9911796707
TMI BlogMaster Circular for DepositoriesX X X X Extracts X X X X X X X X Extracts X X X X ..... arifications with regard to KYC requirement for eligible Foreign Investors 1.1.6 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 (DP-BO Rights and Obligation Document) 1.4 Opening of demat account in case of HUF 1.5 Operation of minor's demat account 1.6 Facility for a Basic Services Demat Account (BSDA) 1.7 Change of Name in the Beneficial Owner (BO) Account 1.8 Fees/Charges to be paid by BO 1.9 Safeguards on transfer of securities in dematerialized mode 1.10 Delivery Instruction Slip (DIS) Issuance and Processing 1.11 Transmission of shares 1.12 SMS alerts for demat accounts operated by Power of Attorney 1.13 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 1.14 Discontinuation of sending transaction statements by depository participants to clients 1.15 Exemption to Depository Participants (DPs) from providing hard copies of transaction statements to BOs 1.16 Transfer of funds and securities fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed form by Stock Broker DPs 4.16 Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS) 4.17 Principles of Financial Market Infrastructures (PFMIs) 4.18 Annual System Audit of Depositories 4.19 Guidelines for Business Continuity Plan (BCP) and Disaster Recovery (DR) 4.20 (Information Technology) IT Governance For Depositories 4.21 Guidelines for inspection of Depository Participants (DPs) by Depositories 4.22 Activity of Demat of warehouse receipts 4.23 Voting rights in respect of securities held in pool account 4.24 Risk Management Policy at the Depositories 4.25 Outsourcing by Depositories 4.26 Cyber Security and Cyber Resilience framework of Depositories 4.27 Database for Distinctive Number (DN) of Shares 4.28 Ticker on Website - For Investor awareness 4.29 Separate mobile number/ email id for the clients of Depository Participants (DPs) SCHEDULE List of Circulars & Communications Section 1: Beneficial Owner (BO) Accounts 1.1 Opening of BO Account by non body corporates 1.1.1 Proof of Identity (PoI) i. Permanent Account Number (PAN) to be the sole identification number for all transactions in the securities market Reference: Circular MRD/DoP/Cir-5/2007 dated April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the PAN card. Reference: Circular SEBI/MIRSD/01/2013 dated January 04, 2013 1.1.2 Proof of Address (PoA) Reference: Circular MIRSD/SE/Cir-21/2011 dated October 05, 2011 List of documents admissible as Proof of Address: (*Documents having an expiry date should be valid on the date of submission.) a. Passport/ Voters Identity Card/ Ration Card/ Registered Lease or Sale Agreement of Residence/ Driving License/ Flat Maintenance bill/ Insurance Copy. b. Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill - Not more than 3 months old. c. Bank Account Statement/Passbook -- Not more than 3 months old. d. Self-declaration by High Court and Supreme Court judges, giving the new address in respect of their own accounts. e. 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. f. Identity card/document with address, issued by any of the following: Central/State Government and its Departments, Statutory/Regulator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the requirement of submission of 'proof of address' is as follows: a. 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. b. 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. 1.1.5 Clarifications with regard to KYC requirement for eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular dated October 5, 2011 or authorised signatories as mentioned at point 1 above may be adequate in lieu of the passport copy. 5. For foreign entities, CIN is optional; and in the absence of DIN no. for the directors their passport copy should be given. CIN no. is provided as an example and requires the client's registration number in its respective country. If the foreign entity does not have CIN, the equivalent registration number of the entity may be mentioned. If it does not have any registration number, then SEBI Registration number may be mentioned. In case the directors (as per point 3 above), of the client do not have an equivalent of DIN in the client's respective jurisdiction, "Not Applicable" may be stated. Copy of the Passport may not be provided. 6. It shall be mandatory for all the Intermediaries addressed in this circular to carry out In person verification of their clients. In person verification is not applicable for a non-individual Client. In case of QFI - Individual Client, IPV shall be carried out by SEBI registered intermediary as per SEBI Circular dated August 22, 2011. 7. Copies of all the documents submitted by the applicant should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate copy with the originals or with the details available on SEBI website and provide duly certified copy of such verified SEBI registration certificate to the intermediary. 11. Every client has to provide the trading account related details, as required by Annexure 3 to the SEBI circular dated August 22, 2011. Annexure 3 to the circular dated August 22, 2012 pertaining to trading account related details is not applicable for FIIs and Sub Accounts. However, Intermediaries are required to update details of any action taken or proceedings initiated against the entity by the foreign regulators or SEBI/ Stock exchanges. For QFI, the intermediary shall collect the following details from Annexure 3: * Bank Account details * Depository account * Regulatory Actions as mentioned above 12. Intermediary shall provide a set of all the executed documents to the client, free of charge. Intermediary shall display these standard documents prescribed by SEBI on its web site, intimate the clients regarding the link and email a copy of the same to the client. 13. Place of incorporation If place of incorporation is not available, Intermediary should take Registered office address/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Required Required Board Resolution Exempt Required Required KYC Form Required Required Required Senior Management (Whole Time Directors/ Partners/ Trustees/ etc.) List Required Required Required Proof Of Identity Exempt Exempt Entity declares on letterhead - full name, nationality and DoB OR Photo-identity proof' Proof of Address Exempt Exempt Declaration on letter head Photographs Exempt Exempt Exempt Authorized Signatories List & Signatures Required - List of Global Custodian ('GC') signatories can be given in case of POA to GC Required - List of GC signatories can be given in case of POA to GC Required Proof Of Identity Not required Not required Not required Proof of Address Not required Not required Not required Photographs Not required Not required required Ultimate Beneficial Owner ('UBO') List Exempt required - Can declare "no UBO over 25%" required Proof Of Identity Exempt Exempt Required Proof of Address Exempt Exempt Exempt Photographs Exempt Exempt Exempt 1.1.6 Acceptance of third party address as correspondence address Reference: Circular CIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accounts. Reference: Hon'ble High Court of Sikkim judgment dated March 31, 2006 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/ filling tax returns in India Reference Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006 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 FIIs/Institutional Clients Reference Circular MRD/DoP/Dep/SE/Cir-13/06 dated September 26, 2006 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, FIIs, MFs, VCFs, FVCIs, Scheduled Commercial Banks, Multilateral and Bilateral Development Financial Institutions, State Industrial Development Corporations, Insurance Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he is required to affix at present on a number of pages. iii. The Depository Participant shall provide a copy of Rights and Obligations Document to the beneficial owner 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. ANNEXURE Rights and Obligations of Beneficial Owner and Depository Participant as prescribed by SEBI and Depositories General Clause 1. The Beneficial Owner and the Depository participant (DP) shall be bound by the provisions of the Depositories Act, 1996, SEBI (Depositories and Participants) Regulations, 1996, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver 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, SEBI (Depositories and Participants) Regulations, 1996 and Bye-Laws/Operating Instructions/Busines Rules of the Depositories. Transfer of Securities 11. The DP shall effect transfer to and from the demat accounts of the Beneficial Owner only on the basis of an order, instruction, direction or mandate duly authorized by the Beneficial Owner and the DP shall maintain the original documents and the audit trail of such authorizations. 12. The Beneficial Owner 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 beneficial owner in such form and manner and at such time as agreed with the Beneficial Owner and as specified by SEBI/depository in this regard. 14. However, if there is no transaction in the demat account, or if the balance has become Nil during the year, the DP shall send one physical statement of holding annually to suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amounts as provided in Clause 5&6 specified above, the DP after giving two days notice to the Beneficial Owner shall have the right to stop processing of instructions of the Beneficial Owner 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 beneficial owner due to the negligence of the depository or the participant, the depository shall indemnify such beneficial owner. b. Where the loss due to the negligence of the participant under Clause (1) 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 Beneficial Owner 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. 23. The DP or the Depository shall have the right to freeze/defreeze the accounts of the Beneficial Owners on receipt of instructions re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties mentioned in this document. 1.4 Opening of demat account in case of HUF Reference: SEBI/ MRD/CDSL/ 149156 /2009 dated January 01, 2009 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. 1.5 Operation of minor's demat account Reference: SMDRP/NSDL/4615 /2000 dated March 13, 2000 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 nor the Sale of Goods Act 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the last traded price may be taken into account and for unlisted securities other than units of mutual funds, face value may be taken in to account. The value of suspended securities may not be considered for the purpose of determining eligibility of demat account as BSDA. iii. If the value of holding in such BSDA exceeds the prescribed criteria at any date, the DPs may levy charges as applicable to regular accounts (non BSDA) from that date onwards. iv. The DPs shall assess the eligibility of the BOs at the end of the current billing cycle and convert eligible demat accounts into BSDA. 1.6.5 Services for Basic Services Demat Accounts: i. Transaction statements: a. Transaction statements shall be sent to the BO at the end of each quarter. If there are no transactions in any quarter, no transaction statement may be sent for that quarter. b. If there are no transactions and no security balance in an account, then no further transaction statement needs to be provided. c. Transaction statement shall be required to be provided for the quarter in which the account became a zero balance account. ii. Holding Statement: a. DP shall send atleast one annual physical statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber 01, 2012 1.7.1 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. iii. In case of change in father's name: Publication of name change in official gazette. 1.7.2 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. 1.8 Fees/Charges to be paid by BO 1.8.1 Account opening, custody and credit of securities Reference Circular MRD/DoP /SE/Dep/Cir-4/2005 dated January 28, 2005 With effect from February 1, 2005 i. No investor shall pay any charge towards opening of a Beneficial Owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collect quarterly/ monthly AMC. 1.8.6 Dissemination of tariff/charge structure of DPs on the website of depositories Reference Circular MRD/Dep/Cir- 20/06 dated December 11, 2006 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. 1.9 Safeguards to address the concerns of the investors on transfer of securities in dematerialized mode Reference Circular SEBI/MRD/Dep/Cir-03/2007 dated February 13, 2007 and Circular SEBI/MRD/Dep/Cir-03/2008 dated February 28, 2008 Following safeguards shall be put in place to address the concerns of the investors arising out of transfer of securities from the BO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... azetted officer or Family Settlement Deed as an alternate to the NOC duly executed by all the legal heirs of the deceased Beneficial Owner, provided that: a. The Family Settlement Deed clearly vests the securities in favour of the person seeking transmission in his/ her name. b. Vesting of securities in favour of the person seeking transmission in his/ her name is not contingent upon any other onerous conditions in such Family Settlement Deed. Note: If the division of shares as per the Family Settlement Deed is amongst more than one person, then the Family Settlement Deed can be considered as an NOC for transmission of shares to each legal heirs applying for transmission. However, if DPs still have problems in comprehending the contents of the Family Settlement Deed, they should refer the matter to Depositories for necessary advice on case-to-case basis. 1.11.2 DP(s) shall automatically open new account in the name of the surviving members(s), in the same order as in the original account, on an application by the surviving member(s) based on existing documents required as per the KYC norms. Submission of new account opening form shall not be insisted upon. 1.11.3 A uniform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the securities ii. For value of securities upto ₹ 2,00,000 (Rupees Two lakh only) per issuer company as on date of application, one or more of the following documents: a. No objection certificate [NOC] from all legal heir(s) who do not object to such transmission (or) copy of Family Settlement Deed duly notarized or attested by a Gazetted Officer and executed by all the legal heirs of the deceased holder. b. Indemnity made on appropriate non judicial stamp paper - indemnifying the STA/Issuer Company. iii. For value of securities more than ₹ 2,00,000 (Rupees Two lakh only) per issuer company as on date of application: a. Succession certificate (or) Probate of will (or) Letter of Administration (or) Court decree. End of Annexure A 1.12 SMS alerts for demat accounts operated by Power of Attorney Reference: SEBI/MRD/DEP/VM/169784 /09 dated July 15, 2009 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, foreign nationals, and NRIs. 1.13 Exemption from sending quarterly statements of transactions by depository participants (DPs) to clients in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the stipulated procedure, the dispatch of transaction statements is 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. 1.15 Exemption to Depository Participants (DPs) from providing hard copies of transaction statements to BOs Reference Circular MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004 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 43 of SEBI (Depositories & Participants) Regulations, 1996; if the BO is still desirous of receiving statements in hard copy, DPs shall be duty bound to provide the same. 1.16 Transfer of funds and securities from Clearing Member pool account to BO Account Reference Circular SMDRP/Policy/Cir-05/2001 dated February 1, 2001 & Circular SEBI/MRD/Policy/AT/Cir-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt 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. iii. 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 SEBI (Mutual Funds) Regulations. iv. 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 and dispatch the CAS to the investor. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hared by the AMC/MF-RTA with the depository. xii. If there is any transaction in any of the demat accounts of the investor or in any of his mutual fund folios, then CAS shall be sent to that investor on monthly basis. In case there is no transaction in any of the mutual fund folios and demat accounts then CAS with holding details shall be sent to the investor on half yearly basis. However, in case of demat accounts with nil balance and no transactions in securities and in mutual fund folios, the requirement to send physical statement shall be applicable as specified at para 1.6.5 and 1.6.6 of this chapter. xiii. 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. xiv. The dispatch of CAS by the depositories to BOs would constitute compliance by the Depository Participants with requirement under Regulation 43 of SEBI (Depositories and Participants) Regulations, to provide statements of account to the BOs as also compliance by the MFs with the requirement under Regulation 36(4) of SEBI (Mutual Funds) Regulations. Section 2: Depository Participants Related 2.1 Supervision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 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. iv. 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. v. The incentive scheme may be reviewed after a period of two years. 2.3 Implementation of the Multilateral Competent Authority Agreement and Foreign Account Tax Compliance Act Circular No. CIR/MIRSD/2/2015 dated August 26, 2015 i. It is brought to the attention of all the intermediaries that India has joined the multilateral competent Authority Agreement (MCAA) on Automatic Exchange of Financial Account Information on June 3, 2015. In terms of the MCAA, all coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting offer documents (debentures and bonds) * Delisting of Securities * Buyback of Securities * Takeover and Restructuring * Corporate Governance and Listing conditions Brokers and stock exchanges * Stock Brokers * Sub brokers * Portfolio managers * · Stock exchanges Registrar and Transfer Agents Other entities Collective Investment Schemes Debenture Trustees Merchant Bankers Bankers to Issue Credit Rating Agencies Custodian of Securities Foreign Institutional Investors Underwriters Venture Capital Funds KYC Registration Agency(KRA) Alternative Investment Fund Mutual Funds Depository and Depository Participants Information to SEBI: * Price Manipulation * Insider trading You can file your complaints online at http://scores.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 (http://scores.gov.in) * SEBI, Northern Regional Office, 5th Floor, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02, 2012 i. 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 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. Reference Circular CIR/MRD/DP/24/2012 dated September 11, 2012 ii. 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 preexisting ISIN for the said security. Thereafter, the additional securities shall be available for trading. iii. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002 and Circular MRD/DoP/SE/Dep/Cir-36/04 dated October 27, 2004 Debt instruments shall necessarily be admitted on both the Depositories. 3.5 American Depository Receipts (ADRs) / Global Depository Receipts (GDRs) 3.5.1 Delivery of underlying shares of GDRs/ADRs in dematerialised form Reference Circular SMDRP/Policy/Cir-9/99 dated May 6, 1999 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/ADRs Reference Circular D&CC/FITTC/Cir-09/2002 dated July 4, 2002 and Circular D&CC/FITTC/Cir-10/2002 dated September 25, 2002 To ensure easy tracking of the underlying shares released on conversion of the "depositories receipts" al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat correct account particulars of investors are available in the database of depositories. 3.7 Withdrawal by issuers from the depository Reference: MRD/DoP/NSDL/VM/ 162378 /2009 dated May 06, 2009 i. 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. ii. 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 3.8 Further issue of shares under Section 86 of Companies Act and Companies (Issue of Share capital with Differential Voting Rights) Rules, 2001 Reference: MRD/DoP/MC/141442 /2008 dated October 17, 2008 In all cases of shares issued by companies under Section 86(a) (ii) of Companies Act and Companies (Issue of Share Capital with Differential Voting Rights) Rules, 2001, separate ISIN may be allotted to differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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. i. 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. ii. 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. iii. 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. iv. The Stock Exchanges/Depositories shall follow a strict time schedule to ensure that the settlements are completed on the same day. v. The Clearing Corporation/Clearing House of the Stock Exchanges shall execute Auto DO f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification and need for forwarding the same to SEBI, indicating whether it forms a part of any Bye Law/ Rule/ Regulation. ii. 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. 4.5 Preservation of Records Reference Circular SEBI/MRD/DEP/Cir-24/05 dated December 22, 2005, circular SEBI/MRD/SE/Cir-16/2005 dated August 04, 2005 and circular MRD/DoP/DEP/Cir-20/2009 dated December 9, 2009 i. Depositories and Depository Participants are required to preserve the records and documents for a minimum period of 5 year. ii. 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. 4.6 Pledge of Shares through depository system Reference: MRD/DoP/MAS - OW/16723/2010 dated August 17, 2010 i. Section 12 of the Depositories Act and Regulation 58 of the SEBI (Depositori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -centric. 4.9 Designated e-mail ID for redressal of investor complaints Reference Circular MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006 i. Depositories and registered DPs shall designate an exclusive e-mail ID for the grievance redressal division/compliance officer exclusively for registering investor complaints. ii. 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. 4.10 Redressal of complaints against Stock Exchanges (SEs) and Depositories through SEBI Complaints Redress System (SCORES). Reference Circular CIR/MRD/ICC/16/2012 dated June 15, 2012 i. The complaints received by SEBI against SEs and 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. ii. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DPS during 2008-09 iii. Report 1C: Redressal of Complaints received against DPs during 2009-10 iv. Report 2A: Details of Arbitration Proceedings (where Investor is a party) during 2008-09: v. Report 2B: Details of Arbitration Proceedings (where Investor is a party) during 2009-10 vi. Report 3A: Penal Actions against DPs during 2008-09 vii. Report 3B: Penal Actions against DPs during 2009-10 viii. Report 4A: Redressal of Complaints lodged by investors against Listed Companies during 2008 -09 ix. Report 4B: Redressal of Complaints lodged by investors against Listed Companies during 2009 -10 Report 1A: Complaints received against Depository Participants (DPs)# during 2009-10: Updated on mmm dd yyyy (to be updated weekly) (In excel sheet) Sl. No. Details of Complaint Status of Complaint Date of Receipt Name of Complainant Type of Complaint* SEBI Ref. No. (if applicable Name of DP Status** Status Date## Date of Filing Arbitration Name of Arbitrator(s) Date of 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total (In case of panel of arbitrators, the cases / awards would appear against every member of the panel) (Arrange the arbitrators in descending number of awards passed by them during the period) Report 2B: Details of Arbitration Proceedings (where BO is a party) during 2009-10: Updated on mmm dd yyyy (to be updated every quarter) (In excel sheet) Sl. No. Name of Arbitrator No. of Awards Passed No. of Awards in favor of BOs No. of Awards appealed No. of Awards Implemented No. of cases pending for redressal at the end of period Filed by DP Filed by BO Pending For more than 6 months For more than 3 months, but less than 6 months 1 2 3 N Total (In case of panel of arbitrators, the cases / awards would appear against every member of the panel) (Arrange the arbitrators in descending number of awards passed by them during the period) Report 3A: Penal Actions against Depository Participants (DPs) during 2008-09: Updated on mmm dd yyyy (to be updated every quarter) (in excel sheet) Sl. No. Name of DP Registration No. No. of Complaints received Action against DP, its authorized person and employees together No. of Penal Orders issued Monetary Penalties levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stence on Power of Attorney in its favour IV b Deactivation/ Freezing/ Suspension related IV c Defreezing related IV d Transmission Related 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 IX b Action - Non-Cash IX c Initial Public Offer/ Follow-on Public Offer Related Type X Others ** Status Type Description I I a I b I c Non actionable Complaint incomplete Outside th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate and convey automatic alerts to those SBDPs that reach a pre-determined level of exposure. These alerts would serve as forewarnings to the SBDPs to the fact that they are approaching their respective maximum exposure limits. [Note: For this purpose, the depositories may monitor the value of securities with its SBDPs on an "end of the day" basis.] Reference: MRD/DRK/SU/16034/2003 dated August 22, 2003 4.16 Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS) Reference Circular CIR/MRD/DP/32/201 dated December 06, 2012 i. Vide notification 51/2012 dated November 23, 2012, Department of Revenue, Ministry of Finance (MoF) has notified the Rajiv Gandhi Equity Savings Scheme (RGESS), 2012. The notification is available on the website of Income Tax Department under section "Notifications". ii. With regard to implementation of the MoF notification, the following is clarified: a. For RGESS eligible close-ended Mutual Funds schemes, advice given by AMCs to the depository for extinguishment of units of close ended schemes upon maturity of the scheme shall be considered as settled through depository mechanism and therefore RGESS compliant. b. AMCs shall disclose that the conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he compliance status of RGESS demat account shall not change. (ii) Voluntary corporate actions: In case of corporate actions where investors has the option to exercise his choice and thereby result in debit of securities, for example: buy-back, etc, the same shall be considered as a sale transaction for the purpose of the scheme. Consolidated list of 'corporate actions'. Sr. No. Corporate Action Classification (Involuntary or Voluntary) 1 Amalgamation Involuntary 2 Scheme of Arrangement Involuntary 3 Reduction of Capital Involuntary 4 Bonus issue Involuntary 5 Buy Back of Shares Voluntary (Involuntary in case of court intervention) 6 Stock Split Involuntary 7 Consolidation of Shares Involuntary 8 Conversion of Partly Paid up Involuntary 9 Dividend [Final/ Interim/ Special] Involuntary 10 Exchange of Share Certificate [Name change] Involuntary 11 Rights Issue Voluntary 12 Conversion (compulsory)* Involuntary 13 Conversion (optionally)* Involuntary 14 Redemption Involuntary (voluntary, if there is option to continue with revised terms) 15 Dividend on Mutual Fund Involuntary 16 Redemption of Mutual Fund Involuntary on maturity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Counterparty (CCP), Central Securities Depository (CSD)/ Securities Settlement System (SSS), Payment and Settlement systems, 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 - a. Enhance safety and efficiency in payment, clearing, settlement, and recording arrangements, b. Reduce systemic risk. c. Foster transparency and financial stability and d. Promote protection of participants and investors. v. Financial Market Infrastructure (FMI) are critically important institutions responsible for providing clearing, settlement and recording of monetary and other financial transactions. The different categories of FMIs, as identified under PFMIs, are listed below - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 settlement of payment obligations, electronic novation and affirmation, portfolio compression and reconciliation, and collateral. Adoption of Principles of Financial Market Infrastructures vi. All CPSS and IOSCO members are required to strive to adopt the PFMIs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 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 confiden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fulfillme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard of the depositories and the system audit report along with comments of depositories should be communicated to SEBI. Further, along with the audit report, depositories are advised to submit a declaration from the MD / CEO certifying the security and integrity of their IT Systems. Annexure System Audit Framework Audit Process Following steps would be repeated annually to ensure that the process is comprehensive & effective: 1. The Audit shall be conducted according to the Norms, Terms of References (TOR) and Guidelines issued by SEBI. 2. Stock Exchange / Depository (Auditee) may negotiate and the board of the Stock Exchange / Depository shall appoint the Auditors based on the prescribed Auditor Selection Norms and TOR. The Auditors can perform a maximum of 3 successive audits. The proposal from Auditor must be submitted to SEBI for records. 3. Audit schedule shall be submitted to SEBI at-least 2 months in advance, along with scope of current audit & previous audit. 4. The scope of the Audit may be extended by SEBI, considering the changes which have taken place during last year or post previous audit report 5. Audit has to be conducted and the Audit report be submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts previous auditees, which fall under SEBI's jurisdiction, which point to its incompetence and/or unsuitability to perform the audit task. Terms of Reference (ToR) 1. General Controls for Data Center Facilities - It must include > Application access - Segregation of duties, Database & Application access etc. > Maintenance access - Vendor engineers. > Physical access - Permissions, logging, exception reporting & alerts. > Environmental controls - Fire protection, AC monitoring etc. > Fault resolution mechanism. >Folder sharing and Back-up controls - Safeguard critical information on local desktops > Incidences of violations in last year & corrective actions taken 2. Software Change Control - It must include > User awareness > Processing of new feature request > Fault reporting / tracking mechanism & process for resolutions > Testing of New releases / Bug-fixes - Testing process (automation level) > Version Control - History, Change Management process etc. > Development / Test/ Production environment - Segregation > New release in Production - Promotion, Release note approvals > Production issues / disruptions reported during last year & corrective actions take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Equipment, Media, etc. 11. Entity Specific Software 12. Any other Item > Electronic Waste Disposal > Based upon previous Audit report as well as any other specific information given by SEBI Audit Report Guidelines The Audit report should have explicit coverage of each Major Area mentioned in the TOR, indicating any Nonconformity (NCs) or Observations (or lack of it). For each section - auditors should also provide qualitative input about ways to improve the process, based upon the best practices observed. The report should also include tabulated data to show NCs / Observations for each Major Area in TOR. Fully detailed report should be submitted, along with an Executive Summary in tabulated form including following information: Issue Log Column Heading Description Responsibility Major Area Major area/relevant clause in Terms of Reference against which compliance is being audited Auditor Description of Finding/ Observation Describe the findings in sufficient detail, referencing any accompanying evidence (e.g. procedure annual, interview notes, reports etc.) Auditor Reference Reference to the section in detailed report - where full background information about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have one to one correspondence between them. b) Exchanges / Depositories should have Recovery Time Objective (RTO) and Recovery Point Objective (RPO) not more than 4 hours and 30 minutes, respectively. c) Solution architecture of PDC and DRS / NS should ensure high availability, fault tolerance, no single point of failure, zero data loss, and data and transaction integrity. d) 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. e) 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. f) Replication between PDC and NS should be synchronous to ensure zero data loss. Whereas the one between PDC and DR and between NS and DR may be asynchronous. g) Adequate resources (with appropriate training and experience) should be available at all times to handle operations on a regular basis as well as during disasters. vi. DR Drills / Testing a) DR drills should be conducted on quarterly basis. In case of exchanges, these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly having no trading on their own platforms, will be required to comply with these guidelines before recommencement of trading on their own platforms in terms of Circular No. MRD/DSA/SE/Cir-12/09 dated October 07, 2009. 4.20 (Information Technology) IT Governance For Depositories Reference: MRD/DMS/03/2014 dated January 21, 2014 i. 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. ii. Depositories shall formulate an IT strategy committee at the Board level of depository to provide insight and advice to the Board in various areas that may include: a. Developments in IT from a business perspective. b. The alignment of IT with the business direction. c. The availability of IT resources to meet strategic objectives. d. Competitive aspects of IT Investments. e. Alignment of the IT architecture to the organization needs and its approval. f. Setting priorities and milestones. iii. Depositories shall formulate an executive level IT Steering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... score of DPs, depositories shall be guided by "DP Rating Model / Categorization" as mentioned at Annexure - III. vi. 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. 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 q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / 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 E.5. Procedure for Loose DIS E.6. Depository sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be in the ratio of 1/3 and 2/3. * DIS issuance sample size shall be 5% of the total samples verified for DIS. 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. Sample Size for inspection area of 'Client Data Modification', 'Miscellaneous areas' and 'Other depository specific requirements' * Base Sample Size * Address change = 50 * Samples from Urban, Semi Urban and Rural Areas shall be equally represented if available. * Nomination Change = 25 * Signature change = 100 * Addition / Deletion / Modification of POA = 100 * Freeze / Unfreeze = 50 * Bank Details Change = 100 * PAN modification = 100 * Account closure initiated by clients = 25 * Closure initiated by DPs = 25 * Demat rejection = 30 * Transactions = 25 * Change in e-mail Id = 25 * Change in mobile number = 25 * Change in SMS flag = 50 * Change in standing instruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Business Continuity 3 Regulatory / procedural Compliance 4 Automation of systems and processes for critical activities 5 Quality of Management 6 Financial Status / profitability of DPs 7 Pending enquires / Penalties imposed by SEBI / Depositories on DP operations 8 Complaints redressal 9 Adverse findings of other activities (eg. 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: (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssess, monitor and manage the risks that arise in or are borne by the depository ; d) the depository's risk-tolerance policy; e) responsibilities and accountability for risk decisions and decision making process in crises and emergencies. ii. The Depositories shall put in place mechanism to implement the Risk Management Framework through a Risk Management Group/Committee which shall be headed by a Chief Risk Officer (CRO). The responsibilities of the said Committee shall include the following: a) t shall review and update the risk management framework periodically. 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. 4.25 Outsourcing by Depositories Reference: CIR/MRD/DP/19/2015 dated December 09, 2015 Based on recommendations by DSRC, the depositories are advised to ensure the following: i. Depositories shall formulate and document an outsourcing policy duly approved by their Board based on the guidelines given below and the principles outlined in the SEBI circular CIR/MIRSD/24/2011 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isted in the outsourcing policy document and outsourcing agreement/ service level agreements pertaining to IT systems shall be part of System Audit of Depositories. 4.26 Cyber Security and Cyber Resilience framework of Depositories Reference: Circular CIR/MRD/DP/13/2015 dated July 06, 2015 i. SEBI as a member of IOSCO has adopted the Principles for Financial Market Infrastructures (PFMIs) laid down by CPMI-IOSCO and has issued guidance for implementation of the principles in the securities market. ii. Principle 17 of PFMI that relates to management and mitigation of 'Operational risk' requires that systemically important market infrastructures institutions "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 fulfilment of the FMI's obligations, including in the event of a wide-scale or major disruption." iii. Depositories (hereafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' critical IT assets and risks associated with such assets, b. 'Protect' assets by deploying suitable controls, tools and measures, c. 'Detect' incidents, anomalies and attacks through appropriate monitoring tools / processes, d. 'Respond' by taking immediate steps after identification of the incident, anomaly or attack, e. 'Recover' from incident through incident management, disaster recovery and business continuity framework. 4. The Cyber security policy should encompass the principles prescribed by National Critical Information Infrastructure Protection Centre (NCIIPC) of National Technical Research Organisation (NTRO), Government of India in the report titled 'Guidelines for Protection of National Critical Information Infrastructure' and subsequent revisions, if any, from time to time. 5. MII should also incorporate best practices from standards such as ISO 27001, ISO 27002, COBIT 5, etc., or their subsequent revisions, if any, from time to time. 6. MII should designate a senior official as Chief Information Security Officer (CISO) whose function would be to assess, identify and reduce cyber security risks, respond to incidents, establish appropriate standards and contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o access confidential data, applications, system resources or facilities. 15. Any access to MII's systems, applications, networks, databases, etc., should be for a defined purpose and for a defined period. MII should grant access to IT systems, applications, databases and networks on a need-to-use basis and based on the principle of least privilege. Such access should be for the period when the access is required and should be authorized using strong authentication mechanisms. 16. MII should implement strong password controls for users' access to systems, applications, networks and databases. Password controls should include a change of password upon first log-on, minimum password length and history, password complexity as well as maximum validity period. The user credential data should be stored using strong and latest hashing algorithms. 17. MII should ensure that records of user access are uniquely identified and logged for audit and review purposes. Such logs should be maintained and stored in encrypted form for a time period not less than two (2) years. 18. MII should deploy additional controls and security measures to supervise staff with elevated system access entitlemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y exposures originating from internal and external sources. 29. Anti-virus software should be installed on servers and other computer systems. Updation of Anti-virus definition files and automatic anti-virus scanning should be done on a regular basis. Security of Data 30. Data-in motion and Data-at-rest should be in encrypted form by using strong encryption methods such as Advanced Encryption Standard (AES), RSA, SHA-2, etc. 31. MII should implement measures to prevent unauthorised access or copying or transmission of data / information held in contractual or fiduciary capacity. It should be ensured that confidentiality of information is not compromised during the process of exchanging and transferring information with external parties. 32. The information security policy should also cover use of devices such as mobile phone, faxes, photocopiers, scanners, etc. that can be used for capturing and transmission of data. 33. MII should allow only authorized data storage devices through appropriate validation processes. Hardening of Hardware and Software 34. Only a hardened and vetted hardware / software should be deployed by the MII. During the hardening process, MII should int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icious activities, unauthorised changes, unauthorised access and unauthorised copying or transmission of data / information held in contractual or fiduciary capacity, by internal and external parties. The security logs of systems, applications and network devices should also be monitored for anomalies. 44. Further, to ensure high resilience, high availability and timely detection of attacks on systems and networks, MII should implement suitable mechanism to monitor capacity utilization of its critical systems and networks. 45. Suitable alerts should be generated in the event of detection of unauthorized or abnormal system activities, transmission errors or unusual online transactions. Response and Recovery 46. Alerts generated from monitoring and detection systems should be suitably investigated, including impact and forensic analysis of such alerts, in order to determine activities that are to be performed to prevent expansion of such incident of cyber attack or breach, mitigate its effect and eradicate the incident. 47. The response and recovery plan of the MII should aim at timely restoration of systems affected by incidents of cyber attacks or breaches. The recovery plan s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (DN) of equity shares of listed companies with details of DN in respect of all physical shares and overall DN range for dematerialised shares. 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. Based on consultations with the Depositories and Stock Exchanges, the following guidelines are given for the operationalisation of the DN database - 4.1. Instructions to the Depositories 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. 4.1.2. The depositories shall provide an interface to the Stock Exchange, Issuers/RTAs for online updation and to the DPs for online enquiry. The same shall be released for live updates latest by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of final trading approval / dealing permission and trading start date [as per point nos. (v), (vi) and (vii) of 5.1.3], immediately upon granting of such permissions. iii. 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. iv. 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. 4.2.3. 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. 4.3. Instructions to the Issuers/RTAs 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 dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed 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 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. SCHEDULE CIRCULARS 1. Circular No. SMDRP/Policy/Cir-28/99 dated August 23, 1999. 2. Circular No. SMDRP/Policy/Cir-05/2001 dated February 1, 2001. 3. Circular No. D&CC/FITTC/Cir-09/2002 dated July 4, 2002. 4. Circular No. D&CC/FITTC/Cir-10/2002 dated September 25, 2002. 5. Circular No. D&CC/FITTC/Cir-13/2002 dated November 1, 2002. 6. Circular No. D&CC/FITTC/CIR - 12/2002 dated October 30, 2002. 7. Circular No. D&CC/FITTC/Cir-15/2002 dated December 27, 2002. 8. Circular No. LGL/Cir-2/2003 dated February 19, 2003. 9. Circular No. DCC/FITTC/Cir-19/2003 dated March 4, 2003 10. Circular No. SEBI/MRD/Policy/AT/Cir-19/2004 dated April 21, 2004. 11. Circular No. MRD/DoP/Dep/Cir-27/2004 dated August 16, 2004. 12. Circular No. MRD/DoP/Dep/Cir-29/2004 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D/DP/24/2012 dated September 11, 2012. 51. Circular No. CIR/MRD/DP/DA/25/2012 dated September 21, 2012. 52. Circular No. CIR/MRD/DP/27/2012 dated November 01, 2012. 53. Circular No. CIR/MRD/DP/32/2012 dated December 06, 2012. 54. Circular No. CIR SEBI/MIRSD/01/2013 dated January 04, 2013. 55. Circular No. CIR/MRD/DP/10/2013 dated March 21, 2013. 56. Circular No. CIR SEBI/MRD/DRMNP/26/2013 dated September 04, 2013. 57. Circular No. CIR SEBI/MIRSD /07/2013 dated September 12, 2013. 58. Circular No. CIR SEBI/MIRSD/09/2013 dated October 08, 2013. 59. Circular No. CIR/MIRSD/10/2013 dated October 28, 2013. 60. Circular No. CIR SEBI/MIRSD/ 12/2013 dated December 04, 2013. 61. Circular No. CIR SEBI/MRD/DOP/01/2014 dated January 07, 2014. 62. Circular No. CIR MRD/DMS/03/2014 dated January 21, 2014. 63. Circular No. CIR SEBI/MRD/DMS/05/2014 dated February 07, 2014. 64. Circular No. CIR/MRD/DP/21/2014 dated July 01, 2014. 65. Circular No. CIR/MRD/DP/22/2014 dated July 04, 2014. 66. Circular No. CIR/MRD/DP/31/2014 dated November 12, 2014. 67. Circular No. CIR/MRD/DP/1/2015 dated January 12, 2015. 68. Circular No. CIR/ MIRSD/1/2015 dated March 04, 2015. 69. Circular No. CIR/M ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
