and disclosure by the FMIs shall be as follows:
Self-assessment
Periodicity
and Disclosures
Quarterly (within 45 days from the end of the quarter – June,
Quantitative September, December and within 60 days from the end of March
quarter)
Qualitative Annually (within 60 days from the end of the financial year)
6. FMIs shall be monitored and assessed against the PFMIs on annual basis by the Regulatory Oversight
Committee (ROC) of the FMI and the ROC shall submit a report to the governing board of the FMI and
SEBI within 60 days from the end of the financial year.
4.29 System and Network Audit of Market Infrastructure Institutions (MIIs)164
4.29.1 Based on discussions with Stock Exchanges, Clearing Corporations, Depositories
(hereinafter referred as ‘Market Infrastructure Institutions – MIIs), and
recommendations of the Technical Advisory Committee (TAC) of SEBI, the
existing System Audit Framework has been reviewed.
4.29.2 MIIs are required to conduct System and Network Audit as per the framework
and Terms of Reference (TOR) laid under Para 4.29.6 & 4.29.7 respectively.
MIIs are also required to maintain a list of all the relevant SEBI circulars/
directions/ advices, etc. pertaining to technology and compliance thereof, as per
format enclosed as Annexure 24 and the same shall be included under the scope
of System and Network Audit.
4.29.3 MIIs are also required to submit information with regard to exceptional major
Non-Compliances (NCs)/ minor NCs observed in the System and Network
audit as per format enclosed as Annexure 25 and are required to categorically
highlight those observations/NCs/suggestions pointed out in the System and
Network audit (current and previous) which remain open.
4.29.4 The Systems and Network audit Report including compliance with SEBI
circulars/ guidelines and exceptional observation format along with compliance
status of previous year observations shall be placed before the Governing Board
of the MII and then the report along with the comments of the Management of
the MII shall be communicated to SEBI within a month of completion of audit.
164 Reference: SEBI Circular SEBI/HO/MRD1/MRD1_DTCS/P/CIR/2022/58 dated May 02, 2022
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4.29.5 Further, along with the audit report, MIIs are required to submit a Joint
declaration from the Managing Director(MD)/Chief Executive Officer(CEO) and
Chief Technology Officer (CTO) certifying:
4.29.5.1 the security and integrity of their IT Systems.
4.29.5.2 correctness and completeness of data provided to the Auditor
4.29.5.3 entire network architecture, connectivity (including co-lo facility) and its
linkage to the trading infrastructure are in conformity with SEBI’s
regulatory framework to provide fair equitable, transparent and non-
discriminatory treatment to all the market participants
4.29.5.4 internal review of Critical Systems as defined under Para 4.31 was carried
out during the Audit period, including the Failure Modes and Effects
Analysis (FMEA).
4.29.6 Framework for System and Network Audit
Audit Process
4.29.6.1 For the System and Network Audit, the following broad areas shall be
considered in order to ensure that the audit is comprehensive and
effective:
4.29.6.1.1 The Audit shall be conducted according to the Norms, Terms of
Reference (TOR) and Guidelines issued by SEBI.
4.29.6.1.2 The Governing Board of the Market Infrastructure Institution (MII)
shall appoint the Auditors based on the prescribed Auditor Selection
Norms and TOR.
4.29.6.1.3 An Auditor can perform a maximum of 3 successive audits. However,
such auditor shall be eligible for re-appointment after a cooling-off
period of two years.
4.29.6.1.4 Further, during the cooling-off period, the incoming auditor may not
include:
(i) Any firm that has common partner(s) with the outgoing audit firm;
and
(ii) Any associate / affiliate firm(s) of the outgoing audit firm which are
under the same network of audit firms wherein the term "same
network" includes the firms operating or functioning, hitherto or in
future, under the same brand name, trade name or common control.
4.29.6.1.5 The number of years an auditor has performed an audit prior to this
circular shall also be considered in order to determine its eligibility in
terms of Para 4.29.6.1.3 above.
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4.29.6.1.6 The scope of the Audit may be broadened by the Auditor to inter-alia
incorporate any new developments that may arise due to issuance of
circulars/ directions/ advice by SEBI from time to time.
4.29.6.1.7 The audit shall be conducted once in a financial year and period of
audit shall be 12 months. However, for the MIIs, whose systems have
been identified as “protected system” by National Critical Information
Infrastructure Protection Centre (NCIIPC), the audit shall be conducted
on a half yearly basis and audit period shall be of 6 months. Further,
the audit shall be completed within 2 months from the end of the audit
period.
4.29.6.1.8 In the Audit report, the Auditor shall include its comments on whether
the areas covered in the Audit are in compliance with the
norms/directions/ advices issued by SEBI, internal policy of the MII,
etc. Further, the audit report shall also include specific non-
compliances (NCs), observations for minor deviations and suggestions
for improvement. The audit report shall take previous audit reports
into consideration and cover any open items therein. The auditor
should indicate if a follow-on audit is required to review the status of
NCs.
4.29.6.1.9 For each of the NCs/ observations and suggestions made by the
Auditor, specific corrective action as deemed fit may be taken by the
MII. The management of the MII shall provide its comments on the
NCs, observations and suggestions made by the Auditor, corrective
actions taken or proposed to be taken along with time-line for such
corrective actions.
4.29.6.1.10 The Audit report along with the comments of management shall be
placed before the Governing Board of the MII. The Audit report along
with comments of the Governing Board shall be submitted to SEBI,
within 1 month of completion of audit.
4.29.6.1.11 The follow-on audit should be completed within one month of the
corrective actions taken by the MII. After the follow-on audit, the MII
shall submit a report to SEBI within 1 month from the date of
completion of the follow-on audit. The report shall include updated
Issue-Log to indicate the corrective actions taken and specific
comments of the Auditor on the NCs and the corrective actions.
4.29.6.1.12 In cases wherein follow-on audit is not required, the MII shall submit
an Action Taken Report (ATR) to the Auditor. After verification of the
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ATR by the Auditor, the MII shall submit a report to SEBI within 1
month from the date of completion of verification by the Auditor. The
report shall include updated Issue-Log to indicate the corrective actions
taken and specific comments of the auditor on the ATR.
4.29.6.1.13 The overall timeline from the last date of the audit period till
completion of final compliance by MII, including follow-on audit, if
any, should not exceed one year/6 months(as applicable).In
exceptional cases, if MII is of the view that compliance with certain
observations may extend beyond said period, then the concerned MII
shall seek specific approval from the Governing Board.
Auditor Selection Norms
4.29.6.2 MII shall ensure compliance with the following norms while appointing
Auditor:
4.29.6.2.1 The Auditor must have minimum 3 years of demonstrable experience
in IT audit of securities market participants e.g. stock exchanges,
clearing corporations, depositories, intermediaries, etc. and/ or
financial services sector i.e. banking, insurance, Fin-tech etc.
4.29.6.2.2 The team performing system and network audit must have experience
in / direct access to experienced resources in the areas covered under
TOR. It is recommended that resources deployed by the Auditor for the
purpose of system and network audit shall have relevant industry
recognized certifications e.g. CISA (Certified Information Systems
Auditor) from ISACA, CISM (Certified Information Securities
Manager) from ISACA, GSNA (GIAC Systems and Network Auditor),
CISSP (Certified Information Systems Security Professional) from
International Information Systems Security Certification Consortium,
commonly known as (ISC).
4.29.6.2.3 The Auditor shall have experience in working on Network audit/IT
audit/governance/IT service management frameworks and processes
conforming to industry leading practices like CobiT/ ISO 27001 and
beyond.
4.29.6.2.4 The Auditor should have the capability to undertake forensic audit and
undertake such audit as part of system and network audit, if required.
4.29.6.2.5 The Auditor must not have any conflict of interest in conducting fair,
objective and independent audit of the exchange / depository/
clearing corporation. It should not have been engaged over the last
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three years in any consulting engagement with any departments /
units of the entity being audited.
4.29.6.2.6 The Auditor should not have any cases pending against it, which point
to its incompetence and/or unsuitability to perform the audit task.
4.29.6.2.7 The proposed audit agency must be empanelled with CERT-In.
4.29.6.2.8 Any criteria, in addition to the aforesaid criteria, that the MII may deem
fit for the purpose of selection of Auditor.
Audit Report Guidelines
4.29.6.3 The Audit report should cover each of the major areas mentioned in the
TOR and compliance with SEBI circulars/directions/advices, etc. related
to technology. The Auditor in the Audit Report shall give its views
indicating the NCs to the standards or observations or suggestions. For
each section, auditors should also provide qualitative inputs/suggestions
about ways to improve the processes, based upon the best industry
practices.
4.29.6.4 The auditor shall certify that entire network architecture, connectivity
(including co-lo facility) and its linkage to the trading infrastructure are in
conformity with SEBI’s regulatory framework to provide fair equitable,
transparent and non-discriminatory treatment to all the market
participants.
4.29.6.5 The report should also include tabulated data to show NCs / observations
for each of the major areas in the TOR.
4.29.6.6 The audit report to include point-wise compliance of areas prescribed in
Terms of Reference (TOR) and areas emanating from relevant SEBI
circulars/directions/advices along with any accompanying evidence.
4.29.6.7 Evidences should be specified in the audit report while reporting/ closing
an issue.
4.29.6.8 A detailed report with regard to the system and network audit shall be
submitted to SEBI. The report shall include an Executive Summary as per
the following format:
Issue Log Column Description Responsibility
Heading
Comprehensive identification of major areas
Major Area in compliance with various SEBI circulars / Auditor/Auditee
norms and internal policies of MII
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Point-wise list of areas/relevant clauses in
Point wise TOR against which compliance is being
Auditor
Compliance audited (in tabular format).
Describe the findings in sufficient detail,
Description of
referencing any accompanying evidence (e.g.
Finding/ Auditor
procedure manual, interview notes, reports
Observation
etc.)
Reference to the section in detailed report –
Reference where full background information about Auditor
the findings are available
Process or unit where the audit is conducted
Process/ Unit Auditor
and the finding pertains to
Major/Minor Non-compliance,
Category of Findings Auditor
Observation, Suggestion etc.
Audited By Which Auditor covered the findings Auditor
A detailed analysis on the cause of the Non-
Root Cause Analysis Auditee
compliance
The action (to be) taken to correct the Non-
Remediation Auditee
compliance
Target Completion
The date by which remedial action must
Date for Remedial Auditor/Auditee
be/will be completed
Action
Status of finding on reporting date
Status Auditor/Auditee
(open/close)
Auditing personnel (upon verification that
Verified By Auditor
finding can be closed)
Date when finding is verified and can be
Closing Date Auditor
closed
4.29.7 Terms of Reference (TOR) for System and Network audit Program
4.29.7.1 The scope of audit shall encompass all the IT resources including
hardware, software, network, policies, procedures etc. of MIIs (Primary
Data Centre (PDC), Disaster Recovery Site (DRS) and Near Site (NS))
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4.29.7.2 IT environment
4.29.7.2.1 Organization details
a. Name
b. Address
c. IT team size (in house- employees)
d. IT team size (vendors)
4.29.7.2.2 IT and network set up and usage
a. PDC, DRS, NS and Regional/ Branch offices (location, owned/
outsourced)
b. Connectivity amongst PDC, NS and DRS
c. IT infrastructure / applications pertaining to the activities done as a
MII.
d. System Architecture
e. Network architecture
f. Telecommunication network
4.29.7.3 IT Governance
4.29.7.3.1 Whether IT Governance framework exists to include the following:
a. IT organization structure including roles and responsibilities of key
IT personnel;
b. IT governance processes including policy making, implementation
and monitoring to ensure that the governance principles are
followed;
4.29.7.3.2 IT policies and procedures
a. Whether the organization has a defined and documented IT
policy? If yes, is it approved by the Governing Board (GB)?
b. Is the current System Architecture, including infrastructure,
network and application components describing system linkages
and dependencies, documented?
c. Whether defined and documented Standard Operating Procedures
(SOPs) for the following processes are in place?
i. IT Assets Acquisition
ii. Access Management
iii. Change Management
iv. Backup and Recovery
v. Incident Management
vi. Problem Management
vii. Patch Management
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viii. Data Centre Operations
ix. Operating Systems and Database Management
x. Network Management
xi. DRS Operations
xii. Data Retention and Disposal
xiii. Asset Inventory
xiv. IT asset refresh/replacement policy
xv. Database security
xvi. Interface Security
xvii. Application Security
xviii. Password Security
xix. Archived and backed up data security
4.29.7.3.3 Whether the above mentioned SOPs is reviewed at periodic intervals
or upon the occurrence of any major event? In this regard, whether
any organization policy has been formulated by the MII?
4.29.7.4 Business Controls
4.29.7.4.1 General Controls for Data Centre Facilities
a. Application Access – segregation of duties, database and
application access etc. (Approved Policy clearly defining roles and
responsibilities of the personnel handling business operations)
b. Maintenance Access – vendor engineers
c. Physical Access controls – permissions, logging, exception
reporting & alerts
d. Environmental Controls – fire protection, AC monitoring, etc.
e. Fault Resolution Mechanism
f. Folder Sharing and Back Up Controls – safeguard of critical
information on local desktops
g. Incidences of violations in the previous audit report and corrective
action(s), if any, taken
h. Any other controls, as deemed fit, by the MII
4.29.7.4.2 Software change control
a. Whether pre-implementation review of application controls
(including controls over change management) was undertaken?
b. Adherence to secure Software Development Life Cycle (SDLC) /
Software Testing Life Cycle (STLC) standards/ methodologies
c. Whether post implementation review of application controls was
undertaken?
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d. Is the review of processes to ensure data integrity post
implementation of new application or system followed by
implementation team?
e. User awareness
f. Processing of new feature request
g. Fault reporting / tracking mechanism & process for resolutions
h. Testing of New releases / Bug-fixes – Testing process (automation
level)
i. Version Control – History, Change Management process etc.
j. Development / Test/ Production environment – Segregation
k. New Release in Production – Promotion, Release note approvals
l. Production Issues / disruptions reported in the previous audit
report, root cause analysis & corrective actions taken, if any
m. Software Development Stage
n. Software Design to ensure adequate system capacity to enable
functioning in a degraded manner in the event of a crash.
o. Any other controls, as deemed fit, by the MII
4.29.7.4.3 Data Communication/ Network Controls
a. Network Administration – Redundancy, Monitoring, breakdown
resolution etc.
b. WAN Management – Connectivity provisions for business
continuity.
c. Encryption - Router based as well as during transmission
d. Connection Permissions – Restriction on need to have basis
e. Fallback Mechanism – Dial-up connections controls etc.
f. Hardware based Signing Process
g. Incidences of access violations observed in the previous report &
corrective actions taken, if any
h. Any other controls, as deemed fit, by the MII
4.29.7.4.4 Security Controls
a. Secured e-mail with other entities such as SEBI, other partners
b. Email Archival Implementation
4.29.7.4.5 Access Policy and Controls
a. Defined and documented policies and procedures for managing
access to applications and infrastructure –PDC, DRS, NS, branches
(including network, operating systems and database) and approved
by relevant authority
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b. Review of access logs
c. Access rights and roles review procedures for all systems
d. Segregation of Duties (SOD) matrix describing key roles
e. Risk acceptance for violation of SOPs and alternate mechanism put
in place
f. Privileged access to system and record of logs,
g. Periodic monitoring of access rights for privileged users
h. Authentication mechanisms used for access to systems including
use of passwords, One Time Passwords (OTP), Single Sign on, etc.
i. Any other controls, as deemed fit, by the MII
4.29.7.4.6 Electronic Document Controls
4.29.7.4.7 General Access Controls
4.29.7.4.8 Performance Audit
a. Comparison of changes in transaction volumes since previous audit
b. Review of systems (hardware, software, network) performance over
the period
c. Review of the current volumes against the last performance test and
against the current system utilization
4.29.7.4.9 Business Continuity / Disaster Recovery Facilities
a. Business Continuity Planning (BCP) manual, including Business
Impact Analysis (BIA), Risk Assessment and Disaster Recovery (DR)
process, Roles and responsibilities of Incent Response Team (IRT)
/Crisis Management Team (CMT), employees, support/outsourced
staff.
b. Implementation of policies
c. Back-up procedures and recovery mechanism using back-ups.
d. Storage of Back-up (Remote site, DRS etc.)
e. Redundancy – Equipment, Network, Site etc.
f. DRS installation and Drills - Management statement on targeted
resumption capability (in terms of time required & extent of loss of
data)
g. Evidence of achieving the set targets during the DR drills in event of
various disaster scenarios.
h. Debrief / review of any actual event when the DR/BCP was invoked
during the year
i. User awareness and training
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j. Is Recovery Time Objective (RTO) /Recovery Process Objective
(RPO) during BIA documented?
k. Is annual review of BCP-DR or in case of major change in business/
infrastructure undertaken?
l. Is quarterly review regarding implementation of BCP policy done
by Standing Committee of Technology (SCOT) of the MII?
m. Testing of BCP-DR plan through appropriate strategies including
simulations, DR drills, system recovery, etc.
n. Is the recordkeeping of quarterly DR drills, live trading sessions
from DRS being maintained?
o. Is BCP-DR policy document prepared and implemented in line with
SEBI circular on BCP and DR of MII?
4.29.7.4.10 IT/Network Support & IT Asset Management
a. Utilization Monitoring – including report of prior year utilization
b. Capacity Planning – including projection of business volumes
c. Capacity and performance management process
for the network/systems
d. IT (S/W, H/W & N/W) Assets, Licenses & maintenance contracts
e. Comprehensive review of Assets life cycle management
(Acquisition, commissioning, deployment, monitoring,
maintenance and de commissioning) and relevant records related to
it.
f. Insurance
g. Disposal – Equipment, media, etc.
4.29.7.5 Entity Specific Software used for or in support of trading/clearing
systems / peripheral systems and critical processes
4.29.7.6 Human Resources Management
4.29.7.6.1 Screening of Employee, Third party vendors / contractors
4.29.7.6.2 Onboarding
4.29.7.6.3 Off boarding
4.29.7.6.4 Consequence Management (Incident / Breach of policies)
4.29.7.6.5 Awareness and Trainings
4.29.7.6.6 Non-Disclosure Agreements (NDAs) and confidentiality agreement
4.29.7.7 Network audit
4.29.7.7.1 The audit shall cover entire network infrastructure which shall inter-
alia includes physical verification and tracing of the connectivity
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paths, server configuration, physical checking wire to wire
connectivity and configurations of computer networking devices etc.
4.29.7.7.2 The audit shall require tracing of the connectivity and network
diagram based on the physical audit.
4.29.7.7.3 The audit shall cover the link, the path, device-level redundancy, no
single-point failures, high availability, and fault tolerance aspects in
the network.
4.29.7.7.4 The audit shall cover entire network that is used to connect members
to the MIIs (POP, MPLS, VSAT, COLO, etc.)
4.29.7.7.5 The audit shall cover applications, internal networks, servers, etc. of
the MIIs/offered by the MIIs to its members that are used for trading,
risk management, clearing and settlement etc.
4.29.7.7.6 Network performance and design
4.29.7.7.7 Network Security implementation
4.29.7.7.8 Network health monitoring and alert system
4.29.7.7.9 Log management process
4.29.7.7.10 Service level definition for vendors/Service level management
4.29.7.7.11 Governance process for network service delivery by vendors
4.29.7.8 The results of all testing that was conducted before deployment of any IT
system/application in production environment, shall be checked by
auditor during system audit.
4.29.7.9 IT Vendor Selection and Management
4.29.7.9.1 Identification of eligible vendors
4.29.7.9.2 Dissemination process of Request for Proposal (RFP)
4.29.7.9.3 Definition of criteria of evaluation
4.29.7.9.4 Process of competitive analysis
4.29.7.9.5 Approach for selection
4.29.7.9.6 Escrow arrangement for keeping source code
4.29.7.10 E-Mail system
4.29.7.10.1 Existence of policy for the acceptable use of electronic mail
4.29.7.10.2 Regulations governing file transfer and exchange of messages with
external parties
4.29.7.10.3 Rules based on which e-mail addresses are assigned
4.29.7.10.4 Storage, backup and retrieval
4.29.7.11 Redressal of Technological Complaints
4.29.7.11.1 Ageing analysis of technology complaints
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4.29.7.11.2 Whether all complaints received are brought to their logical
conclusion?
4.29.7.12 Any other Item(s)
4.29.7.12.1 Electronic Waste Disposal
4.29.7.12.2 Observation(s) based on previous Audit Report (s)
4.29.7.12.3 Any other specific area(s) that may be informed by SEBI.
4.29A Advisory on System and Network of MIIs165
With regard to the system and network audit of the MIIs, the following needs to be
ensured by the MIIs:-
4.29A.1 MIIs should update the scope of system and network audit as and when
any circular/letter/advisory etc. pertaining to technology is issued by SEBI.
4.29A.2 MIIs should include all IT resources, which shall inter-alia includes
applications, underlying hardware, and other IT infrastructure components
such as load balancers, network devices, security devices etc. in the system
and network audit.
4.29A.3 In the system and network audit report, details such as physical
locations/sites covered, engagement period of auditor, period during which
audit was carried out and list of IT infrastructure/applications covered shall
be specified.
4.29A.4 MIIs shall cover all “Critical Systems” in system and network audit. For non-
critical systems, auditors may adopt sampling methodology.
4.29A.5 Sample size taken by auditor in order to ascertain the various compliances
prescribed by SEBI shall be specified in the system and network audit report.
4.29A.6 Technical assessments such as review of network architecture and
configuration review shall be included in the system and network audit.
4.29A.7 During system and network audit, evidence should be collected by
inspecting physical assets, records/documents, testing of relevant systems,
relevant system generated reports etc. in order to ascertain the compliance of
various controls defined by SEBI.
4.29A.8 System and network audit report shall include the point-wise compliance of
areas emanating from relevant SEBI circulars/directions/advices along with
any accompanying evidence.
165 SEBI email dated February 05, 2024
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4.29A.9 Auditor shall certify that entire network architecture, connectivity
(including co-lo facility) and its linkage to the trading infrastructure are in
conformity with SEBI’s regulatory framework to provide fair equitable,
transparent and non-discriminatory treatment to all the market participants.
4.29A.10 Evidence verified/checked by auditor to ascertain the compliance of
particular control shall be in line with the intent/requirement of the said
control mentioned in the SEBI circular pertaining to system and network
audit.
4.29A.11 All MIIs are advised to ensure the strict compliance of the said advisory and
shall also bring the same to the notice of the concerned system and network
auditors. The compliance of the aforesaid advisory shall be provided by MIIs
along with their system and network audit report(conducted as per the
applicable SEBI circular on system and network audit).
4.30 Testing Framework for the Information Technology (IT) systems of the Market
Infrastructure Institutions (MIIs)166
4.30.1 MIIs (i.e. Stock Exchanges, Clearing Corporations and Depositories) are
systemically important institutions as they, inter-alia, provide infrastructure
necessary for the smooth and uninterrupted functioning of the securities
market. Therefore, it is imperative to devise a comprehensive testing
framework to manage the IT systems/applications of MIIs throughout their
lifecycle, which can assist the MIIs in performing thorough risk assessment
before deploying any IT systems in production/ live environment.
4.30.2 Based on the recommendations of the TAC, MIIs are hereby directed to ensure
the following requirements while establishing the testing framework of their
IT systems/applications:-
4.30.2.1 All MIIs should do extensive testing, validation and documentation
whenever new systems/ applications or changes to existing
systems/applications are introduced before the deployment in
production/live environment.
4.30.2.2 A comprehensive methodology for system testing, functional testing,
application security testing should be established and the same shall be
approved by Standing Committee on Technology (SCOT) of respective
MIIs. The scope of testing shall, inter-alia, cover business logic, system
166 Reference: SEBI Circular SEBI/HO/MRD/TPD/P/CIR/2023/65 dated May 05, 2023
127
function, security controls and system performance under load and stress
conditions. Any dependency on the existing systems shall be properly
tested.
4.30.2.3 Testing should be carried out in a separate environment that
replicates/mirrors the production environment in order to minimize any
disruption.
4.30.2.4 All MIIs shall have the practice of traceability matrix to ensure that the
test plan covers all intended functionality of the IT system and
application.
4.30.2.5 All MIIs shall adopt the practice of using automated testing techniques to
run the test cases automatically, which may increase the depth and scope
of tests and ultimately help to improve the software quality.
4.30.2.6 All MIIs shall establish policy/procedures on the use of third party
systems/applications/software codes to ensure these systems are subject
to review and testing before they are integrated with the systems of the
MIIs.
4.30.2.7 All MIIs shall ensure that core code components operate as intended and
do not produce unintended consequences. Further, any new code shall
not have any impact on the existing functionality. All MIIs shall also
ensure that Application Programming Interface Testing is done so that the
concerned application can interact with other applications without
causing disruptions of any kind.
4.30.2.8 All MIIs should perform regression testing for changes (e.g. enhancement,
rectification, etc.) to an existing IT system to validate that it continues to
function properly after the changes have been implemented. After fixing
the defects found during the testing, all MIIs shall perform regression
testing again to ensure that other existing functionalities are not affected
during fixing the defects. All MIIs shall explore to capture the automated
test cases so that regression testing can be performed multiple times with
much wider coverage test cases in a short time.
4.30.2.9 All MIIs may institute tools to measure test/code coverage to assess
comprehensiveness of the test.
4.30.2.10 All Issues identified from testing, including system defects or software
bugs, should be properly tracked and remediated immediately. Major
issues that could have an adverse impact on the MII should be reported
to their SCOT and addressed prior to deployment to the production
environment.
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4.30.2.11 All MIIs should ensure that the results of all testing, including results of
User Acceptance Testing (UAT), that was conducted, are documented in
the test report. The same shall be checked by the auditor during System
and Network Audit.
4.30.2.12 All MIIs shall periodically conduct non-functional testing such as volume
testing, resilience testing, scalability testing, performance testing, stress
testing, application security testing, BCP testing, negative/destructive
testing etc. for all IT systems/applications throughout their lifecycle (pre-
implementation, post implementation, after changes).
4.30.2.13 All MIIs shall perform white box testing or structural testing, which shall
inter-alia include analyzing data flow, control flow, information flow,
coding practices, exception and error handling within the system.
4.31 Guidelines for Business Continuity Plan (BCP) and Disaster Recovery (DR)167
4.31.1 Upon examination and based on consultation with MIIs and TAC of SEBI, the
modified framework for BCP and DR shall be as under:
4.31.1.1 Stock Exchanges, Clearing Corporations and Depositories (collectively
referred as Market Infrastructure Institutions – MIIs) shall have in place
BCP and DRS so as to maintain data and transaction integrity.
4.31.1.2 For Stock Exchanges : Apart from DRS, all Stock Exchanges shall also
have a Near Site (NS) to ensure near zero data loss.
For Clearing Corporations and Depositories: Apart from DRS, all Clearing
Corporations and Depositories shall also have a Near Site (NS) to ensure
zero data loss.
4.31.1.3 The DRS should preferably be set up in different seismic zones and in case
due to certain reasons such as operational constraints, change of seismic
zones, etc., minimum distance of 500 kilometer shall be ensured between
PDC and DRS so that both DRS and PDC are not affected by the same
disaster.
4.31.1.4 The manpower deployed at DRS shall have the same expertise as
available at PDC in terms of knowledge/ awareness of various
technological and procedural systems and processes relating to all
operations such that DRS can function at short notice, independently.
167 Reference: SEBI Circular SEBI/HO/MRD1/DTCS/CIR/P/2021/33 dated March 22, 2021 and SEBI
Circular SEBI/HO/MRD/TPD-1/P/CIR/2024/119 dated September 12, 2024
129
MIIs shall have sufficient number of trained staff at their DRS so as to
have the capability of running live operations from DRS without
involving staff of the PDC.
4.31.1.5 All MIIs shall constitute an Incident and Response team (IRT)/ Crisis
Management Team (CMT), which shall be chaired by the Managing
Director (MD) of the MII or by the Chief Technology Officer (CTO), in
case of non-availability of MD. IRT/ CMT shall be responsible for the
actual declaration of disaster, invoking the BCP and shifting of operations
from PDC to DRS whenever required. Details of roles, responsibilities and
actions to be performed by employees, IRT/ CMT and
support/outsourced staff in the event of any Disaster shall be defined and
documented by the MII as part of BCP-DR Policy Document.
4.31.1.6 The Technology Committee of the MIIs shall review the implementation
of BCP-DR policy approved by the Governing board of the MII on a
quarterly basis.
4.31.1.7 MIIs shall conduct periodic training programs to enhance the
preparedness and awareness level among its employees and outsourced
staff, vendors, etc. to perform as per BCP policy.
4.31.2 Configuration of DRS / NS with PDC
4.31.2.1 Hardware, system software, application environment, network and
security devices and associated application environments of DRS / NS
and PDC shall have one to one correspondence between them.
4.31.2.2 MIIs should develop systems that do not require configuration changes
at the end of trading members/ clearing members/ depository
participants for switchover from the PDC to DRS. Further, MIIs should
test such switchover functionality by conducting unannounced live
trading from its DRS for at least 1 day in every six months. Unannounced
live trading from DRS of MIIs shall be done at a short notice of 45 minutes
after 90 days from the date of this circular.
4.31.2.3 In the event of disruption of any one or more of the ‘Critical Systems’ (as
defined below), the MII shall, within 30 minutes of the incident, declare
that incident as ‘Disaster’ and take measures to restore operations
including from DRS within 45 minutes of the declaration of ‘Disaster’.
Accordingly, the Recovery Time Objective(RTO)- the maximum time
taken to restore operations of ‘Critical Systems’ from DRS after
declaration of Disaster- shall be 45 minutes, to be implemented within 90
days from the date of the circular. ‘Critical Systems’ for an Exchange/
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Clearing Corporation shall include Trading, Risk Management, Collateral
Management, Clearing and Settlement and Index computation. ‘Critical
Systems’ for a Depository shall include systems supporting settlement
process and inter-depository transfer system.
4.31.2.4 MIIs shall ensure that the Recovery Point Objective (RPO) - the maximum
tolerable period for which data might be lost due to a major incident- shall
be near zero. Further, MIIs shall have a documented methodology for
data reconciliation when resuming operations from DRS or any other site
as applicable.
4.31.2.5 For Stock Exchanges: Solution architecture of PDC and DRS / NS shall
ensure high availability, fault tolerance, no single point of failure, near
zero data loss, and data and transaction integrity
For Clearing Corporations and Depositories: Solution architecture of PDC
and DRS / NS shall ensure high availability, fault tolerance, no single
point of failure, zero data loss, and data and transaction integrity.
4.31.2.6 Any updates made at the PDC should be reflected at DRS/ NS
immediately (before end of day) with head room flexibility without
compromising any of the performance metrics.
4.31.2.7 Replication architecture, bandwidth and load consideration between the
DRS / NS and PDC should be within stipulated RTO and ensure high
availability, right sizing, and no single point of failure.
4.31.2.8 For Stock Exchanges: Synchronous replication or appropriate replication
between PDC and NS shall be implemented to ensure near zero data loss.
Asynchronous replication may be implemented between PDC and DRS
and between NS and DRS.
For Clearing Corporations and Depositories: Synchronous replication
between PDC and NS shall be implemented to ensure zero data loss.
Asynchronous replication may be implemented between PDC and DRS
and between NS and DRS.
4.31.2.9 Adequate resources (with appropriate training and experience) should be
available at all times to handle operations at PDC, NS or DRS, as the case
may be, on a regular basis as well as during disasters.
4.31.3 DR Drills / Testing
4.31.3.1 DR drills should be conducted on a quarterly basis. In case of Exchanges
and Clearing Corporations, these drills should be closer to real life
scenario (trading days) with minimal notice to DRS staff involved.
4.31.3.2 During the drills, the staff based at PDC should not be involved in
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supporting operations in any manner.
4.31.3.3 The drill should include running all operations from DRS for at least 1
full trading day.
4.31.3.4 Before DR drills, the timing diagrams clearly identifying resources at both
ends (DRS as well as PDC) should be in place.
4.31.3.5 The results and observations of these drills should be documented and
placed before the Governing Board of Stock Exchanges /Clearing
Corporations/ Depositories. Subsequently, the same along with the
comments of the Governing Board should be forwarded to SEBI within a
month of the DR drill.
4.31.3.6 The System Auditor while covering the BCP – DR as a part of mandated
annual System Audit should check the preparedness of the MII to shift its
operations from PDC to DRS unannounced and also comment on
documented results and observations of DR drills.
4.31.3.7 ‘Live’ trading sessions from DR site shall be scheduled for at least two
consecutive days in every six months. Such live trading sessions from the
DRS shall be organized on normal working days (i.e. not on weekends /
trading holidays). The Stock Exchange/ Clearing Corporation/
Depository shall ensure that staff members working at DRS have the
abilities and skills to run live trading session independent of the PDC
staff.
4.31.3.8 Stock Exchanges, Clearing Corporations and Depositories shall include a
scenario of intraday shifting from PDC to DRS during the mock trading
sessions in order to demonstrate its preparedness to meet RTO/RPO as
stipulated above.
4.31.3.9 MII should undertake and document Root Cause Analysis (RCA) of their
technical/ system related problems in order to identify the causes and to
prevent reoccurrence of similar problems.
4.31.4 BCP - DR Policy Document
4.31.4.1 MIIs shall put in place a comprehensive BCP-DR policy document
outlining the following:
i. Broad scenarios that would be defined as a Disaster for an MII
(in addition to definition provided in Para 4.31.2.3).
ii. Standard Operating Procedure to be followed in the event of
Disaster.
iii. Escalation hierarchy within the MII to handle the Disaster.
iv. Clear and comprehensive Communication Protocols and
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procedures for both internal and external communications from
the time of incident till resumption of operations of the MII.
v. Documentation policy on record keeping pertaining to DR drills.
vi. Scenarios demonstrating the preparedness of MIIs to handle
issues in Critical Systems that may arise as a result of Disaster.
vii. Preparedness of Depositories to handle any issue which may
arise due to trading halts in Stock Exchanges.
viii. Framework to constantly monitor health and performance of
Critical Systems in normal course of business.
4.31.4.2 The BCP-DR policy document of MII should be approved by
Governing Board of the MIIs after being vetted by Technology
Committee and thereafter communicated to SEBI. The BCP-DR
policy document should be periodically reviewed at least once in
six months and after every occurrence of disaster.
4.31.4.3 In case an MII desires to lease its premise at the DRS to other
entities including to its subsidiaries or entities in which it has stake,
the MII should ensure that such arrangements do not compromise
confidentiality, integrity, availability, targeted performance and
service levels of the MII’s systems at the DRS. The right of first use
of all the resources at DRS including network resources should be
with the MII. Further, MII should deploy necessary access controls
to restrict access (including physical access) of such entities to its
critical systems and networks.
4.31.5 Stock Exchanges, Clearing Corporations and Depositories should ensure that
Para 4.31.3.6 and 4.31.4.1(v) mentioned above are also included in the scope of
System Audit.
MIIs are advised to collaborate in developing a standardized definition of
“near zero data loss” and submit the same to SEBI after taking approval from
their respective Standing Committee on Technology (SCOT).
4.32 IT (Information Technology) Governance For Depositories168
4.32.1 SEBI constituted the Depository System Review Committee (DSRC) to
undertake a comprehensive review of the Indian depository system. Based on
the recommendations of DSRC, following guidelines are issued to strengthen
the information Technology (IT) governance framework of depositories.
4.32.2 The Depositories shall formulate an IT strategy document and an Information
168 Reference: SEBI Circular MRD/DMS/03/2014 dated January 21, 2014
133
Security policy which should be approved by the Board and reviewed annually.
4.32.3 The Depositories shall create an Office of Information Security and designate a
senior official as Chief Information Security Officer (CISO) whose work would
be to assess, identify and reduce information technology (IT) risks, respond to
incidents, establish appropriate standards and controls, and direct the
establishment and implementation of policies and procedures.
4.32.4 SEBI has laid down Guidelines for Business Continuity Plan (BCP) and Disaster
Recovery (DR) for MIIs under Para 4.31. In addition to the requirements under
Para 4.31, depositories shall designate a senior official as the head of BCP
function.
4.33 Guidelines for inspection of Depository Participants (DPs) by Depositories169
4.33.1 Depository System Review Committee (DSRC) was constituted by SEBI to
undertake a comprehensive review of the depository system of Indian Securities
market.
4.33.2 As a first measure, DSRC has reviewed framework adopted by the depositories
with regard to the inspection of depository participants (DPs). Considering the
recommendations of the committee, it has been decided that depositories shall
ensure the following while inspecting their DPs.
Inspection Areas and Sample Size
4.33.3 For conducting inspection of DPs, depositories shall inspect the following areas
as mentioned below:
4.33.3.1 Depositories shall inspect the areas mentioned at Para 4.33.3.2 below during
inspection of DPs with regards to any
4.33.3.1.1 Circulars / Guidelines issued by SEBI on the areas mentioned below
4.33.3.1.2 Guidelines / Operating Instructions / Directions from depositories on the
areas mentioned below.
4.33.3.2 In case there are built in system checks at the depository that ensure
compliance of any of the inspection areas/sub –areas with regard to Para
4.33.3.1.1 and Para 4.33.3.1.2 above, the depository may decide on the
including the same during the inspection of DPs
Inspection Areas
A. Account Opening / KYC Documents
A.1. Account Opening forms
A.2. KYC Documents
A.2.1. PAN Verification
169 Reference: SEBI Circular SEBI/MRD/DMS/05/2014 dated February 07, 2014
134
A.2.2. In-person verification
A.2.3. Forwarding of Documents to KYC Registration Agency (KRA)
A.3. Proof of Identity (POI)
A.4. Proof of Address
A.5. Correspondence Address
A.6. Authorized Signatories
A.7. Completeness / Validation of data entered into DPM with data
provided in the Account Opening forms
A.8. Minor BO / Joint / HUF accounts
A.9. Account Activation
A.10. PMS Accounts
A.11. Nomination
A.12. Any other area as may be specified by the depository
B. Basic Service Demat Account (BSDA)
B.1. Procedures and Checks pertaining to BSDA
B.2. Any other area as may be specified by the depository
C. Client Data Modification (CDM)
C.1. Procedure for CDM
C.2. Any other area as may be specified by the depository
D. Demat / Remat / Conversion /Reconversion request
D.1. Procedure for receiving/processing requests pertaining to Demat /
Remat / Conversion /Reconversion request
D.2. Procedure for forwarding requests pertaining to Demat / Remat /
Conversion /Reconversion request to RTA / issuer
D.3. Arrangement for Safekeeping of Security / Share Certificates
D.4. Tracking of demat requests
D.5. Rejection of above requests attributable to DPs
D.6. Checks pertaining to processing of Demat / Remat / Conversion /
Reconversion request
D.7. Any other area as may be specified by the depository
E. Delivery Instruction Slip (DIS)
E.1. Issuance of DIS
E.2. Inventory Control of DIS
E.3. First Instruction Slip Booklet
E.4. Requisition Slip
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E.5. Procedure for Loose DIS
E.6. Depository specific areas
E.7. Verification of DIS
E.8. Procedure for accepting DIS
E.9. Time Stamping and related Areas
E.10. Accepting DIS by Fax
E.11. Accepting DIS in form of Annexure
E.12. Completeness of DIS
E.13. Accepting DIS in electronic form
E.14. Procedure for Verification of DIS
E.15. Signature Verification
E.16. Corrections / Cancellations to DIS
E.17. Blocking of used / executed / lost / misplaced / Stolen DIS
E.18. Procedure for processing of DIS
E.19. Any other area as may be specified by the depository
F. Transaction
F.1. Checks pertaining to setting up / processing of transactions
F.2. Future dated transactions
F.3. Transfer of all ISINs of BO account having 5 or more ISINs
F.4. Any other area as may be specified by the depository
G. Transaction Statement (TS)
G.1. Validation of TS
G.2. Maintenance of records of TS
G.3. Issuance of TS to BOs
G.4. Any other area as may be specified by the depository
H. Compliance under Prevention of Money Laundering Act, 2002 (PMLA)
H.1. Compliance with PMLA Act, 2002 and SEBI Guidelines on areas such as
Customer due diligence, suspicious transaction monitoring , reporting
and record keeping
H.2. Appointment of Principal officer as required under PMLA Act,2002
H.3. Mechanism to deal with alerts provided by Depository
H.4. Suspicious Transactions reports to FIU
H.5. Any other area as may be specified by the depository
I. Maintenance of record and documents
I.1. Information regarding place(s) of record keeping
I.2. Outsourcing of record keeping activities
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I.3. Any other area as may be specified by the depository
J. Service Centre Opening and closing/ modification of service centers
J.1. Procedure for Opening /Closureof Service centers
J.2. Details of Service centre on Depository website
J.3. Qualified persons at service centers
J.4. Any other area as may be specified by the depository
K. Information Technology areas
K.1. Hardware, Software and Network requirements / configurations
K.2. Logical and Physical restrictions / safeguards
K.3. IT Security
K.4. Procedure for alteration of parameters / configurations
K.5. Redundancy
K.6. Any other area as may be specified by the depository
L. Power of Attorney (POA)
L.1. Documents executed
L.2. Maintenance of POA Register
L.3. Clauses of POA
L.4. Registration of BO for SMS Alert facility for POA
L.5. Any other area as may be specified by the depository
M. Inter Depository Transfers (IDT)
M.1. Processing of IDT
M.2. Checks pertaining to IDT
M.3. Any other area as may be specified by the depository
N. Account Transfer
N.1. Procedure followed for account transfer
N.2. Checks pertaining to Account transfer
N.3. Waiver claimed for inter depository transfer
N.4. Any other area as may be specified by the depository
O. Transmission
O.1. Procedure followed for transmission
O.2. Checks pertaining to Transmission
O.3. Waiver Claimed for inter depository transfer
O.4. Any other area as may be specified by the depository
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P. Pledge / Unpledge
P.1. Procedure followed for Pledge / Unpledge
P.2. Checks pertaining to Pledge / Unpledge
P.3. Any other area as may be specified by the depository
Q. Freeze / Unfreeze
Q.1. Freeze facility
Q.2. Procedure followed for Freeze
Q.3. Checks pertaining to freeze
Q.4. Any other area as may be specified by the depository
R. Miscellaneous areas
R.1. Investor Grievance
R.2. Forms for various activities
R.3. Execution of any supplementary agreement/ Letter of Confirmation
R.4. Submission of Internal Audit / Concurrent Audit / Net worth
Certificate
R.5. Submission of Annual Financial Statement
R.6. Outsourcing of Activities
R.7. Closure / transfer of Balances
R.8. Submission of Information sought by Depositories specifically through
Circulars / Letters.
R.9. Half Yearly Compliance
R.10. Any other area as may be specified by the depository
S. Status of compliance for deviations / observations noted in last inspection
T. Complaints
T.1. Account Opening
T.2. Demat / Remat
T.3. Transaction Statement
T.4. Improper Service
T.5. Charges
T.6. Delivery Instruction Related( DIS )
T.7. Closure
T.8. Manipulation / Unauthorized Action
T.9. Monthly report for client complaints
During inspection, depositories shall cover implementation of circulars /
guidelines issued by SEBI and guidelines / operating instructions / directions
by depositories in respect of these areas. In addition, Depositories may
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include such other areas as felt appropriate.
4.33.4 For the purpose of determining the size of sample, depositories shall be guided
by 'Adaptive Sample Size determination methodology' as mentioned below:
4.33.4.1 Sample Size for inspection area of 'Account Opening'
 The sample selection for account opening shall cover all categories of clients
such as individuals, HUF, Corporate, FPIs etc.
 Base sample size: 5% of Account Opening Forms (AOFs) or 150 AOFs
whichever is higher, with a maximum cap of 1000 accounts.
 Final Sample Size: The final sample size shall also be dependent on past rating
/ categorization of DP. The following multipliers shall be used to determine
the final sample size for the current inspection. In case the total number of
instances / cases is less than the final sample size, then 100% of the samples
shall be verified.
DP Rating / Categorization Multiplier
High risk 3
Medium High risk 2
Medium risk 1.5
Low risk 1
 The selected sample shall maintain the proportion of new accounts opened in
each category, except for Account Opening Forms (AOF) relating to FIPs
where it shall be checked on a 100% basis.
4.33.4.2 Sample Size for inspection area relating to DIS
 Base sample size: 10% of total DIS processed or 200 processed DIS whichever
is higher, with a maximum cap of 1000 DIS.
 Final Sample Size: The sample size shall also be dependent on rating /
categorization of DP. The following multipliers shall be used to determine the
final sample size for the current inspection. In case the total number of
instances / cases is less than the final sample size, then 100% of the samples
shall be verified.
DP Rating / Categorization Multiplier
High risk 3
Medium High risk 2
Medium risk 1.5
Low risk 1
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 Out of total intra depository instructions to be verified, the percentage of on
and off market instructions would be in the ratio of 1/3 and 2/3.
 DIS issuance sample size shall be 5% of the total samples verified for DIS.
4.33.4.3 Sample Sizes for inspection areas of 'Demat / Remat request' and
'Pledge/Unpledge'
 5% of Demat / Remat request processed or 100 requests whichever is higher
with a maximum cap of 500 such requests.
 5% of Pledge / Unpledge request processed or 100 requests whichever is
higher with a maximum cap of 500 such requests.
4.33.4.4 Sample Size for inspection area of 'Client Data Modification',
'Miscellaneous areas' and 'Other depository specific requirements'
 Base Sample Size
o Address change = 50
 Samples from Urban, Semi Urban and Rural Areas shall be equally
represented if available.
o Nomination Change= 25
o Signature change = 100
o Addition / Deletion / Modification of POA = 100
o Freeze/ Unfreeze= 50
o Bank Details Change= 100
o PAN modification = 100
o Account closure initiated by clients = 25
o Closure initiated by DPs = 25
o Demat rejection = 30
o Transactions = 25
o Change in e-mail Id = 25
o Change in mobile number = 25
o Change in SMS flag = 50
o Change in standing instruction flag = 50
o Transmission = 50% of total transmission cases
o Previous compliance = 100% of total samples
o Final sample size shall be arrived at after multiplying with the respective
multiplier corresponding to the DP Risk rating / categorization as given
below. In case the total number of instances / cases is less than the final
sample size, then 100% of the samples shall be verified.
DP Rating/ Categorisation Multiplier
140
High risk 3
Medium High risk 2
Medium risk 1.5
Low risk 1
4.33.4.5 Other Aspects
 A uniform Base sample size of 100 shall be adopted in case of all other
activities. In case the total number of samples is less than 100, then 100% of
the samples shall be verified.
Categorization / Risk Rating of DPs
4.33.5 For the purpose of computing total risk score of DPs, depositories shall be
guided by “DP Rating Model / Categorization” as mentioned below:
4.33.5.1 Quantitative Score Calculation: Specific weights shall be assigned to each
area as decided by each depository. The Total Quantitative Score shall be the
summation of all individual inspection scores.
Table: Indicative Table for calculation of Quantitative Score
B = No of
Instances Inspection
Weight
S. No Inspection Areas divided by Score
(A)
Sample IS = A*B
size
A. Inspection Area 1
A.1. Inspection Sub Area A 1
A.2. Inspection Sub Area 2
Total Score for Inspection Area 1
B. Inspection Area 2
B.1. Inspection Sub Area B 1
B.2. Inspection Sub Area B 2
B.3. Inspection Sub Area B 3
Total Score for Inspection Area 2
Depositories shall include all inspection areas and sub areas, as per Para 4.33.3 (List
of Inspection Areas), in the above model to arrive at the Quantitative Score for a DP.
Table: Indicative Table for calculation of Quantitative Score for Complaints
Received
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S. No. Type and Nature of Weight (Number of Inspection
Complaint (A) Complaints Score
redressed) /
Number of IS = A*B
Complaints
received)
T Complaints
T.1 Complaint Sub Area 1
T.2 Complaint Sub Area 2
Total Score for Complaints
Quantitative Score = Σ (Scores of Inspection Areas including Total score for
Complaints)
4.33.5.2 Qualitative Score Calculation: Specific weights shall be assigned to each area
as decided by depository. The Total Qualitative Score shall be the summation
of all area scores.
Point on the
scale of 1 to Area
Sr. Weight 10. score
Qualitative Factors
No (A) [10 being the =(A) *
Worst] (B)
(B)
1 Ownership and Governance
2 IT security and Business Continuity
3 Regulatory / procedural Compliance
Automation of systems and processes for
4
critical activities
5 Quality of Management
6 Financial Status / profitability of DPs
Pending enquires / Penalties imposed by
7
SEBI / Depositories on DP operations
8 Complaints redressal
Adverse findings of other activities (eg.
9
Broking / custodian / banks etc)
Total Qualitative Score = Σ (Area Scores)
Following indicative factors shall be taken into account for arriving at above
mentioned qualitative score:
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(a) Ownership and Governance
1. Constitution of Board of DP – Number of promoter directors, Independent
Directors etc.
2. Role of non-executive directors / Independent directors.
(b) Quality of Management
1. Experience, Fit and Proper and Qualification of Key Personnel.
2. Existence of Succession planning for top management especially in control
functions.
3. Chinese walls between the activities in terms of manpower, resources etc.
4. Training and development of employees.
5. Adequacy of staff strength.
6. Compliance level of previous inspection observations/ directions of
regulatory bodies
(c) IT security and Business Continuity
1. High Availability.
2. Appropriate Interconnected Architecture.
3. Appropriate Recovery Time Objective (RTO) and Recovery Point Objective
(RPO) and near “Zero Data Loss”.
4. Periodic drills that simulate the real life disaster scenarios on a regular basis.
5. Technological glitches in the past period and remedies taken.
6. Information security.
7. Upgradation of technology
(d) Financial Status / profitability of DPs
1. The net-worth of the DPs (whether reducing or increasing from previous
years)
2. Net Profits of DPs operations.
(e) Complaints redressal
1. Complaint redressal system
2. Percentage of complaints pending and resolved.
(f) Other adverse findings
1. Actions taken by Stock exchange and SEBI / RBI with respect to other
activities
2. Actions taken by other depository.
4.33.5.3 Total Score = Qualitative Score + Quantitative Score
4.33.6 Depositories should periodically undertake risk - impact analysis for each of the
inspection areas, assign appropriate risk weightage, calculate risk scores for each
DPs in the lines mentioned below.
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a. Risk Weightage: Depositories shall assign risk weights for each of
inspection areas after taking into consideration following factors:
1. Operational risks in each of the inspection areas.
2. Category of DPs (such as stock broker DPs, bank DP, etc.)
3. Size of Operation
4. Repetitive violations
5. IT Security and BCP
6. Complaints received and redressed
b. Quantitative Score Calculation: Depositories shall arrive at a
Quantitative Risk Score for each inspection area by multiplying
percentage of non-compliance to the sample size with the corresponding
assigned risk weight.
c. Qualitative Score Calculation: Depositories shall arrive at a Qualitative
Risk Score for each qualitative area by multiplying the score assigned by
inspection team to DP with corresponding assigned risk weight.
d. Total DP Risk Score shall be the summation of quantitative and
qualitative scores assigned to the DP.
e. Depositories shall suitably normalize the scales of the qualitative and
quantitative scores in arriving at the Total DP risk score.
4.33.7 Depositories shall categorize their DPs as 'High Risk', 'Medium to High Risk',
'Medium Risk', and 'Low Risk' DPs based on the percentile of risk score.
DP Risk Rating / Categorization Percentile of Risk Score
High ≥ 80
Medium-High 46-79
Medium 21-45
Low ≤ 20
4.33.8 After arriving at the risk rating / categorization as mentioned above, for
subsequent inspections, depositories shall use the DP risk rating/ categorization
to decide on the frequency of inspection of DPs
4.33.9 Apart from the above, depositories may undertake specific purpose inspections
for DPs which score high in the specific inspection areas as Para 4.33.3
4.33.10 Depositories shall jointly inspect DPs which are registered with both
depositories to have better control over DPs, avoid duplicity of manpower, time
and cost and also to reduce the possibility of regulatory arbitrage, if any.
Depositories shall share the risk rating / categorization of common DPs with
each other. For the purpose of determining sample size and frequency of the
joint inspection of such common DPs, the higher risk categorization assigned by
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any of the Depository shall prevail.
4.34 Dissemination of information on action taken against Depository Participants on
the website of Depositories170
4.34.1 The following directions have been approved by SEBI:
4.34.1.1 Wherever powers are conferred upon Depositories to take actions in case
of default/non-compliance by DPs, the data of such actions/non-
compliance should be made available in public domain by the depository
4.34.1.2 A link may be provided in the SEBI website leading to the Depository
website as detailed in Para 4.34.1.1 above.
4.34.2 Depositories are advised to make available on its website, the information
pertaining to action taken against DP pursuant to joint inspection/suo-moto
independent inspection carried out. For prospective cases, the same shall be
uploaded within 10 days of concluding the matter.
4.35 Activity of Demat of warehouse receipts171
The aforesaid activity is not in compliance with Regulation 42 of DP Regulations and
therefore depositories cannot carry out this activity. Depositories are therefore
advised to take suitable steps in this regard, either to hive-off or to discontinue the
activity.
4.36 Voting rights in respect of securities held in pool account172
The corporate benefits availed by the clearing member, clearing corporation and
intermediaries shall be held in trust on behalf of beneficiary owners. Therefore, the
clearing member, clearing corporation as well as the intermediaries cannot have
voting rights in respect of securities held in the pool account.
4.37 e-Voting Facility Provided by Listed Entities173
Kindly refer para titled ‘e-voting facility provided by listed entities’ of SEBI Circular
SEBI/HO/CFD/PoD2/CIR/P/2023/120 dated July 11, 2023 (Master circular for
compliance with the provisions of the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 by listed entities)
170 Reference: SEBI Letter SEBI/HO/MlRSD/DPlEA/OW/2021/10188/3 dated May 11, 2021
171 Reference: SEBI Letter MRD/DP/SG-OW/202/2012 and MRD/DP/SG-OW/203/2012 dated
January 4, 2012
172 Reference: SEBI Letter SMDRP/NSDL/26563/2001 dated April 10, 2001
173 Reference: SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2020/242 dated December 09, 2020
145
4.38 Risk Management Policy at the Depositories174
4.38.1 The depositories are advised to establish a clear, comprehensive and well
documented risk management framework which shall include the following:
4.38.1.1 an integrated and comprehensive view of risks to the depository
including those emanating from participants, participants' clients and
third parties to whom activities are outsourced etc.;
4.38.1.2 list out all relevant risks, including technological, legal, operational,
custody and general business risks and the ways and means to address
the same;
4.38.1.3 the systems, policies and procedures to identify, assess, monitor and
manage the risks that arise in or are borne by the depository;
4.38.1.4 the depository's risk-tolerance policy;
4.38.1.5 responsibilities and accountability for risk decisions and decision making
process in crises and emergencies.
4.38.2 The Depositories shall put in place mechanism to implement the Risk
Management Framework through a Risk Management Committee which
shall be headed by a Public Interest Director175.The responsibilities of the said
Committee shall include the following:
4.38.2.1 It shall meet periodically in order to continuously identify, evaluate and
assess applicable risks in depository system through various sources such
as investors complaints, inspections, system audit etc.;
4.38.2.2 It shall suggest measures to mitigate risk wherever applicable;
4.38.2.3 It shall monitor and assess the adequacy and effectiveness of the risk
management framework and the system of internal control;
4.38.2.4 It shall review and update the risk management framework periodically.
4.38.3 The Board of the depository shall approve the Risk Management Framework
and the Chief Risk Officer shall have access to the Board. The CRO shall be
responsible, accountable and answerable to the board on overall risk
management issues.
4.39 Code of Conduct & Institutional mechanism for prevention of Fraud or Market
Abuse176
4.39.1 Pursuant to the report of the Committee on Fair Market Conduct
(‘Committee’), set up inter-alia to recommend appropriate Institutional
174 Reference: SEBI Circular CIR/MRD/DP/1/2015 dated January 12, 2015
175 Reference: SEBI Circular SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/13 dated January 10, 2019
176 Reference: SEBI Circular SEBI/HO/MRD/DCAP/CIR/P/2021/23 dated March 03, 2021
146
Mechanism to ensure accountability of the management/designated persons
in case of negligence/failure, necessary changes have been carried out in PIT
Regulations.
4.39.2 Based on the above, it has been decided that the Code of Conduct and
Institutional Mechanism for prevention of fraud or market abuse shall be
applicable to Stock Exchanges, Clearing Corporations and Depositories
(herein after collectively referred as ‘MIIs’) also, on the lines of Regulation 9(1)
to 9(4) of PIT Regulations.
4.39.3 Accordingly, depositories shall do the following:
4.39.3.1 Formulate a Code of Conduct to regulate, monitor and report
trading by their designated persons and immediate relative of
designated persons towards achieving compliance with the PIT
Regulations, by adopting the minimum standards set out in
Schedule C to the PIT Regulations.
4.39.3.2 Managing Director (MD) / Chief Executive Officer (CEO) of the
depository shall be obligated to frame the referred code of conduct.
The Board of Directors may ensure the compliance by MD/CEO in
this regard.
Explanation – For the avoidance of doubt it is clarified that a
depository, which is listed, is already required to adopt minimum
standards set out in Schedule B of PIT regulations. Further, such
depository shall adopt minimum standards as set out in Schedule B
of PIT regulations with respect to trading in its own securities and
in Schedule C with respect to trading in other securities.
4.39.3.3 Depository shall identify and designate a compliance officer to
administer the aforesaid code of conduct.
4.39.3.4 The Board of Directors of the depository , in consultation with the
aforesaid compliance officer, shall specify the designated persons to
be covered by the code of conduct on the basis of their role and
function in the organisation and the access that such role and
function would provide to unpublished price sensitive information
in addition to seniority and professional designation and shall
include the position/designation as specified in the Regulation 9(4)
of the PIT Regulations.
4.39.4 Depositories shall put in place an Institutional Mechanism for prevention of
fraud or market abuse covering the following:
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4.39.4.1 MD / CEO of the depository shall put in place adequate and
effective system of internal controls to ensure compliance with the
regulations and circulars issued by the Board from time to time, to
prevent fraud or market abuse by depository or its designated
persons and immediate relatives of designated persons.
4.39.4.2 The Board of Directors of the depository shall ensure that the
MD/CEO ensures compliance with Para 4.39.3 and Para 4.39.4.1
above. The compliance officer of the depository shall administer the
internal controls to prevent fraud or market abuse by designated
persons and immediate relatives of designated persons of the
depository.
4.39.4.3 The Regulatory Oversight Committee of the depository shall review
compliance with the provisions of this Circular at least once in a
financial year and shall also verify that the systems for internal
control are adequate and are operating effectively.
4.39.4.4 Depository shall formulate written policies and procedures for
inquiry in case of suspected fraud or market abuse by its designated
persons and immediate relatives of designated persons, which shall
be approved by its Board of Directors. Any enquiry / investigation
against the designated persons and immediate relatives of
designated persons of the depository may be undertaken under the
supervision of Regulatory Oversight Committee comprising of PIDs
and independent external expert with consideration of avoidance of
conflict of interest, if any, so as to ensure maximum fairness and
transparency.
4.39.4.5 Depository shall initiate appropriate inquiry upon becoming aware
of any illegal or unethical practices or transactions of suspected
fraud or market abuse by its designated persons and immediate
relatives of designated persons and promptly inform its Board of
Directors of such suspected fraud or market abuse and results of the
inquiry.
4.39.4.6 Depository shall have an effective whistler-blower policy to enable
stakeholders, including employees to freely communicate their
concerns about illegal or unethical practices and report instances of
fraud or market abuse or any suspicion of fraud or market abuse.
4.39.4.7 Depository shall ensure that the policy framed under Para 4.39.4.6
provides for suitable protection against any discharge, termination,
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demotion, suspension, threats, harassment, directly or indirectly or
discrimination against any employee who reports instances of fraud
or market abuse or any suspicion of fraud or market abuse.
4.40 Outsourcing by Depositories177
Based on recommendations by DSRC, the depositories are advised to ensure
the following:
4.40.1 Depositories shall formulate and document an outsourcing policy duly
approved by their Board based on the guidelines given below and the
principles outlined at Para 2.4.4.
Core activities of Depositories
4.40.2 Core and critical activities of depositories shall not be outsourced. The core
activities of the depositories shall include but not limited to the following:
4.40.2.1 Processing of the applications for admission of Depository
Participants (DPs), Issuers and Registrar & Transfer Agents
(RTAs).
4.40.2.2 Facilitating Issuers/RTAs to execute Corporate Actions.
4.40.2.3 Allotting ISINs for securities.
4.40.2.4 Maintenance and safekeeping of Beneficial Owner’s data.
4.40.2.5 Execution of settlement and other incidental activities for pay-in/
pay-out of securities.
4.40.2.6 Execution of transfer of securities and other transactions like
pledge, freeze, etc.
4.40.2.7 Provision of internet based facilities for access to demat accounts
and submitting delivery instructions.
4.40.2.8 Ensuring continuous connectivity to DPs, RTAs, Clearing
Corporations and other Depository.
4.40.2.9 Monitoring and redressal of investor grievances.
4.40.2.10 Inspection of DPs and RTAs.
4.40.2.11 Surveillance Functions.
4.40.2.12 Compliance Functions.
4.40.3 Core IT (Information Technology) support infrastructure / activities for
running the core activities of depositories shall not be outsourced to the extent
possible.
Due Diligence
177 Reference: SEBI Circular CIR/MRD/DP/19/2015 dated December 09, 2015
149
4.40.4 The depositories shall conduct appropriate due diligence in selecting the third
party to whom activity is proposed to be outsourced and ensure that only
reputed entities having proven high delivery standards are selected.
Risk Management & Monitoring
4.40.5 Depositories shall ensure that outsourced activities are further outsourced
downstream only with the prior consent of the depository and with
appropriate safeguards including proper legal documentation/ agreement.
4.40.6 Depositories shall ensure that risk impact analysis is undertaken before
outsourcing any activity and appropriate risk mitigation measures like back
up/ restoration system are in place.
4.40.7 An effective monitoring of the entities selected for outsourcing shall be done
to ensure that there is check on the activities of outsourced entity.
Depositories shall strive to automate their processes and workflows to the
extent possible which shall enable real time monitoring of outsourced
activities.
Audit
4.40.8 The outsourcing policy document shall act as a reference for audit of the
outsourced activities. Audit of implementation of risk assessment and
mitigation measures listed in the outsourcing policy document and
outsourcing agreement/ service level agreements pertaining to IT systems
shall be part of System Audit of Depositories.
4.41 Cyber Security and Cyber Resilience framework of Depositories178
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity and
Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs).
4.41.1 Guidelines for MIIs regarding Cyber security and Cyber resilience179
178 Reference: SEBI Circular CIR/MRD/DP/13/2015 dated July 06, 2015, Circular
SEBI/HO/MRD1/MRD1_DTCS/P/CIR/2022/68 dated May 20, 2022 and Circular
SEBI/HO/MRD/TPD/P/CIR/2023/147 dated August 24, 2023
179 SEBI Circular SEBI/HO/MRD/ TPD/P/CIR/2023/146 dated August 29, 2023
150
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity and
Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs).
4.41.2 Advisory on Encryption of Data at Rest and Data in Motion 180
As per the SEBI circular on cyber security and cyber resilience framework, MIIs
are advised to ensure adoption of encryption of Data-in motion and Data-at-
rest by March 31, 2024.
4.41.3 Advisory on Cyber security and Cyber resilience 181
With regard to the cyber security preparedness of the MIIs, the following needs
to be ensured by the MIIs:
4.41.3.1 MIIs shall ensure real-time monitoring of their IT environment with the
capability of generation of real-time alerts. Logs from all servers/networks and
other infrastructure shall be aggregated into SOC/SIEM and team at SOC shall
proactively monitor/take actions on the alerts generated from the ingested data.
4.41.3.2 MIIs shall proactively monitor both inbound and outbound traffic.
4.41.3.3 MIIs shall build appropriate defense strategies to deal with DDoS, Insider
Threat, Phishing and Ransomware-as-a-Service (“RaaS”) attacks.
4.41.3.4 MIIs should carry out employee awareness campaigns, psychometric tests,
continuous face to face engagement with employees, simulation exercises etc. for
employees handing critical activities/tasks to deal with any social
engineering/phishing attacks.
4.41.3.5 MIIs shall physically segregate the network implemented for doing various kind
of automation for physical security of building vis-à-vis networks implemented
for core activities.
4.41.3.6 MIIs shall identify the vulnerabilities in their IT environment through regular
scans and all critical high-impact vulnerabilities shall be closed on an urgent
basis.
4.41.3.7 MIIs shall follow proper change management policy to ensure adequate testing
and closure of vulnerabilities before deploying into production environment.
Further, appropriate monitoring shall be done with respect to any change
management implemented by MIIs.
4.41.3.8 MIIs shall ensure that they maintain online as well as offline backups of their
data and appropriate testing shall be conducted on these backups to ensure
confidentiality, integrity and availability.
180 SEBI email dated September 28, 2023
181 SEBI email dated January 16, 2024
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4.41.3.9 MIIs shall ensure continuous security monitoring of third-party involvement,
such as access of systems to vendors, to mitigate any cyber security risks.
4.41.3.10 MIIs shall follow the principle of zero trust architecture while providing access
to IT systems. Further, MIIs shall monitor privilege access to any IT systems
proactively.
4.41.3.11 MIIs should also beef up physical security of their premises.
4.41.4 Measures taken to strengthen the cyber resilience of MIIs182
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity
and Cyber Resilience Framework for SEBI Regulated Entities (REs).
4.41.5 Patch Management policy of MIIs183
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity
and Cyber Resilience Framework for SEBI Regulated Entities (REs).184
4.41.6 Cyber Security Operation Center (C-SOC)185
4.41.6.1 Recognizing the need for a robust Cyber Security and Cyber Resilience
framework at Market Infrastructure Institutions (MIIs), i.e., Stock
Exchanges, Clearing Corporations and Depositories, a detailed regulatory
framework on cyber security and cyber resilience has been prescribed.
4.41.6.2 With the view to further strengthening the aforesaid framework,
particularly in respect of monitoring of cyber threats and cyber resiliency,
the matter was discussed with SEBI’s TAC, SEBI’s High Powered
Committee on Cyber Security (HPSC-CS) and the MIIs.
4.41.6.3 Accordingly, it has been decided that MIIs shall have a Cyber Security
Operation Center (C-SOC) that would be a 24x7x365 set-up manned by
182 SEBI letter dated December 26,2023
183 SEBI letter dated January 12, 2024
184 https://www.sebi.gov.in/legal/circulars/aug-2024/cybersecurity-and-cyber-resilience-
framework-cscrf-for-sebi-regulated-entities-res-_85964.html
185 Reference: SEBI Circular CIR/MRD/CSC/148/2018 dated December 07, 2018
152
dedicated security analysts to identify, respond, recover and protect from
cyber security incidents.
4.41.6.4 The C-SOC shall function in accordance with the framework specified at
Para 4.41 Illustrative list of broad functions and objectives to be carried out
by a C-SOC are mentioned below:
4.41.6.4.1 Prevention of cyber security incidents through proactive actions:
a) Continuous threat analysis,
b) Network and host scanning for vulnerabilities and breaches,
c) Countermeasure deployment coordination,
d) Deploy adequate and appropriate technology at the perimeter to
prevent attacks originating from external environment and
internal controls to manage insider threats. MIIs may implement
necessary controls to achieve zero trust security model.
4.41.6.4.2 Monitoring, detection, and analysis of potential intrusions /
security incidents in real time and through historical trending on
security-relevant data sources.
4.41.6.4.3 Response to confirmed incidents, by coordinating resources and
directing use of timely and appropriate countermeasures.
4.41.6.4.4 Analysis of the intrusions / security incidents (including Forensic
Analysis and Root Cause Analysis) and preservation of evidence.
4.41.6.4.5 Providing situational awareness and reporting on cyber security
status, incidents, and trends in adversary behaviour to appropriate
organizations including to CERT- In and NCIIPC.
4.41.6.4.6 Engineer and operate network defense technologies such as
Intrusion Detection Systems (IDSes) and data collection / analysis
systems.
4.41.6.4.7 MIIs to adopt security automation and orchestration technologies
in C-SOC to automate the incident identification, analysis and
response as per the defined procedures.
4.41.6.5 Further to the above, the C-SOC of MII shall, at the minimum, undertake
the following activities:
4.41.6.5.1 In order to detect intrusions / security incidents in real time, the C-
SOC should monitor and analyze on a 24x7x365 basis relevant logs
of MII’s network devices, logs of MII’s systems, data traffic, suitable
cyber intelligence (intel) feeds sourced from reliable vendors,
inputs received from other MIIs, inputs received from external
agencies such as CERT-In, etc. The cyber intelligence (intel) feeds
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may include cyber news feeds, signature updates, incident reports,
threat briefs, and vulnerability alerts.
4.41.6.5.2 To this end, appropriate alert mechanisms should be implemented
including a comprehensive dashboard, tracking of key security
metrics and provide for cyber threat scorecards.
4.41.6.5.3 The C-SOC should conduct continuous assessment of the threat
landscape faced by the MII including undertaking periodic VAPT
(Vulnerability Assessment and Penetration Testing).
4.41.6.5.4 The C-SOC should have the ability to perform Root Cause Analysis,
Incident Investigation, Forensic Analysis, Malware Reverse
Engineering, etc. to determine the nature of the attack and
corrective and/or preventive actions to be taken thereof.
4.41.6.5.5 The C-SOC should conduct periodic (at the minimum quarterly)
cyber-attack simulation to aid in developing cyber resiliency
measures. The C-SOC should develop and document mechanisms
and standard operating procedures to recover from the cyber-
attacks within the stipulated RTO of the MII. The C-SOC should
also document various scenarios and standard operating
procedures for resuming operations from Disaster Recovery (DR)
site of MII.
4.41.6.5.6 The C-SOC should conduct periodic awareness and training
programs at the MII and for its members / participants /
intermediaries with regard to cyber security, situational awareness
and social engineering.
4.41.6.5.7 The C-SOC should be capable to prevent attacks similar to those
already faced. The C-SOC should also deploy multiple honey pot
services which are dynamic in characteristics to avoid being
detected as honey pot by attackers.
4.41.6.6 As building an effective C-SOC requires appropriate mix of right people,
suitable security products (Technology), and well-defined processes and
procedures (Processes), an indicative list of areas that MIIs should
consider while designing and implementing a C-SOC are as follows:
4.41.6.6.1 The MII shall ensure that the governance and reporting structure
of the C-SOC is commensurate with the risk and threat landscape
of the MII. The C-SOC shall be headed by the Chief Information
Security Officer (CISO) of the MII. The CISO shall be designated as
a Key Managerial Personnel (KMP) and relevant provisions
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relating to KMPs in the Securities Contracts (Regulation) (Stock
Exchanges and Clearing Corporations) Regulations, 2018 and the
subsequent circulars issued by SEBI relating to KMPs, shall apply
to the CISO.
4.41.6.6.2 While the CISO is expected to work closely with various
departments of MIIs, including MII’s Network team, Cyber
Security team and Information Technology (IT) team, etc., the
reporting of CISO shall be directly to the MD & CEO of the MII.
4.41.6.6.3 The roles and responsibilities of CISO may be drawn from Ministry
of Electronics and IT Notification No. 6(12)/2017-PDP-CERT-In
dated March 14, 2017.
4.41.6.6.4 The C-SOC should deploy appropriate technology tools of
adequate capacity to cater to its requirements. Such tools shall, at
the minimum, include Security Analytics Engine, Malware
detection tools, Network and User Traffic Monitoring and
Behaviour Analysis systems, Predictive Threat Modelling tools,
Tools for monitoring of System parameters for critical systems /
servers, Deep Packet Inspection tools, Forensic Analysis tools, etc.
4.41.6.6.5 Each MII is advised to formulate a Cyber Crisis Management Plan
(CCMP) based on its architecture deployed, threats faced and
nature of operations. The CCMP should define the various cyber
events, incidents and crisis faced by the MII, the extant cyber threat
landscape, the cyber resilience envisaged, incident prevention,
cyber crisis recognition, mitigation and management plan. The
CCMP should be approved by the respective Standing Committee
on Technology / IT- Strategy Committee of the MIIs and the
governing board of the MII. The CCMP should also be reviewed
and updated annually.
4.41.6.6.6 The C-SOC should have well-defined and documented processes
for monitoring of its systems and networks, analysis of cyber
security threats and potential intrusions / security incidents, usage
of appropriate technology tools deployed by C-SOC, classification
of threats and attacks, escalation hierarchy of incidents, response to
threats and breaches, and reporting (internal and external) of the
incidents.
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4.41.6.6.7 The C-SOC should employ domain experts in the field of cyber
security and resilience, network security, data security, end-point
security, etc.
4.41.6.6.8 The MIIs are also advised to build a contingent C-SOC at their
respective DR sites with identical capabilities w.r.t. the primary C-
SOC in line with the circulars issued by SEBI in this regard.
Additionally, the MIIs should perform monthly live-operations
from their DR-C-SOC.
4.41.6.6.9 The C-SOC should document the cases and escalation matrices for
declaring a disaster.
4.41.6.7 In view of the feedback received from MIIs, it has been decided that MIIs
may choose any of the following models to set-up their C-SOC:
i. MII’s own C-SOC manned primarily by its internal staff,
ii. MII’s own C-SOC, staffed by a service provider, but supervised by a
full time staff of the MII. (Refer to Para 4.41.6.7.3)
iii. C-SOC that may be shared by the MII with its group entities (that
are also SEBI recognized MIIs),
iv. C-SOC that may be shared by the MII with other SEBI recognized
MII(s).
4.41.6.7.1 The responsibility of cyber security of an MII, adherence to
business continuity and recovery objectives, etc. should lie with the
respective MII, irrespective of the model adopted for C-SOC.
4.41.6.7.2 The respective risk committee(s) of the MII should evaluate the
risks of outsourcing the respective activity.
4.41.6.7.3 The MII may outsource C-SOC activities in line with the guidelines
as given below:
Level of support definitions for outsourcing/in-house are as follows:
 Security Analyst Level 1 (L1): This function may be mostly outsourced
a) Monitoring SIEM Solution console for identifying the security events
generated by the log sources integrated with SIEM tools.
b) Identification of security events that are false +ve before qualifying event
as an incident.
c) Identify the exceptions which are identified as an event (e.g. VA scanning
performed by SEBI appointed 3rd party which may be identified as port
scanning attack).
d) Perform first level event analysis before qualifying the incidents.
e) Qualifying the event as an incident using Knowledgebase.
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f) Escalating exceptions & Events to L2 level.
g) Log Incident tickets in service management tool and assign it to the
respective team.
h) Follow-up for the closure of the incident tickets generated.
 Security Analyst Level 2 (L2): Combination of Outsource / In-House
a) Exception Analysis.
b) Analysis of extended events.
c) Confirmation of False +ve & update Knowledge Base.
d) Qualify Incident & provide mitigation suggestions.
e) Escalate incident to next level.
f) Update /configuration correlation rules after approval.
 Security Analyst Level 3 (L3): Combination of Outsource / In-House
a) Analysis of escalated Incidents.
b) Define correlation rules.
c) Analysis of impact on SIEM over all correlation rules and operations for
the correlation rules suggested by Level 2 Analyst.
d) Approve correlation rules after the impact analysis.
e) Perform impact analysis before deployment of correlation rules.
f) Perform impact analysis for update and upgrade of SIEM & Advance
security solutions components.
g) Define Mitigation suggestions for newly identified incidents.
h) Approve the reports before sharing with others.
 SOC Manager (L4): In-house
a) Lead and manage Security Operations Centre.
b) Provide strategic directions to SOC team and organization for security
posture improvements.
c) To identify key contacts for incident escalation and change management
activities.
d) Ensure compliance to SLA.
e) Ensure process adherence and process improvisation to achieve
operational objectives.
f) Revise and develop processes to strengthen the current Security
Operations.
g) Responsible for team and vendor management.
h) Responsible for overall use of resources and initiation of corrective action
where required for Security Operations Center.
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i) Escalate to the other IT Infra. Management teams or application
maintenance teams, as necessary.
j) Overall responsibility for delivery of in scope activities as a part of this
engagement.
k) Point of contact for problem escalation and reporting.
 Security Subject Matter Expert for Security technologies: In-house with reliance on
external expertise
a) Subject Matter Expert (SME) for SIEM and Advance security solutions.
b) Assist you with troubleshooting steps to be performed by you in order to
re-establish connectivity between the SIEM System and SEBI’s locations.
c) Provide software-level management for the SIEM System components;
d) Verify data collection and log continuity;
e) Manage user access including user and group permissions updates;
f) Review application performance, capacity, and availability make
recommendations as appropriate;
g) Review SIEM System disk space usage;
h) Verify time synchronization among SIEM System components;
i) Perform archival management and retrieval per change management
process;
j) Provide problem determination / problem source identification for the
SIEM System, consisting of creating tickets & tracking progress of Open
tickets
k) Managing tickets to resolution / closure, in accordance with the processes
as defined in the Integrated and Transition vendor announcements &
manage SIEM System update alerts;
l) Install application patches and software updates in order to improve
performance, or enable additional functionality
Illustrative Training Requirements
Security Analyst Level 1 (L1):
i. SEC401: Security Essentials Bootcamp Style
https://www.sans.org/event/cyber-defence-canberra-2018/course/security-
essentials-bootcamp-style
ii. SEC301: Introduction to Cyber Security
https://www.sans.org/course/introduction-cyber-security
Security Analyst Level 2 (L2):
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i. SEC542: Web App Penetration Testing and Ethical Hacking
https://www.sans.org/event/cyber-defence-canberra-2018/course/web-
app-penetration-testing-ethical-hacking
ii. SEC566: Implementing and Auditing the Critical Security Controls -In-Depth
https://www.sans.org/private-training/course/implementing-auditing-
critical-security-controls
iii. SEC575: Mobile Device Security and Ethical Hacking
https://www.sans.org/private-training/course/mobile-device-security-
ethical-hacking
Security Analyst Level 3 (L3):
i. SEC504: Hacker Tools, Techniques, Exploits, and Incident Handling
https://www.sans.org/event/cyber-defence-canberra-2018/course/hacker-
techniques-exploits-incident-handling
ii. FOR508: Advanced Digital Forensics, Incident Response, and Threat Hunting
https://www.sans.org/event/digital-forensics-summit-
2018/course/advanced-incident-response-threat-hunting-training
iii.SEC501: Advanced Security Essentials -Enterprise Defender
https://www.sans.org/private-training/course/advanced-security-
essentials-enterprise-defender
iv. MGT414: SANS Training Program for CISSP® Certification
https://www.sans.org/course/sans-plus-s-training-program-cissp-
certification-exam
SOC Manager (L4):
i. Cyber Security Specialist
http://www.leaderquestonline.com/it-career-training/cybersecurity-
specialist/
ii. Managing Security Operations: Detection, Response, and Intelligence
https://www.sans.org/event/rocky-mountain-2018/course/managing-
security-operations-detection-response-and-intelligence
iii. SIEM with Tactical Analytics
https://www.sans.org/private-training/course/siem-with-tactical-analytics
iv. SEC511: Continuous Monitoring and Security Operations
https://www.sans.org/course/continuous-monitoring-security-operations
v. SEC599: Defeating Advanced Adversaries -Implementing Kill Chain Defenses
https://www.sans.org/course/defeating-advanced-adversaries-kill-chain-
defenses
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4.41.6.8 A report on the functioning of the C-SOC, including details of cyber-
attacks faced by the MII, major cyber events warded off by the MII, cyber
security breaches, data breaches should be placed on a quarterly basis
before the board of the MII.
4.41.6.9 The system auditor of the MII shall audit the implementation of the
aforesaid guidance in the annual system audit of the MII. The Scope
and/or Terms of Reference (ToR) of the annual system would accordingly
be modified to include audit of the implementation of the aforementioned
areas.
4.41.6.10 Further, the C-SOC shall share relevant alerts and attack information with
members / participants / intermediaries of the MII, other MIIs, external
cyber response agencies such as CERT-In, and SEBI.
For further guidance regarding Cyber security and Cyber resilience,
kindly also refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on
Cybersecurity and Cyber Resilience Framework for SEBI Regulated
Entities (REs).186
4.42 Recommendations of high powered steering Committee187
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity and
Cyber Resilience Framework for SEBI Regulated Entities (REs).
4.43 Database for Distinctive Number (DN) of Shares188
4.43.1 Share capital reconciliation of the entire issued capital of the company by the
issuer or its agent is a mandatory requirement under Regulation 75 of the DP
Regulations.
4.43.2 In order to ensure centralised record of all securities, including both physical
and dematerialised shares, issued by the company and its reconciliation
thereof, the Depositories are advised to create and maintain a database of
distinctive numbers (DN) of equity shares of listed companies with details of
DN in respect of all physical shares and overall DN range for dematerialised
shares.
186 https://www.sebi.gov.in/legal/circulars/aug-2024/cybersecurity-and-cyber-resilience-
framework-cscrf-for-sebi-regulated-entities-res-_85964.html
187 Reference: SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/10055 dated April 22, 2019
188 Reference: SEBI Circular CIR/MRD/DP/10/2015 dated June 05, 2015
160
4.43.3 The DN database shall make available, information in respect of issued capital,
such as DN Range, number of equity shares issued, name of stock exchange
where the shares are listed, date of in-principle listing / final trading approval
/ dealing permission, shares held in physical or demat form, date of allotment,
shares dematerialized under temporary (frozen) ISIN (International Securities
Identification Number) or Permanent (active) ISIN etc., at one place.
4.43.4 Based on consultations with the Depositories and Stock Exchanges, the
following guidelines are given for the operationalisation of the DN database –
4.43.4.1 Instructions to the Depositories
4.43.4.1.1 The depositories shall create and maintain a database to capture DN in
respect of all physical equity shares and overall DN range for
dematerialised equity shares issued by listed companies.
4.43.4.1.2 The depositories shall provide an interface to the Stock Exchange,
Issuers/RTAs for online updation and to the DPs for online enquiry.
4.43.4.1.3 The database shall include the following information -
i. Distinctive Numbers (From) vii. Trading start date
ii. Distinctive Numbers (To) viii. Physical/demat
iii. Number of Equity shares ix. Date of allotment and date of issue
(date of credit to BO account)
iv. Name of stock exchange x. ISIN along with name of company
v. Date of in-principle listing xi. Nature of ISIN [Temporary (Frozen)
approval or Permanent (Active)]
vi. Date of final trading
approval/dealing permission
4.43.4.1.4 The depositories shall ensure that the database maintained by them is
continuously updated and synchronised. The initial synchronisation
may be in batch mode and shall thereafter shift to online mode.
4.43.4.1.5 The Depositories, in co-ordination with the Stock Exchanges, having
nationwide trading terminals and the Issuers/RTAs, shall facilitate the
process of populating the database with details of equity share capital
and the corresponding DN information.
4.43.4.2 Instructions to the Stock Exchanges
4.43.4.2.1 The Stock Exchanges shall provide the following information of all
companies listed on the concerned Stock Exchange-
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i. Total number of equity shares (A) for which final trading approval /
dealing permission has been granted.
ii. Total number of equity shares (B) for which in-principle listing approval
has been granted but final trading approval / dealing permission is
pending.
iii. Total number of equity shares comprising the paid-up capital i.e. (A+B).
4.43.4.2.2 The Stock Exchanges shall use the interface provided by the Depositories
for the following -
i. In respect of further issue of shares by listed companies, consequent to
update of DN information by Issuers/RTAs, the stock exchange shall
validate the DN information updated by the Issuer/RTA and update the
date of ‘in-principle’ listing approval, date of final trading approval /
dealing permission and trading start date, immediately upon granting
of such permissions.
ii. In respect of companies coming out with initial public offer or new
listings on stock exchanges, the stock exchange shall update the DN
database with the total number of equity shares for which final trading
approval / dealing permission has been granted.
iii. In respect of companies whose capital is changed/altered for any reason
other than further issuance of shares such as buy-back of shares,
forfeiture of shares, capital reduction, etc., the stock exchange shall
confirm such change/alteration in the capital as updated by the
Issuer/RTA in the DN database.
4.43.4.2.3 In case the DN data on listed shares as per the records of Issuers/RTAs
does not match with records of the Stock Exchanges, the Stock
Exchanges shall coordinate with the Issuer/RTA to reconcile such
differences.
4.43.4.3 Instructions to the Issuers/RTAs
4.43.4.3.1 Issuers/RTAs shall use the interface provided by the Depositories for
the following -
i. To update DN information in respect of all physical share capital and
overall DN range for dematerialised share capital for all listed
companies.
ii. Updating the fields (i)-(iv), (viii) and (ix) given in Para 4.43.4.1.3, on a
continuous basis for subsequent changes including changes in case of
further issue, fresh issuance / new listing and other change / alteration
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in capital (such as buy-back of shares, forfeiture of shares, capital
reduction, etc.).
iii. Capturing / updating the DN information on a continuous basis while
processing, dematerialisation / rematerialisation requests confirmation,
executing corporate action, etc.
4.43.4.3.2 Issuers/RTAs shall take all necessary steps to update the DN database.
If there is mismatch in the DN information with the data
provided/updated by the Stock Exchanges in the DN database, the
Issuer/RTA shall take steps to match the records and update the same.
4.43.4.3.3 Failure by the Issuers/RTAs to ensure reconciliation of the records as
required in terms of para above shall attract appropriate actions under
the extant laws.
4.43.4.4 Instructions to the DPs
4.43.4.4.1 The DPs shall use the interface provided by the Depositories to check the
DNs of certificates of equity shares submitted for dematerialisation and
ensure that appropriate ISIN is filled in Dematerialisation Request Form,
as applicable, while processing request for dematerialisation.
4.43.5 Despite follow-ups by Depositories, certain companies were yet to comply with
the above provisions. Hence, in order to protect the interest of investors the
following is directed189:-
4.43.5.1 Action against non-compliant companies
4.43.5.1.1 With effect from August 01, 2019:-
i. The depositories shall freeze all the securities held by the promoters and
directors of the listed companies that are not in compliance with the
above provisions under para 4.43.1 to 4.43.4 (Beneficiary Owner Account
Level Freeze).
ii. The depositories shall not effect any transfer, by way of sale, pledge, etc.,
of any of the securities, held by the promoters and directors of such non-
compliant companies.
iii. The depositories shall freeze all related corporate benefits on the
Beneficiary Owner a/c frozen as above.
iv. The depositories shall retain the freeze on the securities held by
promoters and directors of non-compliant companies till such time the
company complies with the directions provided above (Para 4.43.1 to
Para 4.43.4).
189 Reference: SEBI Circular SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/87 dated August 01, 2019
163
Depositories are advised to keep in abeyance the action mentioned
above in specific cases where moratorium on enforcement proceedings
has been provided for under any Act, Court/ Tribunal Orders, etc.
4.43.5.1.2 The names of companies that are not in compliance with aforementioned
provisions shall be prominently disseminated on the website of the
exchanges/depositories, indicating that the concerned companies have
not complied with the above provisions.
4.43.5.1.3 Prior to revocation of suspension of trading of shares of any company,
exchanges shall ensure compliance by the company with the above
provisions and ensure availability of updated details of company’s
promoters (especially their PAN) and directors (especially their PAN
and DIN), apart from ensuring compliance with other applicable
regulatory norms.
4.43.5.2 The concerned Stock Exchanges and Depositories shall coordinate with each
other and take necessary steps to implement these provisions.
4.43.5.3 SEBI may also take any other appropriate action(s) against the concerned
listed companies and its promoters/directors for non-compliance with the
above provisions.
4.44 Ticker on Website - For Investor awareness190
4.44.1 In order to create wider awareness about the same, Depositories and Depository
Participants are advised to run the following ticker on their websites:
"No need to issue cheques by investors while subscribing to IPO. Just write
the bank account number and sign in the application form to authorise your
bank to make payment in case of allotment. No worries for refund as the
money remains in investor's account."
4.44.2 Depositories are advised to communicate the above to their depository
participants and ensure its implementation.
4.45 Separate mobile number/ email id for the clients of Depository Participants (DPs)191
4.45.1 It has been observed that DPs do not have the procedure to check that separate
mobile number/ email id is uploaded for each client.
4.45.2 In view of the same, Depositories are advised to instruct their participants to
ensure that separate mobile number/E-mail address is uploaded for each client.
However, under exceptional circumstances, the participants may, at the specific
190 Reference: SEBI Email on “Ticker on Website - For Investor awareness” dated November 05,
2015
191 Reference: SEBI Email on Separate mobile number/ email id for the clients of Depository
Participants (DPs) dated January 16, 2015.
164
written request of a client, upload the same mobile number/E-mail address for
more than one client provided such clients belong to one family.
‘Family’ for this purpose would mean self, spouse, dependent children and
dependent parents.
4.46 Comprehensive guidelines for Investor Protection Fund (IPF) and Investor Services
Fund (ISF) at Stock Exchanges and Depositories192
4.46.1 The comprehensive guidelines for IPF are as under:
4.46.1.1 Investor Protection Fund
A. Constitution and Management of the IPF
i. All depositories shall establish an IPF. The IPF of the depository shall be
administered through separate trusts created for the purpose.
ii. The IPF Trust of depository shall consist of five trustees as under:
a) Three Public Interest Directors (PIDs);
b) One representative from the investor associations recognized by SEBI;
and
c) Chief Regulatory Officer or Compliance Officer.
iii. The maximum tenure of a trustee (excluding the Chief Regulatory Officer or
Compliance Officer, whose trusteeship would be co-terminus with their
service) shall be five years or as specified by SEBI.
iv. The depository shall provide the secretariat for their IPF Trusts respectively.
v. The depository shall ensure that the funds in the IPF are well segregated and
that their IPF is immune from any liabilities of the depository. Further,
supervision of utilization of IPF and interest or income from IPF will rest
with the IPF Trust.
B. Contribution to IPF of Depository
i. The following contributions shall be made by the Depository to the IPF:
a. 5% of their profits from depository operations every year.
b. All fines and penalties recovered from Depository Participants (DPs) and
other users including clearing member pool account penalty as specified
in SEBI circular no. SMDRP/Policy/Cir-05/2001 dated February 01, 2001.
c. Interest or income received out of any investments made from the IPF.
d. Funds lying to the credit of IPR (Investor Protection Reserve) / BOPF
(Beneficial Owners Protection Fund) of the Depository or any other such
fund / reserve of the Depository shall be transferred to IPF.
192 Reference: SEBI Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/81 dated May 30, 2023
(superceded SEBI Circular SEBI/HO/MRD/DP/CIR/P/2016/58 dated June 07, 2016)
165
e. Any other contribution as may be specified by SEBI from time to time.
C. Utilization of IPF and interest or income from IPF
i. The amount in IPF and any interest or income generated from the IPF of the
depositories shall be utilized for the purposes as stated in the table below:
SN Particulars Utilization
a) Promotion of investor education and
investor awareness programmes through
seminars, lectures, workshops,
publications (print and electronic media),
training programmes, etc. aimed at
enhancing securities market literacy and
promoting retail participation in securities
market;
b) To utilize the fund for supporting
initiatives of DPs for promotion of investor
1 IPF
education and investor awareness
programmes;
c) To meet the legitimate claims of the
beneficial owners, upto the maximum cap
as to be determined by the depository, in
case the same is not settled by the
beneficial owner indemnity insurance;
d) To utilize the fund in any other manner as
may be prescribed or permitted by SEBI in
the interest of investors;
Interest or income To further strengthen the corpus, 100% of
received out of any interest or income from IPF shall be treated as
2
investments made corpus of IPF.
from the IPF
D. Deployment of Funds of IPF Depositories
i. Funds of the IPF Trust shall be invested in instruments such as Central
Government securities, fixed deposits of scheduled banks and any such
instruments which are allowed as per the investment policy approved by the
governing boards of depository. The investments shall be adequately
diversified with single issuer exposure, excluding Government securities,
not exceeding 10% of the IPF corpus. The investment policy shall be devised
166
with an objective of capital protection, portfolio diversification, liquidity,
along with highest degree of safety and least market risk.
E. Review of IPF Corpus
i. The depositories shall conduct half-yearly review (by end of March and
September every year) to ascertain the adequacy of the IPF corpus. In case
the IPF corpus is found to be inadequate, the same shall be enhanced
appropriately.
F. Disclosures
i. The depositories are advised to
a) Disclose the corpus of the IPF on its website and update the same on a
monthly basis.
b) Disseminate its policy on processing investor claims from IPF on their
website including the compensation limit fixed by them per investor.
c) To frame FAQs on their policy on processing investor claims for easy
understanding of investors.
d) Give adequate notice (including a press release) to the investors before
implementing any amendment in the policy on processing of claims. In
case of any amendment in the policy on processing of investor claims, the
same should not be applicable to the TMs who have been disabled or
suspended or declared defaulter by the exchange prior to the effective
date of implementation of policy.
4.46.1.2 Miscellaneous
If a depository is wound up or derecognized or exits, then the balance in the
IPF and/or ISF lying un-utilised with depository shall be transferred to
Investor Protection and Education Fund of SEBI in terms of SEBI (Investor
Protection and Education Fund) Regulations, 2009. The funds shall be utilised
for purposes of Investor education
4.47 Enhanced Supervision of Depository Participant193
Kindly refer para titled ‘Enhanced Supervision of Stock Brokers / Depository
Participants’ of https://www.sebi.gov.in/legal/master-circulars/aug-2024/master-
circular-for-stock-brokers_85605.html August 09, 2024 (Master circular for Stock
Brokers)
193 Reference: SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016,
SEBI Circular CIR/HO/MIRSD/MIRSD2/CIR/P/2017/64 dated June 22,2017 & SEBI Circular
SEBI/HO/MIRSD/ MIRSD_DPIEA/P/CIR/2022/83 dated June 20, 2022
167
4.48 Amendment pursuant to comprehensive review of Investor Grievance Redressal
Mechanism194
The respective provisions dealing with mediation, conciliation and have been
superseded with the introduction of Online Dispute Resolution (ODR) Mechanism.
Kindly refer https://www.sebi.gov.in/legal/master-circulars/dec-2023/master-
circular-for-online-resolution-of-disputes-in-the-indian-securities-
market_80236.html dated December 28, 2023 (Master circular for Online Resolution
of Disputes in the Indian Securities Market)
4.49 Investor Grievance Redressal Mechanism195
Online Web Based Complaints Redressal System:
4.49.1 SEBI has implemented an online platform (SCORES) designed to help investors
to lodge their complaints, pertaining to securities market, against listed
companies and SEBI registered intermediaries.
4.49.2 In line with the same, to enable investors to lodge and follow up their complaints
and track the status of redressal of such complaints from anywhere, all
Depositories are advised to design and implement an online web based
complaints redressal system of their own, which will facilitate investors to file
complaints and escalate complaints for redressal in accordance with their
respective byelaws, rules and regulations.
4.49.3 The system should be web enabled and provide online access 24 x 7 with the
following salient features:
4.49.3.1 Complaints/Grievance Redressal Committee (GRC)* and reminders thereon
are lodged online at anytime from anywhere;
4.49.3.2 An email is generated instantaneously acknowledging the receipt of the
complaint and allotting a unique registration number for future reference
and tracking;
4.49.3.3 The matter/case moves online to the entity (intermediary or listed company)
concerned for its redressal;
4.49.3.4 The entity concerned can indicate the mode i.e. online or offline for GRC*
4.49.3.5 The access of the online system should be given to the Trading Members and
Depository Participants.
194 Reference: SEBI Circular SEBI/HO/DMS/ CIR/P/2017/15 dated February 23, 2017, SEBI Circular
SEBI/HO/MRD1/ICC1/CIR/P/2021/625 dated September 02, 2021 and SEBI Circular
SEBI/HO/MRD1/ICC1/CIR/P/2022/94 dated July 04, 2022
195 Reference: SEBI Circular SEBI/HO/MRD1/ICC1/CIR/P/2022/94 dated July 04, 2022 and
(Amended vide SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/145 dated July 31,
2023)
168
4.49.3.6 The entity concerned uploads an Action Taken Report (ATR) on the
Complaints/GRC*;
4.49.3.7 All Depositories peruse the ATR and dispose of the Complaints/GRC if it is
satisfied that the complaint has been redressed adequately;
4.49.3.8 The concerned investor can view the status of the complaint online;
4.49.3.9 The entity concerned and the concerned investor can seek and provide
clarification(s) online to each other;
4.49.3.10 The life cycle of a Complaints/GRC* has an audit trail; and
4.49.3.11 All the Complaints/GRC* are saved in a central database which would
generate relevant MIS reports to enable all Depositories to take appropriate
policy decisions and or remedial actions.
4.49.3.12 There should be a provision to link the online system with SCORES.
4.49.4 The system is intended to expedite redressal / disposal of investors’ complaints
as it would also obviate the need for physical movement of complaints. Further,
the possibility of loss, damage or misdirection of the physical complaints would
be avoided. It would also facilitate easy retrieval and tracking of complaints at
any time.
4.49.5 All Depositories are advised to widely publicise (including in media) its online
web based complaints redressal system.
Hybrid Mode of Conducting GRC*:
4.49.6 During the COVID pandemic, Stock Exchanges were advised to conduct GRC*
and arbitration / appellate arbitration meetings/hearings online for faster
redressal of complaints. The online process saves time and cost of the parties
involved which is in the interest of investors.
4.49.7 Therefore, it has been decided that the depositories shall follow the hybrid mode
(i.e. online and offline) of conducting GRC*.
(The provisions dealing with mediation, conciliation and arbitration have been
superseded with the introduction of Online Dispute Resolution (ODR) Mechanism.
Kindly refer https://www.sebi.gov.in/legal/master-circulars/dec-2023/master-
circular-for-online-resolution-of-disputes-in-the-indian-securities-
market_80236.html dated December 28, 2023 (Master circular for Online Resolution
of Disputes in the Indian Securities Market)
*Grievance Redressal Committee (GRC) has been abolished by the SEBI
(Depositories and Participants) (Amendment) Regulations, 2023, w.e.f. 28-08-2023
and as per SEBI Circular dated June 25, 2024 the Regulatory Oversight Committee
reviews the Grievances.
169
4.50 Digital Mode of Payment196
4.50.1 SEBI has notified the SEBI (Payment of Fees and Mode of Payment)
(Amendment) Regulations, 2017 on March 06, 2017 to enable digital mode of
payment (RTGS/NEFT/IMPS, etc.) of fees/penalties/remittance/other
payments etc.
4.50.2 Pursuant to above, SEBI has been receiving direct credit of amounts from various
intermediaries / other entities.
4.50.3 In order to identify and account such direct credit in the SEBI account,
intermediaries/other entities shall provide the information as mentioned in
Annexure 26 to SEBI once the payment is made.
4.50.4 The above information should be emailed to the respective department(s)as well
as to Treasury &Accounts division at tad@sebi.gov.in
4.51 Framework for Innovation Sandbox197
4.51.1 Capital market in India have been early adopters of technology. SEBI believes
that encouraging adoption and usage of financial technology (‘FinTech’) would
have a profound impact on the development of securities market. FinTech can
act as a catalyst to further develop and maintain an efficient, fair and transparent
securities market ecosystem.
4.51.2 To create an ecosystem which promotes innovation in the securities market, SEBI
feels that FinTech firms should have access to market related data, particularly,
trading and holding data, which is otherwise not readily available to them, to
enable them to test their innovations effectively before the introduction of such
innovations in a live environment.
4.51.3 The “Innovation Sandbox”, would be a testing environment where FinTech
firms and entities not regulated by SEBI including individuals (herein
afterwards referred to as participants/ applicants) may use the environment for
offline testing of their proposed solutions in isolation from the live market,
subject to fulfillment of the eligibility criteria, based on market related data made
available by Stock Exchanges, Depositories and Qualified Registrar and Share
Transfer Agents (QRTAs).
Features and Structure of Innovation Sandbox
4.51.4 The components and structure of the Innovation Sandbox can be broadly
classified into design, legal and administrative categories. The method of
196 Reference: SEBI Circular SEBI/HO/GSD/T&A/CIR/P/2017/42 dated May 16, 2017
197 Reference: SEBI Circular SEBI/MRD/CSC/CIR/P/2019/64 dated May 20, 2019
170
implementation has been elaborated under the head “Implementation” in Para
4.51.6 to 4.51.13.
4.51.4.1 Design Components
A. Data Sets
a) One of the most important components of an Innovation Sandbox is access to
securities market related data, which will enable participants to test and
improve their FinTech solutions.
b) The datasets that will be made available to participants shall be clearly
defined and known to market participants. Indicative datasets which may
become part of the Innovation Sandbox are as follows:
i. Depositories data: Holding data, KYC data
ii. Stock exchange data: Transactions data like order log, trade log
iii. RTA data: Mutual fund transactions data
c) The datasets shall be historical and anonymized data and shall also contain
data related to episodic market events. Live data shall not be made available
to participants.
d) Access to datasets shall be provided in a phased manner starting with limited
amount of data and based on validations, more exhaustive data would be
provided to participants.
e) The use of datasets shall be governed by comprehensive confidentiality
agreement which shall include an ‘End User Agreement’ clearly specifying
that the datasets made available shall not be sold or sublet or shared in any
manner with any other entities.
B. Infrastructure
a) The datasets to be used for testing solutions in the Innovation Sandbox shall
be shared through application program interface (APIs), which will be widely
published and available to all eligible participants.
b) Virtual machines may be made available with configurations similar to the
live environment for testing an innovative product, service or solution on the
datasets.
4.51.4.2 Legal components
a) Flexibility
The Innovation Sandbox shall be flexible to adapt and incorporate the
changes, once the Innovation Sandbox evolves and matures.
b) Not-for-profit
The Innovation Sandbox can be set up as a separate not-for-profit entity
which enhances the impartiality of the Innovation Sandbox.
171
c) Compliance
The Innovation Sandbox should ensure that all applicants can perform their
testing without breaking any regulatory barriers, including compliance with
investor protection, Know Your Client norms, data integrity or any other
Indian laws.
d) Legally robust
The Innovation Sandbox should clearly define the rights and obligations of
the stakeholders. Applicants are required to agree to contractually binding
terms of participation.
e) Intellectual Property Rights (IPR) protection
The Innovation Sandbox should have the relevant provisions to protect the
applicants’ IPR. Also, it should define how the IPR which results from the
collaboration can be used once the testing phase has ended.
f) Prevention of Data misuse
The Innovation Sandbox should have provision to restrict misuse of data
from the stated purposes.
g) Restriction from Fraudulent purposes
The Innovation Sandbox should have provision for restricting development
of any product/ solution for fraudulent/ manipulative purposes.
h) Secured
The Innovation Sandbox should be secured from cyber threats or
unauthorized access.
4.51.4.3 Administrative Components
a) Application Assessment
Applications received for participating in the Innovation Sandbox will be
assessed and rule based self-assessment process shall be formalized, in order
to allow the applicants’ automatic entry into the Innovation Sandbox.
b) Governance body
A governance body shall be formed comprising of representatives from the
Stock Exchanges, Depositories and Qualified Registrar and Share Transfer
Agents. This body shall supervise the operations of the Innovation Sandbox
in the interests of its contributors, users and securities market in general. The
governance body shall be responsible for ensuring that the sandbox fulfils
its stated objectives. The governance of the Innovation Sandbox should be
neutral and should not favor any particular participant or category of
participants.
172
c) Operational team
An operational team shall be constituted to carry out the day-to-day
activities of the Innovation Sandbox including processing applications,
communicating with applicants, assisting the governance body, maintaining
the infrastructure of the Innovation Sandbox, supervising the testing in
Innovation Sandbox etc.
d) Rules of participation
Rules shall be framed to regulate the rights and responsibilities of the
participant with respect to an Innovation Sandbox and to other participants.
These rules could be same for each applicant type and may include the entry
and exit criteria, operating guidelines, reporting requirements etc.
e) Grievance redressal process
A grievance redressal mechanism shall be formulated to deal with the
grievances of any applicant in the Innovation Sandbox. This mechanism
shall clearly define the point of contact for grievance redressal along with
the escalation matrix.
4.51.4.4 Interface for Innovation Sandbox
The entire sandbox participation lifecycle (applying, tracking, on-boarding,
monitoring, reporting, etc.) shall be completely digital to ensure transparency
and efficiency.
Eligibility Criteria
4.51.5 The eligibility criteria for inclusion into the Innovation Sandbox are as follows:
a. Applicability
Conceptually, the Innovation Sandbox framework is applicable to any entity,
who intends to innovate on the products, services, and/or solutions for the
securities and commodities market in India.
b. Genuine need to test
The applicant should have a genuine need for testing the solution using
resources available in the Innovation Sandbox. The applicant should be able
to postulate that the solution cannot be developed properly without testing in
the Innovation Sandbox.
c. Testing readiness of the solution
The applicant should have the necessary resources to support testing in the
sandbox. The applicant must show testing plans with clear objectives,
parameters and success criteria.
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d. Post-testing strategy
The applicant should be able to postulate their post-testing plan.
e. Direct benefits to consumers
The solution should offer identifiable benefits (direct or indirect) to
consumers and to the capital market and the Indian economy at large.
f. Secure
The solution shall be validated for cyber security parameters. The applicant is
required to submit a cyber-security compliance certificate as per SEBI’s Cyber
Security guidelines.
Implementation
4.51.6 A Steering Committee comprising of representatives from the Market
Infrastructure Institutions (MIIs) and QRTAs shall develop the operating
guidelines as mentioned at Para 4.51.4.3 (c) towards the components and
structure of the Innovation Sandbox as articulated in the Features, Structure and
Eligibility criteria of Innovation Sandbox in Para 4.51.4 and Para 4.51.5. The
Steering Committee shall also include members drawn from the areas of FinTech
start-ups, academia and angel investors or any other area as may be prescribed
by SEBI. At the initial stage, SEBI representative shall be a permanent invitee to
this Committee.
4.51.7 Post issuance of operating guidelines, the Steering Committee shall carry out all
the functions as envisaged in the Administrative Components at Para 4.51.4 viz.
receive, evaluate and process the applications received for participating in the
Innovation Sandbox, approve / reject applications so received, grievance
redressal etc. The Steering Committee shall also be responsible for
registering/onboarding the applicant post approval of the application and
monitor the participant throughout the lifecycle of the project.
4.51.8 Each of the MIIs and QRTAs shall build their own interface and APIs. Any
approved sandbox applicant can then get access to the APIs of the respective
MIIs and QRTAs where the applicant would test its solution
4.51.9 The Sandbox applicant may give a presentation to the Steering Committee upon
completion of the testing and exit from the Innovation Sandbox.
4.51.10 The Steering Committee overseeing the testing of the applicant’s solution within
the sandbox shall maintain an Objective and Key Result Areas (OKRA)
document for effective oversight on the entire process.
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4.51.11 The entire sandbox participation lifecycle (applying, tracking, on-boarding,
monitoring, reporting, etc.) should move towards a complete digital
environment within a time-bound manner, not exceeding 24 months, towards
ensuring transparency and efficiency.
4.51.12 The Steering Committee, to begin with, shall evolve decisions based on
consensus and have a Chairperson from among the group on a rotation basis.
4.51.13 Based on the functioning of the Steering Committee, SEBI would prescribe other
norms for governance, as and when required.
Outcome of Innovation Sandbox
4.51.14 SEBI envisages the Innovation Sandbox to have the following benefits:
4.51.14.1 Product showcase
A platform for showcasing the working prototype of the solution which
may help FinTech firms secure more funding.
4.51.14.2 Product regulation
Assessing compliance and readiness with SEBI’s regulations.
4.51.14.3 Industry interoperability
Providing an environment where developers could explore industry
challenges and use cases for innovative technologies linked to
interoperability of new solutions across the industry.
4.52 Revised Framework for Innovation Sandbox198
Kindly refer SEBI Circular SEBI/HO/ITD/ITD/CIR/P/2021/16/2021 dated
February 02, 2021 in respect of Revised Framework for Innovation Sandbox
4.53 Framework for Regulatory Sandbox199
Kindly refer SEBI Circular SEBI/HO/MRD-1/CIR/P/2020/95 dated June 05, 2020
and SEBI circular SEBI/HO/ITD/ITD/CIR/P/2021/575 dated June 14, 2021 in
respect of Framework & Revised Framework for Regulatory Sandbox respectively.
4.54 Monitoring of Foreign Investment limits in listed Indian companies200
4.54.1 As per FEMA, the onus of compliance with the various foreign investment limits
rests on the Indian company. In order to facilitate the listed Indian companies to
ensure compliance with the various foreign investment limits, SEBI in
198 Reference: SEBI Circular SEBI/HO/ITD/ITD/CIR/P/2021/16/2021 dated February 02, 2021
199 Reference: SEBI Circular SEBI/HO/MRD-1/CIR/P/2020/95 dated June 05, 2020, updated vide
SEBI Circular SEBI/HO/ITD/ITD/CIR/P/2021/575 dated June 14, 2021
200 Reference: SEBI Circular IMD/FPIC/CIR/P/2018/61 dated April 05, 2018
175
consultation with RBI has decided to put in place a system for monitoring the
foreign investment limits.
4.54.2 For the architecture of the new system, kindly refer para titled ‘Monitoring of
Investment Limit at individual level’ of SEBI Circular SEBI/HO/AFD-
2/CIR/P/2022/175 dated December 19, 2022 (Master Circular for Foreign
Portfolio Investors, Designated Depository Participants and Eligible Foreign
Investors)
4.54.3 The depositories shall put in place the necessary infrastructure and IT systems for
operationalizing the monitoring mechanism referred above.
4.55 Disclosure of performance of CRAs on Stock Exchange and Depository website201
Kindly refer Disclosure of performance of CRAs on Stock Exchange and Depository
website of https://www.sebi.gov.in/legal/master-circulars/may-2024/master-
circular-for-credit-rating-agencies-cras-_83417.html dated May 16, 2024 (Master
Circular for Credit Rating Agencies)
4.56 Handling of Clients’ Securities by Trading Members/Clearing Members202
Kindly refer Handling of Client’s Securities by Trading Members/ Clearing Members
of https://www.sebi.gov.in/legal/master-circulars/aug-2024/master-circular-for-
stock-brokers_85605.html dated August 09, 2024 (Master circular for Stock Brokers)
4.57 Early Warning Mechanism to prevent diversion of client securities203
Kindly refer para titled ‘Early Warning Mechanism to prevent diversion of client
securities’ of https://www.sebi.gov.in/legal/master-circulars/aug-2024/master-
circular-for-stock-brokers_85605.html dated August 09, 2024 (Master circular for
Stock Brokers)
4.58 Standard Operating Procedure in the cases of Trading Member /Clearing Member
leading to default204
Kindly refer para titled ‘Standard operating procedure in the cases of Trading
Member / Clearing Member leading to default’ of
201 Reference: SEBI Circular SEBI/ HO/ MIRSD/ DOS3/ CIR/ P/ 2018/ 140 dated November 13,
2018
202 Reference: SEBI Circular CIR/HO/MIRSD/DOP/CIR/P/2019/75 dated June 20, 2019, SEBI
Circular SEBI/HO/MIRSD/DOP/CIR/P/2019/95 dated August 29, 2019 and SEBI Circular
SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/153 dated November 11, 2022
203 Reference: SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2018/153 dated December 17, 2018
204 Reference: SEBI Circular SEBI/HO/MIRSD/DPIEA/CIR/P/2020/115 dated July 01, 2020 and
SEBI Circular SEBI/HO/MIRSD/DPIEA/P/CIR/2022/72 dated May 27, 2022
176
https://www.sebi.gov.in/legal/master-circulars/aug-2024/master-circular-for-
stock-brokers_85605.html dated August 09, 2024 (Master circular for Stock Brokers)
4.59 Mapping of Unique Client Code (UCC) with demat account of the clients205
Kindly refer para titled ‘Mapping of Unique Client Code(UCC) with demat account
of clients’ of https://www.sebi.gov.in/legal/master-circulars/aug-2024/master-
circular-for-stock-brokers_85605.html dated August 09, 2024 (Master circular for
Stock Brokers)
4.60 Reporting for Artificial Intelligence(AI) and Machine Learning (ML) applications and
systems offered and used by Market Infrastructure Institutions (MIIs)206
Background
4.60.1 SEBI is conducting a survey and creating an inventory of the AI / ML landscape
in the Indian financial markets to gain an in-depth understanding of the
adoption of such technologies in the markets and to ensure preparedness for any
AI / ML policies that may arise in the future.
Scope definition
4.60.2 Any set of applications / software / programs/ executable / systems (computer
systems) cumulatively called application and systems, to carry out compliance
operations/activities, where AI/ML is used for compliance or management
purposes, is included in the scope of this circular. In order to make the scope
inclusive of various AI and ML technologies in use, the scope also covers Fin-
Tech and Reg-Tech initiatives undertaken by MIIs that involves AI and ML.
4.60.3 Technologies that are considered to be categorized as AI and ML technologies in
the scope of this section, are as follows:
Applications and Systems belonging but not limited to following categories or a
combination of these:
4.60.3.1 Natural Language Processing (NLP), sentiment analysis or text mining
systems that gather intelligence from unstructured data. – In this case,
Voice to text, text to intelligence systems in any natural language will be
considered in scope. E.g.: robo chat bots, big data intelligence gathering
systems.
4.60.3.2 Neural Networks or a modified form of it. – In this case, any systems
that uses a number of nodes (physical or software simulated nodes)
mimicking natural neural networks of any scale, so as to carry out
205 Reference: SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2019/136 dated November 15, 2019
206 Reference: SEBI Circular SEBI/HO/MRD/DOP1/CIR/P/2019/24 dated January 31, 2019
177
learning from previous firing of the nodes will be considered in scope.
Eg: Recurrent Neural networks and Deep Learning Neural Networks
4.60.3.3 Machine learning through supervised, unsupervised learning or a
combination of both. – In this case, any application or systems that carry
out knowledge representation to form a knowledge base of domain, by
learning and creating its outputs with real world input data and
deciding future outputs based upon the knowledge base. E.g.: System
based on Decision tree, random forest, K mean, Markov decision
process, Gradient boosting Algorithms.
4.60.3.4 A system that uses statistical heuristics method instead of procedural
algorithms or the system / application applies clustering or
categorization algorithms to categorize data without a predefined set of
categories
4.60.3.5 A system that uses a feedback mechanism to improve its parameters and
bases it subsequent execution steps on these parameters.
4.60.3.6 A system that does knowledge representation and maintains a
knowledge base.
Regulatory requirements
4.60.4 All MIIs shall fill in the AI / ML reporting form (Annexure 27) in respect of the
AI or ML based applications or systems as defined in Para 4.60.3 offered or used
by them, and submit the same in soft copy only at AI_MII_SE@sebi.gov.in(for
stock Exchanges)/AI_MII_DEP@sebi.gov.in (for depositories)
/AI_MII_CC@sebi.gov.in (for Clearing Corporations) to SEBI on a quarterly
basis within 15 days of the expiry of the quarter.
4.61 Measures to expedite Dematerialisation of securities207
4.61.1 In order to enable prompt execution of demat requests, Depositories shall provide
additional details, such as PAN, Address and Residential status of investors in the
DRF itself.
4.61.2 To include a provision in DRF to capture 2 signatures – one registered with DP at
the time of demat account opening and the other registered with issuer/RTA at
the time of allotment /transfer. The request submitted by BO would be only
processed when both two signatures i.e. one registered with RTA and other
registered with DP matches with two respective signatures on DRF. In case of
207 Reference: SEBI Letter MRD/DoPII/DSAII/MIRSD/DOS3/OW/2018/28162/1 dated October 22,
2018
178
mismatch of any of the two signatures the existing process of verifying signature
may be followed.
4.61.3 To advise Depository Participants to update bank account details of all demat
account holders in their records.
4.62 Capacity Planning Framework for the Depositories208
4.62.1 Depositories have been identified as financial Market Infrastructure Institutions
which facilitate and perform systemically critical functions in the securities
market. In view of their importance in the smooth functioning of the securities
market, the framework for capacity planning of the Depositories was also
discussed in TAC. Based on recommendations of the committee, it has been
decided to put in place following requirements for Depositories while planning
capacities for their operations:
4.62.1.1 The installed capacity shall be at least 1.5 times (1.5x) of the projected
peak load.
4.62.1.2 The projected peak load shall be calculated for the next 60 days based on
the per hour peak load trend of the past 180 days.
4.62.1.3 The Depositories shall ensure that the utilisation of resources in such a
manner so as to achieve work completion in 70% of the allocated time.
4.62.1.4 All systems pertaining to Depository operations shall be considered in
this process including all technical components such as network,
hardware, software, etc., and shall be adequately sized to meet the
capacity requirements.
4.62.1.5 In case the actual capacity utilization exceeds 75% of the installed
capacity for a period of 15 days on a rolling basis, immediate action shall
be taken to enhance the capacity.
4.62.1.6 The actual capacity utilisation shall be monitored especially during the
period of the day in which pay-in and pay-out of securities takes place
for meeting settlement obligations.
4.62.2 Depositories shall implement suitable mechanisms, including generation of
appropriate alerts, to monitor capacity utilisation on a real-time basis and shall
proactively address issues pertaining to their capacity needs.
208 Reference: SEBI Circular SEBI/HO/MRD/DP/CIR/P/2017/29 dated April 03, 2017
179
4.63 Trading Supported by Blocked Amount in Secondary Market209
4.63.1 In its continuing endeavour to provide protection to the investors from the default
of member(s) [‘trading member’ (TM) / ‘clearing member’ (CM)], SEBI has decided
to introduce a supplementary process for trading in secondary market based on
blocked funds in investor’s bank account, instead of transferring them upfront to
the trading member, thereby providing enhanced protection of cash collateral. The
said facility shall be provided by integrating Reserve Bank of India (RBI) approved
Unified Payments Interface (UPI) mandate service of single-block-and-multiple-
debits with the secondary market trading and settlement process and hereinafter
referred as ‘UPI block facility’
4.63.2 Under the proposed framework, funds shall remain in the account of client but will
be blocked in favour of the clearing corporation (‘CC’) till the expiry date of the
block mandate or till block is released by the CC, or debit of the block towards
obligations arising out of the trading activity of the client, whichever is earlier.
Further, settlement for funds and securities will be done by the CC without the
need for handling of client funds and securities by the member.
4.63.3 Further, while a UPI block upon creation shall be considered towards collateral, the
same shall also be available for settlement purposes. For the clients who prefer to
block lump sum amount, their block can be debited multiple times, subject to
available balance, for settlement obligations across days.
4.63.4 The main features of the framework are as under:
4.63.4.1 General features:
4.63.4.1.1 Availing UPI block facility shall be at the option of the investor.
4.63.4.1.2 Shall be introduced as a non-mandatory facility to be provided by the
stock broker.
4.63.4.1.3 Since an investor is allowed to have trading accounts across multiple
stock brokers, an investor can choose to avail UPI block facility under
some broker(s) and non-UPI based trading under others. However, once
opted for UPI block facility (until they opt out after fulfilling all
obligations) under particular broker(s), the following needs to be adhered
to in respect of UPI block facility under that broker(s):
4.63.4.1.3.1 All cash collaterals shall be provided through UPI block only.
4.63.4.1.3.2 Cash equivalent collateral such as bank guarantees and fixed
deposits shall not be permitted.
209 Reference: SEBI Circular SEBI/HO/MRD/MRD-PoD-2/P/CIR/2023/99 dated June 23, 2023
180
4.63.4.1.3.3 Securities collateral to be provided through pledge/re-pledge
system and only those securities can be provided which are in
the approved list of CC.
4.63.4.1.3.4 Funds pay-in settlement to be done through UPI block only.
4.63.4.1.4 Collateral and settlement shall continue to be segment-wise, and the
client/TM/CM shall need to transfer/reallocate collateral between
segments.
4.63.4.1.5 Running account settlement shall not be supported. CC shall settle the
account of clients using UPI block facility on a daily basis, i.e., any pay-
out due to the client shall be paid out to the client on the settlement day.
4.63.4.1.6 Single block limit of Rs. 5 lakhs shall apply [currently applicable for UPI
based securities market transaction]. However, multiple blocks can co-
exist subject to the overall limit applicable in UPI
4.63.4.2 Eligibility of investors: All investors who are permitted to use RBI’s UPI
facility, and meeting the criteria defined by CCs, shall be eligible.
4.63.4.3 Process (in brief):
4.63.4.3.1 The stock brokers providing the facility shall notify the details of investors
desirous of availing the service to the stock exchange. The stock exchange
shall validate the bank and demat account maintained in the Unique
Client code (‘UCC’) systems and used for block creation and settlement.
The exchanges shall provide relevant details to the CC.
4.63.4.3.2 The block shall be created by client using the UPI application (‘UPI app’)
based on the blocking request initiated through stock broker app. While
creating the blocking request under the proposed block mechanism,
relevant information such as TM Code, CM Code, Unique Client Code,
segment etc. shall be captured by the stock broker and sent to UPI.
4.63.4.3.3 The UPI block shall get created in favour of the CC and can be debited by
the CC only.
4.63.4.3.4 The block shall support multiple debits – i.e., for a block created on day 1,
it can be partially debited multiple times till the exhaustion of amount or
expiry/release of the block, whichever is earlier.
4.63.4.3.5 Since the CC shall directly maintain/update the client collateral value
based on the blocking information received from the UPI railroads of
National Payment Corporation of India (‘NPCI’) through the CC’s
sponsor bank, the stock brokers shall not allocate any collateral for clients
under the facility of UPI block. Other procedures such as deemed
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allocation of proprietary collateral, validation of 50:50 cash collateral, risk
reduction mode monitoring etc. remain unchanged.
4.63.4.3.6 The CC shall debit the UPI block created in its favor to the extent of client
level obligations, and receive the same in its account, without funds going
through the clearing bank account of the CM. Securities provided as early
pay-in (EPI) by the clients, using the block mechanism provided by
depositories shall be received by the CC as per the prevailing process.
4.63.4.4 Settlement
4.63.4.4.1 There shall be two rounds of pay-in and one round of pay-out.
4.63.4.4.2 In Round 1 Pay-in, settlement obligation shall be calculated at client level,
individually, for the clients opting for UPI block facility. There shall be no
netting of obligations across different clients opting for UPI block facility
and the settlement obligations shall be inclusive of standard statutory
levies such as securities transaction tax (STT), stamp duty etc. The first
deadline for pay-in shall be for the UPI clients. Clients with payable funds
shall provide UPI block atleast to the extent of obligations, and clients
with deliverable securities shall ensure availability of securities to the
extent of obligations through the prevailing Early Pay-in (EPI) block
mechanism wherein the securities given as EPI are blocked in favour of
CC in the demat account of the client undertaking sale transaction. At the
end of the Round 1 pay-in deadline defined by the CCs, the clients who
have not provisioned for their pay-in shall be considered as short.
4.63.4.4.2.1 Round 2 Pay-in
4.63.4.4.2.1.1 The second round of funds obligation shall be a single net
settlement of funds obligation at CM level for
(i) proprietary account of CM/TM,
(ii) clients not opting for UPI block facility and
(iii) shortages from UPI clients in Round 1 pay-in, including shortfall
of funds in lieu of securities, if any.
[Illustration for funds in lieu of securities: Consider a scenario
when a security sold for Rs. 100 was not delivered by client and last
closing price available on settlement day for the said security was
Rs. 105. In such a case, the CC shall not provide the payout of Rs.
100 to the client and in addition shall debit Rs. 5 from the block
amount of the client. In case the blocked amount is insufficient,
then CC shall debit this amount to CM.]
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4.63.4.4.2.1.2 The second round of securities obligation shall be a single net
settlement at CM level for
(i) proprietary account of CM/TM, and
(ii) clients not opting for UPI block facility, as per the existing
process.
4.63.4.4.2.1.3 The CMs shall be required to provide the aforementioned
funds/securities obligations to the CC.
4.63.4.4.2.1.4 If the CMs fail to fulfil the obligation, then such members shall be
treated as short and relevant provisions for shortage
handling/default management shall apply
4.63.4.4.3 Pay-out - The pay-out shall be done in a single round after the two pay-in
rounds. The CC shall give pay-out of funds directly to the bank account
of the clients opting for UPI block facility, provided they have fulfilled
their payin obligations. The CCs shall provide instructions to depositories
for securities pay-out to the clients, which shall be directly delivered to
client’s account without the need of handling of such securities pay-out
by TM/CM. For all other clients and proprietary account of CM/TM,
there shall be single net settlement by CC to CM as is currently being
done.
4.63.4.5 Release of block
4.63.4.5.1 Client can request for release of block to TM through TM app. TM shall
request CM, and CM shall request CC. In case the TM, CM and CC do not
have any residual claim, the CC shall release the block through UPI. Upon
release of the block, the client’s bank shall unfreeze the amount in the
account of the client. Information regarding release shall be shared by
NPCI with CC (through CC’s sponsor bank) who in-turn shall transmit it
to CM and TM. Further, since the release of the block is going to result in
collateral being unallocated in favour of the client, as per the existing
process, the CC shall send a notification to the client regarding the
collateral being removed
4.63.4.6 Various scenarios
4.63.4.6.1 An analysis of how various scenarios i.e.
(i) prefunded purchase by client,
(ii) delivery sale by client by EPI,
(iii) purchase/ sale by client supported by margins and
(iv) intraday cash market/ derivatives trading,
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would be handled under the proposed UPI block facility vis-a-vis the
current process is placed as Annexure 28
4.63.4.7 Dealing with shortages:
4.63.4.7.1 Cash Market: Funds shortage
4.63.4.7.1.1 CC shall provide pay-out of securities to the client’s demat account
and instruct the depository to auto-pledge such securities to the TM’s
“client unpaid securities pledgee account”.
4.63.4.7.1.2 CC shall maintain the shortage amount of client. The obligation shall
devolve on TM’s CM, who shall settle the same with CC.
4.63.4.7.1.3 If client provides additional block subsequently, the CC shall debit
the amount to the extent of shortfall and provide the same to the CM.
4.63.4.7.1.4 In case client fails to provide the amount, then TM can sell the
securities pledged in favour of Client Unpaid Securities Pledgee
Account (CUSPA) and/ or provided by way of margin pledge and
mark early pay-in.
4.63.4.7.1.5 Out of the funds pay-out due to the client, amount to the extent of
shortfall shall be paid to the CM who fulfilled the obligation. The
remaining funds, if any, shall be paid out to the client.
4.63.4.7.1.6 The CC shall continue to maintain and update the residual short
amount of the client, if any.
4.63.4.7.2 Cash Market: Securities shortage
4.63.4.7.2.1 Funds pay-out shall not be provided to the client. The amount shall
be withheld by CC and used towards requirement of funds in lieu of
securities delivered short.
4.63.4.7.2.2 Funds required in lieu of securities shortage in excess of funds pay-
out shall be debited from block amount of client. In case of insufficient
blocked amount, the same shall devolve on clearing member.
[Illustration: Consider a scenario when a share sold for Rs. 100 was
not delivered and last closing price available on settlement day was
Rs. 105. In such a case, the CC shall not provide the pay-out of Rs. 100
to the client and in addition shall debit Rs. 5 from the block amount
of the client. In case the blocked amount is insufficient, then CC shall
debit this amount to CM.]
4.63.4.7.2.3 Auction shall be conducted to buy the securities short delivered by
UPI clients.
4.63.4.7.2.4 If actual amount required towards auction purchase or financial
closeout exceeds the pay-out amount referred to in Para 4.63.4.7.2.2
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above, the same shall be debited from client block. In case of
insufficient client block, the same shall devolve on clearing member.
4.63.4.7.2.5 In case of any devolvement on member, the short amount of client
shall be maintained and in case any blocking is done in future, the
block shall be debited to the extent of shortfall and provided to the
clearing member
4.63.4.7.3 Shortfall: Derivatives
4.63.4.7.3.1 CC shall debit block to the extent of pay-in requirements, irrespective
of whether such debit causes a margin shortfall. In exceptional
circumstances, if pay-in exceeds the margin, the residual amount shall
devolve on CM.
4.63.4.7.3.2 In case of margin shortfall, TM/CM can close-out the position of the
client and resultant loss shall be debited to the block or resultant profit
shall be paid out to the client by the CC. Till the time TM/CM closes
out the position, the provisions related to deemed allocation of
proprietary collateral shall apply.
4.63.4.7.3.3 In case obligations have devolved on CM, any pay-out resulting from
close-out of positions, or any new block created by client, to the extent
of devolvement, shall be provided to the CM.
4.63.5 Since the framework requires certain changes to be made in the systems and
processes of clearing corporations, stock exchanges, depositories, stock brokers and
NPCI, the concerned entities are expected to make requisite changes and test the
systems and processes for robustness thereafter to make the facility live by January
01, 2024.
4.63.6 To begin with, the facility may be made available in the equity cash segment. The
CCs may extend the facility to additional segments subsequently.
4.63.7 Further, detailed operational guidelines including mode of brokerage collection
shall be issued by CCs in consultation with relevant stakeholders such as stock
exchanges, depositories etc.
4.64 Enhanced Due Diligence for Dematerialization of Physical Securities210
4.64.1 In terms of Regulation 40 of LODR Regulations, transfer of securities held in
physical mode is not permitted. Standardised norms with respect to
documentation/procedure for transfer of physical securities were issued by
SEBI.
4.64.2 To augment the integrity of the system in processing of dematerialization request
210 Reference: SEBI Circular SEBI/HO/MIRSD/RTAMB/CIR/P/2019/122 dated November 05, 2019
185
in respect of the remaining physical shares, the Depositories and the listed
companies/RTAs are directed to implement the following due diligence process:
4.64.2.1 All Listed companies or their RTAs shall provide data of their members
holding shares in physical mode, viz. the name of shareholders, folio
numbers, certificate numbers, distinctive numbers and PAN etc.
(hereinafter, static database) as on March 31, 2019, to the Depositories. The
common format for this data shall be specified jointly by the Depositories
and be communicated to Issuer companies / their RTAs.
4.64.2.2 Depositories shall capture the relevant details from the static database as
per above para and put in place systems to validate any dematerialization
request received after December 31, 2019. Accordingly, the depository
system shall retrieve the shareholder name(s) recorded against the folio
number and certificate number in Static Data for each DRN request
received after this date and validate the same against the demat account
holder(s) name as available in the records of the Depositories.
4.64.2.3 In case of mismatch of name on the share certificate(s) vis-à-vis name of the
beneficial owner of demat account, the depository system shall generate
flag/alert. In instances, where such flags/alerts have been generated, the
following additional documents explaining the difference in name shall be
sought, namely
4.64.2.3.1 Copy of Passport
4.64.2.3.2 Copy of legally recognized marriage certificate
4.64.2.3.3 Copy of gazette notification regarding change in name
4.64.2.3.4 Copy of Aadhar Card
4.64.2.4 In the case of complete mismatch of name on the share certificate(s) vis-à-
vis name of the beneficial owner of demat account, the applicant may
approach the Issuer company/RTA for establishing his title/ownership.
4.65 Framework For Adoption Of Cloud Services By SEBI Regulated Entities (REs)211
Kindly refer SEBI Circular SEBI/HO/ITD/ITD_VAPT/P/CIR/2023/033 dated March
06, 2023 on Adoption of Cloud Services by SEBI Regulated Entities for necessary
compliance in respect of Depositories.
4.66 Committees at Market Infrastructure Institutions212&213
211 Reference: SEBI Circular SEBI/HO/ITD/ITD_VAPT/P/CIR/2023/033 dated March 06, 2023
212 Reference: SEBI Circular SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/13 dated January 10, 2019,
and SEBI email dated February 06, 2020
213 Reference: SEBI Circular SEBI/HO/MRD/MRD-PoD-3/2024/088 dated June 25, 2024
186
A. In order to ensure effective oversight of the functioning of depository (being an
Market Infrastructure Institutions (MIIs)), Regulation 30 of the DP Regulations
mandates depositories to constitute two functional, three oversight committees and
investment committee within each depository.
B. Based on the recommendations of the Committee on Strengthening Governance of Market
Infrastructure Institutions, the functions, composition and Terms of Reference (TOR) of the
statutory committees of MIIs were further deliberated in the Industry Standards Forum (ISF)
of MIIs.
Taking into consideration the recommendations of the ISF of MIIs and subsequent
deliberations, the revised TOR of statutory committees of Depositories is provided as follows:
S. Name of Brief terms of reference
N. Committee
(I) Functional Committees
1 Member (I) On admission, transfer and surrender of
Committee membership/Withdrawal and Change in control
(MC)
a. Formulate the policy to scrutinize, evaluate, accept or reject applications for
admission of members (participants), transfer of membership and approve
surrender of membership or withdrawal and Change in Control.
b. The activities with regard to scrutinizing, evaluating, accepting or rejecting
applications for admission, transfer surrender, withdrawal and change in
control of membership can be implemented through an Internal Committee
(IC) under MC.
c. Define the Standard Operating Procedure (SOP) for the IC, including the
timelines to be followed by IC, its composition, standardize criteria to
scrutinize, evaluate, accept and grounds for rejection of applications, and
other associated aspects to ensure uniformity and consistency while dealing
with applications or cases. For scenarios not covered in the SOP, IC should
seek approval of MC.
d. Oversee the implementation of the membership policy by the IC, including
its timelines, uniformity and consistency in approach, based on quarterly
report submitted by IC. MC shall continue to be responsible and accountable
for the activities of the IC.
(II) On Regulatory Actions
e. Ensure that the depository has detailed SOP and processes in place towards
monitoring the activities of its members through inspections.
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S. Name of Brief terms of reference
N. Committee
f. Ensure that there is mechanism for monitoring of its members on various
parameters including through adoption of technology and take necessary
action for non-compliance.
g. Formulate policy to deal with any disciplinary matters relating to various
market participants i.e. the participants, clients, issuer or its registrar and
transfer agent, clearing members, and other users. This shall include
termination or disciplinary action against such constituents such as
participants, suspending, expelling or imposing penalty on the participant,
freezing the account of the participant, or issuer or its registrar and transfer
agent, issuing warning letters etc. The policy should have an SOP for
undertaking such actions.
h. Based on the laid down policy, consider all cases of violations observed and
impose appropriate regulatory measure on the constituents of the
depositories.
i. For enforcement against violations, where no discretion of MC is involved,
the same could be delegated to an IC, provided corresponding regulatory
action, including penalty amount, if any, is standardised in the policy framed
by MC or through a circular issued by depository or SEBI, If the same is
delegated, quarterly report in this regard should be placed before MC by the
IC. However, for scenarios which require immediate regulatory action, the
depository shall inform the MC post imposition of such actions.
j. Oversee the regulatory actions taken by IC, if delegated, including evaluating
that no discretion has been exercised in the process. For any violation by IC,
MC will be responsible and liable for the same.
k. While imposing the regulatory measure, the Committee shall adopt a laid
down process, based on the 'Principles of natural justice’, and 'Principle of
proportionality'. The 'Principle of natural justice' may be extended by the
MC/IC as applicable.
l. Any review, appeal or waiver of penalty filed shall be placed before MC for
its consideration.
(III) On IPF related aspects:
m. Recommendation in respect of the legitimate claims of the beneficial owners,
in case the same is not settled by the beneficial owner indemnity insurance,
to the Trustees of the IPF on whether the claim is to be paid out of IPF or
otherwise.
2 Nomination (I) Governing Board & its Members related aspects:
and
Remuneration a. Scrutinising and interviewing applicants for selecting the MD of the
Depository.
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S. Name of Brief terms of reference
N. Committee
Committee b. Adhering and developing a skill evaluation metrics to assess applications of
(NRC) new or existing PIDs and NIDs for their appointment and/or reappointment
and recommending their names to the Governing Board.
c. Ensuring at all times that the governing board comprises of directors with
required skill set and expertise in the areas as provided in SEBI (Depositories
and Participants) Regulations, 2018.
d. Ensure compliance with governing board level skill diversity at the time of
appointment, reappointment or extension of tenure of PIDs or NIDs.
e. Framing & reviewing the policy to carry out internal evaluation of every
director’s performance, including that of PIDs.
f. Reviewing and recommending extension of the term of appointment and re-
appointment of existing PIDs.
g. Appointment of Independent External Professionals (IEPs)
II) KMPs related aspects:
h. Identifying KMPs based on importance of activities carried out by them
including being key decision makers within the depository, other than those
specifically provided under regulation 2(1)(k) of the SEBI (Depositories and
Participants) Regulations, 2018. For identifying KMPs, one of the criteria
should be, persons (including employees/consultants) drawing annual pay
higher than any KMP(s).
i. Review, at least once a year hierarchical set ups across the departments, in
order to identify KMPs due to a change in role and responsibilities assigned
to them. Such review should necessarily include, consultants reporting to the
MD/CEO or ED.
j. The appointment and removal of KMPs, other than resignations.
k. Laying down policy for accountability of KMPs. Further, mapping legal and
regulatory duties to the concerned position and Delegation of Power (DoP) at
various levels
l. Laying down the policy for compensation of KMPs in compliance with the
compensation norms prescribed under D&P Regulations, 2018 and ensuring
that the compensation paid to KMPs is as per the compensation policy.
m. Framing performance review parameters for evaluation of KMPs, including
that of MD.
n. Assess the performance of KMPs based on reports submitted by the
functional heads/reporting authority and observations if any received from
SEBI and submit such reports to the governing board every year.
o. Determining the tenure of a KMP, other than a director, to be posted in a
particular role within regulatory, compliance, risk management and investor
grievance vertical.
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S. Name of Brief terms of reference
N. Committee
p. Determining and finalizing the Key result areas (KRAs) of all KMPs at the
beginning of every year. Review the same in line with organization needs.
q. Ensuring that no KMP reports to a non-KMP.
(III) On other organisation level related aspects:
r. Ensure that no employee of the depository is working or reporting to an
employee of any other company where the depository has invested and vice-
versa.
s. Ensure that hiring of consultants is based on a pre-defined SOP of the
Depository.
t. Framing, reviewing, implementing and monitoring SOP for imposing
disciplinary actions against employees of depository.
u. Besides the above, it will also discharge the function as Nomination &
Remuneration Committee under the Companies Act, 2013 and SEBI (LODR)
regulations, 2015 as amended from time to time.
(IV) Oversight Committees
3. Standing a. Ensure the availability of required IT infrastructure for core and critical
Committee on functions under verticals for “Critical operations” and “Regulatory,
Technology compliance, risk management and investor grievances”.
b. To ensure existence of adequate Business Continuity Plan (BCP) and Disaster
(SCOT)
Recovery (DR) plans.
c. Ensuring sound and prudent policies, standards and procedures for
managing technology risks and safeguard information assets in the
depository.
d. Review the implementation of technology risk management framework and
strategy of the depository.
e. Monitor whether the technology used by the depository remains up to date
and meets the growing demands of the markets.
f. Periodic review of the IT system and network architecture design to identify
any weaknesses in the existing design.
g. Review of In-house availability of appropriate IT staff to manage IT systems
and related outsourcing arrangement.
h. Monitor the adequacy of system capacity and efficiency.
i. To look into the changes being suggested by the depository to the existing
software or hardware.
j. Oversee investigation into the issues related to computerized depository
system, such as hanging or slowdown or breakdown etc.
k. Ensure that transparency is maintained in disseminating information
regarding slowdown or breakdown in the depository system and ensure the
depository issue a press release specifying the reason for any such
breakdown.
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S. Name of Brief terms of reference
N. Committee
l. Approve Root Cause Analysis (RCA) of any stoppage of depository system
and report to the governing board and SEBI.
m. Review the implementation of board approved cyber security and cyber
resilience policy and its framework and ensure the existence of advanced
cyber security and cyber resilience framework at the depository.
n. Review the identification and classification process of critical assets based on
their sensitivity and criticality for business operations, services and data
management.
o. Ensuring that the scope of the system audit, cyber audit and VAPT of the
depository is broad and representative of all critical areas of the depository.
p. Monitoring the results of periodic cyber security and DR drills conducted by
depository.
q. Review and approve the report regarding overall cyber security posture and
technology implementation at the depository and submit to the Governing
Board. Upon approval by the governing board, submit the report to SEBI.
r. On the above areas, the committee shall submit a report to the Governing
Board of the depository for necessary actions, if any.
s. Such other matters as may be referred by the Governing Board of the
depository and/or SEBI.
4. Regulatory Oversee the matters related to the following:
Oversight
a. Surveillance and Investigation:
Committee
Oversight of market by generating and providing alerts to stock exchanges
(ROC)
on off-market transfers, pledge and account opening/closure related aspects,
generation of alerts and providing requisite information to FIU-
IND/Depository Participants for Anti Money Laundering purposes, take
necessary action of freezing/unfreezing of beneficiary accounts based upon
orders passed by SEBI/stock exchanges/other statutory bodies, monitoring
of shareholding for listed and unlisted MIIs as per norms specified by SEBI,
appropriate action based on the findings arising out of periodic surveillance
meetings, development of new alerts based on learnings from past or
ongoing cases, etc., as may be applicable to the depositories.
b. Admission of Securities:
i. To consider and decide on the criteria for admission, withdrawal of
securities and continuous compliance requirements.
ii. To declare any security admitted into Depository as ineligible.
c. Compliance:
i. Oversee implementation and compliance with D&P Regulations, 2018 as
amended from time to time and other applicable rules and regulations
along with SEBI Circulars and other directions issued thereunder.
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S. Name of Brief terms of reference
N. Committee
ii. Review the observations arising from various SEBI inspections, ensuring
its advisories and findings are appropriately and timely addressed, and
reports to governing board on timely basis.
iii. Monitor and assess the depository against the PFMIs on an annual basis
and submit a report to the governing board of the depository.
d. Code of Conduct:
i. Lay down procedures for implementation of the code of conduct and
prescribe the reporting formats for disclosures required under the code of
conduct.
ii. Oversee the compliance of the code of conduct by KMPs and members of
statutory committees (except directors) & Institutional mechanism for
prevention of Fraud or Market Abuse” of Section 4 of SEBI Master Circular
for Depositories at least once in a financial year and also verify the
adequacy and operational effectiveness of the systems for internal control.
iii. Periodically oversee the dealings in securities by KMPs and IEPs
iv. Periodically oversee the trading conducted by firms or corporate entities
in which the directors of the Depository hold twenty percent or more
beneficial interest or hold a controlling interest.
v. While monitoring trades by KMPs and members of statutory committees,
ROC shall take into consideration sensitive information held by them as
per structured digital database maintained by depository.
e. Ensure the adequacy of resources dedicated to functions under verticals for
“Critical operations” and “Regulatory, compliance, risk management and
investor grievances”.
f. Grievance Redressal mechanism:
i. Define policy and SOP for dealing with complaints, by Depository.
ii. Review of complaint resolution process and status of redressal of
grievances of demat account holders, depository participants, Issuers or
RTAs with respect to depository operations. This shall include review of
complaints remaining unresolved over a long period of time.
iii. Ensuring that Depository takes pro-active actions in case of repeated
nature of complaints against particular Depository Participants.
g. Investor Protection and Services:
i. Supervising the functioning of Investor Services Cell of the Depository.
a. Whistleblower Mechanism:
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S. Name of Brief terms of reference
N. Committee
i. Frame the Whistle Blower Policy to be approved by the governing
board
ii. Communicate the whistle blower policy internally to all persons and
display the same on the depository’s website.
iii. Review the whistle blower policy based on feedback received.
b. Review the fees and charges levied by a Depository including comments on
its appropriateness, on a periodic basis as well as each time there is change.
5. Risk a. Formulate a detailed Risk Management Framework (RMF) which shall be
Management approved by the governing board of the depository to ensure continuity of
Committee operation at all points of time.
b. The RMF shall include the following:
(RMC)
i. The framework for identification of internal and external risks;
ii. Measures for risk mitigation including systems and processes for internal
control and;
iii. Business continuity plan.
c. Monitor each risk associated with the functioning of the depository more
specifically for functions under vertical 1 and 2.
d. Review the RMF & Risk Mitigation Measures at least once annually taking
into account the changing industry dynamics and evolving complexity.
e. Monitor and review enterprise-wide risk management plan and lay down
procedures to inform governing board about the risk assessment and
mitigation procedures.
f. RMC shall coordinate with other committees. In case of any overlap with
activities of other committees, RMC may consider views of such committees.
g. Monitor implementation of the RMF and also keep the governing board
informed about implementation of the RMF and deviation, if any.
h. Approve the Half-Yearly Risk report to be submitted by the Chief Risk Officer
(CRiO) to SEBI and the governing board of the depository.
i. To comply with the roles and responsibilities as provided under the
Companies Act 2013 and the SEBI (Listing Obligation and Disclosure
Requirement), Regulations, 2015.
6. Investment a. Evaluate each investment and divestment proposals, whether requiring
Committee (IC) infusion of funds or otherwise, except treasury investments.
b. Evaluate proposals of capital expenditure
c. Make detailed analysis of existing investments.
d. Investment Committee can provide the recommendation along with rationale
to the governing Board.
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C. The overarching principles for composition and quorum for the statutory committees
at MIIs shall be as under:
Composition of Statutory Committees at MIIs
S.N. Name of Statutory Composition
Committee
1. Member a. The Committee may include two Key Management
Personnel (KMP) including the Managing Director
Committee (MC)
(MD), Non-Independent Directors (NIDs) (other
than Executive Director214), Independent External
Professionals (IEPs) along with Public Interest
Directors (PIDs).
b. The committee shall be chaired by the PID with
expertise in Capital Markets.
2. Nomination & a. The Committee may include NIDs (other than
Remuneration Executive Director and MD), IEPs along with PIDs.
Committee (NRC) b. IEPs may be part of the committee for the limited
purpose of recommendation relating to selection of
the MD.
3. Standing a. The Committee may include the MD, NIDs (other
Committee than Executive Director), at least 2 IEPs along with
on Technology PIDs.
(SCOT) b. The IEPs should be proficient in technology with at
least one of them being an expert and practitioner in
cyber security.
c. The Chief Technology Officer (CTO) and Chief
Information Security Officer (CISO) should be
invitees to the meetings of the Committee.
d. The committee shall be chaired by the PID with
expertise in technology.
4. Regulatory a. The Committee may include NIDs (other than
Oversight Executive Director and MD) and IEPs, along with
Committee PIDs.
(ROC)
214 As per SECC Regulations, 2018 and D&P Regulations, 2018, any employee of an MII may be appointed on the
governing board in addition to the managing director and such director shall deemed to be a non-independent director.
Such employee of MII appointed to the governing board has been termed as “Executive Director”.
194
Composition of Statutory Committees at MIIs
S.N. Name of Statutory Composition
Committee
b. Relevant KMP(s) may be invited to the meetings of
the committee, whenever required.
c. The Committee shall be chaired by the PID with
expertise in legal and regulatory practices.
5. Risk a. The Committee may include the MD, NIDs (other
Management than Executive Director) and IEPs, along with PIDs.
Committee b. The Chief Risk Officer (CRiO) and CISO should be
(RMC) invitees to the meetings of the Committee.
c. If a PID with expertise in risk management is
present in the governing board, the committee may
preferably be chaired by the said PID.
6. Investment a. The Committee may include the MD, NIDs (other
Committee (IC) than Executive Director), IEPs, along with PIDs.
a. In any statutory committee, the total number of PIDs shall not be less than the
total number of other members of the Committee (including IEPs) put together.
In case of SCOT, the total number of PIDs shall not be less than the total
number of other members of the Committee, excluding IEPs.
b. The Chairperson of each statutory committee at MII shall be a PID.
c. The voting on a resolution in the meetings of the statutory committees at MIIs
shall be valid only when the number of PIDs that have casted their vote on
such resolution is not less than the total number of other members put together
who have casted their vote on such resolution.
d. The invitees, if any, to the meetings of the Committees shall not have any
voting rights.
e. The casting vote in the meetings of the statutory committees shall be with the
Chairperson of the committee.
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f. The functions or terms of reference of any statutory committee cannot be
delegated. However, for the Member Committee (MC) of MIIs, certain
operational activities of the Committee can be delegated to Internal
Committee(s) (ICs). In such cases the ICs shall at least have one member from
the MC, other than KMPs.
g. MIIs shall lay down the policy for the procedure for conducting of meetings,
frequency of meetings, timelines for placing of agenda papers, etc., of their
statutory committees.
D. If certain activities of the MII are not covered under the TOR of statutory committees,
the governing board of the MII shall be directly responsible for the functioning and
oversight of such activities. Further, in order to ensure accountability within the MII,
the governing board and each statutory committee shall identify the KMP(s) or
employees for executing the responsibilities assigned to them by the governing board
or statutory committees.
E. Further, MIIs shall ensure compliance with the following:
a. Over and above the statutory committees, the requirement to have mandatory
committees under relevant laws for listed companies shall apply mutatis
mutandis to MIIs.
b. PIDs in Statutory Committees at MIIs:
i. PIDs on the governing board of a MII shall not act simultaneously as a
member on more than five statutory committees of the MII.
ii. The above restrictions shall not be applicable to committees constituted
under other relevant laws such as The Companies Act, 2013, SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015,
amongst others.
iii. MIIs shall ensure availability of the required number of PIDs in order
to fulfil the requirement of composition of statutory committees.
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c. IEPs in Statutory Committees at MIIs:
i. The IEPs forming a part of statutory committees shall be from amongst
the persons of integrity, having a sound reputation and not having any
conflict of interest. They shall be specialists in the field of work assigned
to the committee; however, they shall not be associated in any manner
with the relevant MII, its associates, its subsidiaries, any other entity
associated with the MII and its members.
ii. MIIs shall frame the guidelines for appointment, tenure, code of
conduct, etc., of IEPs. Extension of the tenure may be granted to IEPs at
the expiry of the tenure, subject to performance review in the manner
prescribed by SEBI for PIDs.
iii. The maximum tenure limit of IEPs in a committee of MII shall be at par
with that of PIDs, as prescribed under Regulation 24(3) of the SECC
Regulations, 2018.
iv. IEPs shall not use or act on any sensitive information received in
capacity as a member of the statutory committee for obtaining any
undue benefit.
v. The members of statutory committees shall abide by the code of
conduct as applicable to them in terms of both SECC Regulations, 2018
and D&P Regulations, 2018.
vi. In the interest of securities market, SEBI may suo moto nominate
members on any statutory committee of the MIIs, if felt necessary.
vii. MIIs shall devise an internal mechanism to obtain regular feedback,
inputs, suggestions, etc. on regulatory, non-regulatory and operational
matters from various stakeholders including trading members, clearing
members and depository participants, investors, etc.
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viii. The newly recognized stock exchange, clearing corporation and
depository shall submit a confirmation to SEBI within three months
from the date of their recognition regarding the formation and
composition of statutory committees.
4.66.1 Further, while Para 4.66 A provides for the composition that is specific to each
statutory committee at depository, the overarching principles for composition
and quorum of the statutory committee at depositories shall be as under, which
shall be applicable to all committees.
4.66.1.1 On each committees at depositories, the number of Public Interest
Directors (PIDs) shall not be less than the total of number of shareholder
directors, Key Management Personnel (KMPs), independent external
persons, etc. put together, wherever shareholder directors, KMPs,
independent external persons, etc. are part of the concerned committee
4.66.1.2 PID shall be chairperson of each committee at depository
4.66.1.3 To constitute the quorum for the meeting of the depository committee,
the number of PIDs on each of the committees at depositories shall not be
less than total number of other members (shareholder directors, KMPs,
independent external persons, etc. as applicable) put together.
4.66.1.4 The voting on a resolution in the meeting of the committees at
depositories shall be valid only when the number of PIDs that have cast
their vote on such resolution is equal to or more than the total number of
other members (shareholder directors, KMPs, independent external
persons, etc., as applicable) put together who have cast their vote on such
resolution.
4.66.1.5 The casting vote in the meetings of the committees shall be with the
chairperson of the committee.
4.66.1.6 Apart from that specifically provided in Para 4.66 A, whenever required,
a committee may invite Managing Director, other relevant KMPs and
employees of the depository. However, such invitee shall not have any
voting rights.
4.66.2 Further, depositories are directed to adhere to the following:
4.66.2.1 Over and above the statutory committees mentioned at Para 4.66 A
above, the committees that are mandated by relevant law for listed
companies shall apply mutatis mutandis to depositories.
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4.66.2.2 Depositories shall lay down policy for the frequency of meetings, etc.,
for the statutory committees.
4.66.2.3 PIDs in Committees at depositories:
4.66.2.3.1 DP Regulations prescribes that a PID on the board of a depository
shall not act simultaneously as a member on more than five
committees of that depository.
4.66.2.3.2 It is clarified that the above limitation on maximum number of
committees that a PID can be member of, shall be applicable only to
statutory committees prescribed by SEBI under DP Regulations, and
circulars issued thereunder. The said requirement shall not be
applicable to committees constituted under Companies Act, 2013,
LODR Regulations, amongst others.
4.66.2.3.3 In case of non-availability of adequate number of PIDs in a
depository, the relevant depository shall take steps to induct more
PIDs in order to fulfil the requirement of composition of committees
within a depository.
4.66.2.4 Meeting of PIDs:
4.66.2.4.1 As per code of conduct for PIDs provided DP Regulations, the PIDs
shall be required to meet separately every six months. It is added
that all the PIDs shall necessarily attend all such meetings of PIDs
4.66.2.4.2 The objective of such meetings, shall include inter alia reviewing the
status of compliance with SEBI letters/ circulars, reviewing the
functioning of regulatory departments including the adequacy of
resources dedicated to regulatory functions, etc. PIDs shall also
prepare a report on the working of the committees of which they are
member and circulate the same to other PIDs. The consolidated
report in this regard shall be submitted to the governing board of
the depositories. Further, PIDs shall identify the important issues
which may involve conflict of interest for the depository or may
have significant impact on the market and report the same to SEBI,
from time to time.
4.66.2.5 Independent external persons in committees at depositories:
4.66.2.5.1 The independent external persons forming a part of committees
shall be from amongst the persons of integrity, having a sound
reputation and not having any conflict of interest. They shall be
specialists in the field of work assigned to the committee; however,
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they shall not be associated in any manner with the relevant
depository and its members.
4.66.2.5.2 Depositories shall frame the guidelines for appointment, tenure,
code of conduct, etc., of independent external persons. Extension of
the tenure may be granted to independent external persons at the
expiry of the tenure, subject to performance review in the manner
prescribed by SEBI for PIDs. Further, the maximum tenure limit of
Independent external persons in a committee of depository shall be
at par with that of PIDs, as prescribed under Regulation 25(3) of the
DP Regulations.
4.66.3 Performance review of Public Interest Directors (PIDs)215:
4.66.3.1 In respect of Public Interest Directors (PIDs) appointed in the governing
board of depositories, Regulation 25(3) of DP Regulations, provides the
following:
“Public interest directors shall be nominated for a term of three years,
extendable by another term of three years, subject to performance review in
the manner as may be specified by the Board:
Provided that post the expiry of term(s) at a depository, a public interest
director may be nominated for a further term of three years in other depository
or recognized stock exchange or a recognized clearing corporation, only after
a cooling-off period of one year:
Provided further that a person may be nominated as a public interest director
for a maximum of three terms across a depository/recognized stock
exchange/recognized clearing corporations, subject to a maximum age limit of
seventy-five years.”
4.66.3.2 For complying with the aforementioned regulation, while developing a
framework for performance review of PIDs, depositories need to
consider the following:
4.66.3.2.1 Policy for Performance review of PIDs:
4.66.3.2.1.1 The Nomination and Remuneration committee (NRC) of the
depositories will be responsible for framing the performance
review policy for PIDs.
4.66.3.2.1.2 Such performance review policy shall include criteria for
performance evaluation, methodology adopted for such
evaluation and analyzing the results, amongst others.
215 Reference: SEBI Circular SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/26 dated February 5, 2019
200
4.66.3.2.1.3 Performance review policy of PID shall include scope for both
internal evaluation as well as external evaluation.
4.66.3.2.1.4 Further, as performance review is not a static process and requires
periodical review, NRC shall also be responsible for reviewing
such performance review policy, at least once in 3 years.
4.66.3.2.1.5 Such performance review policy and changes made therein, shall
be approved by the governing board of depository.
4.66.3.2.2 Guiding criteria of Performance Review:
As a part of framing performance review policy, NRC shall be primarily
responsible for formulation of performance evaluation criteria. The criteria
for performance review of PIDs, which shall be considered for both internal
evaluation and external evaluation, may be framed by NRC taking into
consideration guiding principles provided below. These principles would
serve as a guidance for depositories and the same may be adopted by
respective depository, as considered appropriate, with additional
principles, if any.
Guide for depositories to frame criteria for performance review of PIDs:
a. Qualifications: The PID’s qualification in area of law, finance, accounting,
economics, management, administration or another area relevant to the
financial markets, including any recent updates in this regard.
b. Experience: The PID’s prior experience in area of law, finance, accounting,
economics, management, administration or any other area relevant to the
financial markets, including any recent updates in this regard.
c. Knowledge and Competency:
 Whether the PID has sufficient understanding and knowledge of the
entity in which it operates and the applicable regulatory norms.
 Whether the PID has sufficient understanding of the role,
responsibilities and obligations of PID under the relevant regulatory
norms.
 How the PID fares across different competencies as identified for
effective functioning of Board of the concerned depository (The
depository may list various competencies and mark all PIDs against
every such competency e.g. Constructive and analytical decision making
abilities).
 Whether the PID has sufficient understanding of the risk attached with
the business structure.
d. Fulfilment of functions:
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 Whether the PID understands and fulfils the functions as assigned to
him/her by the Board and the regulatory norms.
 Whether the PID gives views and opinion on various regulatory matters
when comments are invited by SEBI through various means.
e. Ability to function as a team:
 Whether the PID is able to function as an effective team- member.
 Whether the PID listens attentively to the contributions of others and
gives adequate weightage to the views and perception of other Board
members.
 Whether the PID shares good interpersonal relationship with other
directors.
f. Initiative:
 Whether the PID actively takes initiative with respect to various areas.
 Whether the PID insists on receiving information necessary for decision
making.
 Whether the concerned PID keeps himself well informed about the
functioning of depository and the external environment in which it
operates.
 Whether the PID remains updated in terms of developments taking
place in regulatory areas.
 Whether the PID has identified any important issues concerning any
matter which may involve conflict of interest for the concerned
depository, or may have significant impact on their functioning, or may
not be in the interest of securities market, and whether the PID reported
same to SEBI.
 Whether the PID appropriately deals with critical matters.
g. Availability and attendance:
 Whether the PID is available for meetings of the Board and attends the
meeting of Governing board and Committees regularly and timely,
without delay. It must be ensured that the concerned PID hasn’t
remained absent for three consecutive meetings of the governing board
and has attended seventy five per cent of the total meetings of the
governing board in each calendar year; failing which the PID shall be
liable to vacate office.
h. Commitment: Whether the PID is adequately committed to the Board and
the depository.
i. Contribution:
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 Whether the PID has contributed effectively to the entity and in the
Board meetings.
 Whether the PID participates in the proceedings of Board meetings
keeping in mind the interests of various stakeholders.
 Whether the PID actively deliberates and contributes on proposed
business propositions and strategic decisions taking into consideration
pros and cons of such propositions, long term outlook, business goals,
cost-benefit analysis, etc.
j. Integrity:
 Whether the PID demonstrates highest level of integrity (including
conflict of interest disclosures, maintenance of confidentiality, etc.).
 Whether the PID strictly adhere to the provisions of the Securities
Contracts (Regulation) (Stock Exchanges and Clearing Corporations)
Regulations, 2018, 2018, DP Regulations and any other regulatory
provision, as applicable, along-with the code of conduct and code of
ethics prescribed under other applicable regulatory norms.
 Whether disclosures such as dealing in securities and other regulatory
disclosures are provided by the PID on timely basis.
 Confirmation on the PID being a Fit & Proper person.
 Confirmation that the PID doesn’t disclose confidential information,
including technologies, unpublished price sensitive information, unless
such disclosure is expressly approved by the Board of directors or
required under the applicable laws.
k. Independence:
 Whether the PID is independent from the entity and the other directors
and there is no conflict of interest.
 Confirmation as to non-association of the PID with relevant depository
and its member.
 Whether the PID keeps regulators informed of material developments in
the concerned depository’s functioning, from time to time.
l. Independent views and judgment:
 Whether the PID exercises his/ her own judgment and voices opinion
freely.
 Whether the PID’s participation in decisions taken during meetings are
unbiased, based on ethical judgment and are in strict conformity to the
applicable regulatory norms.
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 Whether the PID raises his/her concern if anything is observed contrary
to regulatory norms and the expected norms of ethical conduct.
 Whether the PID is committed to ensure that there is fairness and
integrity in depository’s system, in letter as well as spirit.
4.66.3.2.3 Evaluation mechanism:
4.66.3.2.3.1 PIDs shall be subjected to internal evaluation as well as external
evaluation, carrying equal weightage.
4.66.3.2.3.2 Internal evaluation: All the governing board members shall
evaluate the performance of each PID, on an annual basis at the
end of every financial year.
4.66.3.2.3.3 External evaluation: PIDs shall also be subject to external
evaluation during their last year of the term in a depository , by a
management or a human resources consulting firm. The
consultant shall take into consideration the performance of the
PID for the entire tenure served in a given depository, at least up
to 4 months before expiry of his/ her term. In order to avoid any
bias or conflict of interest, external consultant should not be a
related party or associated with the depository, the concerned
PID or any other governing board members.
4.66.3.2.3.4 Such performance review should be carried out in fair & objective
manner and the review should be recorded with clarity and
verifiable facts in a standardized format covering all the relevant
criteria / aspects.
4.66.3.2.3.5 While evaluating conflict of interest of a PID, the governing board
of the depository shall also take into consideration provisions of
Clause 2(d) of Schedule II Part C of DP Regulations under the
head ‘Public Interest Director’; and conflict of interest, if any, of
any PIDs should be disclosed to SEBI by the governing board with
their comments/ views.
4.66.3.2.4 Disclosure: Performance evaluation criteria for PIDs shall be disclosed
in their annual report as well as on the website of the concerned
depository.
4.66.3.2.5 Recommendation to SEBI: After taking into account the performance of
a PID in the concerned depository, on the basis of internal evaluation
and external evaluation both carrying equal weightage, NRC shall
consider and recommend extension of his / her tenure to the Governing
Board of the depository. The Governing Board of the depository shall in-
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turn consider and recommend to SEBI if the tenure of the PID is desired
to be extended by another term of three years.
4.66.3.2.6 In addition to the other requirements prescribed in performance review
policy of the depositories along-with norms specified in DP Regulations,
the following may be considered by NRCs of depositories:
4.66.3.2.6.1 It shall be ensured that the concerned PID hasn’t remained absent
for three consecutive meetings of the governing board and has
attended seventy-five per cent of the total meetings of the
governing board in each calendar year; failing which PID shall be
liable to vacate office.
4.66.3.2.6.2 It shall be ensured that PIDs in the governing boards of
depositories are selected from diverse fields of work, in terms of
their qualification and experience.
4.66.3.3 The application for extension of term of a PID shall be accompanied with the
attendance details of PID in the meetings of various mandatory committees
and of the governing board of the depository along-with specific reasons for
seeking extension of his/her term as a PID. Such specific reasons shall include
facts such as whether the concerned PID, during the term served, had
identified any important issues concerning any matter which may involve
conflict of interest, or have significant impact on functioning of depository, or
may not be in the interest of securities market as a whole, and whether the
PID had reported the same to SEBI.
4.66.3.4 In terms of DP Regulations, a minimum of two names shall be submitted by
the depository at the time of making request for appointment of PID and
extension of the term of existing PID, including appointment of PID for the
purpose of broad basing the governing board, against each such vacancy.
4.66.3.5 The aforementioned norms specify the minimum requirements that have to
be complied with by depositories, however the NRCs of depositories may
adopt additional and more stringent norms while framing a policy for
performance review of PIDs. With regard to the detailed criteria for
performance evaluation, as provided in Para 4.66.3.2.2, the same shall serve
as an illustrative guide for depositories to frame performance evaluation
criteria, both for internal as well as external evaluation, and the same may be
adopted by depositories as considered appropriate, with additional criteria, if
any.
4.66.3.5.1 Additionally, with regard to tenure of existing PIDs as on February 5, 2019,
following is clarified:
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4.66.3.5.1.1 The term of existing PIDs serving in a MII for more than three years,
can be extended, subject to his / her performance review and a
maximum tenure of 6 years as PID in that particular MII.
4.66.3.5.1.2 The term of existing PIDs, that have already served for six years or
more in a single MII, shall not be eligible for further extension in that
MII.
4.66.4 Parameters for Performance Evaluation of Market Infrastructure Institutions216
4.66.4.1 Regulation 31(6) of the SEBI (Depositories and Participant Regulations, 2018
(hereafter referred to as “D&P Regulations, 2018”) states that every recognised
depository (referred as Market Infrastructure Institutions (MIIs)) shall
appoint an independent external agency to evaluate its performance and the
performance of its statutory committees within such periodicity and in such a
manner as may be specified by the Board.
4.66.4.2 In order to bring consistency and uniformity with respect to evaluations to be
done by the external agency, it was felt that basic minimum standards and
principles should be developed along with weightages. Accordingly, the
matter was discussed at the Industry Standards Forum (ISF) of MIIs where the
broad criteria, the weightage for each criterion, sub-parameters under each
criterion, etc. were deliberated. For each sub-parameter, sample Key
Performance Indicators (KPIs), both quantitative and qualitative in nature,
were identified by SEBI in consultation with the ISF.
4.66.4.3 Based on the deliberations at the ISF of MIIs and subsequent internal
deliberations, the broad framework with basic minimum criteria for
independent external evaluation of performance of MIIs has been approved
by the Board in its meeting held on June 27, 2024. The minimum criteria for
the independent external evaluation of performance of MIIs and their
weightages are as under:
S.N. Criteria Weightage
(i) Resilience in technology and processes of MII, in delivery 40%
of its core functions.
(ii) Investor Education and Protection. 17%
(iii) Efficient discharge of Regulatory role by MII. 15%
(iv) Compliance with Regulatory Norms. 10%
(v) Evaluation of Governance Practices. 8%
(vi) Adequacy of Resources. 5%
216 Reference SEBI Circular no. SEBI/HO/MRD/POD-III/CIR/P/2024/127 dated September 24, 2024
206
(vii) Fair access and treatment to all stakeholders and 5%
information disclosure.
The above criteria may be subsequently reviewed, depending upon the
evolving regulatory and operating context.
4.66.4.4 A broad framework in this regard, developed in consultation with ISF of MIIs
is provided at SEBI Circular no. SEBI/HO/MRD/POD-III/CIR/P/2024/127 dated
September 24, 2024 Annexure-A
https://www.sebi.gov.in/legal/circulars/sep-2024/parameters-for-
performance-evaluation-of-market-infrastructure-institutions_86974.html
4.66.4.5 Rating Framework
In order to ensure consistency in the manner of assessment and outcomes
across similar MIIs, compare performance of such MIIs and monitor trends
over time, a rating framework has been developed which would be assigned
after evaluation of the MIIs. The rating would reflect the Independent External
Agency’s judgment on the performance of the MII in respect of expected
outcomes. The rating framework is provided at SEBI Circular no.
SEBI/HO/MRD/POD-III/CIR/P/2024/127 dated September 24, 2024 at
Annexure-B https://www.sebi.gov.in/legal/circulars/sep-
2024/parameters-for-performance-evaluation-of-market-infrastructure-
institutions_86974.html dated September 24, 2024.
4.66.4.6 Principles for appointment of Independent External Agency: The following
principles shall be adhered to by the MIIs for selection of an independent
external agency:
4.66.4.6.1 The Independent External Agency shall be appointed with prior No
Objection Certificate (NOC) from SEBI and on such terms and conditions,
including fees, timelines, etc. as may be approved by the Governing Board of
the MII.
4.66.4.6.2 The Independent External Agency shall have requisite domain knowledge,
experience and expertise on matters concerning the securities market and the
functioning of the MII.
4.66.4.6.3 MII shall ensure that there is no conflict of interest in the appointment of the
Independent External Agency and the Agency had not been
employed/hired by the MII for the evaluation period and till submission of
the report.
4.66.5 Timelines for External Evaluation
4.66.5.1 The independent external evaluation shall take place once in three years for
each MII. In this regard, the following shall be ensured:
4.66.5.1.1 The first independent external evaluation shall be only for the Financial Year
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(FY) 2024-2025. The report of the same shall be submitted to the Governing
Board of the MII and SEBI by September 30, 2025.
4.66.5.1.2 b) The subsequent independent external evaluation(s) shall be for a block of
next three FYs and so on. Upon completion, a report in this regard shall be
submitted to the Governing Board of the MII and SEBI within 6 months from
the end of the 3rd FY to be evaluated.
4.66.6 Performance Evaluation Metrics for KMPs including MD
4.66.6.1 The SEBI D&P Regulations, 2018 require MIIs to clearly define the roles &
responsibilities and the Key Performance Indicators (KPIs) of each Key
Management Personnel (KMP) and have performance management
mechanisms for their evaluation. Further, these KPIs have to inculcate
regulatory, risk management and compliance outcomes.
4.66.6.2 In order to effectively reflect the efforts of the Managing Director (MD) and
KMPs towards outcomes of various functions under Verticals 1 (Critical
Operations) and Vertical 2 (Regulatory, compliance, risk management and
investor grievances), MIIs shall ensure that their internal performance
evaluation metrics have allocated sufficient weightage for these outcomes.
4.66.6.3 The performance evaluation of MD should provide at least 50% weightage
towards Verticals 1 and 2 related outcomes.
4.66.6.4 The performance evaluation of MD and KMPs shall include the minimum
criteria as specified for the MIIs at Annexure-A. However, for KMPs the
criteria and corresponding weightages may be adjusted depending upon the
specific roles and responsibilities assigned to such KMPs.
4.67 Exemption from clubbing of investment limit for foreign Government agencies and its
related entities217 and Write-off of shares held by FPIs218
Kindly refer para titled ‘Monitoring of investment limit at investor group level’ and
‘Write-off of securities held by FPIs’ of https://www.sebi.gov.in/legal/master-
circulars/may-2024/master-circular-for-foreign-portfolio-investors-designated-
depository-participants-and-eligible-foreign-investors-_83689.html dated May 30,
2024 (Master Circular for Foreign Portfolio Investors, Designated Depository
Participants and Eligible Foreign Investors)
4.68 Stealing of Customers data registered with NSE/ BSE
4.68.1 Central Economic Intelligence Bureau, Department of Revenue, GOI brought to the
notice of SEBI that certain fraudsters are collecting data of customers who already
217 Reference: SEBI Circular IMD/FPI&C/CIR/P/2020/07 dated January 16, 2020
218 Reference: SEBI Circular SEBI/HO/IMD/FPI&C/CIR/P/2020/177 dated September 21, 2020
208
into trading either in NSE/BSE and send them bulk messages on the pretext of
providing investment tips and luring them to invest with them in their bogus firms
by promising huge profits. In view of the above, there is need to sensitize, create
awareness among investors about the same.
4.68.2 In this regard, Stock exchanges and Depositories to advise, sensitize their
stockbrokers, investors on the above issue and also that necessary steps, safeguards
are taken so that data of the customers/investors registered with the
Members/Participants are not shared or revealed to unauthorised persons.
4.69 Advisory regarding remote access and telecommuting219
4.69.1 In reference to the meeting of the TAC held on April 30, 2020, the Market
Infrastructure Institutions (MIIs) were advised to implement the following
measures after taking into consideration the COVID-19 situation:-
4.69.1.1 The MII shall have proper remote access policy framework incorporating the
specific requirements of accessing the enterprise resources securely located in
the data centre from home, using internet connection.
4.69.1.2 For implementation of the concept of trusted machine as end users, the MII
shall categorize the machines as official desktops/laptops and accordingly the
same may be configured to ensure implementation of solution stack
considering the requirements of authorized access. Official devices shall have
appropriate security measures to ensure that the configuration is not
tampered with. The MII shall ensure that internet connectivity provided on
all official devices shall not be used for any purpose other than the use of
remote access to data centre resources.
4.69.1.3 If personal devices (BYOD) are allowed for general functions, then
appropriate guidelines should be issued to indicate positive and negative list
of applications that are permitted on such devices. Further, these devices
should be subject to periodic audit.
4.69.1.4 The MII shall implement the various measures related to Multi-Factor
Authentication (MFA) for verification of user access so as to ensure better data
confidentiality and accessibility. VPN remote access through MFA shall also
be implemented. It is clarified that MFA refers to the use of two or more
factors to verify an account holder’s claimed identity.
4.69.1.5 The MII shall ensure that the trusted machine is the only client permitted to
access the data centre resources. The MII shall ensure that the Virtual Private
Network (VPN) remote login is device specific through the binding of the
219 Reference: SEBI MRD email dated May 18, 2020
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Media Access Control (MAC) address of the device with the IP address to
implement appropriate security control measures.
4.69.1.6 The MII shall explore a mechanism for ensuring that the employee using
remote access solution is indeed the same person to whom access has been
granted and not another employee or unauthorized user. A suitable video-
recognition method has to be put in place to ensure that only the intended
employee uses the device after logging in through remote access. The MII
shall implement short session timeouts for better security. Towards this end,
it is suggested that the MII may consider running a mandatory monitor on the
device that executes:
4.69.1.6.1 At random intervals takes a picture with the webcam and uploads the
same to the MII’s server,
4.69.1.6.2 At random intervals pops up and prompts biometric authentication with
a timeout period of a few seconds. If there is a timeout, this is flagged on
the MII server as a security event.
4.69.1.7 The MII shall ensure that appropriate risk mitigation mechanisms are put in
place whenever remote access of data centre resources is permitted for service
providers.
4.69.1.8 Remote access has to be monitored continuously for any abnormal access and
appropriate alerts and alarms should be generated to address this breach
before the damage is done. For on-site monitoring, the MII shall implement
adequate safeguard mechanism such as cameras, security guards, nearby co-
workers to reinforce technological activities.
4.69.1.9 The MII shall ensure that the backup, restore and archival functions work
seamlessly, particularly if the users have been provided remote access to
internal systems.
4.69.1.10 The MII is advised to exercise sound judgement and discretion while applying
patches to existing hardware and software and apply only those patches
which were necessary and applicable.
4.69.1.11 The Security Operations Centre (SOC) engine has to be periodically
monitored and logs analyzed from a remote location. Alerts and alarms
generated should also be analyzed and appropriate decisions should be taken
to address the security concerns. The security controls implemented for the
Remote Access requirements need to be integrated with the SOC Engine and
should become a part of the overall monitoring of the security posture.
4.69.1.12 The MII shall update its incidence response plan in view of the current
pandemic.
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4.69.1.13 The MII shall implement cyber security advisories received from SEBI, CERT-
IN and NCIIPC on a regular basis.
4.69.2 Further, all the guidelines developed and implemented during pandemic situation
shall become SOPs post Covid-19 situation for future preparedness.
4.70 Standard Operating Procedure for handling of technical glitches by Market
Infrastructure Institutions (MIIs) and payment of “Financial Disincentives” thereof220
4.70.1 MIIs (i.e. Stock Exchanges, Clearing Corporations and Depositories) are
systemically important institutions as they, inter-alia, provide infrastructure
necessary for the smooth and uninterrupted functioning of the securities market.
4.70.2 With increasing dependence on technology, as the operations and functioning of
MIIs are fully automated right from order entry to order matching to trade
confirmation leading up to clearing and settlement of trades, the instances of
technical glitches at MIIs, leading to business disruption/unavailability of services
provided by MIIs, have been occurring, despite various mechanisms stipulated by
SEBI such as Business Continuity Planning, Disaster Recovery policies, System
Audit etc.
4.70.3 The general practice in the computing/technology industry to deal with business
disruption/unavailability of services, is to work with specified downtime and for
downtimes beyond such specified time, a pre-defined penalty structure is included
in Service Level Agreement.
4.70.4 Considering the criticality of smooth functioning of systems of MIIs (as any
disruption adversely impacts all classes of investors / market participants as well
as the credibility of the securities market), specifying a pre-defined threshold for
downtime of systems of MIIs becomes desirable. For any downtime or
unavailability of services, beyond such pre-defined time, there is a need to ensure
that “Financial Disincentive” is paid by the MIIs. This will encourage MIIs to
constantly monitor the performance and efficiency of their systems and upgrade/
enhance their systems etc. to avoid any possibility of technical
glitches/disruption/disaster and restart their operations expeditiously in the event
of glitch/disruption/disaster.
4.70.5 Accordingly, after extensive discussion with various stakeholders, it has been
decided that, MIIs shall :
4.70.5.1 Follow the Standard Operating Procedure (SOP) for handling technical
glitches as detailed under Para A below; and
220 Reference: SEBI Circular SEBI/HO/MRD1/DTCS/CIR/P/2021/590 dated July 05, 2021 and
SEBI Circular SEBI/HO/MRD/TPD-1/P/CIR/2024/124 dated September 20, 2024
.
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4.70.5.2 Comply with the “Financial Disincentive” structure as detailed under Para
B below.
A. Standard Operating Procedure (SOP) for handling of technical glitches
Definition of “Technical Glitch”
1. Technical glitch shall mean any malfunction in the systems of an MII. Malfunction
in the systems of the MII shall include malfunction in its (a) hardware, or; (b)
software, or; (c) any products/ services provided by the MII, whether on account
of inadequate infrastructure/ systems or otherwise, which may lead to either
stoppage or variance in the normal functions/ operations of systems of the MII.
Reporting Requirements
2. The following reporting structure for technical glitches shall be adopted by the
MIIs:
S. No. Disruption Reporting
1. No business • Standing Committee on
disruption Technology (SCOT) of MII
• Governing Board of MII
2. Business disruption • SCOT of MII
• Governing Board of MII
• SEBI
Business disruption shall mean either stoppage or variance in the normal
functions/operations of systems of the MII thereby impacting normal/regular
service delivery of the MII.
2.1. With regard to incidents resulting in business disruption, the following shall
be submitted by the MIIs to SEBI:
i. Information of technical glitch on immediate basis but not later than 2 hours
from the time of occurrence of the glitch; provided that glitches of the nature
of a disaster- as defined under Para 4.31 shall be reported immediately upon
declaration of disaster.
ii. Preliminary report within 24 hours of the occurrence of the glitch.
iii. Comprehensive Root Cause Analysis (RCA) report and corrective action
taken to address the technical glitch within 21 days of the incident. Such
report shall be submitted to SEBI, after placing the same before the Standing
Committee on Technology and the Governing Board of the MII and
confirming compliance with their observations.
iv. RCA submitted by the MIIs should inter-alia include exact cause of the
technical glitch (including root cause from vendor(s), if applicable), exact
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duration of the technical glitch, chronology of events, list of business
processes/systems and time for which they were impacted,
recommendations of SCOT / Governing Board of MII, details of corrective/
preventive measures taken (or to be taken) by MII along with timelines and
any other aspect relevant to the technical glitch. As part of the RCA, MIIs are
required to demonstrate compliance with various requirements of this SOP.
The RCA shall include details regarding time of incident, time when
operations were restored and in the event of a disaster, time when disaster
was declared.
2.2. All communication and information with regard to technical glitch shall be
shared by the MII with SEBI through a dedicated e-mail id viz.
techglitch@sebi.gov.in
2.3. SEBI on identification of the Technical Glitch resulting into Financial
Disincentive to the MIIs, or upon receipt of the information of any such instance
shall provide an opportunity to the concerned MIIs to make their submissions
in respect of the facts of the case.
2.4. MIIs shall carry out internal examination pertaining to occurrence of technical
glitches to ascertain individual accountability and take appropriate action
including suitable recording and reckoning in the performance appraisal of
those individuals. SEBI would retain the right to initiate enforcement action
against the individuals at the MII, if there is sufficient ground to do so.
Placing before TAC
3. With regard to the incidents wherein business is disrupted, the RCA and
corrective action taken, as submitted by the MII, shall be placed before TAC of
SEBI. TAC/ SEBI, if it so desires, may seek additional information/ clarification
from the MII regarding the technical glitch.
4. In case TAC finds the actions taken by the MII as inadequate, then, based on the
recommendations of TAC, the MII shall be required to address the technical glitch
by taking appropriate corrective actions, within the timeline specified by
TAC/SEBI. While deciding such timeline, criticality of the malfunction and/or
the services/ applications affected by the same shall also be taken into
consideration.
B. “Financial Disincentive” structure with regard to handling of technical glitches
Failure to timely submit RCA
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1. In case of delay in submission or submission of incomplete/ inadequate RCA by
an MII, a “financial disincentive” of Rs.1,00,000 per working day shall be paid by
the MII for each working day of delay from the timeline specified at clause 2.1
(iii) of Para 4.70.5 A above or any revised timeline specified by TAC/SEBI for
submission of exact RCA.
Failure to timely address technical glitch
2. In order to ensure that MIIs address technical glitch within the timeline specified
by TAC/SEBI, the following progressive slab-wise “financial disincentive” shall
be paid from the expiry of the timeline specified by TAC/ SEBI:
No. of working days during which
Financial disincentive to be
S No. failure continues (i.e. after expiry of
paid by the MII (Rs.)
the timeline specified by TAC/SEBI)
i. First 15 working days 2 lakh per working day
3 lakh per working day in
ii. Subsequent 15 working days
addition to S No. (i) above
25 lakh in addition to S No (i)
iii. Beyond 30 working days
and (ii) above
Failure to declare disaster within stipulated timelines
3. It has been mandated that, in the event of disruption of any one or more of the
‘Critical Systems’, the MII shall, within 30 minutes of the incident, declare that
incident as ‘Disaster’. In case of delay in declaration of disaster beyond the
timeline specified by SEBI, the following “financial disincentive” shall be paid:
Delay in declaration of disaster
S. Financial disincentive Equivalent
beyond abovementioned
No. (Rs.)
timeline specified by SEBI
i. Financial disincentive on MII 10% of average of standalone net
profit for previous two financial years
or Rs. 2 cr., whichever is higher.
Failure to restore operations within Recovery Time Objective (RTO)
4. In the event of a disaster, if an MII fails to restore its operations within the RTO
prescribed by SEBI, i.e. to restore operations of ‘Critical Systems’ including from
Disaster Recovery Site within 45 minutes of declaration of Disaster, the following
“financial disincentive” shall be paid:
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Failure to restore operations
S Financial disincentive Equivalent
within the RTO prescribed by
No. (Rs.)
SEBI
Financial disincentive on MII 10% of average of standalone net profit
i. for previous two financial years or Rs. 2
cr., whichever is higher.
“Financial disincentive” under Clause 3 and Clause 4 above, in relation to the
same disaster, shall be paid only once either under Clause 3 or Clause 4.
5. Further, if an MII fails to restore operations of Critical Systems including from
Disaster Recovery Site within three hours from the occurrence of the disaster, the
following additional “financial disincentive” (over and above S No 3 or 4 above)
shall be paid:
Failure to Restore operations
S Financial disincentive Equivalent
of Critical systems beyond
No. (Rs.)
abovementioned timeline
i. Financial disincentive on MII 10% of average of standalone net profit
for previous two financial years or Rs. 2
cr., whichever is higher.
Failure to restore normalcy in cases of business disruption, not being in the
nature of a Disaster
6. In the event of any business disruption, which is not required to be declared as
“Disaster”, if an MII fails to restore normalcy of operations within 75 minutes of
the incident, the following slab wise “financial disincentive” shall be paid by the
MII:
S Failure to Restore normalcy Financial
No. within disincentive (Rs.)
i. 75 minutes to 3 hours of the incident Rs. 50 lacs
ii. Beyond 3 hours of the incident Rs.1 crore
7. The amount of “financial disincentive” paid as per the above structure shall be
credited by MII to the following funds maintained by it:
S Financial Disincentive on MIIs, Credited to Funds
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No.
i. Stock Exchange Investor Protection Fund (IPF)
Core Settlement Guarantee Fund
ii. Clearing Corporation
(Core SGF)
iii. Depositories Investor Protection Fund (IPF)
8. Further, the MII shall submit a compliance report within 90 days of occurrence
of disaster/ business disruption to SEBI providing details of payment of “financial
disincentives” including computation of “financial disincentives” as per the SOP
and the date when the amount was credited to the aforementioned funds.
9. MIIs shall disclose on their websites (and in their respective annual reports), the
details of financial disincentive paid by them on account of technical glitches.
Further, listed MIIs shall make appropriate disclosures required in terms of SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015
regarding any financial disincentive imposed by SEBI on account of technical
glitch.
10. The financial disincentives automatically triggered under predefined
circumstances as stated in clauses 1,2,3,4,5,6 above shall be paid by the MIIs.
However, these financial disincentives shall be without prejudice to any action as
may be initiated by SEBI.
4.70.6 The aforesaid “Financial Disincentives”, when triggered automatically under
predefined conditions, as detailed in Para 4.70.5 B, shall be credited to the Investor
Protection Fund/Core Settlement Guarantee Fund maintained by the MII.
4.71 Standard Operating Procedure for handling of Stock Exchange Outage and
extension of trading hours thereof221
4.71.1 Trading hours of stock exchanges are pre-defined and known to all market
participants including the other Market Infrastructure Institutions (MIIs) to enable
them to carry out activities related to continuous trading in securities.
4.71.2 If due to any technical reason or otherwise, continuous trading on stock exchanges
is disrupted, it is of paramount importance that not only all market participants
including other MIIs, are promptly informed about the outage but also the trading
hours are extended, if required, so as to provide opportunity for smooth closure of
intraday positions.
221 Reference: SEBI Circular SEBI/HO/MRD-TPD-1/CIR/P/2023/7 dated January 09, 2023
216
4.71.3 With a view to ensure that any outage at stock exchange(s) is handled in a
harmonized and consistent manner, the matter was discussed with the MIIs and
Standard Operating Procedure with regard to handling of such stock exchange
outage in Cash Market and Equity Derivatives segment is detailed below.
Definition of Stock Exchange Outage
4.71.4 Stock Exchange Outage shall mean stoppage of continuous trading, either suo moto
by exchange or by virtue of reasons beyond control of stock exchange. Further,
stoppage of continuous trading shall not include trading halt on account of index
based market-wide circuit breaker.
Reporting Requirements for outage
4.71.5 The stock exchange that suffered the outage (referred to as affected stock exchange)
shall intimate about the outage to various stakeholders as mentioned below:
Sl. Communication to Reporting
No.
1. Market Participants/ Trading  Immediate but not later than 15 minutes from
Members/ Other MIIs occurrence of outage. Through broadcast
message and by publishing on its website
2. SEBI  Immediate after occurrence of outage. Through
an email to dedicated email id :
techglitch@sebi.gov.in
4.71.6 Further, the affected stock exchange shall update about the ongoing outage in the
time intervals of 45 minutes from the initial intimation, as mentioned at Para 4.71.5
above, until normalcy to operations is restored. Extension of trading hours, if
applicable (as mentioned subsequently from Para 4.71.10 to 4.71.16), shall be
mentioned in the intimation by the affected stock exchange.
Trading on unaffected segment(s) / exchanges and Resumption of trading on
affected stock exchange
4.71.7 In the event of disruption of trading in one or more market segments of affected
stock exchange, qualifying as outage, trading in other unaffected segments of the
affected exchange shall continue and all other unaffected exchanges shall continue
to trade in all of their market segments.
4.71.8 Affected stock exchange would restore operations to normalcy at the earliest
including from the Disaster Recovery Site and carry out various activities, in terms
of Para 4.31 on Business Continuity Planning (BCP) and Disaster Recovery (DR)
and Para 4.70 on Standard Operating Procedure for handling of technical glitches
217
by Market Infrastructure Institutions (MIIs) and payment of “Financial
Disincentives” thereof, as applicable.
4.71.9 A pre-opening session similar to normal pre-opening session would be conducted
for effective price discovery, before resumption of trading. Further, there shall be
an advance intimation of at least 15 minutes to various market participants with
regard to resumption of trading or start of pre-opening session, as applicable.
Extension of trading hours in case of outage
4.71.10 If the trading on the affected stock exchange resumes to normalcy at least one hour
(excluding 15 minutes of pre-opening session, if applicable) before the normal
scheduled market closure, trading hours on that day for all stock exchanges would
remain unchanged.
4.71.11 If the trading on the affected stock exchange does not resume to normalcy even one
hour (excluding 15 minutes of pre-opening session, if applicable) before the
scheduled market closure, trading hours for all stock exchanges would
automatically get extended for additional one and half hours for that day and the
same would be intimated by the affected stock exchange to market participants,
other MIIs and SEBI latest by one hour fifteen minutes before the normal scheduled
market closure. Subsequent to the communication from the affected stock
exchange, the unaffected stock exchanges would also suitably issue a notice with
regard to extension of trading hours on their stock exchanges.
4.71.12 If the trading on the affected stock exchange does not resume to normalcy even 45
minutes (excluding 15 minutes of pre-opening session, if applicable) post normal
scheduled market closure, in the case of extension of trading hours, no further
trading would be allowed on the affected stock exchange for that day and other
stock exchanges would continue to operate till the extended time provided at Para
4.71.11 above to enable smooth closure/settlement of intraday positions. The
affected exchange would have to suitably intimate the same to market participants,
other MIIs and SEBI latest by 45 minutes post normal scheduled market closure.
4.71.13 If the occurrence of outage as mentioned in Para 4.71.4 above, happens during the
last trading hour of normal operation and latest before 15 minutes of normal
scheduled market closure, trading hours for all stock exchanges would
automatically get extended by one and half hours for that day and the same would
be intimated by the affected stock exchange to market participants, other MIIs and
SEBI immediately but not later than 10 minutes from the occurrence of outage.
Subsequent to the communication from the affected stock exchange, the unaffected
stock exchanges would also suitably issue a notice with regard to extension of
trading hours on their stock exchanges.
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4.71.14 Exchanges to put in place a common close out policy, to ensure uniform
methodology of settlement of open positions, in case continuous trading didn’t
happen in Cash Market or Equity Derivative Segment of the exchange during last
half an hour of trading for the day due to outage.
4.71.15 Extension of trading hours, if any, for Cash Market would result in equivalent
extension of trading hours in Equity Derivative Segment and vice versa, provided
trading hours at the start of the day are aligned for both Cash Market and Equity
Derivative Segment. Further, Extension of trading hours in the Cash Market would
also result in equivalent extension to other secondary market mechanisms
conducted during trading hours such as Offer For Sale, Buy back etc.
4.71.16 For illustration, a few scenarios pertaining to extension of trading hours are
tabulated herewith with the assumptions that trading hours for two exchanges A
and B in Cash Market and Equity Derivative Segment, at start of the day, are from
09:15 to 15:30 (i.e. excluding pre-opening and post-closing session) and all segments
of exchange B are operating unaffected.
S Occurrence of
Event Extension of trading hours
No outage
In Equity
Normalcy in the said
Derivative No extension of trading hours for exchange A
1 segment restored
Segment of and B
latest by 14:30
exchange A
In Cash Market of Start of Pre-opening No extension of trading hours for exchange A
2
exchange A latest by 14:15 and B
Trading hours in Cash Market and Equity
Derivative Segment of exchange A and B
extended till 17:00 and announcement in this
Failure to start
regard to be made latest by 14:15 by the
Preopening by 14:15
affected stock exchange. Note that such
on exchange A
Any time during announcement is to be made on the basis of
the trading assessment by stock exchange on the likely
3 hours in Cash resumption of normalcy
Market on No trading permitted in Cash Market on
exchange A exchange A for the day.
Failure to start Equity Derivative Segment on exchange A
Preopening by 16:00 and Cash Market and Equity Derivative
on exchange A Segment on exchange B would continue to
trade till 17:00. The affected stock exchange to
announce latest by 16:15
219
Trading hours in Cash Market and Equity
At 15:05 on Derivative Segment of exchange A and B
4 exchange A in extended till 17:00 and announcement to be
Cash Market made by affected stock exchange within 10
minutes of occurrence of outage i.e. by 15:15
At 15:16 on
5 exchange A in No extension of trading hours for exchange A
Cash Market and B
4.72 Standard Operating Procedure (SOP) for Reporting of Cyber Security Incidents/
breaches/ deficiencies by MIIs and Imposition of “Financial Disincentive 222
Background
4.72.1 Stock exchanges, Depositories and Clearing Corporations are collectively referred
to as securities Market Infrastructure Institutions (MIIs). These institutions are
systemically important for the country’s financial development and provide the
infrastructure necessary for the securities market. A smooth and uninterrupted
functioning of operations of the MIIs is essential for ensuring the continuity of the
securities market. It is, therefore, critical for the MIIs to constantly monitor the
performance of their internal processes and systems and upgrade/ enhance their
systems with respect to cyber security and cyber resilience so as to eliminate cyber
security deficiencies and prevent or minimize the possibility of a cyber security
breach.
4.72.2 However, incidents of technical and administrative lapses at MIIs were observed
some of which have arisen due to non-compliance with the extant regulatory
framework for cyber security and cyber resilience and which have hindered the
smooth functioning of the MIIs and threatened the continuity of the securities
market. In the event of such incidents, it should be incumbent on MIIs to address
cyber security deficiencies and breaches in a timely manner by taking appropriate
corrective actions. It was also observed that the MIIs were non-compliant with the
extant regulatory framework for cyber security and cyber resilience in the cyber
audit reports and reports from other agencies.
4.72.3 It is decided to levy a “Financial Disincentive” on MIIs in the event of the following
cases:
222 Reference: SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/22202/1 dated August 28, 2019
220
4.72.3.1 Non-compliance with the extant cyber security regulations and guidelines
resulting in cyber security breaches, cyber-attacks, cyber security
deficiencies or any other cyber security incidents
4.72.3.2 Lackadaisical approach or undue delay in addressing cyber security
deficiencies and breaches
4.72.3.3 Non-reporting/ delay in reporting a cyber security incident/ breach
The intent of this financial disincentive is to encourage MIIs to constantly monitor
the performance of their systems and upgrade/ enhance their systems so as to
eliminate cyber security deficiencies and prevent or minimize the possibility of a
cyber security breach.
4.72.4 In this regard, an SOP for reporting of cyber security breaches and deficiencies by
MIIs and imposition of “Financial Disincentive” is placed below for information
and necessary compliance.
Definitions
4.72.5 “Cyber security deficiency” shall be defined as loophole, vulnerability or non-
compliance observed in
a. The MII’s stated internal cyber security policy/cyber security
protocol/operational guidelines/information security practices or
b. The cyber security guidelines specified by SEBI from time to time
which threatens or compromises the security, confidentiality, integrity or availability
of the MII’s computer resource or cyber assets.
4.72.6 “Cyber security incident” shall be defined as any real or suspected adverse event in
relation to cyber security that violates, explicitly, implicitly, applicable cyber
security policy resulting in unauthorized access, denial of service or disruption,
unauthorized use of computer resource for processing or storage of information or
changes to data or information without authorization.
4.72.7 “Cyber security breach” shall be defined as any incident or security violation that
results in unauthorized or illegitimate access or use by a person as well as an entity,
of data, applications, services, networks and/or devices through bypass of the
underlying cyber security protocols, policies and mechanisms resulting in the
compromise of the confidentiality, integrity or availability of data/information
maintained in a computer resource or cyber asset. A cyber security breach is a
subset security incident.
4.72.8 “Information security practices” shall be defined as implementation of cyber
security policies and standards in order to minimize the cyber security incidents
and cyber security breaches.
221
4.72.9 “Cyber security policy” shall be defined as a set of documented business rules and
processes for protecting information and the computer resource.
4.72.10 “Cyber security protocol” shall be defined as the official procedure or system of
rules governing the cyber security operations of a MII. The cyber security protocol
is usually as subset of the cyber security policy.
4.72.11 “Operational guidelines” refers to any additional set of rules and procedures issued
internally by a MII that compliments its cyber security protocol and information
security practices.
Reporting Requirements
4.72.12 The following reporting structure for cyber security deficiencies / breach shall be
adopted by the MIIs:
S. No. Issue Reporting
1. Cyber Security Breach /  CERT-In
Incident  SEBI’s Cyber Security Cell
 Standing Committee on Technology
of the MII
 Governing Board of the MII
2. Cyber Security  Standing Committee on Technology of
Deficiencies the MII
 Governing Board of the MII
 SEBI’s Cyber Security Cell
Cases for levy of “Financial Disincentive”
4.72.13 The “Financial Disincentives” shall be levied in the following cases:
4.72.13.1 Cyber Security breaches, cyber-attacks and any other cyber security incidents
occurring on account of non-compliance of SEBI cyber security policies and
guidelines and delay in reporting the Root Cause Analysis to SEBI in case of
breaches, attacks and incidents.
For the above, a “Financial Disincentive of Rs.10,000,00/- {ten lakhs} shall be
levied for
i. each such cyber security breach, cyber-attack or any other cyber security
incident on account of non-compliance of SEBI cyber security policies and
guidelines
ii. delay in reporting the Root Cause Analysis to SEBI in case such breaches,
attacks and incidents.
222
iii. for cyber security breaches, cyber-attacks and any other cyber security
incidents occurring otherwise and where there is a delay in submission of
the RCA reports.
SEBI prescribed a time period of two weeks from the date of the incident for
submission of RCA reports.
4.72.13.2 Cyber Security deficiencies occurring on account of non-compliance of SEBI
cyber security policies and guidelines observed during biannual cyber security
audits mandated under Para 4.82 or reports from other agencies.
For the above, a “Financial Disincentive” of Rs.500,000/- {five lakhs} shall be
levied for each such deficiency from the date of the report.
4.72.13.3 A cyber security breach / incident should be reported as soon as it is discovered
as per the reporting structure specified at Para 4.72.12. A “Financial
Disincentive” of INR 10,000,00/- {ten lakhs} shall be levied on those MIIs that
i. Do not report a cyber security breach/incident, or
ii. Delay the reporting of the cyber security breach/incident
4.72.13.4 Failure to timely address the cyber security deficiencies / breaches within the
deadline set by SEBI/ HPSC-CS. The progressive slab-wise structure for
imposition of “Financial Disincentives” shall be followed from the expiry of the
deadline specified by SEBI/ HPSC-CS.
No. of working days post the stated
“Financial Disincentive”
deadline during which the deficiency /
(Rs) per working day
cause of breach is not addressed
First 15 working days 1 lakh per working day
Subsequent 15 working days 2 lakh per working day
Subsequent working days 5 lakh per working day
4.72.14 Notwithstanding the reporting structure mentioned at Para 4.72.12 above, the
penalties would start being levied by SEBI at Para 4.72.13.
Proceeds to be credited to SEBI’s IPEF
4.72.15 Further, with view to making such “Financial Disincentives” effective and
meaningful, the amount realized from the same may be credited to the “Investor
Protection and Education Fund” of SEBI in accordance with Section 11(1) of SEBI
Act, 1992 read with Regulation 4(1)(j) of the Securities and Exchange Board of India
(IPEF) Regulations, 2009, which is as follows:
Amounts to be credited to the Fund.
“4. (1) The following amounts shall be credited to the Fund:-
(a)…
(b)…
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(j) such other amount as the Board may specify in the interest of investors.”
4.72.16 The “Financial Disincentive” specified above shall continue to accrue till the time
the issue has been addressed by the MII by taking appropriate corrective actions
and the same has been validated by an independent third party.
4.72.17 The amount of “Financial Disincentive” realized as per the above structure shall be
credited by MII to Investor Protection and Education Fund administered by SEBI
as mentioned at Para 4.72.15.
4.72.18 Imposition of aforesaid “Financial Disincentive” shall be irrespective of any other
action(s) initiated/taken by SEBI.
4.73 Implementation of Cyber Capability Index223
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity and
Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs).
4.74 Advisory for SEBI Regulated Entities (REs) regarding Cybersecurity best practices224
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity and
Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs).
4.75 Norms for Scheme of Arrangement by unlisted Stock Exchanges, Clearing
Corporations and Depositories225
4.75.1 To harmonize and bring uniformity in the norms related to scheme of arrangement
for unlisted MIIs in line with provisions currently applicable to listed MIIs,
comments of unlisted MIIs were sought and the matter was deliberated in Secondary
Market Advisory Committee (SMAC). Taking into account the recommendations of
SMAC, the framework for Scheme of Arrangement by unlisted MIIs has been
introduced.
4.75.2 The detailed framework for scheme of arrangement by unlisted MIIs is given as
under:
4.75.2.1 The unlisted MII desirous of undertaking a scheme of arrangement or involved
in a scheme of arrangement as per the provisions of Companies Act 2013 shall
file the draft scheme of arrangement along with a non-refundable fee with SEBI
223 Reference: SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/28527/1 dated October 30, 2019,
SEBI/HO/MRD/CSC/OW/P/2019/28517/1 dated October 30, 2019 and SEBI MRD email
dated November 04, 2019
224 Reference: SEBI Circular SEBI/HO/ITD/ITD_VAPT/P/CIR/2023/032 dated February 22, 2023
225 Reference: SEBI Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/45 dated March 28, 2023
224
for obtaining the observation letter or no-objection letter, before filing such
scheme with any Court or Tribunal, in terms of requirements specified by SEBI
from time to time.
4.75.2.2 The unlisted MII shall pay a fee to SEBI at the rate of 0.1% of the paid-up share
capital of the unlisted or transferee or resulting company, whichever is higher,
post sanction of the proposed scheme, subject to a cap of INR 5,00,000.
4.75.2.3 The provisions may not apply to schemes which solely provide for merger of a
wholly owned subsidiary or its division with the parent company. However,
such draft schemes shall be filed with SEBI for the purpose of disclosures and
the same shall be disseminated on the websites of the unlisted MII.
4.75.3 Information to be provided to SEBI:
4.75.3.1 The unlisted MIIs shall provide the following information to SEBI while filing
the draft scheme of arrangement for obtaining the observation letter or no
objection letter:
(b) The Draft Scheme of Arrangement or Amalgamation or Merger or Demerger
or Reconstruction or Reduction of Capital, etc. (hereinafter referred as
“Scheme”)
(c) Approval of the governing board of the unlisted MII for the proposed
Scheme.
(d) Valuation Report provided by an independent registered valuer,
accompanied with an undertaking from the unlisted MII stating that no
material event impacting the valuation has occurred during the last 6 months.
The Valuation Report is required to be placed before the Audit Committee of
the unlisted MII.
For the purpose of this clause, the Registered Valuer shall be a person,
registered as a valuer, having such qualifications and experience and being a
member of an organization recognized, as specified in Section 247 of the
Companies Act, 2013 read with the applicable Rules issued thereunder.
(e) Report from the Audit Committee recommending the draft Scheme, taking
into consideration, inter-alia, the Valuation Report, and also having
comments on the following:
i. Need for the Scheme
ii. Rationale of the Scheme
iii. Synergies of business of the entities involved in the Scheme
iv. Impact of the Scheme on the shareholders.
v. Cost benefit analysis of the Scheme.
225
(f) Fairness opinion on valuation of assets or shares done by the valuer for the
unlisted MII shall be taken from an independent SEBI registered Merchant
Banker.
(g) Shareholding pattern of the unlisted MII pre and post the Scheme.
(h) Audited financials of last 3 years (financials not being more than 6 months
old) of unlisted entities.
(i) Auditor’s Certificate stating that the accounting treatment contained in the
Scheme is in compliance with all the Accounting Standards specified by the
Central Government under Section 133 of the Companies Act, 2013 read with
the rules framed thereunder or the Accounting Standards issued by ICAI, as
applicable, and other generally accepted accounting principles.
(j) Declaration from the unlisted MII on any past defaults of debt obligations
(including listed debt, if any) of the entities forming part of the Scheme.
(k) No Objection Certificate (NOC) from the lending scheduled commercial
banks or financial institutions or debenture trustees, in case the unlisted MII
or entities forming part of the Scheme have any outstanding debt obligation.
(l) Report on Complaints containing the details of complaints or comments
received by it on the proposed Scheme from various sources (complaints or
comments received directly or forwarded by SEBI or any other agency) as per
Annexure 31.
(m) Detailed Compliance Report as per the format specified at Annexure 32 duly
certified by the Company Secretary, Chief Financial Officer and the
Managing Director, confirming compliance with various regulatory
requirements specified for the Scheme and all accounting standards.
(n) The unlisted MII shall ensure that all dues to, and fines or penalties imposed
by SEBI or any other agency have been paid or settled before filing the draft
Scheme. In case of unpaid dues or fines or penalties, the unlisted entity shall
submit to SEBI a ‘Report on the Unpaid Dues’ which shall contain the details
of such unpaid dues in the format given at Annexure 33, prior to filing the
draft Scheme.
(o) The unlisted MII shall provide the information regarding any pending
proceedings or litigations against the unlisted MII or entities forming part of
the Scheme and the liabilities thereof, if any.
(p) Immediately upon filing of the draft Scheme with SEBI, the unlisted MII shall
disclose the draft Scheme along with all relevant documents on its website.
226
(q) Subsequent to filing the draft Scheme with SEBI, no changes to the draft
Scheme, except those mandated by the regulators or authorities or court or
tribunal, shall be made without specific written consent of SEBI.
4.75.3.2 The valuation report referred to in Para 4.75.3.1(c) above and the fairness
opinion referred to in Para 4.75.3.1 (e) above shall be provided by a Registered
Valuer and Independent SEBI Registered Merchant Banker respectively. The
Registered Valuer and the merchant banker referred therein shall not be treated
as independent in case of existence of any conflict of interest among themselves
or with the company, including that of common directorships or partnerships.
4.75.4 Processing of the Draft Scheme by SEBI
4.75.4.1 Upon receipt of the application from the unlisted MII, SEBI shall provide its
observation letter or no-objection letter on the draft Scheme to the MII. While
processing the draft Scheme, SEBI may seek clarifications from any person
relevant in this regard including the unlisted MII and if required, may also seek
an opinion from an Independent Chartered Accountant.
4.75.4.2 SEBI shall endeavour to provide its observation letter or no-objection letter on
the draft Scheme within 30 days from the later of the following:
(a) date of receipt of satisfactory reply on clarifications, if any, sought from
the unlisted MII; or
(b) date of receipt of opinion from Independent Chartered Accountant, if any,
sought by SEBI; or
(c) All complaints or comments received by SEBI on the draft Scheme, if any,
shall be forwarded to the unlisted MII, for necessary action and resolution
of the same.
4.75.5 Validity of observation letter or no-objection letter: The validity of the
observation letter or no-objection letter of SEBI shall be for six months from the date
of issuance, within which the Scheme shall be filed with any Court or Tribunal, as
required, for approval.
4.76 Procedures for ensuring compliance with Securities Contracts (Regulation) (Stock
Exchanges and Clearing Corporations) Regulations, 2018 (SECC Regulations) by
Listed Stock Exchanges226
4.76.1 Regulation 45 of the SECC Regulations provides for listing of stock exchanges. As
per Regulation 45(1) of the SECC Regulations, the Board may specify such
conditions as it may deem fit in the interest of the securities market.
226 Reference: SEBI Circular MRD/DSA/01/2016 dated January 01, 2016
227
4.76.2 Accordingly, it has been decided to prescribe the following modalities so as to
ensure compliance with the provisions of SECC Regulations:
4.76.2.1 Ensuring holding of 51 per cent by public at all times by the listed stock
exchange:
4.76.2.1.1 The listed stock exchange shall disseminate the details of its shareholding
with category wise breakup, on a continuous basis, on its website.
Similarly, the stock exchange where the shares are listed, shall also display
the above information.
4.76.2.1.2 The depositories shall put in place necessary system to ensure that the
shareholding of trading members or their associates and agents does not
exceed 49 per cent. For this purpose, the depositories shall put in place
systems for capturing the shareholding data of trading members or their
associates and agents and ensure that there is a mechanism for
coordination between the depositories towards sharing of information. The
depositories shall also monitor the aggregate shareholding limit of the
trading members or their associates and agents based on their demat
balance, on a daily basis, at the end of the day. The stock exchange where
the shares are listed shall share a list of all trading members or their
associates and agents with the depositories to facilitate monitoring of
demat balances.
4.76.2.1.3 The trading members or their associates and agents shall obtain prior
approval of the listed stock exchange for further acquisition of shares, once
the aggregate shareholding of the trading members or their associates and
agents crosses the limit of 45 per cent. The trading members or their
associates and agents shall refer to the shareholding pattern under the
category of trading members or their associates and agents, to
determine/ascertain the available head room before placing the order.
4.76.2.1.4 In the event of trading members or their associates and agents making
purchases without requisite approval as stated above, the depositories
shall initiate consequential action such as freezing of voting rights and all
corporate benefits in respect of such shareholding till the time the same is
divested.
4.76.2.1.5 The divestment of any excess shareholding beyond the specified limit
would be through a special window provided by the stock exchange where
the shares of the stock exchange are listed.
4.76.2.2 Ensuring shareholding threshold of 5 per cent or 15 per cent as the case may
be in terms of SECC Regulations:
228
4.76.2.2.1 The depositories shall put in place a mechanism to ensure that no
shareholder of listed stock exchange gets credit of shares beyond 5 per cent
or 15 per cent, as applicable. The depositories shall generate an alert when
such holding exceeds 2 per cent and monitor the same under intimation to
SEBI.
4.76.2.2.2 The Depository would inform the listed stock exchange as and when
threshold limit is breached and take consequential action such as freezing
of voting rights and all corporate actions in respect of such excess holding
till the same is divested through the special window.
4.76.3 The stock exchanges, both listed and where the securities are listed, and
depositories shall ensure that aforesaid mechanism is in place.
4.77 Measures to strengthen tracking and reporting of delay in pay-in/pay-out for rolling
settlement227
4.77.1 SEBI carried out review of existing SOP with regard to tracking of instances of delay
in normal rolling settlement and reporting thereof to SEBI along with the joint
monthly report submitted by the CCs/depositories.
4.77.2 The Competent Authority has approved the following measures subsequent to the
aforesaid review to strengthen tracking of intermediate activities in rolling
settlement and reporting of settlement delays. This is without prejudice to financial
disincentives, if any, emanating from delay in completion of pay-in/pay-out
activities.
4.77.3 For tracking of intermediate activities constituting rolling settlement
4.77.3.1 CCs and Depositories may put in place systems to ensure:
4.77.3.1.1 All intermediate activities that may impact rolling settlement (i.e. from
trade date to settlement) are streamlined and the process flow is
optimized. If there are dependencies / data shared with other
CC/Depository, discussions may be done with the concerned CC /
Depository with regard to optimization. Further, all intermediate
activities are time stamped with start and finish time of the activity.
4.77.3.1.2 Such intermediate activities are defined along with outer timelines for
each activity after discussion with the concerned stakeholders such as
members/participants, DVP agent, participating banks, other Market
Infrastructure Institutions (MIIs) etc. to achieve final pay-in and pay-out
within SEBI stipulated timelines.
227 Reference: SEBI Email dated January 31, 2022
229
4.77.3.1.3 Process flow and associated timelines, so decided, are intimated to all the
stakeholders and delay in completion of any of these activities, should be
traceable and attributable to one or more entity / MII, as the case may be.
4.77.3.1.4 Procedures to handle various exceptions i.e. scenarios that could result in
settlement delay are documented along with the steps to be taken towards
completing settlement processes at the earliest in case of exceptions.
4.77.3.2 On the basis of the aforesaid, CCs and Depositories may separately prepare a
Comprehensive Standard Operating Procedure (CSOP) which is mutually
agreed upon by other CCs and Depositories as far as all the timelines and
exception handling are concerned. This CSOP would be submitted to SEBI after
approval of the Governing Boards of CCs and Depositories.
4.77.3.3 Further, the said CSOP shall also cover action points emanating from 4.77.4
below and would be reviewed periodically by the MIIs to incorporate any
regulatory/system changes.
4.77.4 For reporting of Delay in rolling settlement cycle
4.77.4.1 In case of delay in completion of any of the intermediate activities beyond their
pre-agreed time, the respective CCs/Depositories would inform the impacting
CCs/Depositories regarding delay in completion of the intermediate activity at
their end on immediate basis.
4.77.4.2 CCs shall intimate delay in settlement beyond the stipulated timelines for
settlement for rolling settlement to SEBI (under intimation to depositories).
This intimation should be given within one hour of such SEBI stipulated
timelines and should inter-alia mention - reasons for delay, entity/MII
responsible for the delay and likely completion time of the settlement process.
4.77.4.3 CCs and Depositories shall submit a separate report to SEBI, on a monthly basis
(from February 2022 onwards, replacing the existing joint monthly report),
wherein following details are inter-alia provided:
4.77.4.3.1 Day wise completion time for pay-in and pay-out activities
4.77.4.3.2 Details about settlement delays for the month
4.77.4.3.3 Intermediate activity that caused the delay and reason(s) thereof
4.77.4.3.4 Steps taken to address the root cause of the issue
4.77.4.3.5 Review of instances of delay to understand areas of improvement etc.
4.77.4.4 CCs / Depositories would also submit a report to their Governing Boards on
quarterly basis with regard to instances of delay attributable to them in the said
quarter. If settlement delay is on account of technical reasons, findings are to
be evaluated by the SCOT of the CC / Depository before referring to the
Governing Board. The report would inter-alia include the details of individual
230
instances of settlement delay along with reasons thereof and corrective /
preventive actions taken
4.78 Advisory on Security Patch Management Policy228
4.78.1 All the MIIs are advised to ensure the following:
4.78.1.1 The security patch management policy is audited by an external auditor.
4.78.1.2 Appropriate changes, if necessary, are made to the existing policy on security
patch management.
4.79 Strengthening Resiliency of Websites of Stock Exchanges, Clearing Corporations and
Depositories (MIIs) 229
4.79.1 MII shall take necessary steps to ensure that its website(s) are resilient to cyber-
attack(s).
4.79.2 Redundant websites: MII shall host its website(s) at multiple DNS (Domain
Naming Servers) and hosts. MII shall put-in place suitable systems to switch to
alternate website(s) hosted on a different DNS / hosts in the event of a cyber-attack
on its primary website(s) and at the same time, shall take necessary steps to recover
from the cyber-attack on the its primary website(s).
4.79.3 Web Application Firewall (WAF): MII shall mandatorily deploy Web Application
firewalls of demonstrated capabilities.
4.79.4 Continuous monitoring of the website(s): MII shall deploy suitable and adequate
resources for 24x7 monitoring of its website(s), including monitoring of their
website(s) through the SOCs (Security Operations Center).
4.79.5 MII shall periodically conduct penetration testing of its website(s) and related
systems, at the minimum, once in a calendar year.
4.79.6 In cases where services of 3rd party vendors / service providers are availed by the
MII for hosting of its website(s) and for other related areas, MII shall ensure that
the cyber security and resilience framework of such 3rd party vendors / service
providers are as per the requirements specified by SEBI for MIIs. Further, MII shall
include audit of the cyber security and resilience framework of such 3rd party
vendors / service providers (limited to the services availed by MIIs) in the scope of
its annual system audit.
4.79.7 MII shall implement the principles mentioned in the 'Guidelines for Indian
Government Websites' developed by National Informatics Centre (NIC) and
adopted by Department of Administrative reforms and Public Grievances
(DARPG) on the areas of 'Website Hosting', 'Website Management', 'Development',
228 Reference: SEBI Email dated September 12, 2022
229 Reference: SEBI Letter SEBI/HO/MRD/DSA/OW/P/2016/31948 dated November 24, 2016
captioned “Strengthening Resiliency of Websites of Stock Exchanges, Clearing Corporations and
Depositories (MIIs)”
231
etc. The said guidelines are available at
http://web.guidelines.gov.in/assets/documents/pdf/hand_book.pdf
4.79.8 MII shall frame and implement a Web Server Security Policy that should cover
Network and Host Security Policy, Web Server Backup and Logging Policy, Web
Server Administration and Updation Policy, Classification of documents to be
published on Web Server, Password Management Policy, Encryption Policy, and
Physical Security
4.79.9 In addition to the above, MIIs shall ensure implementation of the following:
4.79.9.1 MIIs shall advise their auditors to give additional emphasis on the Application
Security audit.
4.79.9.2 MIIs shall include suitable IT / Cyber security related certifications
requirements in the criteria for selection of software developers / vendors.
4.79.9.3 MIIs shall ensure that their software vendors undertake security audit of their
systems on a periodic basis (at least once a year).
4.80 Bolstering Cyber Resiliency230
4.80.1 In order to bolster cyber resiliency MIIs should take following steps:
4.80.1.1 In addition to the current detection and prevention tools deployed at the MIIs
for Network Traffic Analysis and other SIEM solutions, MIIs should start
using User and Entity Behaviour Analytics (UEBA) tools for combating cyber
threats.
4.80.1.2 The Indian-CERT has set-up a Cyber Swachhta Kendra for analyzing
BOTs/malware characteristics and providing information and enabling
citizens for removal of BOTs/malware. MIIs should share their public facing
IPs with the Cyber Swachhta Kendra for monitoring purposes.
4.80.1.3 The Standing Committee on Technology (SCOT) of Exchanges and Clearing
Corporations and the IT Strategy Committees (IT-CS) of Depositories should
on a quarterly basis review the cyber security preparedness of the respective
MIIs and also appraise the Board of MII regarding the same.
4.80.1.4 MIIs should place the details of Cyber-threat vectors and Cyber-attack
scenarios and the corresponding action plan / steps taken to manage such
threat vectors and scenarios, before its SCOT or IT-CS for assessing the
adequacy of steps taken / efficacy of plans and further improvements.
Thereafter, the MII should place a report in this regard before its Board before
submitting the same to SEBI.
4.80.1.5 In addition to the periodic vulnerability assessment and penetration testing
conducted by MIIs to evaluate security posture of the MII, the MIIs should
230 Reference: SEBI Email dated November 11, 2017 captioned Bolstering Cyber Resiliency
232
also conduct periodic table-top exercises, mock drills, etc. to improve its
preparedness to handle cyber breach/incident. Such exercises should be
followed-up with a detailed review before its SCOT or IT-CS.
4.81 Advisory on Cyber Audit and VAPT231
With regard to the cyber audit of the MIIs, the following needs to be ensured by the
MIIs:
4.81.1 All MIIs should update the scope of the audit as and when any guidelines or
advisory related to cyber security is issued by SEBI.
4.81.2 During cyber audit, evidence should be collected by inspecting physical assets,
records/documents, testing of relevant systems, relevant system generated
reports etc. in order to ascertain the compliance of various controls defined by
SEBI.
4.81.3 The cyber audit report is to be submitted in the Standardized format. Please refer
to SEBI Circular on CSCRF dated August 20, 2024 for the said standardised
format.
4.81.4 Along with cyber audit reports, all MIIs are required to submit to SEBI the
comments of their SCOT and Governing Board.
4.81.5 Scope of cyber audit shall also include testing the functional efficacy of the SOC.
4.81.6 VAPT exercise shall cover all possible ingress and egress points including broker
ICT setup, co-location facility etc.
4.81.7 All MIIs shall conduct Periodic Training for the concerned employees regarding
Cyber Security in line with SEBI Circular on CSCRF dated August 20, 2024and the
same has to be checked by the Auditors during cyber audit.
4.81.8 The audit report shall include control wise compliance of all SEBI
circulars/advisories along with the evidences.
4.81.9 All MIIs are advised to include the directions issued by SEBI pursuant to
discussion in HPSC-CS in their regular bi-annual cyber audit.
4.81.10 In order to ascertain the compliance of identification of critical assets as per SEBI
Circular on CSCRF dated August 20, 2024, process of identification of critical
assets and its implementation should be assessed during cyber audit.
4.81.11 For minimum baseline standards followed for conducting VAPT, please refer to
SEBI Circular on CSCRF dated August 20,.
All MIIs are advised to ensure the strict compliance of the said advisory and shall also
bring the same to the notice of the concerned cyber auditors.
231 Reference: SEBI Email dated December 28, 2022
233
4.82 Comprehensive Review of Cyber Security at Stock Exchanges, Clearing Corporations
and Depositories (MIIs)232
Kindly refer SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on Cybersecurity and
Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs).
4.83 Activity schedule for depositories for T+1 rolling Settlement233&234&235
4.83.1 The activity schedule for T+1 Rolling Settlement is as under:
Sr. Day Time Description of activity
No.
1 T Trade Day
By 07:30 AM Completion of custodial confirmation of
trades to Clearing Corporation (“CC”).
By 09:00 AM Download of final obligations to custodians
and members by CC
2 T+1
By 11:00 AM Pay-in of securities and funds.
By 01.30 PM Pay-out of funds.
By 03.30 PM Pay-out of securities.
4.84 Advisories related to Technology
4.84.1 Advisory on Technology related Investments and Planning by Market Infrastructure
Institutions (MIIs)236
4.84.1.1 The operations and functioning of MIIs are driven by technology systems,
with their critical operations requiring robust technology infrastructure to
enable trading, transfer/ holding of securities, clearing and settlement and
information dissemination etc. as applicable. MIIs, in a sense, today can be
categorized as a technology company, running a constellation of IT systems,
serviced by different technology vendors.
232 Reference: SEBI Letter SEBI/HO/MRD/DSA/OW/P/2018/000005436/5 dated February 21,
2018
233 Reference: SEBI Circular DCC/FITTC/Cir-19/2003 dated March 4, 2003 and SEBI Circular
MRD/DoP/SE/Dep/Cir-18/2005 dated September 2, 2005
234 Circular No.SEBI/HO/MRD2/DCAP/P/CIR/2021/628 dated September 07, 2021
235 SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/137 dated October 10, 2024
236 SEBI letter dated December 27, 2023
234
4.84.1.2 Recent years have witnessed rapid pace of market development including
significant growth of investor activity and market volumes. This has been
coupled with evolving landscape of technology catering to securities market.
Existing business processes have been increasingly getting digitized by the
MIIs, due to change in market dynamics as well as Regulatory mandates. With
such significant changes in the technology systems at MIIs, there is a need for
upgradation of existing systems to make them up to date to cater to future
growth as well as to implement Regulatory changes. It is therefore important
that technology systems of MIIs keep up with the advancement and
sophistication in the field of technology.
4.84.1.3 To ensure the aforesaid, continuous monitoring of technology infrastructure
and systems, along with that of allied processes, is needed for early
identification of requirements pertaining to additional investments in
technology infrastructure/ systems and technology related human resources.
4.84.1.4 Accordingly, MIIs are advised to:
4.84.1.4.1 Review existing strategies/ frameworks for technology related
investments/ expenses.
4.84.1.4.2 Formulate short term, medium term and long term Technology
Investment Plan and Technology Human Resource Plan and
periodically review them. Further, MIIs to ensure that such plans are
pro-active, future-oriented and attuned to the criticality of technology
for its functioning.
4.84.1.4.3 Formulate a comprehensive framework for budgeting of annual
financial requirements for technology related investments/ expenses.
4.84.1.4.4 Review organisational structure and employee strengths across various
IT/ technology related departments/verticals. This should include
review of outsourcing policies and responsibility mapping of internal
staff for such outsourced functions.
4.84.1.4.5 Review internal governance frameworks, human resource strategies and
risk frameworks pertaining to technology operations.
235
4.84.2 Advisory on automation/review of operational processes involving IT systems
of Market Infrastructure Institutions (MIIs)237
4.84.2.1 Rapid advancement in the field of technology, over the past few years, has not
only resulted into operations of Market Infrastructure Institutions (MIIs)
increasingly getting automated and executed through an array of IT systems
but also into continuous upgrade/enhancements in these systems to meet
technology / regulatory / business needs.
4.84.2.2 On the other hand, in the recent past, instances of disruption in business
operations of MIIs have been observed on account of system related issues.
Root cause for some of these glitches could be traced back to manual
error/oversight during setting up of certain system configuration or error in
executing Begin of Day (BoD) or End of Day (EoD) activities.
4.84.2.3 Continuous availability of systems is cornerstone of operations of the MIIs.
While MIIs have business continuity policies and vendor management /
outsourcing framework, adequate focus also needs to be provided to error
free execution of aforesaid routine activities. Increased and effective use of
automation and system driven pre-checks/alerts along with Standard
Operating Procedures for routine daily activities / troubleshooting /
production release of components, become critical in eliminating technology
/ operational risk.
4.84.2.4 In view of the aforesaid, MIIs are advised to:
4.84.2.4.1 Carry out comprehensive review of all the operational processes related
to EoD and BoD activities and put in place a framework to periodically
review them. The said review may be carried out from the perspective
of automation of these activities, formulation of SOPs and system driven
validations/monitoring alerts covering various scenarios to ensure
uninterrupted and error-free functioning of systems as well as timely
generation of EoD/BoD reports for members and market participants.
4.84.2.4.2 Put in place similar framework for one off / non-routine
events/activities such as introduction of new component/functionality,
troubleshooting, activities pertaining to mock trading etc.
237 SEBI letter dated April 23, 2024
236
4.84.2.4.3 Ensure that all activities/processes related to or impacting system
configuration, for clauses 4.84.2.4.1 and 4.84.2.4.2 above, are carried out
or overseen by employee(s) of MII competent to understand the
operational implications of such technical activities
4.84.3 Process for freezing/un-freezing of accounts/holdings pursuant to issuance of
orders of SEBI/ Securities Appellate Tribunal(SAT)/ Supreme Court of India/
other courts238
4.84.3.1 At present, orders issued by SEBI and/or Hon’ble SAT/Supreme Court of
India/other courts (hereinafter referred to as tribunal/court) are intimated to
Market Infrastructure Institutions (MIIs), Mutual Funds(MFs) and Registrar
and Transfer Agents (RTAs) for taking consequent actions by the concerned
Department of SEBI.
4.84.3.2 In order to streamline and expedite the said process of taking consequent
actions pursuant to issuance of orders by SEBI and/or tribunal/court,
directing freezing/ un-freezing of accounts/holdings, it has been decided to
introduce a new automated mechanism, which would be monitored by a
Centralized Coordination Cell of SEBI. The salient features of the new
mechanism are as follows: -
4.84.3.2.1 An automated process would be set up for sending intimations by SEBI
to MIIs, MFs and RTAs in a standardized format from the SEBI’s Case
Management System(CMS) portal in respect of issuance of orders by
SEBI and/or tribunal/court for freezing/un-freezing of
accounts/holdings for seamless implementation of the directions.
4.84.3.2.2 A Centralized Coordination Cell under the Enforcement Department-1
(EFD-1) of SEBI has been formed to monitor/ensure timely compliance
with directions for freezing/un-freezing of accounts/holdings in a time
bound manner. The cell will undertake the necessary co-ordination with
MIIs, MFs, RTAs and/or the concerned department of SEBI for timely
implementation of the directions.
238 SEBI letter dated February 22, 2024
237
4.84.3.2.3 In order to ensure that the consequent actions pursuant to issuance of
orders by SEBI and/or tribunal/court are acted upon on an immediate
basis, the intimations regarding the orders of SEBI and/or
tribunal/court directing freezing/ un-freezing of accounts/holdings,
would be sent to the generic email IDs of MIIs, MFs and RTAs.
4.84.3.2.4 MIIs, MFs and RTAs shall establish clear ownership of their dedicated
generic email ID at all times and ensure that there is due diligence at
their end to ensure compliance with orders of SEBI and/or
tribunal/court in a time bound manner.
4.84.3.2.5 In case of any query/ further clarification required by MIIs, MFs and
RTAs, they can contact the generic email ID of the Centralized
Coordination Cell of EFD-1 of SEBI. The Centralized Coordination Cell
would ensure that the clarification is sent to the concerned
MII/MF/RTA in a time bound manner by coordinating with the
concerned department of SEBI.
4.84.3.2.6 MIIs, MFs and RTAs shall develop the capability to generate the relevant
system generated reports with respect to directions passed by SEBI
and/or tribunal/court vis-a-vis actions taken by them for
reconciliation/monitoring.
4.84.3.3 The following schematic diagram illustrates the functioning of aforesaid
devised automated process:
Auto- MIIs
SEBI
SEBI/Tribunal/Court orders trigger
Centralized of email
Portal
Back-up Scenario MFs
Concerned Dept. of Manual
Email
SEBI
trigger RTAs
Centralized Coordination Cell of
For any query
SEBI
238
4.84.3.4 In view of the above, MIIs are requested to take necessary steps to put in
place requisite systems/mechanisms/framework for implementation of the
above.
4.85 Wind-Down Plan of Depositories239
4.85.1 The Depository System Review Committee (DSRC) during assessment of the
depository framework vis-a-vis the Committee on Payment and Settlement
Systems-International Organisation of Securities Commissions (IOSCO)
principles for Financial Market Infrastructure, recommended that there is a
need for the depositories to have a well-documented framework for orderly
winding down of the depository operations including making necessary legal
provisions in the Depositories Act, 1996 and the rules and regulations framed
thereunder.
4.85.2 In view of the recommendations of DSRC, the Securities and Exchange Board
of India (Depositories and Participants) Regulations, 1996 were amended to
include a provision regarding wind-down plan. Accordingly, in terms of
Regulation 51 of the Securities and Exchange Board of India (Depositories and
Participants) Regulations, 2018, every depository shall devise and maintain a
wind-down plan in accordance with guidelines specified by the Board.
4.85.3 In this regard, the following broad guidelines are hereby issued:
i. A wind-down plan would be necessary for scenarios such as insolvency of
the depository or the inability of the depository to provide critical depository
operations/services or the erosion of net-worth (as defined below) of the
depository.
The threshold for calculation of erosion of net-worth is defined as the higher
of the following:
a) The net-worth requirement for Depository as specified by SEBI in
Depositories & Participants Regulations, 2018 (as modified time to time), or
b) Sum of 25% of annual gross operational expenses for last Financial Year
and Liquid Net Assets equal to six months of current operating expenses,
funded by equity, as specified in FMI Principles.
239 SEBI letter No. MRD/DoPII/DSAII/OW/2019/ 3662/1 dated February 07, 2019
239
ii. Upon the occurrence of any of the scenarios as described above, the
depository shall bring the same to the notice of SEBI.
iii. The governing board shall prepare a restoration plan to either infuse funds
or dispose its investments or borrow additional funds as debt or in any other
manner, to meet with the requirements. Such a restoration plan shall be
submitted to SEBI within one month of the occurrence of any of the scenarios
mentioned under 3 (i). The restoration plan of depository shall also mention
the timeline for paras 3 (iv) & (v) below, however, the aggregated time for 3
(iv) & (v) should not be more than 3 months.
iv. Where the depository fails to implement the restoration plan within
specified time (as mentioned in restoration plan), it may undergo an orderly
wind down.
v. The Governing Board of such Depository shall pass a resolution within
specified time (as mentioned in restoration plan), regarding the inability of
the Depository to function, carry out critical operations and provide
Depository services, which shall be submitted to SEBI on the day of passing
of such a resolution.
vi. In such an event, SEBI may, in consultation with the Government if
required, make alternate arrangements, such as supersession of the governing
board, induction of shareholders and infusion of capital, etc, or alternatively
direct transfer of demat accounts and operations to a different depository. In
case of transfer of operations to another depository, the participants, issuers,
beneficial owners and registrar and share transfer agents of such depository,
the agreements entered into by such individuals and entities with the
depository shall be assigned and deemed to be entered into with another
depository. The transition period for transfer of beneficial owner accounts,
connectivity of issuers, participants and registrar and share transfer agents
shall be as decided by the governing Board of the depository which is
winding down in consultation with SEBI.
240
4.86. Charges levied by Market Infrastructure Institutions – True to label240
4.86.1 Market Infrastructure Institutions (MIIs) being public utility institutions act
as first level Regulator and are entrusted with the responsibility of providing
equal, unrestricted, transparent and fair access to all market participants. The
principle of equal, fair and transparent access by MIIs is highlighted in
Regulation 39 (3) of Securities Contracts (Regulations) (Stock Exchange and
Clearing Corporations) Regulations, 2018 and Regulation 82 of SEBI
(Depositories and Participants) Regulations, 2018.
4.86.2 Upon examination of existing processes related to charges levied by MIIs on
their members (i.e. stock brokers, depository participants, clearing members),
it was observed that a volume based slab-wise charge structure is followed by
some MIIs. These charges are levied in lieu of various services offered by MIIs
and are recovered from the end clients by members. It has also been observed
that members generally recover such charges from the end clients on daily
basis whereas MIIs receive aggregate charges from the members on monthly
basis.
4.86.3 The aforesaid process can result in a situation wherein the aggregated charges
collected by the members from the end clients is higher than the end of month
charges paid to the MII (due to slab benefit). This can also result in an incorrect
or misleading disclosure to the end client about the charges levied by MIIs.
4.86.4 The aforesaid matter was deliberated with the Secondary Market Advisory
Committee (SMAC) of SEBI, wherein it was observed that in addition to
impacting transparency, the existing slab-wise charge structure of MIIs can
also create a hindrance for the MIIs in ensuring equal and fair access to all
market participants by impacting level playing field between members owing
to their size differentials.
4.86.5 In view of the aforesaid concerns and as per deliberations with SMAC, it has
been decided that the MIIs would comply with following additional
principles while designing the processes for charges levied on their members
which are to be recovered from the end clients:
4.86.6 The MII charges which are to be recovered from the end client should be True
to Label i.e. if certain MII charge is levied on the end client by members (i.e.
240 Circular No. SEBI/HO/MRD/TPD-1/P/CIR/2024/92 dated July 01, 2024
241
stock brokers, depository participants, clearing members), it should be
ensured by MIIs that the same amount is received by them.
4.86.7 The charge structure of the MII should be uniform and equal for all its
members instead of slab-wise viz. dependent on volume/activity of
members.
4.86.8 To begin with, the new charge structure designed by MIIs should give due
consideration to the existing per unit charges realized by MIIs so that the end
clients are benefitted with the reduction of charges.
242
Annexures
Annexure 1
243
244
Annexure 2
245
246
INSTRUCTIONS/CHECK LIST FOR FILLING KYC FORM
A. IMPORTANT POINTS:
1. Self-attested copy of PAN card is mandatory for all clients, including
Promoters/Partners/Karta/Trustees and whole time directors and persons
authorized to deal in securities on behalf of company/firm/others.
2. Copies of all the documents submitted by the applicant should be self-attested
and accompanied by originals for verification. In case the original of any
document is not produced for verification, then the copies should be properly
attested by entities authorized for attesting the documents, as per the below
mentioned list.
3. If any proof of identity or address is in a foreign language, then translation into
English is required.
4. Name & address of the applicant mentioned on the KYC form, should match with
the documentary proof submitted.
5. If correspondence & permanent address are different, then proofs for both have
to be submitted.
6. Sole proprietor must make the application in his individual name & capacity.
7. For non-residents and foreign nationals, (allowed to trade subject to RBI and
guidelines under Foreign Exchange Management Act, 1999 (“FEMA”)), copy of
passport/PIO Card/OCI Card and overseas address proof is mandatory.
8. For foreign entities, CIN is optional; and in the absence of DIN no. for the
directors, their passport copy should be given.
9. In case of Merchant Navy NRI’s, Mariner’s declaration or certified copy of CDC
(Continuous Discharge Certificate) is to be submitted.
10. For opening an account with Depository participant or Mutual Fund, for a minor,
photocopy of the School Leaving Certificate/Mark sheet issued by Higher
Secondary Board/Passport of Minor/Birth Certificate must be provided.
11. Politically Exposed Persons (PEP) are defined as individuals who are or have
been entrusted with prominent public functions in a foreign country, e.g., Heads
of States or of Governments, senior politicians, senior Government/judicial/
military officers, senior executives of state owned corporations, important
political party officials, etc.
B. Proof of Identity (POI): - List of documents admissible as Proof of Identity:
247
1. Unique Identification Number (UID) (Aadhaar)/ Passport/ Voter ID card/
Driving license.
2. PAN card with photograph.
3. Identity card/ document with applicant’s Photo, issued by any of the following:
Central/State Government and its Departments, Statutory/Regulatory
Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public
Financial Institutions, Colleges affiliated to Universities, Professional Bodies such
as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and Credit cards/Debit
cards issued by Banks.
C. Proof of Address (POA): - List of documents admissible as Proof of
Address:(*Documents having an expiry date should be valid on the date of
submission.)
1. Passport/ Voters Identity Card/ Ration Card/ Registered Lease or Sale
Agreement of Residence/ Driving License/ Flat Maintenance bill/ Insurance
Copy.
2. Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill - Not
more than 3 months old.
3. Bank Account Statement/Passbook -- Not more than 3 months old.
4. Self-declaration by High Court and Supreme Court judges, giving the new
address in respect of their own accounts.
5. Proof of address issued by any of the following: Bank Managers of Scheduled
Commercial Banks/Scheduled Co-Operative Bank/Multinational Foreign
Banks/Gazetted Officer/Notary public/Elected representatives to the
Legislative Assembly/Parliament/Documents issued by any Govt. or Statutory
Authority.
6. Identity card/document with address, issued by any of the following:
Central/State Government and its Departments, Statutory/Regulatory
Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public
Financial Institutions, Colleges affiliated to Universities and Professional Bodies
such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members.
7. For FPI, Power of Attorney given by FPI to the Custodians (which are duly
notarized and/or apostiled or consularised) that gives the registered address
should be taken.
8. The proof of address in the name of the spouse may be accepted.
248
9. Aadhaar Letter issued by UIDAI241
D. Exemptions/clarifications to PAN
(*Sufficient documentary evidence in support of such claims to be collected.)
1. In case of transactions undertaken on behalf of Central Government and/or State
Government and by officials appointed by Courts e.g. Official liquidator, Court
receiver etc.
2. Investors residing in the state of Sikkim.
3. UN entities/multilateral agencies exempt from paying taxes/filing tax returns in
India.
4. SIP of Mutual Funds upto Rs 50, 000/- p.a.
5. In case of institutional clients, namely, FPIs, Mutual Funds (MFs), Venture
Capital Funds (VCFs), Foreign Venture Capital Funds (FVCIs), Scheduled
Commercial Banks, Multilateral and Bilateral Development Financial
Institutions, State Industrial Development Corporations, Insurance Companies
registered with IRDA and Public Financial Institution as defined under section
2(72) of the Companies Act, 2013, Custodians shall verify the PAN card details
with the original PAN card and provide duly certified copies of such verified
PAN details to the intermediary.
E. List of people authorized to attest the documents:
1. Notary Public, Gazetted Officer, Manager of a Scheduled Commercial/ Co-
operative Bank or Multinational Foreign Banks (Name, Designation & Seal
should be affixed on the copy).
2. In case of NRIs, authorized officials of overseas branches of Scheduled
Commercial Banks registered in India, Notary Public, Court Magistrate, Judge,
Indian Embassy /Consulate General in the country where the client resides are
permitted to attest the documents.
F. In case of Non-Individuals, additional documents to be obtained from non-
individuals, over & above the POI & POA, as mentioned below:
Types of entity Documentary requirements
241 Reference: SEBI Circular CIR/MIRSD/ 09 /2012 dated August 13, 2012
249
Corporate  Copy of the balance sheets for the last 2 financial years (to be
submitted every year).
 Copy of latest share holding pattern including list of all those
holding control, either directly or indirectly, in the company
in terms of Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers)
Regulations, 2011, duly certified by the company
secretary/Whole time director/MD (to be submitted every
year).
 Photograph, POI, POA, PAN and DIN numbers of whole
time directors/two directors in charge of day to day
operations.
 Photograph, POI, POA, PAN of individual promoters
holding control - either directly or indirectly.
 Copies of the Memorandum and Articles of Association and
certificate of incorporation.
 Copy of the Board Resolution for investment in securities
market.
 Authorised signatories list with specimen signatures.
Partnership firm  Copy of the balance sheets for the last 2 financial years (to be
submitted every year).
 Certificate of registration (for registered partnership firms
only).
 Copy of partnership deed.
 Authorised signatories list with specimen signatures.
 Photograph, POI, POA, PAN of Partners.
Trust  Copy of the balance sheets for the last 2 financial years (to be
submitted every year).
 Certificate of registration (for registered trust only).
 Copy of Trust deed.
 List of trustees certified by managing trustees/CA.
 Photograph, POI, POA, PAN of Trustees.
HUF  PAN of HUF.
 Deed of declaration of HUF/ List of coparceners.
 Bank pass-book/bank statement in the name of HUF.
 Photograph, POI, POA, PAN of Karta.
Unincorporated  Proof of Existence/Constitution document.
association or a  Resolution of the managing body & Power of Attorney
body of granted to transact business on its behalf.
individuals  Authorized signatories list with specimen signatures.
250
Banks/Institutional  Copy of the constitution/registration or annual
Investors report/balance sheet for the last 2 financial years.
 Authorized signatories list with specimen signatures.
Foreign Portfolio  Copy of SEBI registration certificate.
Investors (FPI)  Authorized signatories list with specimen signatures.
Army/Government  Self-certification on letterhead.
Bodies  Authorized signatories list with specimen signatures.
Registered Society  Copy of Registration Certificate under Societies Registration
Act, 1860.
 List of Managing Committee members.
 Committee resolution for persons authorised to act as
authorised signatories with specimen signatures.
 True copy of Society Rules and Bye Laws certified by the
Chairman/Secretary.
251
Annexure 3
Rights and Obligations of Beneficial Owner and Depository Participant as prescribed by
SEBI and Depositories
General Clause
1. The Beneficial Owner (BO) and the Depository participant (DP) shall be bound by the
provisions of the Depositories Act, 1996, Securities and Exchange Board of India
(Depositories and Participants) Regulations, 2018 (DP Regulations), rules and
regulations of Securities and Exchange Board of India (SEBI),
circulars/notifications/guidelines issued there under, bye laws and business
rules/operating instructions issued by the depositories and relevant notifications of
Government Authorities as may be in force from time to time.
2. The DP shall open/activate demat account of a beneficial owner in the depository
system only after receipt of complete Account opening form, KYC and supporting
documents as specified by SEBI from time to time.
Beneficial Owner information
3. The DP shall maintain all the details of the beneficial owner(s) as mentioned in the
account opening form, supporting documents submitted by them and/or any other
information pertaining to the beneficial owner confidentially and shall not disclose
the same to any person except as required by any statutory, legal or regulatory
authority in this regard.
4. The BO shall immediately notify the DP in writing, if there is any change in details
provided in the account opening form as submitted to the DP at the time of opening
the demat account or furnished to the DP from time to time.
Fees/Charges/Tariff
5. The BO shall pay such charges to the DP for the purpose of holding and transfer of
securities in dematerialized form and for availing depository services as may be
agreed to from time to time between the DP and the BO as set out in the Tariff Sheet
provided by the DP. It may be informed to the BO that "no charges are payable for
opening of demat accounts”
6. In case of Basic Services Demat Accounts, the DP shall adhere to the charge structure
as laid down under the relevant SEBI and/or depository
circulars/directions/notifications issued from time to time.
7. The DP shall not increase any charges/tariff agreed upon unless it has given a notice
in writing of not less than thirty days to the BO regarding the same.
Dematerialization
252
8. The BO shall have the right to get the securities, which have been admitted on the
depositories, dematerialized in the form and manner laid down under the bye laws,
business rules and operating instructions of the depositories.
Separate Accounts
9. The DP shall open separate accounts in the name of each of the BOs and securities of
each BO shall be segregated and shall not be mixed up with the securities of other
BOs and/or DP’s own securities held in dematerialized form.
10. The DP shall not facilitate the BO to create or permit any pledge and /or
hypothecation or any other interest or encumbrance over all or any of such securities
submitted for dematerialization and/or held in demat account except in the form and
manner prescribed in the Depositories Act, 1996, DP Regulations and bye-
laws/operating instructions/business rules of the depositories.
Transfer of Securities
11. The DP shall effect transfer to and from the demat accounts of the BO only on the
basis of an order, instruction, direction or mandate duly authorized by the BO and
the DP shall maintain the original documents and the audit trail of such
authorizations.
12. The BO reserves the right to give standing instructions with regard to the crediting
of securities in his demat account and the DP shall act according to such instructions.
Statement of account
13. The DP shall provide statements of accounts to the BO in such form and manner and
at such time as agreed with the BO and as specified by SEBI/depository in this regard.
14. However, if the balance has become Nil during the year, the DP shall send one
holding statement annually to such BOs through email and shall resume sending the
transaction statement as and when there is a transaction in the account. In case of
accounts with credit balance but no transactions during the year, half yearly
statement of holding for the year shall be sent to the BO through email.242
15. The DP shall provide the services of issuing the statement of demat accounts in an
electronic mode. The DP will furnish to the BO the statement of demat accounts under
its digital signature, as governed under the Information Technology Act, 2000.
However, if the DP does not have the facility of providing the statement of demat
account in the electronic mode, then the DP shall be obliged to forward the statement
of demat accounts in physical form.243
16. In case of Basic Services Demat Accounts, the DP shall send the transaction
statements as mandated by SEBI and/or Depository from time to time.
242 Reference: SEBI Circular SEBI/HO/MRD-PoD2/CIR/P/2024/93 dated July 01, 2024
243 Reference: SEBI Circular SEBI/HO/MRD-PoD2/CIR/P/2024/93 dated July 01, 2024
253
Manner of Closure of Demat account
17. The DP shall have the right to close the demat account of the BO, for any reasons
whatsoever, provided the DP has given a notice in writing of not less than thirty days
to the BO as well as to the Depository. Similarly, the BO shall have the right to close
his/her demat account held with the DP provided no charges are payable by him/her
to the DP. In such an event, the BO shall specify whether the balances in their demat
account should be transferred to another demat account of the BO held with another
DP or to rematerialize the security balances held.
18. Based on the instructions of the BO, the DP shall initiate the procedure for
transferring such security balances or rematerialize such security balances within a
period of thirty days as per procedure specified from time to time by the depository.
Provided further, closure of demat account shall not affect the rights, liabilities and
obligations of either the BO or the DP and shall continue to bind the parties to their
satisfactory completion.
Default in payment of charges
19. In event of BO committing a default in the payment of any amount provided in
Clause 5 & 6 within a period of thirty days from the date of demand, without
prejudice to the right of the DP to close the demat account of the BO, the DP may
charge interest at a rate as specified by the depository from time to time for the period
of such default.
20. In case the BO has failed to make the payment of any of the amounts as provided in
Clause 5&6 specified above, the DP after giving two days’ notice to the BO shall have
the right to stop processing of instructions of the BO till such time he makes the
payment along with interest, if any.
Liability of the Depository
21. As per Section 16 of Depositories Act, 1996,
a. Without prejudice to the provisions of any other law for the time being in force,
any loss caused to the BO due to the negligence of the depository or the
participant, the depository shall indemnify such BO.
b. Where the loss due to the negligence of the DP under Clause (a) above, is
indemnified by the depository, the depository shall have the right to recover the
same from such participant.
Freezing/ Defreezing of accounts
22. The BO may exercise the right to freeze/defreeze his/her demat account maintained
with the DP in accordance with the procedure and subject to the restrictions laid
down under the bye laws and business rules/operating instructions.
254
23. The DP or the depository shall have the right to freeze/defreeze the accounts of the
BOs on receipt of instructions received from any regulator or court or any statutory
authority.
Redressal of Investor grievance
24. The DP shall redress all grievances of the BO against the DP within a period of twenty
one days from the date of receipt of the complaint.
Authorized representative
25. If the BO is a body corporate or a legal entity, it shall, along with the account opening
form, furnish to the DP, a list of officials authorized by it, who shall represent and
interact on its behalf with the DP. Any change in such list including additions,
deletions or alterations thereto shall be forthwith communicated to the DP.
Law and Jurisdiction
26. In addition to the specific rights set out in this document, the DP and the BO shall be
entitled to exercise any other rights which the DP or the BO may have under the
Rules, bye laws and regulations of the respective depository in which the demat
account is opened and circulars/notices issued there under or rules and regulations
of SEBI.
27. The provisions of this document shall always be subject to Government notification,
any rules, regulations, guidelines and circulars/ notices issued by SEBI and Rules,
Regulations and Bye-laws of the relevant Depository, where the BO maintains
his/her account, that may be in force from time to time.
28. The BO and the DP shall abide by the arbitration and conciliation procedure
prescribed under the bye-laws of the depository and that such procedure shall be
applicable to any disputes between the DP and the BO.
29. Words and expressions which are used in this document but which are not defined
herein shall unless the context otherwise requires, have the same meanings as
assigned thereto in the rules, bye-laws and regulations and circulars/notices issued
there under by the depository and/or SEBI.
30. Any changes in the rights and obligations which are specified by SEBI/depositories
shall also be brought to the notice of the clients at once.
31. If the rights and obligations of the parties hereto are altered by virtue of change in
Rules and regulations of SEBI or bye-laws, rules and regulations of the relevant
depository, where the BO maintains his/her account, such changes shall be deemed
to have been incorporated herein in modification of the rights and obligations of the
parties mentioned in this document.
255
Annexure 4
Intermediaries providing this facility to ensure adherence to the following:
A. The mandate provided by client should:
i. be in favor of the concerned SEBI registered Intermediary only,
ii. not provide the authority to transfer the mandate in favor of any assignees of the
concerned Intermediary,
iii. require the Intermediary to return the securities to the client(s) that may have been
received by them erroneously or those securities that it was not entitled to receive
from the client(s).
B. The mandate provided by client shall not facilitate Intermediaries to do the
following:
i. Transfer of securities for off-market trades,
ii. To execute trades in the name of client without client's consent,
iii. To open an email ID on behalf of the client for receiving relevant
communications,
iv. Prohibit to issue DIS to beneficial owner.
v. Prohibit client from operating the account.
256
Annexure 5
257
258
Annexure 6
259
Annexure 7
“Deleted here as Section 1.16 in this circular makes reference to SEBI Master
Circular SEBI/HO/MIRSD/POD-1/Cir/2024/37 dated May 07, 2024”
Current reference - Request for transmission of Securities by Nominee or
legal heir – Please refer Annexure 16 and 17 of SEBI Master Circular
SEBI/HO/MIRSD/POD-1/Cir/2024/37 dated May 07, 2024.
Annexure 8
“Deleted here as Section 1.16 in this circular makes reference to SEBI Master
Circular SEBI/HO/MIRSD/POD-1/Cir/2024/37 dated May 07, 2024”
Current reference- Request for transmission of Securities by Nominee or
legal heir – Individual Affidavits to be given by ALL the Legal Heirs OR
Legal Heirs named in Succession Certificate*/ Probate of Will*/ Will*/ Letter
of Administration*/ Legal Heirship Certificate*/Court Decree* (For
Transmission of securities on death of Sole Holder where NO NOMINATION
has been registered)
Please refer Annexure 16 and 17 of SEBI Master Circular
SEBI/HO/MIRSD/POD-1/Cir/2024/37 dated May 07, 2024.
Annexure-9
“Deleted here as Section 1.16 in this circular makes reference to SEBI Master
Circular SEBI/HO/MIRSD/POD-1/Cir/2024/37 dated May 07, 2024”
Current reference-Request for transmission of Securities by Nominee or legal
heir - Bond of Indemnity - For Transmission of Securities on death of Sole
Securities’ Holder, where no nomination has been registered
Please refer Annexure 18 of SEBI Master Circular SEBI/HO/MIRSD/POD-
1/Cir/2024/37 dated May 07, 2024.
260
Annexure-10
“Deleted here as Section 1.16 in this circular makes reference to SEBI Master
Circular SEBI/HO/MIRSD/POD-1/Cir/2024/37 dated May 07, 2024”
Current reference -Request for transmission of Securities by Nominee or
legal heir- No-Objection Certificate from the Legal Heir(s) Format of NOC
from other Legal Heir(s) for Transmission of Securities in favour of the
Claimant(s) wherein the Sole Holder is deceased and NO NOMINATION has
been registered
Please refer Annexure 19 of SEBI Master Circular SEBI/HO/MIRSD/POD-
1/Cir/2024/37 dated May 07, 2024
Annexure 11
“Deleted here as Section 1.16 in this circular makes reference to SEBI Master
Circular SEBI/HO/MIRSD/POD-1/Cir/2024/37 dated May 07, 2024”
Current reference- Issuance of Securities in dematerialized form in case of
Investor Service Requests- Please refer Annexure 7 of SEBI Master Circular
SEBI/HO/MIRSD/POD-1/Cir/2024/37 dated May 07, 2024
Annexure 12
“Deleted here as Section 2.17 in this circular makes reference to SEBI Master
Circular SEBI/HO/ITD-1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20,
2024”
Current reference-
Illustrative Measures for Data Security on Customer Facing Applications -Kindly
refer Annexure-H of the SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on
Cybersecurity and Cyber Resilience Framework (CSCRF) for SEBI
Regulated Entities (REs) for necessary compliance in respect of Depository
Participants.
261
Annexure 13
“Deleted here as Section 2.17 in this circular makes reference to SEBI Master
Circular SEBI/HO/ITD-1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20,
2024”
Current reference
Illustrative Measures for Data Transport Security
Kindly refer Annexure-I of the SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on
Cybersecurity and Cyber Resilience Framework (CSCRF) for SEBI
Regulated Entities (REs) for necessary compliance in respect of Depository
Participants.
Annexure 14
“Deleted here as Section 2.17 in this circular makes reference to SEBI Master
Circular SEBI/HO/ITD-1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20,
2024”
Current reference
Illustrative Measures for Application Authentication Security
Kindly refer Annexure-G of the SEBI Circular Number SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024 on
Cybersecurity and Cyber Resilience Framework (CSCRF) for SEBI
Regulated Entities (REs) for necessary compliance in respect of Depository
Participants
262
Annexure 15
Form to report on AI and ML technologies – To be submitted quarterly
Intimation to Depository for the use of the AI and ML application and systems
S No. Head Value
1 Entity SEBI registration number
2 Registered entity category
3 Entity name
4 Entity PAN no.
5 Application / System name
6 Date from when the Application / System was
used
7 Type of area where AI or ML is used <order execution / Advisory
services / KYC / AML /
Surveillance /
compliance/others (please
specify in 256 characters)>
7.a Does the system involve order initiation, routing <Yes / NO>
and execution?
7.b Does the system fall under discretionary <Yes / NO>
investment or Portfolio management activities?
7.c Does the system disseminate invest mentor <Yes / NO>
trading advice or strategies?
7.d Is the application/system used in area of Cyber <Yes / NO>
Security to detect attacks
7.e What claims have been made regarding AI and <free text field>
ML
Application / System – if any?
8 What is the name of the Tool / Technology that <free text field>
is categorized as AI and ML system /
Application and submissions are declared vide
this response
9 How was the AI or ML project implemented <Internally / through
solution provider / Jointly
with a solution provider or
263
third party>
10 Are the key controls and control points in your <free text field>
AI or ML application or systems in accordance to
circular of SEBI that mandate cyber security
control requirements
11 Is the AI / ML system included in the system <Yes / NO / NA>
audit, if applicable?
12 Describe the application / system and how it <free text field>
uses
AI / ML as portrayed in the product offering
13 What safeguards are in place to prevent <free text field>
abnormal
behavior of the AI or ML application / System
264
Annexure 16
Consolidated Quarterly Reporting Form
Consolidated Quarterly report to SEBI of all registered depository participants with
Depositories using AI and ML application and systems for the Quarter Ended
DD/MM/YYYY
To be filled if System Audit is
applicable
If system audit report is If system audit report is
submitted by entity later submitted with adverse
than “date used from” remarks and
Depositories are
entitled to inspect the
entity
Entity Does Is there any Was the If
Entity Type of area
Name Entity Applicati Date system adverse entity inspected
Regn. where AI or
PAN on used audit comment in inspected in , was any
No. ML is used
no. /System from report the System past 1 year irregulari
name comply to audit report ty noted
Para 2.20
<order <Yes / <Yes / <Yes / NO> <Yes /
execution/ NO/> NO/> NO>
Advisory
services/KY
C/AML
/Surveillanc
e/complianc
e/others
(please
specify in
256
characters)>
Add separate rows for each system or application.
265
Annexure 17
Sr. Name Registrati Name of Type of Registrati LEI No. If ODI Jurisdi
N of on No. of FPI / Client on No. of of entity subscrib c tion
o. reporti Reportin ODI viz. FPI FPI mention er, /
ng FPI g FPI Subscrib or ODI mentione ed at please Count
(Nodal (Nodal er with subscrib d at Column mention ry of
Entity) Entity) whom er or Column D (for name of entity
mentione the DR D ODI dealing menti
d in applican holder subscrib FPI on ed
column B t shares, er or DR at
owners holder) Colu
hip of mn D
more
than
50%
commo
n
control
A B C D E F G H I
266
Annexure 18
Sr. Name Registrat Name LEI No. ISIN ISIN Quanti Value As
N of ion No. of ODI of ODI of the Descript ty of of on
o. Reporti of Subscri subscri India ion or securit securit date
ng FPI Reportin ber or ber or n name of ies ies (DD-
(Nodal g FPI DR DR Secur the held held MM
Entity) (Nodal holder holder ity security (in M-
Entity) having mentio ratio YYY
mention investm ned at as Y)
ed in ent in Colum being
column Indian n D held in
B Securiti India)
es
through
ODI or
DR
route
A B C D E F G H I J
Note
1. Reference ISIN No. – ISIN of the underlying Indian Security (ISINs issued by NSDL
for underlying security).
2. The quantity of securities in the requisite ISIN / or Indian Security shall be reported
in the ration as being held in India.
3. The securities shall be reported as at the end of the month.
4. For the purpose of valuation, the closing price of such security as at the end of the
month in India be considered for the computation of value of securities held.
267
Annexure 19
Format for reporting changes in "status or constitution" of Depository Participants
Name of the Depository:-
Report for the quarter ending:- June/September/December/March Year:-
Date of report:-
Sr. No Date of Name of the SEBI Type of Details of PAN Date of
receipt Depository Regn. change changes (incoming Change
Participant number Pre Post entities, if
any)
Type Description of Change
Amalgamation, demerger, consolidation or any other kind of corporate
I restructuring falling within the scope of Chapter XV of the Companies Act, 2013
or the corresponding provision of any other law for the time being in force.
II Change in director, including managing director/ whole-time director
III Change in shareholding not resulting in change in control
IV Any other purpose as may be considered appropriate by the Depositories
268
Annexure 20
Data of complaints against the Depositories to be displayed on their websites
Data for the month ending……….
Sr. Received Carried Received Total Resolved Pending at the end of Average
No. from forward from during Compl during the month** Resolution
previous the aints the time^
month month month*
Pending Pending
for less for more
than 3 than 3
months months
1 2 3 4 5 6 7 8
Directly
1 from
Investors
SEBI
2
(SCORES)
3 Members
Other
4 Sources (if
any)
Grand
Total
*Should include complaints of previous months resolved in the current month, if any.
**Should include total complaints pending as on the last day of the month, if any.
^ Average resolution time is the sum total of time taken to resolve each complaint in the current month divided by total
number of complaints resolved in the current month.
s
Month-wise data for the current financial year
Sr. Month Carried forward from previous Received Resolved Pending
No. month
1 2 3 4 5 6
1 April
2 May
3 June
4 July
Grand Total
Year-wise data (for 5 years on rolling basis)
Sr. Year Carried forward from previous Received Resolved Pending
No. year
1 2 3 4 5 6
1 2020-21
2 2021-22
269
3 2022-23
4 2023-24
5 2024-25
Grand Total
270
Annexure 21
Investor Charter for Depositories and Depository Participants
1. Vision
Towards making Indian Securities Market - Transparent, Efficient, & Investor friendly
by providing safe, reliable, transparent and trusted record keeping platform for investors
to hold and transfer securities in dematerialized form.
2. Mission
• To hold securities of investors in dematerialised form and facilitate its transfer, while
ensuring safekeeping of securities and protecting interest of investors.
• To provide timely and accurate information to investors with regard to their holding
and transfer of securities held by them.
• To provide the highest standards of investor education, investor awareness and timely
services so as to enhance Investor Protection and create awareness about Investor
Rights.
3. Details of business transacted by the Depository and Depository Participant (DP)
A Depository is an organization which holds securities of investors in electronic form.
Depositories provide services to various market participants - Exchanges, Clearing
Corporations, Depository Participants (DPs), Issuers and Investors in both primary as
well as secondary markets. The depository carries out its activities through its agents
which are known as Depository Participants (DP). Details available on the link [link to
be provided by Depositories]
4. Description of services provided by the Depository through Depository
Participants (DP) to investors
(1) Basic Services
Expected Timelines for processing by the
Sr. Brief about the Activity / DP after receipt of proper documents
No. Service
Dematerialization of
1. securities 7 days
Rematerialization of securities
2. 7 days
Mutual Fund Conversion /
3. Destatementization 5 days
271
Expected Timelines for processing
Sr. Brief about the Activity / by the DP after receipt of proper
No. Service documents
Re-conversion /
Restatementisation of Mutual
4. fund units 7 days
5. Transmission of securities 7 days
6. Registering pledge request 15 days
7. Closure of demat account 30 days
For T+1 day settlements, Participants shall
accept instructions from the Clients, in
physical form up to 4 p.m. (in case of
electronic instructions up to 6.00 p.m.) on T
day for pay-in of securities.
For T+0 day settlements, Participants shall
accept EPI instructions from the clients, till
11:00 AM on T day.
8. Settlement Instruction Note: ‘T’ refers ‘Trade Day’
(2) Depositories provide special services like pledge, hypothecation, internet based
services etc. in addition to their core services and these include
Sr. Type of Activity Brief about the Activity / Service
No. /Service
1. Value Added Services Depositories also provide value added services such as
a. Basic Services Demat Account(BSDA)
[link to be provided by Depositories]1
b. Transposition cum dematerialization
[link to be provided by Depositories]2
c. Linkages with Clearing System
[link to be provided by Depositories]3
d. Distribution of cash and non-cash corporate benefits
(Bonus, Rights, IPOs etc.), stock lending, demat of
NSC / KVP, demat of warehouse receipts etc.
2. Consolidated Account CAS is issued 10 days from the end of the month (if
statement (CAS) there were transactions in the previous month) or half
yearly(if no transactions) .
3. Digitalization of Depositories offer below technology solutions and e-
services provided by facilities to their demat account holders through DPs:
the depositories
272
Sr. Type of Activity Brief about the Activity / Service
No. /Service
a. E-account opening: Details available on the link [link to
be provided by Depositories}4
b. Online instructions for execution: Details available on
the link [link to be provided by Depositories}5
c. e-DIS / Demat Gateway: Details available on the link
[link to be provided by Depositories}6
d. e-CAS facility: Details available on the link
[link to be provided by Depositories}7
e. Miscellaneous services: Details available on the link
[link to be provided by Depositories}8
5. Details of Grievance Redressal Mechanism
The Process of investor grievance redressal
1. Investor Investor can lodge complaint/ grievance against the
Complaint/ Depository/DP in the following ways:
Grievances
a. Electronic mode -
(i) SCORES 2.0 (a web based centralized grievance
redressal system of SEBI) [link to be provided by
Depositories]
Two Level Review for complaint/grievance against
DP:
- First review done by Designated Body
- Second review done by SEBI
(ii) Respective Depository’s web portal dedicated for
the filing of compliant [link to be provided by
Depositories]
(iii) Emails to designated email IDs of
Depository [link to be provided by
Depositories]
b. Offline mode [details of link to the form to be provided
by Depositories]
The complaints/ grievances lodged directly with the
Depository shall be resolved within 21 days.
2. Online Dispute If the Investor is not satisfied with the resolution provided
Resolution (ODR) by DP or other Market Participants, then
273
platform for online the Investor has the option to file the complaint/
Conciliation and grievance on SMARTODR platform for its resolution
Arbitration through by online conciliation or arbitration.
[SMARTODR link to be provided by Depositories]
3. Steps to be followed in  Investor to approach Market Participant for redressal
ODR for Review, of complaint
Conciliation and  If investor is not satisfied with response of Market
Participant, he/she can escalate the complaint on
Arbitration
SEBI SCORES portal.
 Alternatively, the investor may also file a complaint
on SMARTODR portal for its resolution through
online conciliation and arbitration.
 Upon receipt of complaint on SMARTODR portal, the
relevant MII will review the matter and endeavour to
resolve the matter between the Market Participant
and investor within 21 days.
 If the matter could not be amicably resolved, then the
Investor may request the MII to refer the matter case
for conciliation.
 During the conciliation process, the conciliator will
endeavor for amicable settlement of the dispute
within 21 days, which may be extended with 10 days
by the conciliator.
 If the conciliation is unsuccessful, then the investor
may request to refer the matter for arbitration.
 The arbitration process to be concluded by
arbitrator(s) within 30 days, which is extendable by
30 days.
6. Guidance pertaining to special circumstances related to market activities:
Termination of the Depository Participant
Sr. Type of special circumstances Timelines for the Activity/ Service
No.
1.  Depositories to terminate the Client will have a right to transfer all
participation in case a participant no its securities to any other Participant
longer meets the eligibility criteria of its choice without any charges for
the transfer within 30 days from the
and/or any other grounds as
date of intimation by way of
mentioned in the bye laws like
letter/email.
suspension of trading member by the
Stock Exchanges.
274
Sr. Type of special circumstances Timelines for the Activity/ Service
No.
Participant surrenders the
participation by its own wish.
7. Dos and Don’ts for Investors [link to be provided by the Depositories]
Sr. Guidance
No.
i. Always deal with a SEBI registered Depository Participant for opening a demat
account.
ii. Read all the documents carefully before signing them.
iii. Before granting Power of attorney to operate your demat account to an
intermediary like Stock Broker, Portfolio Management Services (PMS) etc.,
carefully examine the scope and implications of powers being granted.
iv. Always make payments to registered intermediary using banking channels. No
payment should be made in name of employee of intermediary.
v. Accept the Delivery Instruction Slip (DIS) book from your DP only (pre-printed
with a serial number along with your Client ID) and keep it in safe custody and
do not sign or issue blank or partially filled DIS slips.
Always mention the details like ISIN, number of securities accurately. In case
of any queries, please contact your DP or broker and it should be signed by all
demat account holders.
Strike out any blank space on the slip and Cancellations or corrections on the
DIS should be initiated or signed by all the account holder(s).
Do not leave your instruction slip book with anyone else.
Do not sign blank DIS as it is equivalent to a bearer cheque.
vi. Inform any change in your Personal Information (for example address or Bank
Account details, email ID, Mobile number) linked to your demat account in the
prescribed format and obtain confirmation of updation in system
vii. Mention your Mobile Number and email ID in account opening form to receive
SMS alerts and regular updates directly from depository.
viii. Always ensure that the mobile number and email ID linked to your demat
account are the same as provided at the time of account opening/updation.
ix. Do not share password of your online trading and demat account with anyone.
x. Do not share One Time Password (OTP) received from banks, brokers, etc.
These are meant to be used by you only.
275
Sr. Guidance
No.
xi. Do not share login credentials of e-facilities provided by the depositories such
as e-DIS/demat gateway, SPEED-e/easiest etc. with anyone else.
xii. Demat is mandatory for any transfer of securities of Listed public limited
companies.
xiii. If you have any grievance in respect of your demat account, please write to
designated email IDs of depositories or you may lodge the same with SEBI
online at https://scores.sebi.gov.in
xiv. Keep a record of documents signed, DIS issued and account statements
received.
xv. As Investors you are required to verify the transaction statement carefully for
all debits and credits in your account. In case of any unauthorized debit or
credit, inform the DP or your respective Depository.
xvi. Appoint a nominee to facilitate your heirs in obtaining the securities in your
demat account, on completion of the necessary procedures.
xvii. Register for Depository's internet based facility or download mobile app of the
depository to monitor your holdings.
xviii. Ensure that, both, your holding and transaction statements are received
periodically as instructed to your DP. You are entitled to receive a transaction
statement every month if you have any transactions.
xix. Do not follow herd mentality for investments. Seek expert and professional
advice for your investments
xx. Beware of assured/fixed returns.
8. Rights of investors [link to be provided by the Depositories]
i. Receive a copy of KYC, copy of account opening documents.
ii. No minimum balance is required to be maintained in a demat account.
iii. No charges are payable for opening of demat accounts.
iv. If executed, receive a copy of Power of Attorney. However, Power of Attorney is not
a mandatory requirement as per SEBI / Stock Exchanges. You have the right to
revoke any authorization given at any time.
v. You can open more than one demat account in the same name with single DP/
multiple DPs.
vi. Receive statement of accounts periodically. In case of any discrepancies in
statements, take up the same with the DP immediately. If the DP does not respond,
take up the matter with the Depositories.
vii. Pledge and /or any other interest or encumbrance can be created on demat
holdings.
276
viii. Right to give standing instructions with regard to the crediting of securities in demat
account.
ix. Investor can exercise its right to freeze/defreeze his/her demat account or specific
securities / specific quantity of securities in the account, maintained with the DP.
x. In case of any grievances, Investor has right to approach Participant or Depository
or SEBI for getting the same resolved within prescribed timelines.
xi. Every eligible investor shareholder has a right to cast its vote on various resolutions
proposed by the companies for which Depositories have developed an internet
based ‘e-Voting’ platform.
xii. Receive information about charges and fees. Any charges/tariff agreed upon shall
not increase unless a notice in writing of not less than thirty days is given to the
Investor.
xiii. Right to indemnification for any loss caused due to the negligence of the Depository
or the participant.
xiv. Right to opt out of the Depository system in respect of any security.
9. Responsibilities of Investors [link to be provided by the Depositories]
i. Deal with a SEBI registered DP for opening demat account, KYC and
Depository activities.
ii. Provide complete documents for account opening and KYC (Know Your Client). Fill
all the required details in Account Opening Form / KYC form in own handwriting and
cancel out the blanks.
iii. Read all documents and conditions being agreed before signing the account
opening form.
iv. Accept the Delivery Instruction Slip (DIS) book from DP only (preprinted with a serial
number along with client ID) and keep it in safe custody and do not sign or issue
blank or partially filled DIS.
v. Always mention the details like ISIN, number of securities accurately.
vi. Inform any change in information linked to demat account and obtain confirmation
of updation in the system.
vii. Regularly verify balances and demat statement and reconcile with trades /
transactions. viii. Appoint nominee(s) to facilitate heirs in obtaining the securities in
their demat account.
ix. Do not fall prey to fraudsters sending emails and SMSs luring to trade in stocks /
securities promising huge profits.
277
10. Code of Conduct for Depositories [link to be provided by the Depositories] (Part D of
Third Schedule of SEBI (D & P) regulations, 2018)
A Depository shall:
(a) always abide by the provisions of the Act, Depositories Act, 1996, any Rules or
Regulations framed thereunder, circulars, guidelines and any other directions issued
by the Board from time to time.
(b) adopt appropriate due diligence measures.
(c) take effective measures to ensure implementation of proper risk management
framework and good governance practices.
(d) take appropriate measures towards investor protection and education of investors.
(e) treat all its applicants/members in a fair and transparent manner.
(f) promptly inform the Board of violations of the provisions of the Act, the Depositories
Act, 1996, rules, regulations, circulars, guidelines or any other directions by any of
its issuer or issuer’s agent.
(g) take a proactive and responsible attitude towards safeguarding the interests of
investors, integrity of depository’s systems and the securities market.
(h) endeavor for introduction of best business practices amongst itself and its members.
(i) act in utmost good faith and shall avoid conflict of interest in the conduct of its
functions.
(j) not indulge in unfair competition, which is likely to harm the interests of any other
Depository, their participants or investors or is likely to place them in a
disadvantageous position while competing for or executing any assignment.
(k) segregate roles and responsibilities of key management personnel within the
depository including
a. Clearly mapping legal and regulatory duties to the concerned position
b. Defining delegation of powers to each position
c. Assigning regulatory, risk management and compliance aspects to business
and support teams
(l) be responsible for the acts or omissions of its employees in respect of the conduct
of its business.
(m)monitor the compliance of the rules and regulations by the participants and shall
further ensure that their conduct is in a manner that will safeguard the interest of
investors and the securities market.
278
11. Code of Conduct for Participants [link to be provided by the Depositories]
(Part A of Third Schedule of SEBI (D & P) regulations, 2018)
1. A participant shall make all efforts to protect the interests of investors.
2. A participant shall always endeavour to—
(a) render the best possible advice to the clients having regard to the client’s needs
and the environments and his own professional skills;
(b) ensure that all professional dealings are effected in a prompt, effective and
efficient manner;
(c) inquiries from investors are adequately dealt with;
(d) grievances of investors are redressed without any delay.
3. A participant shall maintain high standards of integrity in all its dealings with its
clients and other intermediaries, in the conduct of its business.
4. A participant shall be prompt and diligent in opening of a beneficial owner account,
dispatch of the dematerialisation request form, rematerialisation request form and
execution of debit instruction slip and in all the other activities undertaken by him on
behalf of the beneficial owners.
5. A participant shall endeavour to resolve all the complaints against it or in respect of
the activities carried out by it as quickly as possible, and not later than one month
of receipt.
6. A participant shall not increase charges/fees for the services rendered without
proper advance notice to the beneficial owners.
7. A participant shall not indulge in any unfair competition, which is likely to harm the
interests of other participants or investors or is likely to place such other participants
in a disadvantageous position while competing for or executing any assignment.
8. A participant shall not make any exaggerated statement whether oral or written to
the clients either about its qualifications or capability to render certain services or
about its achievements in regard to services rendered to other clients.
9. A participant shall not divulge to other clients, press or any other person any
information about its clients which has come to its knowledge except with the
approval/authorisation of the clients or when it is required to disclose the information
under the requirements of any Act, Rules or Regulations.
10. A participant shall co-operate with the Board as and when required.
11. A participant shall maintain the required level of knowledge and competency and
abide by the provisions of the Act, Rules, Regulations and circulars and directions
issued by the Board. The participant shall also comply with the award of the
Ombudsman passed under the Securities and Exchange Board of India
(Ombudsman) Regulations, 2003.
12. A participant shall not make any untrue statement or suppress any material fact in
any documents, reports, papers or information furnished to the Board.
279
13. A participant shall not neglect or fail or refuse to submit to the Board or other
agencies with which it is registered, such books, documents, correspondence, and
papers or any part thereof as may be demanded/requested from time to time.
14. A participant shall ensure that the Board is promptly informed about any action, legal
proceedings, etc., initiated against it in respect of material breach or noncompliance
by it, of any law, Rules, regulations, directions of the Board or of any other regulatory
body.
15. A participant shall maintain proper inward system for all types of mail received in all
forms.
16. A participant shall follow the maker—Checker concept in all of its activities to ensure
the accuracy of the data and as a mechanism to check unauthorised transaction.
17. A participant shall take adequate and necessary steps to ensure that continuity in
data and record keeping is maintained and that the data or records are not lost or
destroyed. It shall also ensure that for electronic records and data, upto-date back
up is always available with it.
18. A participant shall provide adequate freedom and powers to its compliance officer
for the effective discharge of his duties.
19. A participant shall ensure that it has satisfactory internal control procedures in place
as well as adequate financial and operational capabilities which can be reasonably
expected to take care of any losses arising due to theft, fraud and other dishonest
acts, professional misconduct or omissions.
20. A participant shall be responsible for the acts or omissions of its employees and
agents in respect of the conduct of its business.
21. A participant shall ensure that the senior management, particularly decision makers
have access to all relevant information about the business on a timely basis.
22. A participant shall ensure that good corporate policies and corporate governance
are in place.
*********
280
Annexure 22
281
282
Annexure 23
PRINCIPLES FOR FINANCIAL MARKET INFRASTRUCTURES
General Organisation
Principle 1: Legal basis
An FMI should have a well-founded, clear, transparent, and enforceable legal basis
for each material aspect of its activities in all relevant jurisdictions.
Principle 2: Governance
An FMI should have governance arrangements that are clear and transparent,
promote the safety and efficiency of the FMI, and support the stability of the broader
financial system, other relevant public interest considerations, and the objectives of
relevant stakeholders.
Principle 3: Framework for the comprehensive management of risks
An FMI should have a sound risk-management framework for comprehensively
managing legal, credit, liquidity, operational, and other risks.
Credit and liquidity risk management.
Principle 4: Credit risk
An FMI should effectively measure, monitor, and manage its credit exposures to
participants and those arising from its payment, clearing, and settlement processes.
An FMI should maintain sufficient financial resources to cover its credit exposure to
each participant fully with a high degree of confidence. In addition, a CCP that is
involved in activities with a more-complex risk profile or that is systemically
important in multiple jurisdictions should maintain additional financial resources
sufficient to cover a wide range of potential stress scenarios that should include, but
not be limited to, the default of the two participants and their affiliates that would
potentially cause the largest aggregate credit exposure to the CCP in extreme but
plausible market conditions. All other CCPs should maintain additional financial
resources sufficient to cover a wide range of potential stress scenarios that should
include, but not be limited to, the default of the participant and its affiliates that
would potentially cause the largest aggregate credit exposure to the CCP in extreme
but plausible market conditions.
Principle 5: Collateral
An FMI that requires collateral to manage its or its participants’ credit exposure
should accept collateral with low credit, liquidity, and market risks. An FMI should
also set and enforce appropriately conservative haircuts and concentration limits.
283
Principle 6: Margin
A CCP should cover its credit exposures to its participants for all products through
an effective margin system that is risk-based and regularly reviewed.
Principle 7: Liquidity risk
An FMI should effectively measure, monitor, and manage its liquidity risk. An FMI
should maintain sufficient liquid resources in all relevant currencies to effect same-
day and, where appropriate, intraday and multiday settlement of payment
obligations with a high degree of confidence under a wide range of potential stress
scenarios that should include, but not be limited to, the default of the participant and
its affiliates that would generate the largest aggregate liquidity obligation for the
FMI in extreme but plausible market conditions.
Settlement
Principle 8: Settlement finality
An FMI should provide clear and certain final settlement, at a minimum by the end
of the value date. Where necessary or preferable, an FMI should provide final
settlement intraday or in real time.
Principle 9: Money settlements
An FMI should conduct its money settlements in central bank money where practical
and available. If central bank money is not used, an FMI should minimise and strictly
control the credit and liquidity risk arising from the use of commercial bank money.
Principle 10: Physical deliveries
An FMI should clearly state its obligations with respect to the delivery of physical
instruments or commodities and should identify, monitor, and manage the risks
associated with such physical deliveries.
Central securities depositories and exchange-of-value settlement systems
Principle 11: Central securities depositories
A CSD should have appropriate rules and procedures to help ensure the integrity of
securities issues and minimise and manage the risks associated with the safekeeping
and transfer of securities. A CSD should maintain securities in an immobilised or
dematerialised form for their transfer by book entry.
Principle 12: Exchange-of-value settlement systems
If an FMI settles transactions that involve the settlement of two linked obligations
(for example, securities or foreign exchange transactions), it should eliminate
284
principal risk by conditioning the final settlement of one obligation upon the final
settlement of the other.
Default management
Principle 13: Participant-default rules and procedures
An FMI should have effective and clearly defined rules and procedures to manage a
participant default. These rules and procedures should be designed to ensure that
the FMI can take timely action to contain losses and liquidity pressures and continue
to meet its obligations.
Principle 14: Segregation and portability
A CCP should have rules and procedures that enable the segregation and portability
of positions of a participant’s customers and the collateral provided to the CCP with
respect to those positions.
General business and operational risk management
Principle 15: General business risk
An FMI should identify, monitor, and manage its general business risk and hold
sufficient liquid net assets funded by equity to cover potential general business
losses so that it can continue operations and services as a going concern if those
losses materialise. Further, liquid net assets should at all times be sufficient to ensure
a recovery or orderly wind-down of critical operations and services.
Principle 16: Custody and investment risks
An FMI should safeguard its own and its participants’ assets and minimise the risk
of loss on and delay in access to these assets. An FMI’s investments should be in
instruments with minimal credit, market, and liquidity risks.
Principle 17: Operational risk
An FMI should identify the plausible sources of operational risk, both internal and
external, and mitigate their impact through the use of appropriate systems, policies,
procedures, and controls. Systems should be designed to ensure a high degree of
security and operational reliability and should have adequate, scalable capacity.
Business continuity management should aim for timely recovery of operations and
fulfillment of the FMI’s obligations, including in the event of a wide-scale or major
disruption.
285
Access
Principle 18: Access and participation requirements
An FMI should have objective, risk-based, and publicly disclosed criteria for
participation, which permit fair and open access.
Principle 19: Tiered participation arrangements
An FMI should identify, monitor, and manage the material risks to the FMI arising
from tiered participation arrangements.
Principle 20: FMI links
An FMI that establishes a link with one or more FMIs should identify, monitor, and
manage link-related risks.
Efficiency
Principle 21: Efficiency and effectiveness
An FMI should be efficient and effective in meeting the requirements of its
participants and the markets it serves.
Principle 22: Communication procedures and standards
An FMI should use, or at a minimum accommodate, relevant internationally
accepted communication procedures and standards in order to facilitate efficient
payment, clearing, settlement, and recording.
Transparency
Principle 23: Disclosure of rules, key procedures, and market data
An FMI should have clear and comprehensive rules and procedures and should
provide sufficient information to enable participants to have an accurate
understanding of the risks, fees, and other material costs they incur by participating
in the FMI. All relevant rules and key procedures should be publicly disclosed.
Principle 24: Disclosure of market data by trade repositories
A TR should provide timely and accurate data to relevant authorities and the public in
line with their respective needs.
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Annexure 24
Format for monitoring compliance with requirements emanating from SEBI
circulars/guidelines/advisories related to technology
Sl. Date of SEBI Subje Technolog Mechani Non Complia Comment Time-line
N circular/ ct ical sm put in complian nce s of the for taking
o. directions/ad requireme place by ces with status Managem corrective
vice, etc. nts the MIIs SEBI (Open/ ent action in
specified circulars closed) case of
by SEBI in / open
brief direction observati
s, etc. ons
287
Annexure 25
Exception Observation Reporting Format
Note: MIIs are expected to submit following information with regard to exceptional major
non-compliances (NCs) / minor NCs observed in the System and Network Audit. MIIs
should also categorically highlight those observations/NCs/suggestions pointed out in
the System and Network Audit (current and previous) which are not yet complied with.
Name of the MII: ___________________
Name of the Auditor: _________________
Systems and Network Audit Report Date:_________________
Table 1: For preliminary audit
Manage Whethe
Correcti Deadlin me r
Observ Risk ve e for the nt similar
at ion Status Rating Aud Actions correcti response issue
Descri
Audi No. / of it Root propose ve in case of was
ption Impact
t Departme Natur findin TO Cause d by action acceptanc observe
of Analys
perio nt of MII e of g as R Analys auditor e d
findin is
d findin per claus is of in any
g
g Audit e associate of the
or d risks previou
s 3
Audits
Description of relevant Table heads
1. Audit Period – This indicates the period of audit
2. Description of findings/observations – Description of the findings in sufficient details,
referencing any accompanying evidence
3. Status/ Nature of Findings – The category can be specified, for example:
a. Non-compliant (Major/Minor)
b. Work in progress
c. Observation
d. Suggestion
288
4. Risk Rating of finding -A rating has to be given for each of the observations based on
its impact and severity to reflect the risk exposure as well as the suggested priority for
action
Rating Description
Represents weakness in control with respect to threat(s) that is /are sufficiently capable and
HIGH impacts asset (s) leading to regulatory non-compliance, significant financial, operational
and reputational loss. These observations need to be addressed with utmost priority.
Represents weakness in control with respect to threat(s) that is /are sufficiently capable
MEDIUM and impacts asset (s) leading to exposure in terms of financial, operational and
reputational loss. These observations need to be addressed in reasonable timeframe.
Represents weaknesses in control, which in combination with other weakness can develop
LOW into an exposure. Suggested improvements for situations not immediately/directly
affecting controls. .
5. Audit TOR clause – The TOR clause corresponding to this observation
6. Root Cause analysis – A detailed analysis on the cause of the non-conformity.
7. Impact Analysis – An analysis of the likely impact on the operations/ activity of the
organization
8. Corrective Action – The action taken to correct the non-conformity
Table 2: For follow on/ follow up system and Network audit
Preliminar Preliminary Revised Deadlin Reason for
Preliminar Curren
Prelimina y Corrective Correctiv e for the delay in
y Preliminar t Current
ry Audit Audit Action as e Revised implementati
Observatio y Status Findin Status
Date Period proposed by Action, if Correctiv on/
n Number g
Auditor any e Action compliance
Description of relevant Table heads
1. Preliminary Status – The original finding as per the preliminary System and Network
Audit Report
2. Preliminary Corrective Action – The original corrective action as prescribed in the
preliminary System and Network audit report
3. Current Finding – The current finding w.r.t. the issue
289
4. Current Status – Current Status of the issue viz. compliant, non-compliant, work in progress
(WIP)
5. Revised Corrective Action – The revised corrective action prescribed w.r.t. the Non-
compliant/ WIP issues
290
Annexure 26
Date Depar Name of Type of SEBI PAN Amou Purpose of Bank UTR
tment Intermed Intermedi Regn. nt (Rs.) Payment name No.
of iary ary No. (If (including and
SEBI / Other any) the period Account
entities for which number
payment from
was made which
e.g. payment
quarterly, is
annually) remitted
291
Annexure 27
Form to report on AI and ML technologies – to be submitted quarterly
S/N Head Value
1 Entity SEBI registration number
2 Registered entity category
3 Entity name
4 Entity PAN no.
5 Application / System name
6 Date used from
Type of area where AI or ML is used (order
7 execution / Surveillance / compliance / others).
In case of others, please specify.
What is the name of the Tool / Technology that is
8 categorized as AI and ML system / Application <free text field>
and submissions are declared vide this response
<Internally / through
solution provider /
9 How was the AI or ML project implemented Jointly with a solution
provider or third
party>
Are the key controls and control points in your AI
or ML application or systems in accordance with
10 <free text field>
circular(s) of SEBI that mandate/s cybersecurity
control requirements
11 Is the AI / ML system included in the system audit <Yes / No>
Describe the application / system and how it uses
12 <free text field>
AI / ML
What safeguards are in place to prevent abnormal
13 <free text field>
behavior of the AI or ML application / System
292
Annexure 28
Various Scenarios
Current process Proposed process
Scenario 1: Prefunded purchase by client
• Client transfers Rs. 150 to member. • Client creates a block of Rs. 150 in
• Member may retain the client funds favour of the CC. The amount shall get
with itself and allocate collateral to allocated as collateral.
the extent of 20% margin • The client purchases a share worth Rs.
requirements at the CC (Say Rs. 30). 100. The margin requirement is 20, this
• Client purchases a share for Rs. 100, shall get adjusted from the block
the margin collection requirement is (which is allocated as collateral).
Rs. 20 which is blocked from client’s • STT and stamp duty shall be 11 paise,
allocation. which shall be added to the client’s
• Collateral is released after the obligation. The CC shall debit 100.11
member completes the net towards settlement at the stipulated
settlement with the CC. time.
• With the successful debit from the
client, the securities receivable by the
client shall be provided in the client’s
depository account directly by the CC
at the time of settlement pay-out.
Scenario 2: Delivery sale by client by early pay-in
• Client uses block mechanism for • The client shall provide securities as
early pay-in of securities. early pay-in through the block
• Such early pay-in information is mechanism only.
received by the CC from • If the early pay-in information is
depositories. received from depository before trade
• A sell order is executed on behalf of execution, there shall be no margin. If
the client. the information is received
• If sell order is executed after early subsequently, the proprietary
pay-in, then no margin is applicable collateral of the member shall be
at any time. blocked till the receipt of early pay-in.
• If early pay-in is received • Since the client has completed the
subsequent to the sell order settlement, the CC shall pay out funds
execution, the proprietary collateral directly in the client account. While
of the member shall be blocked till providing the funds pay-out, CC shall
receipt of early pay-in. deduct the STT and stamp duty.
293
• While providing pay-out to the
client, the member may adjust other
statutory dues (stamp duty, STT),
brokerage etc.
Scenario 3: Purchase/sale by client supported by margins
• The client may create only partial block
• Client provides 20% margin to the
to the extent of margin instead of entire
member. Client can execute trades
upfront value or early pay-in through
based on the margins on trade date.
block mechanism. The client shall need
The client shall need to provide the
to provide additional block or provide
remaining 80% amount (in case of
early pay-in till the stipulated time.
purchase) or deliver the security (in
case of sale) till the applicable Further process shall be same as
settlement deadline. discussed in Scenario 1 and Scenario 2.
Scenario 4: Intraday cash market/derivatives trading
• Client provides margin money to
• In case of losses, the CC shall debit the
the member. Client carries out
block to the extent of losses towards
intraday trading or trade in
client pay-in.
derivatives. There are no exchange-
• In case of gains, the pay-out shall be
of-value delivery obligations
given by CC in the client account. The
(funds against securities or vice-
CC shall not add the pay-out to the
versa), but only losses or gains.
funds collateral of the client, and if
Losses shall be deducted from the
desired the client may create another
margin money given by clients and
block.
gains may be added to the margin
money of client or paid out.
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Annexure 29 & 30
Deleted here as Section 4.73 in this circular makes reference to SEBI Master
Circular SEBI/HO/ITD-1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20,
2024”
Current reference
Rating by Depositories on Cyber Capability Index - Kindly refer Annexure K of the
SEBI Circular Number SEBI/HO/ITD-1/ITD_CSC_EXT/P/CIR/2024/113 dated
August 20, 2024 on Cybersecurity and Cyber Resilience Framework (CSCRF) for
SEBI Regulated Entities (REs).
Annexure 31
Format for Report on Complaints
Part A
Sr. No. Particulars Number
1 Number of complaints received directly
2 Number of complaints forwarded by SEBI
3 Total number of complaints received (1+2)
4 Total number of complaints resolved
5 Total number of complaints pending (3-4)
Part B
Sr. Date of Status
Name of the Complainant
No. Complaint (Resolved/Pending)
1
2
3
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Annexure 32
Format of the Compliance Report to be submitted along with the draft Scheme
It is hereby certified that the draft Scheme involving (Name of the entities) does not, in any
way violate, override or limit the provisions of securities laws and the same is in
compliance with the applicable provisions of this circular.
Company Secretary Managing Director
Certified that the transactions / accounting treatment provided in the draft Scheme
involving (Name of the entities) are in compliance with all the Accounting Standards
applicable to an unlisted entity.
Chief Financial Officer Managing Director
296
Annexure 33
Format for Report on Unpaid Dues
Sr. Details of Amount Reason for
Particulars
No. dues/fine/penalty (INR) non-payment
1. Pending Dues of SEBI
Pending Dues of
2.
Depositories
297
CIRCULARS
S. No. Circular No.
1 SEBI Circular SMD/POLICY/Cir-2/98 dated January 14, 1998
2 SEBI Circular SMDRP/Policy/Cir-9/99 dated May 6, 1999
3 SEBI Circular SMDRP/Policy/Cir-28/99 dated August 23, 1999
4 SEBI Circular SMDRP/Policy/Cir-29/99 dated August 23, 1999
5 SEBI Circular D&CC/FITTC/Cir-09/2002 dated July 4, 2002
6 SEBI Circular D&CC/FITTC/Cir-10/2002 dated September 25, 2002
7 SEBI Circular D&CC/FITTC/CIR - 12/2002 dated October 30, 2002
8 SEBI Circular D&CC/FITTC/Cir-15/2002 dated December 27, 2002
9 SEBI Circular D&CC/FITTC/CIR – 16/2002 dated December 31, 2002
10 SEBI Circular LGL/Cir-2/2003 dated February 19, 2003
11 SEBI Circular DCC/FITTC/Cir-19/2003 dated March 4, 2003
12 SEBI Circular SEBI/MRD/Policy/AT/Cir- 19/2004 dated April 21, 2004
13 SEBI Circular MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004
14 SEBI Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004
15 SEBI Circular MRD/DoP /SE/Dep/Cir-4/2005 dated January 28, 2005
16 SEBI Circular SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005
17 SEBI Circular MRD/DoP/SE/Dep/Cir-18/2005 dated September 2, 2005
18 SEBI Circular MRD/DoP/Dep/Cir-22 /05 dated November 9, 2005
19 SEBI Circular SEBI/MRD/DEP/Cir-2/06 dated January 19, 2006
20 SEBI Circular SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006
21 SEBI Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006
22 SEBI Circular MRD/DoP/Dep/SE/Cir-13/06 dated September 26, 2006
23 SEBI Circular MRD/DoP/Dep/SE/Cir-17/06 dated October 27, 2006
24 SEBI Circular MRD/Dep/Cir- 20/06 dated December 11, 2006
25 SEBI Circular MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006
26 SEBI Circular MRD/DSA/SE/Dep/Cust/Cir-23/06 dated December 22, 2006
27 SEBI Circular SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007
28 SEBI Circular MRD/DoP/Cir-5/2007 dated April 27, 2007
29 SEBI Circular MRD/DoP/Cir-08/2007 dated June 25, 2007
30 SEBI Circular MIRSD/DPS-III/Cir-9/07 dated July 3, 2007
31 SEBI Circular SEBI/CFD/DIL/DIP/29/2008/01/02 dated February 1, 2008
32 SEBI Circular SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008
33 SEBI Circular MRD/DoP/Cir-20/2008 dated June 30, 2008
34 SEBI Circular MIRSD/DPS- III/Cir-23/08 dated July 25, 2008
35 SEBI Circular MRD/DSA/SE/Dep/Cust/CIR-30/08 dated October 23, 2008
36 SEBI Circular ISD/AML/CIR-1/2008 dated December 19, 2008
37 SEBI Circular MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009
38 SEBI Circular SEBI/IMD/CIR No 11/183204/2009 dated November 13, 2009
298
S. No. Circular No.
39 SEBI Circular MRD/DoP/DEP/Cir 20/2009 dated December 9, 2009
40 SEBI Circular SEBI/MRD/ OIAE/ Dep/ Cir- 4/2010 dated January 29, 2010
41 SEBI Circular CIR/MRD/DMS/13/2010 dated April 23, 2010
42 SEBI Circular SEBI/MRD/ DP/ 19/2010 dated June 10, 2010
43 SEBI Circular MRD/DP/20/2010 dated July 1, 2010
44 SEBI Circular MRD/DP/22/2010 dated July 29, 2010
45 SEBI Circular CIR/MRD/DMS/28/2010 dated August 31, 2010
46 SEBI Circular CIR/MRD/DP/30/2010 dated September 06, 2010
47 SEBI Circular CIR/IMD/DF/17/2010 dated November 09, 2010
48 SEBI Circular CIR/MRD/DP/37/2010 dated December 14, 2010
49 SEBI Circular CIR/MRD/DP/4/2011 dated April 7, 2011
50 SEBI Circular CIR/MRD/ DP/05/2011 dated April 27, 2011
51 SEBI Circular CIR/MIRSD/9/2011 dated June 17, 2011
52 SEBI Circular CIR/MIRSD/16/2011 dated August 22, 2011
53 SEBI Circular MIRSD/SE/Cir-21/2011 dated October 05, 2011
54 SEBI Circular MIRSD/Cir-23/2011 dated December 02, 2011
55 SEBI Circular CIR/MIRSD/24/2011 dated December 15, 2011
56 SEBI Circular MIRSD/Cir- 26 /2011 dated December 23, 2011
57 SEBI Circular CIR/MRD/ICC/16/2012 dated June 15, 2012
58 SEBI Circular CIR/MRD/DP/ 21 /2012 dated August 02, 2012
59 SEBI Circular CIR/MIRSD/ 09 /2012 dated August 13, 2012
60 SEBI Circular MIRSD/09/2012 dated August 13, 2012
61 SEBI Circular CIR/MRD/DP/22/2012 dated August 27, 2012
62 SEBI Circular CIR/CFD/DIL/10/2012 dated August 28, 2012
63 SEBI Circular CIR/MRD/DP/24/2012 dated September 11, 2012
64 SEBI Circular CIR/MRD/DP/DA/25/2012 dated September 21, 2012
65 SEBI Circular CIR/MRD/DP/27/2012 dated November 01, 2012
66 SEBI Circular SEBI/MIRSD/01/2013 dated January 04, 2013
67 SEBI Circular CIR/MIRSD/2/2013 dated January 24, 2013
68 SEBI Circular CIR/CFD/DIL/6/2013 dated March 01, 2013
69 SEBI Circular SEBI/MRD/DRMNP/26/2013 dated September 04, 2013
70 SEBI Circular CIR/MRD/DSA/32/2013 dated October 04, 2013
71 SEBI Circular SEBI/MIRSD/09/2013 dated October 08, 2013
72 SEBI Circular SEBI/MIRSD/ 12/2013 dated December 04, 2013
73 SEBI Circular SEBI/MRD/DOP/01/2014 dated January 07, 2014
74 SEBI Circular MRD/DMS/03/2014 dated January 21, 2014
75 SEBI Circular SEBI/MRD/DMS/05/2014 dated February 07, 2014
76 SEBI Circular CIR/MRD/DP/21/2014 dated July 01, 2014
77 SEBI Circular CIR/MRD/DP/22/2014 dated July 04, 2014
78 SEBI Circular CIR/MRD/DP/31/2014 dated November 12, 2014
299
S. No. Circular No.
79 SEBI Circular CIR/MRD/DSA/33/2014 dated December 09, 2014
80 SEBI Circular CIR/OIAE/1/2014 dated December 18, 2014
81 SEBI Circular CIR/MRD/DP/1/2015 dated January 12, 2015
82 SEBI Circular MIRSD/1/2015 dated March 04, 2015
83 SEBI Circular CIR/MRD/DP/10/2015 dated June 05, 2015
84 SEBI Circular CIR/MRD/DP/13/2015 dated July 06, 2015
85 SEBI Circular CIR/MIRSD/2/2015 dated August 26, 2015
86 SEBI Circular CIR/MRD/DP/18/2015 dated December 09, 2015
87 SEBI Circular CIR/MRD/DP/19/2015 dated December 09, 2015
88 SEBI Circular MRD/DSA/01/2016 dated January 01, 2016
89 SEBI Circular CIR/MIRSD/29/2016 dated January 22, 2016
90 SEBI Circular CIR/MIRSD/64/2016 dated July 12, 2016
91 SEBI Circular CIR/MIRSD/ 66/2016 dated July 21, 2016
SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26,
92
2016
93 SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2016/113 dated October 19, 2016
94 SEBI Circular CFD/DCR2/CIR/P/2016/131 dated December 09, 2016
95 SEBI Circular SEBI/HO/DMS/ CIR/P/2017/15 dated February 23, 2017
96 SEBI Circular SEBI/HO/MIRSD/MIRSD6/CIR/P/2017/20 dated March 10, 2017
97 SEBI Circular SEBI/HO/MRD/DP/CIR/P/2017/29 dated April 03, 2017
98 SEBI Circular SEBI/HO/MIRSD/MIRSD1/CIR/P/2017/38 dated May 02, 2017
99 SEBI Circular SEBI/HO/GSD/T&A/CIR/P/2017/42 dated May 16, 2017
100 SEBI Circular CIR/MRD/DP/56/2017 dated June14, 2017
101 SEBI Circular CIR/HO/MIRSD/MIRSD2/CIR/P/2017/59 dated June 15, 2017
102 SEBI Circular CIR/HO/MIRSD/MIRSD2/CIR/P/2017/64 dated June 22,2017
103 SEBI Circular CFD/CMD/CIR/P/2017/115 dated October 10, 2017
104 SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2018/1 dated January 29, 2018
105 SEBI Circular SEBI/HO/OIAE/IGRD/CIR/P/2018/58 dated March 26, 2018
106 SEBI Circular IMD/FPIC/CIR/P/2018/61 dated April 05, 2018
107 SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2018/138 dated November 01, 2018
SEBI Circular SEBI/ HO/ MIRSD/ DOS3/ CIR/ P/ 2018/ 140 dated November 13,
108
2018
109 SEBI Circular SEBI/HO/MIRSD/CIR/PB/2018/147 dated December 03, 2018
110 SEBI Circular CIR/MRD/CSC/148/2018 dated December 07, 2018
111 SEBI Circular CIR/MRD/CSC/151/2018 dated December 14, 2018
112 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2018/153 dated December 17, 2018
113 SEBI Circular CIR/MRD/DP/158/2018 dated December 27, 2018
114 SEBI Circular SEBI/HO/MIRSD/DOS2/CIR/P/2019/10 dated January 04, 2019
SEBI Circular SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/13 dated January 10,
115
2019
116 SEBI Circular SEBI/HO/MRD/DOP1/CIR/P/2019/24 dated January 31, 2019
300
S. No. Circular No.
SEBI Circular SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/26 dated February 5,
117
2019
118 SEBI Circular CIR/HO/MIRSD/DOS2/CIR/PB/2019/038 dated March 15, 2019
119 SEBI Circular MRD/DoP2DSA2/CIR/P/2019/51 dated April 10, 2019
120 SEBI Circular SEBI/MRD/CSC/CIR/P/2019/64 dated May 20, 2019
121 SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2019/67 dated May 22, 2019
122 SEBI Circular CIR/HO/MIRSD/DOP/CIR/P/2019/75 dated June 20, 2019
SEBI Circular SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/87 dated August 01,
123
2019
124 SEBI Circular SEBI/HO/OIAE/IGRD/CIR/P/2019/86 dated August 02, 2019
125 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2019/95 dated August 29, 2019
126 SEBI Circular SEBI/HO/MRD/DOP1/CIR/P/2019/106 dated October 10, 2019
127 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2019/109 dated October 15, 2019
128 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2019/123 dated November 05, 2019
SEBI Circular SEBI/HO/MIRSD/RTAMB/CIR/P/2019/122 dated November 05,
129
2019
130 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2019/136 dated November 15, 2019
SEBI Circular SEBI/HO/MRD2/DCAP/CIR/P/2019/146 dated November 28,
131
2019
132 SEBI Circular IMD/FPI&C/CIR/P/2020/07 dated January 16, 2020
133 SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2020/12 dated January 22, 2020
134 SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2020/13 dated January 22, 2020
135 SEBI Circular SEBI/HO/MRD/DDAP/CIR/P/2020/16 dated January 28, 2020
136 SEBI Circular IMD/FPI&C/CIR/P/2020/022 dated February 04, 2020
137 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/28 dated February 25, 2020
138 SEBI Circular SEBI/HO/MRD1/DSAP/CIR/P/2020/29 dated February 26, 2020
139 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/73 dated April 24, 2020
140 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/80 dated May 12, 2020
141 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/88 dated May 25, 2020
142 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/90 dated May 29, 2020
143 SEBI Circular SEBI/HO/MRD-1/CIR/P/2020/95 dated June 05, 2020
144 SEBI Circular SEBI/HO/MIRSD/DPIEA/CIR/P/2020/115 dated July 01, 2020
145 SEBI Circular SEBI/HO/MRD2/DDAP/CIR/P/2020/137 dated July 24, 2020
146 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/143 dated July 29, 2020
147 SEBI Circular SEBI/HO/CFD/CMD1/CIR/P/2020/144 dated July 31, 2020
148 SEBI Circular SEBI/HO/OIAE/IGRD/CIR/P/2020/152 dated August 13, 2020
149 SEBI Circular SEBI/HO/MRD2/DDAP/CIR/P/2020/153 dated August 18, 2020
150 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/158 dated August 27, 2020
151 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2020/167 dated September 08, 2020
152 SEBI Circular SEBI/HO/ISD/ISD/CIR/P/2020/168 dated September 09, 2020
153 SEBI Circular SEBI/HO/IMD/FPI&C/CIR/P/2020/177 dated September 21, 2020
301
S. No. Circular No.
154 SEBI Circular SEBI/HO/MRD/DCAP/CIR/P/2020/190 dated October 01, 2020
155 SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2020/242 dated December 09, 2020
SEBI Circular SEBI/HO/MRD2/DCAP/CIR/P/2020/243 dated December 18,
156
2020
157 SEBI Circular SEBI/HO/ITD/ITD/CIR/P/2021/16/2021 dated February 02, 2021
158 SEBI Circular SEBI/HO/MRD/DCAP/CIR/P/2021/23 dated March 03, 2021
159 SEBI Circular SEBI/HO/MIRSD/DOP/CIR/P/2021/31 dated March 10, 2021
160 SEBI Circular SEBI/HO/MRD1/DTCS/CIR/P/2021/33 dated March 22, 2021
161 SEBI Circular SEBI/HO/ITD/ITD/CIR/P/2021/575 dated June 14, 2021
162 SEBI Circular SEBI/HO/ISD/ISD/CIR/P/2021/578 dated June 16, 2021
163 SEBI Circular SEBI/HO/MRD1/DTCS/CIR/P/2021/590 dated July 05, 2021
164 SEBI Circular SEBI/HO/MIRSD/DOP/P/CIR/2021/595 dated July 16, 2021
165 SEBI Circular SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601 dated July 23, 2021
166 SEBI Circular SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/604 dated July 26, 2021
167 SEBI Circular SEBI/HO/MRD1/ICC1/CIR/P/2021/625 dated September 02, 2021
SEBI Circular SEBI/HO/MRD2/DCAP/P/CIR/2021/628 dated September 07,
168
2021
SEBI Circular SEBI/HO/IMD/IMD-IDOF5/P/CIR/2021/635 dated October 4,
169
2021
SEBI Circular SEBI/HO/MRD1/MRD1_ICC1/P/CIR/2021/664 dated November
170
23, 2021
SEBI Circular SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/23 dated
171
February 24, 2022
172 SEBI Circular SEBI/HO/CFD/DCR-3/P/CIR/2022/27 dated March 07, 2022
173 SEBI Circular SEBI/HO/MIRSD/DoP/P/CIR/2022/44 dated April 04, 2022
SEBI Circular SEBI/HO/MRD1/MRD1_DTCS/P/CIR/2022/58 dated May 02,
174
2022
SEBI Circular SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/65 dated May 18,
175
2022
SEBI Circular SEBI/HO/MRD1/MRD1_DTCS/P/CIR/2022/68 dated May 20,
176
2022
177 SEBI Circular SEBI/HO/MIRSD/DPIEA/P/CIR/2022/72 dated May 27, 2022
178 SEBI Circular SEBI/HO/MIRSD/TPD/P/CIR/2022/80 dated June 07, 2022
SEBI Circular SEBI/HO/MIRSD/ MIRSD_DPIEA/P/CIR/2022/83 dated June 20,
179
2022
180 SEBI Circular SEBI/HO/MIRSD/TPD/P/CIR/2022/93 dated June 30, 2022
181 SEBI Circular SEBI/HO/MRD1/ICC1/CIR/P/2022/94 dated July 04, 2022
182 SEBI Circular SEBI/HO/MIRSD/SEC-5/P/CIR/2022/99 dated July 20, 2022
183 SEBI Circular SEBI/HO/EFD1/EFD1_DRA4/P/CIR/2022/104 dated July 29, 2022
184 SEBI Circular SEBI/HO/ISD/ISD-SEC-4/P/CIR/2022/107 dated August 05, 2022
185 SEBI Circular SEBI/HO/MIRSD/DoP/P/CIR/2022/109 dated August 18, 2022
186 SEBI Circular SEBI/HO/MRD/DCAP/P/CIR/2022/110 dated August 19, 2022
302
S. No. Circular No.
SEBI Circular SEBI/HO/MRD/MRD-POD-2/P/CIR/2022/114 dated August 26,
187
2022
188 SEBI Circular SEBI/HO/MIRSD/DoP/P/CIR/2022/119 dated September 19, 2022
SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/137 dated October
189
06, 2022
190 SEBI Circular SEBI/HO/MIRSD/DoP/P/CIR/2022/143 dated October 27, 2022
SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/153 dated
191
November 11, 2022
SEBI Circular SEBI/HO/DDHS/RACPOD1/CIR/P/2023/0002 dated January 05,
192
2023
193 SEBI Circular SEBI/HO/MRD-TPD-1/CIR/P/2023/7 dated January 09, 2023
SEBI Circular SEBI/HO/MIRSD/SEC-5/P/CIR/2023/0026 dated February 08,
194
2023
SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/30 dated February
195
15, 2023
SEBI Circular SEBI/HO/ITD/ITD_VAPT/P/CIR/2023/032 dated February 22,
196
2023
197 SEBI Circular SEBI/HO/ITD/ITD_VAPT/P/CIR/2023/033 dated March 06, 2023
SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/37 dated March 16,
198
2023
SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/42 dated March 27,
199
2023
SEBI Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/45 dated March 28,
200
2023
201 SEBI Circular SEBI/HO/MRD/POD 3/CIR/P/2023/58 dated April 20, 2023
202 SEBI Circular SEBI/HO/MRD/TPD/P/CIR/2023/65 dated May 05, 2023
203 SEBI Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/81 dated May 30, 2023
204 SEBI Circular SEBI/HO/MRD/MRD-PoD-2/P/CIR/2023/99 dated June 23, 2023
205 SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/145 dated July 31, 2023
206 SEBI Circular SEBI/HO/MRD/TPD/P/CIR/2023/147 dated August 24, 2023
207 SEBI Circular SEBI/HO/MRD/TPD/P/CIR/2023/146 dated August 29, 2023
208 SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2023/191 dated December 20, 2023
SEBI Circular SEBI/HO/MRD-PoD-3/P/CIR/2023/190 dated December 19, 2023
209
on Principles of Financial Market Infrastructures (PFMIs)
SEBI Circular SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/18 dated March 20,2024
210 on Safeguards to address the concerns of the investors on transfer of securities in
dematerialized mode
SEBI Circular SEBI/HO/MRD/MRD-PoD-1/P/CIR/2024/66 dated May 29, 2024
211
on Investor Charter for Depositories and Depository Participants
SEBI Circular SEBI/HO/MRD-Pod2/CIR/P/2024/93 dated July 01, 2024 on
212
Dispatch of Consolidated Account Statement (CAS) for all securities assets
303
S. No. Circular No.
SEBI Circular SEBI/HO/MRD/MRD-PoD-3/2024/088 dated June 25, 2024
213 on Statutory Committees at Market Infrastructure Institutions (MIIs)
SEBI/HO/MRD/POD-III/CIR/P/2024/127 dated September 24, 2024 on
214
Parameters for Performance Evaluation of Market Infrastructure Institutions
215 SEBI Circular SEBI/HO/MRD/TPD-1/P/CIR/2024/119 dated September 12, 2024
216 SEBI Circular SEBI/HO/MRD/TPD-1/P/CIR/2024/124 dated September 20, 2024
217 SEBI/HO/MRD/TPD-1/P/CIR/2024/92 dated July 01, 2024
COMMUNICATIONS
S. No. Communication Detail
1 SEBI Letter SEBI SMDRP/NSDL/4615 /2000 dated March 13, 2000
2 SEBI Letter SMDRP/NSDL/26563/2001 dated April 10, 2001
3 SEBI Letter D&CC/ 1099 / 2002 dated November 01, 2002
4 SEBI Letter MRD/VSS/ARR/ 12255/2004 dated June 10, 2004
5 SEBI Letter MRD/DoP/ Dep/82334 /2006 dated December 14, 2006
6 SEBI Letter MRD/DEP/PP/123624 /2008 dated April 23, 2008
7 SEBI Letter MRD/DoP/MC/141442 /2008 dated October 17, 2008
8 SEBI Letter MRD/CDSL/VM/155773/2009 dated February 27, 2009,
9 SEBI Letter MRD/NSDL/VM/158886 /2009 dated March 30, 2009
10 SEBI Letter MRD/DoP/NSDL/VM/ 162378 /2009 dated May 06, 2009
11 SEBI Letter MRD/CDSL/VM/168989 /2009 dated July 07, 2009
12 SEBI Letter MRD/DoP/NSDL/VM/168994 /2009 dated July 07, 2009
13 SEBI Letter SEBI/MRD/DEP/VM/169784 /09 dated July 15, 2009
14 SEBI Letter MRD/DoP/MAS – OW/16723/2010 dated August 17, 2010
15 SEBI Letter MRD/DP/SG-OW/202/2012 dated January 4, 2012
16 SEBI Letter MRD/DP/SG-OW/203/2012 dated January 4, 2012
17 SEBI Letter MRD//DP/OW/23881/2015 dated August 24, 2015
18 SEBI Letter SEBI/HO/MRD/DP/OW/2016/25739/1 dated September 14, 2016
19 SEBI Letter SEBI/HO/MRD/DP/OW/2016/25740/1 dated September 14, 2016
20 SEBI Letter SEBI/HO/MRD/DSA/OW/P/2016/31948 dated November 24, 2016
21 SEBI Letter MRD/DSA1/OW/4946/2018 dated February 14, 2018
22 SEBI Letter MRD/DSA1/OW/4947/2018 dated February 14, 2018
SEBI Letter SEBI/HO/MRD/DSA/OW/P/2018/000005436/5 dated February 21,
23
2018
24 SEBI Letter MIRSD2/DB/AEA/OW/2018/7292 dated March 07, 2018
25 SEBI Letter SEBI/MRD/ICC/OW/P/2018/27066/1 dated September 25, 2018
SEBI Letter MRD/DoPII/DSAII/MIRSD/DOS3/OW/2018/28162/1 dated
26
October 22, 2018
27 SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/10055 dated April 22, 2019
304
S. No. Communication Detail
28 SEBI Letter MRD/DSA/OW/11447/2/2019 dated May 8, 2019
29 SEBI Letter SEBI/MIRSD/16742/2019 dated July 03, 2019
30 SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/22202/1 dated August 28, 2019
31 SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/28517/1 dated October 30, 2019
32 SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/28527/1 dated October 30, 2019
33 SEBI Letter MRD2/DDAP/OW/P/2020/19443/1 dated November 13, 2020
34 SEBI Letter SEBI/HO/MRD2/DDAP/OW/P/2021/1632/1 dated January 20, 2021
35 SEBI Letter MRD2/DDAP/OW/P/2021/8568/1 dated April 09, 2021
36 SEBI Letter SEBI/HO/MlRSD/DPlEA/OW/2021/10188/3 dated May 11, 2021
SEBI Letter SEBl/HO/MlRSD/DOP/OW/P/2021/37347/1 dated December 15,
37
2021
SEBI Letter SEBl/HO/MRD/SEC-2/P/OW/2023/00001730411 dated April 28,
38
2023
39 SEBI MIRSD Email dated January 16, 2015
40 SEBI CFD Email dated November 05, 2015
41 SEBI Email dated November 11, 2017
42 SEBI MRD email dated November 04, 2019
43 SEBI MRD email dated February 06, 2020
44 SEBI DDHS email dated February 20, 2020
45 SEBI MRD email dated May 18, 2020
46 SEBI MIRSD email dated April 16, 2021
47 SEBI MIRSD email dated July 15, 2021
48 SEBI Email dated January 31, 2022
49 SEBI MIRSD email dated March 02, 2022
50 SEBI Email dated September 12, 2022
51 SEBI Email dated December 28, 2022
52 SEBI Letter No. MRD/DoPII/DSAII/OW/2019/ 3662/1 dated February 07, 2019
305
SCHEDULE A
S. No. Circular / Communication No.
1 SEBI Circular SMD/POLICY/Cir-2/98 dated January 14, 1998
2 SEBI Circular SMDRP/Policy/Cir-9/99 dated May 6, 1999
3 SEBI Circular SMDRP/Policy/Cir-28/99 dated August 23, 1999
4 SEBI Circular SMDRP/Policy/Cir-29/99 dated August 23, 1999
5 SEBI Circular D&CC/FITTC/Cir-09/2002 dated July 4, 2002
6 SEBI Circular D&CC/FITTC/Cir-10/2002 dated September 25, 2002
7 SEBI Circular D&CC/FITTC/CIR - 12/2002 dated October 30, 2002
8 SEBI Circular D&CC/FITTC/Cir-15/2002 dated December 27, 2002
9 SEBI Circular D&CC/FITTC/CIR – 16/2002 dated December 31, 2002
10 SEBI Circular SEBI/MRD/Policy/AT/Cir- 19/2004 dated April 21, 2004
11 SEBI Circular MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004
12 SEBI Circular MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004
13 SEBI Circular MRD/DoP /SE/Dep/Cir-4/2005 dated January 28, 2005
14 SEBI Circular SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005
15 SEBI Circular MRD/DoP/Dep/Cir-22 /05 dated November 9, 2005
16 SEBI Circular SEBI/MRD/DEP/Cir-2/06 dated January 19, 2006
17 SEBI Circular SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006
18 SEBI Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006
19 SEBI Circular MRD/DoP/Dep/SE/Cir-13/06 dated September 26, 2006
20 SEBI Circular MRD/DoP/Dep/SE/Cir-17/06 dated October 27, 2006
21 SEBI Circular MRD/Dep/Cir- 20/06 dated December 11, 2006
22 SEBI Circular MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006
23 SEBI Circular MRD/DSA/SE/Dep/Cust/Cir-23/06 dated December 22, 2006
24 SEBI Circular SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007
25 SEBI Circular MRD/DoP/Cir-5/2007 dated April 27, 2007
26 SEBI Circular MRD/DoP/Cir-08/2007 dated June 25, 2007
27 SEBI Circular SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008
28 SEBI Circular MRD/DoP/Cir-20/2008 dated June 30, 2008
29 SEBI Circular MRD/DSA/SE/Dep/Cust/CIR-30/08 dated October 23, 2008
30 SEBI Circular MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009
31 SEBI Circular MRD/DoP/DEP/Cir 20/2009 dated December 9, 2009
32 SEBI Circular SEBI/MRD/ OIAE/ Dep/ Cir- 4/2010 dated January 29, 2010
33 SEBI Circular CIR/MRD/DMS/13/2010 dated April 23, 2010
34 SEBI Circular SEBI/MRD/ DP/ 19/2010 dated June 10, 2010
35 SEBI Circular MRD/DP/20/2010 dated July 1, 2010
36 SEBI Circular MRD/DP/22/2010 dated July 29, 2010
37 SEBI Circular CIR/MRD/DMS/28/2010 dated August 31, 2010
38 SEBI Circular CIR/MRD/DP/30/2010 dated September 06, 2010
39 SEBI Circular CIR/MRD/DP/37/2010 dated December 14, 2010
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S. No. Circular / Communication No.
40 SEBI Circular CIR/MRD/DP/4/2011 dated April 7, 2011
41 SEBI Circular CIR/MRD/ DP/05/2011 dated April 27, 2011
42 SEBI Circular CIR/MRD/ICC/16/2012 dated June 15, 2012
43 SEBI Circular CIR/MRD/DP/ 21 /2012 dated August 02, 2012
44 SEBI Circular CIR/MRD/DP/22/2012 dated August 27, 2012
45 SEBI Circular CIR/MRD/DP/24/2012 dated September 11, 2012
46 SEBI Circular CIR/MRD/DP/DA/25/2012 dated September 21, 2012
47 SEBI Circular CIR/MRD/DP/27/2012 dated November 01, 2012
48 SEBI Circular SEBI/MRD/DRMNP/26/2013 dated September 04, 2013
49 SEBI Circular CIR/MRD/DSA/32/2013 dated October 04, 2013
50 SEBI Circular SEBI/MRD/DOP/01/2014 dated January 07, 2014
51 SEBI Circular MRD/DMS/03/2014 dated January 21, 2014
52 SEBI Circular SEBI/MRD/DMS/05/2014 dated February 07, 2014
53 SEBI Circular CIR/MRD/DP/21/2014 dated July 01, 2014
54 SEBI Circular CIR/MRD/DP/22/2014 dated July 04, 2014
55 SEBI Circular CIR/MRD/DP/31/2014 dated November 12, 2014
56 SEBI Circular CIR/MRD/DSA/33/2014 dated December 09, 2014
57 SEBI Circular CIR/MRD/DP/1/2015 dated January 12, 2015
58 SEBI Circular CIR/MRD/DP/10/2015 dated June 05, 2015
59 SEBI Circular CIR/MRD/DP/13/2015 dated July 06, 2015
60 SEBI Circular CIR/MRD/DP/18/2015 dated December 09, 2015
61 SEBI Circular CIR/MRD/DP/19/2015 dated December 09, 2015
62 SEBI Circular MRD/DSA/01/2016 dated January 01, 2016
63 SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2016/113 dated October 19, 2016
64 SEBI Circular SEBI/HO/CDMRD/DMP/CIR/P/2016/1 dated December 16, 2016
65 SEBI Circular SEBI/HO/DMS/ CIR/P/2017/15 dated February 23, 2017
66 SEBI Circular SEBI/HO/MRD/DP/CIR/P/2017/29 dated April 03, 2017
67 SEBI Circular CIR/MRD/DP/56/2017 dated June14, 2017
68 SEBI Circular SEBI/HO/MRD/DSA/CIR/P/2018/1 dated January 29, 2018
69 SEBI Circular CIR/MRD/CSC/148/2018 dated December 07, 2018
70 SEBI Circular CIR/MRD/CSC/151/2018 dated December 14, 2018
71 SEBI Circular CIR/MRD/DP/158/2018 dated December 27, 2018
72 SEBI Circular SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/13 dated January 10, 2019
73 SEBI Circular SEBI/HO/MRD/DOP1/CIR/P/2019/24 dated January 31, 2019
SEBI Circular SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/26 dated February 5,
74
2019
75 SEBI Circular MRD/DoP2DSA2/CIR/P/2019/51 dated April 10, 2019
76 SEBI Circular SEBI/MRD/CSC/CIR/P/2019/64 dated May 20, 2019
77 SEBI Circular SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/87 dated August 01, 2019
78 SEBI Circular SEBI/HO/MRD/DOP1/CIR/P/2019/106 dated October 10, 2019
307
S. No. Circular / Communication No.
79 SEBI Circular SEBI/HO/MRD2/DCAP/CIR/P/2019/146 dated November 28, 2019
80 SEBI Circular SEBI/HO/MRD/DDAP/CIR/P/2020/16 dated January 28, 2020
81 SEBI Circular SEBI/HO/MRD1/DSAP/CIR/P/2020/29 dated February 26, 2020
82 SEBI Circular SEBI/HO/MRD-1/CIR/P/2020/95 dated June 05, 2020
83 SEBI Circular SEBI/HO/MRD2/DDAP/CIR/P/2020/137 dated July 24, 2020
84 SEBI Circular SEBI/HO/MRD2/DDAP/CIR/P/2020/153 dated August 18, 2020
85 SEBI Circular SEBI/HO/MRD/DCAP/CIR/P/2020/190 dated October 01, 2020
86 SEBI Circular SEBI/HO/MRD2/DCAP/CIR/P/2020/243 dated December 18, 2020
87 SEBI Circular SEBI/HO/MRD/DCAP/CIR/P/2021/23 dated March 03, 2021
88 SEBI Circular SEBI/HO/MRD1/DTCS/CIR/P/2021/33 dated March 22, 2021
89 SEBI Circular SEBI/HO/MRD1/DTCS/CIR/P/2021/590 dated July 05, 2021
90 SEBI Circular SEBI/HO/MRD1/ICC1/CIR/P/2021/625 dated September 02, 2021
91 SEBI Circular SEBI/HO/MRD2/DCAP/P/CIR/2021/628 dated September 07, 2021
SEBI Circular SEBI/HO/MRD1/MRD1_ICC1/P/CIR/2021/664 dated November
92
23, 2021
93 SEBI Circular SEBI/HO/MRD1/MRD1_DTCS/P/CIR/2022/58 dated May 02, 2022
94 SEBI Circular SEBI/HO/MRD1/MRD1_DTCS/P/CIR/2022/68 dated May 20, 2022
95 SEBI Circular SEBI/HO/MRD1/ICC1/CIR/P/2022/94 dated July 04, 2022
96 SEBI Circular SEBI/HO/MRD/DCAP/P/CIR/2022/110 dated August 19, 2022
SEBI Circular SEBI/HO/MRD/MRD-POD-2/P/CIR/2022/114 dated August 26,
97
2022
98 SEBI Circular SEBI/HO/MRD-TPD-1/CIR/P/2023/7 dated January 09, 2023
99 SEBI Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/45 dated March 28, 2023
100 SEBI Circular SEBI/HO/MRD/POD 3/CIR/P/2023/58 dated April 20, 2023
101 SEBI Circular SEBI/HO/MRD/TPD/P/CIR/2023/65 dated May 05, 2023
102 SEBI Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/81 dated May 30, 2023
103 SEBI Circular SEBI/HO/MRD/MRD-PoD-2/P/CIR/2023/99 dated June 23, 2023
104 SEBI Circular SEBI/HO/MRD/TPD/P/CIR/2023/147 dated August 24, 2023
105 SEBI Circular SEBI/HO/MRD/TPD/P/CIR/2023/146 dated August 29, 2023
106 SEBI Letter SEBI SMDRP/NSDL/4615 /2000 dated March 13, 2000
107 SEBI Letter SMDRP/NSDL/26563/2001 dated April 10, 2001
108 SEBI Letter D&CC/ 1099 / 2002 dated November 01, 2002
109 SEBI Letter MRD/VSS/ARR/ 12255/2004 dated June 10, 2004
110 SEBI Letter MRD/DoP/ Dep/82334 /2006 dated December 14, 2006
111 SEBI Letter MRD/DEP/PP/123624 /2008 dated April 23, 2008
112 SEBI Letter MRD/DoP/MC/141442 /2008 dated October 17, 2008
113 SEBI Letter MRD/CDSL/VM/155773/2009 dated February 27, 2009,
114 SEBI Letter MRD/NSDL/VM/158886 /2009 dated March 30, 2009
115 SEBI Letter MRD/DoP/NSDL/VM/ 162378 /2009 dated May 06, 2009
116 SEBI Letter MRD/CDSL/VM/168989 /2009 dated July 07, 2009
117 SEBI Letter MRD/DoP/NSDL/VM/168994 /2009 dated July 07, 2009
308
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118 SEBI Letter SEBI/MRD/DEP/VM/169784 /09 dated July 15, 2009
119 SEBI Letter MRD/DoP/MAS – OW/16723/2010 dated August 17, 2010
120 SEBI Letter MRD/DP/SG-OW/202/2012 dated January 4, 2012
121 SEBI Letter MRD/DP/SG-OW/203/2012 dated January 4, 2012
122 SEBI Letter MRD//DP/OW/23881/2015 dated August 24, 2015
123 SEBI Letter SEBI/HO/MRD/DP/OW/2016/25739/1 dated September 14, 2016
124 SEBI Letter SEBI/HO/MRD/DP/OW/2016/25740/1 dated September 14, 2016
125 SEBI Letter SEBI/HO/MRD/DSA/OW/P/2016/31948 dated November 24, 2016
126 SEBI Letter MRD/DSA1/OW/4946/2018 dated February 14, 2018
127 SEBI Letter MRD/DSA1/OW/4947/2018 dated February 14, 2018
128 SEBI Letter SEBI/HO/MRD/DSA/OW/P/2018/000005436/5 dated February 21,
2018
129 SEBI Letter SEBI/MRD/ICC/OW/P/2018/27066/1 dated September 25, 2018
130 SEBI Letter MRD/DoPII/DSAII/MIRSD/DOS3/OW/2018/28162/1 dated October
22, 2018
131 SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/10055 dated April 22, 2019
132 SEBI Letter MRD/DSA/OW/11447/2/2019 dated May 8, 2019
133 SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/22202/1 dated August 28, 2019
134 SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/28517/1 dated October 30, 2019
135 SEBI Letter SEBI/HO/MRD/CSC/OW/P/2019/28527/1 dated October 30, 2019
136 SEBI Letter MRD2/DDAP/OW/P/2020/19443/1 dated November 13, 2020
137 SEBI Letter SEBI/HO/MRD2/DDAP/OW/P/2021/1632/1 dated January 20, 2021
138 SEBI Letter MRD2/DDAP/OW/P/2021/8568/1 dated April 09, 2021
139 SEBI Letter SEBl/HO/MRD/SEC-2/P/OW/2023/00001730411 dated April 28, 2023
140 SEBI MRD Email dated November 11, 2017
141 SEBI MRD Email dated November 04, 2019
142 SEBI MRD Email dated February 06, 2020
143 SEBI MRD Email dated May 18, 2020
144 SEBI MRD Email dated January 31, 2022
145 SEBI MRD Email dated September 12, 2022
146 SEBI MRD Email dated December 28, 2022
147 SEBI Circular SEBI/HO/CDMRD/DMP/CIR/P/2016/137 dated December 16,
2016
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