Unique client code - SEBI - SMDRP/Policy/CIR-39/2001

Circulars SECURITIES AND EXCHANGE BOARD OF INDIA SECONDARY MARKET DEPARTMENT Mittal Court, B Wing, First Floor, 224, Nariman Point, Mumbai 400 021 SMDRP/Policy/CIR-39/2001 July 18, 2001 The Executive Director / Managing Director of all the Stock Exchanges Sir/Madam, Sub:- Unique client code Pursuant to the discussions in the meeting of the Group on Risk Management Systems for the Equity Markets held on May 02, 2001, it was decided that every investor should have a unique ID. In this regard, it will be mandatory for all brokers to use unique client codes for all clients. For this purpose, brokers shall collect and maintain in their back office the Permanent Account Number (PAN) allotted by Income Tax Department for all their clients. Sub-brokers will similarly maintain for their clients. Where an individual client does not have PAN number, such a client shall be required to give a declaration to that effect. In such an event, until the PAN number is allotted such client shall furnish passport number and place date of issue. Where the client does not have a PAN number or a passport, such client shall furnish driving licence number, place date of issue. If none of the above are available, the client shall give his voter ID number. The above requirement shall be applicable for clients having order value of ₹ 1 lakh or more and shall be enforced w.e.f. August 01, 2001. In the case of other entities, the following procedure shall be adopted : 1. For FIIs, (where FII, itself is the investing entity) and their sub-accounts, SEBI registration number for FIIs and sub-account shall be used until the PAN No. is allotted. 2. For tax paying body corporates, the unique registration number issued by the relevant regulatory authority shall be used till the time the PAN is allotted. Regulatory authorities may be Department of Company Affairs, Securities and Exchange Board of India, Reserve Bank of India, Insurance Regulatory Development Authority, etc. 3. For non-tax paying entities other that mutual funds, such as societies, charitable trusts etc. the unique registration no. allotted by the relevant regulating authority of these entities shall be used until the PAN number is allotted 4. For mutual funds SEBI would be issuing an ID no. for schemes both past one and the new ones. This number would be used in the schemes along with the mutual funds. 5. Brokers shall verify the documents with respect to the unique code and retain a copy of the document. 6. The brokers shall also be required to furnish the above particulars of their clients to the stock exchanges/clearing corporations and the same would be updated every quarter. 7. The stock exchanges shall be required to maintain a database of client details submitted by brokers. Historical records of all quarterly submissions shall be maintained for a period of seven years by the exchanges. The Exchanges are advised to direct members to include a new clause no. 7 as given below in the format of the Member-Client Agreement prescribed by our earlier circular dated April 11, 1997 as given below:- The member hereby undertakes to maintain, the details of the client as mentioned in the client registration form or any other information pertaining to the client, in confidence and that he shall not disclose the same to any person / entity except as required under the law, with prior intimation to SEBI. The Exchanges are also advised that the following clause be made a part of the bye-laws, rules, regulations of the Exchange:- The Stock Exchange shall maintain the details of the clients of the members in confidence and that it shall not disclose to any person / entity such details of the client as mentioned in the client registration form or any other information pertaining to the client except as required under the law or by any authority. Further the brokers shall maintain and preserve for a period of seven years a mapping of client IDs used at the time of order entry in the trading system with those unique client IDs along with client name, address and other particulars given in the Know Your Client form. The Stock Exchanges shall ensure that all the brokers comply with the above requirements. Yours faithfully, P K Kuriachen General Manager Secondary Market Depository, Research Publications Department e-mail : [email protected]