BRANCH & FAN

Compliance Manual

2008

BFCM 2008 13th October 2008

Branch & FAN Compliance Manual

Index

Sr. No. / Particulars / Page no.
A. / Office Administration / 1
1. / Name and Notice Board / 1
2. / Shop & Establishment License/Registration / 1
3. / Notice Board / 1
4. / Registered Agreement of Premises / 1
5. / Office Records / 2
a. / Administration Records / 2
b. / Back Office & Accounting Records / 2
B. / Regulatory Compliances / 3
1. / Account Opening / 3
2. / Trading Terminals / 4
3. / Trading / 5
4. / Contract Notes / 6
5. / Receipts/Payments Funds from Clients / 6
6. / Back office / 7
7. / Risk Management System / 7
8. / Initial Public Offers / 8
9. / Mutual Funds / 8
10. / Insurance / 8
C. / Other Internal Compliances / 9
D. / Responsibility / 9
E. / Actions / 10
F. / Reports / 10
G. / Details of Branch/FAN / 12
H. / Draft Notice Board / 14-15
I. / Sample Notice Board / 16

Branch & FANCompliance Manual

  1. Office Administration

1. Name & Notice Board

(i)Name Board of India Infoline should be displayed at the front side of the Branch.

(ii)SEBI Notice boards containing office information and Do’s and Don’ts for investors(as per Annexure I) should be displayed at the reception area.

(iii) Laminated copy of following registration certificate should be displayed at the

Reception.

  1. SEBI Registration Certificate.
  2. SEBI sub-broker registration certificate in case of sub-broker.
  3. AMFI certificate for MF distribution.
  4. IRDA certificate for Insurance Corporate Agent.
  5. FMC registration certificate for Commodities broking.

2. Shop and Establishment Licence/ Registration.

(i)All branches should have registration/licence under shops and establishment from local Municipal Corporation/ labour department.

(ii)The licences/registration Certificate should be framed and displayed in the reception area.

(iii)The licences should be taken for a period of 2 or 3 years and renewed three months before due date. Copy of licence should be sent to Head Office for records.

  1. Notice Board

Branch should install a Bulletin board in the office area for affixing office notices, circulars to clients, advertisements etc.

  1. Registered Agreement of Premises

(i) All branches should have proper registered leave & licence or lease

Agreement of premises in which they are located.

(ii) Originals should be sent to HO.

(iii)The branch should keep copy of documents with them all the time.

5. Office – Records

Branch should maintain the following records.

(a) Administration Records.

(i) Attendance Register – Branch should maintain a proper register of attendance of all employees. Attendance should be marked for all days including Sundays.

Also leave applications of employees should be properly filled up and their record should be maintained.

(ii)Visitors Entry Register – All visitors should mark their entry in this register indicating in & out time, purpose & signature.

(iii) Payroll Register – Branch should maintain this register in the HR specified format.

(iv) Suggestions/Complaint Register - Branch should maintain register for recording complaints/suggestions by clients indicatingdate, name, client code, particulars of the complaints/suggestions, signature etc. All the complaints/suggestions of the clients should be resolved/acted upon within 1 day of reporting.

(v) Inspection Register – Branch should maintain register for inspection conducted by labour welfare department.

(vi) Fixed Assets Register - Branch should maintain the details of fixed assets in the prescribed format.

(b) Back Office & Accounting Records

1. Counterfoils/Acknowledged copies of contract notes issued to client

2. Copies of KYC.

3. Register of trade conformation to the client.

4. Backups of Voice Logging System.

5. Cheque Inward register with column of validation of bank account.

6.Cheque Outward register (with columns of when cheque/payorder received from HO/Bank and delivered/dispatched to the client).

7. NCFM/BCDE certificates file.

8. Counterfoils of bank payin slips.

9. Cash Book

B.Regulatory Compliances

1. Account Opening

(i) Branches should obtain the KYC filled along with required documentary proof/supporting.

(ii) Important requirements for account opening

a. All columns/options in the Client registration Form should be compulsorily filled in by clients in person.

b. PANProof- Copy of Pan card should be obtained and proof of verification should be done through Income Tax/NSDL website.

c. Client Email Address and MobileNumber:should be filled in as they are required to senddigital contract notes to clients and passwords through SMS.

d. Proof of Bank and Demat Account Details of the client should be obtained.

e.Introduction:Details and signatures of introducer should be filled up. Walk in customers/ clients should be filled up as self introduced.

f.Photograph, Proof of identity and addressdocuments like Passport/Driving license/Voter ID/Ration Card/Bank Account Pass book should be obtained.

g. Financial & Income Tax Documents like Annual Returns, Balance Sheet, Net-worth, (for non individual) to be obtained for the last 2 years for new customers and updated documents should be obtained every year for existing customers.

h. Board resolution from corporate clients for opening an account and trading.

i. Where a client wants to authorize another person to give instructions on his behalf, branch should obtain the authority letter/power of attorney, get it notarized and the document should be preserved alongwith the client agreement.Copy to bemaintained with Branch. However the authorization should not be in the name of BM/RM/Dealer or other IIL employees.

j. BM/RM should verify proof of address and proof of identity with original documents at the time of client registration. Copies ofdocumentary proof be stamped as “verified with original” and signed by the verifying official.

k. Checks to be done

(i)Whether the address mentioned on the KYC is same as the address proof submitted.

(ii)Correct Bank, DP account and brokerage details should be entered in the form.

(iii) Signatures of the client have been taken at all the required pages in the form.

(iv)The agreement is witnessed on behalf of both the parties.

(v)For any change in client details, a written letter alongwith proof should be obtained from clients.

2. Trading terminals

(i)Trading terminals should be operated by the respective NCFM/BCDE certified persons.

(ii)In case of Cash segment for every 5 CTCL Users or part thereof in a branch), 1 User should be NCFM certified.

(iii)In case of F&O Segment every user should be NCFM certified.

(iv)In case of BSE Cash Terminals at least one user out of five users should be BCFM certified.

(v)All the required information in respect of CTCL terminals allotted/created (including view only / admin / test / etc ) should be informed to the HO. The details of terminals will be uploaded to Exchanges from HO.

(vi)In case of any change in User (due to transfer or resignation, etc) , or change in Branch address, Branches should forward a request to HO for creation of a fresh user ID, and deactivation of the earlier ID.

(vii)In case of change of location of Terminals exchange to be informed regarding the same.

(viii) NCFM Certification

(i)The following NCFM certificates should be collected from the employees:-

  1. RMs/Dealers entering the trades

-NCFM Capital market (Dealers) Module for cash segment

-NCFM (Derivatives) module or BSE – BCDE certificate for F&O segment.

-BCSM module for Cash Segment on BSE.

  1. At least one branch employee should have NCFM DP module certificate.
  2. Commodity Dealers should have NCFM Commodity Module certificate.
  3. At least one person in the branch should have completed 100 hours of IRDA training and certification.
  4. At least one person in the branch should have the AMFI Mutual fund (Advisors) module certificate.

(ii)Copies of the certificates should be properly filed at the branch. In case the certified person is transferred or resigned from branch, the details should be suitably updated and complied.

3. Trading

(i)Whenever a new account is activated check confirmation of Client Code upload to Exchanges before entering order of clients.

(ii) Orders should be entered only based on the instructions of the client. Dealers/RMs/BMs should not enter any orders on their own without instructions from client.

(iii) Where, the facility of “Voice Logging System” (VLS) is available all the orders and modifications should be obtained only on telephones having VLS connections.

(iv)All trades should be confirmed to the client before end of day preferably before 4.30 p.m. by the concerned dealer/RM/BM through the voice recorded lines. Each RM/BM/dealer should enter in prescribed confirmation register and sign the same.

(v) Transfer of Trades to other clients account should not be done.

(vi) No off-market transactions shall be executed at any of the branches.

(vii)Trading terminals should not be used for viewing rates of scrip /contracts and using such information for the purpose of executing transactions outside the system. ( i.e. off market or Dabba Trading).

(viii) Branch should not allow manipulative/ fraudulent trades such as matched/ structured trades, transfer of profit/loss trades, large quantity contracts in illiquid scrip etc.

(ix) Transactions for clients should not be executed if they trade on behalf of other clients.

(x) Remarks column available in the trading windowat the time of order entry should not be used.

(xi)If trading by a client in a day is more than 0.5% of Share Capital of the company, it should be reported to HO back office as bulk deal immediately.

(xii)RMs should not mislead clients by giving false information/data for or trading on their own and making false promises assuring fixed returns with the object of enhancing brokerage or incentive.

(xiii) Client codes should be correctly entered.

4. Contract Notes

(i)Digital Contract notes are issued on daily basis through the e-mail Ids of the clients. Also the Contract Note copies are made available on the website from where the clients can download the soft copy of Contract Note.

(ii)If the client requires physical copy of Contract Note then branch can provide a printout of the digitally issued Contract Note. In such case, the hard copy is only a copy of the originally issued digital Contract note sent to the client e-mail Id.

(iii) Acknowledgement of digitally issued CN should be preserved at Branch.

5. Receipt/Payment of funds from clients

(i)No cash dealings with clients (receipt/payment for margin/settlement/applications etc) are permitted.

(ii)The payment should be collected from the clients by T+1 day.

(iii)No third party cheques should be accepted.

(iv)When cheques are received from clients, validation should be made with the bank account details captured in the Back office software. In case of mismatch the client should be asked to provide proof with regard to its additional bank account and relevant documents should be forwarded to HO to update client master.

(v)Cheques received from clients should be deposited in the bank on the same day.

(vi)While depositing cheques ensure client code are clearly and correctly mentioned in the Cheque pay-in slip.

(vii)Details of cheques should be verified before entering in WIRE to ensure that there is no mistake in client code, selection of Exchange (NSE/BSE) cheque number, amount of cheque and bank code selected for bank receipt.

(viii)Where cheque is returned unpaid by the bank for insufficient funds, a fresh cheque /Demand Draft/Payorder/Bankers cheque should be obtained from the client, while cheque received from the bank should be retained alongwith banker’s memo. In case the client does not pay within two days of the incidence, the cheque received back alongwith the banker’s memo be retained. Cheque bounce notice under Section 138 of the Negotiable Instruments Act should be issued on the client by the branch. If payment is still not received within 15 days then case should be filed with Magistrate Court.

6. Back Office

(i)Copies of CNs, ledger account, DP holding, transaction statement etc. are available through WIRE/Tradeplus. Branches should furnish to clients whenever they require.

(ii) Branch should watch for unexplained, frequent and large off-market transactions in the clients Demat account.

(iii) Blank Delivery Instruction Booklet should not be obtained from the clients.

(iv) Branches should redress the investor queries/ complaints within 24 hours.

7. Risk management System

(i)BMs/RMs/Dealers should ensure that orders are placed throughNEAT/OLT/CTCL terminals within the exposure limits applicable to clients as indicated in WIRE.

(ii) Payment of applicable margins should be received from customers from time to time.

(iii)If, there is failure to meet shortfall of margin by client in time then position would be position would be squared off to bring it to cover.

(iv) BMs/RMs should monitor the positions and balances on a daily basis and inform the clients who going out of cover requesting then to deposit additional funds or reduce the position to bring to cover. Client should be advised in case they do not bring it to cover we will sell the positions as per terms and conditions of Broker Client Agreement.

8. Initial Public Offers(IPO)

(i)The application form and cheque obtained from the client should be complete with all details i.e. all details filled up and should be signed. Also in case the application amount is above Rs. 50,000/- then copy of PAN should be enclosed along with the form.

(ii)Bidding of applications in the software of Lead Manager/ Syndicate member should be done before cut off time i.e. 3 p.m. and Confirmation No. indicating successful upload should be obtained from the system. Confirmation No. should be entered in the application form and Acknowledgement. Wherever applications are to be sent to HO/AO for bidding it should be ensured that applications reach before 2 p.m. to ensure bidding on same day. Only after entering the confirmation no. acknowledgement should be issued to customers.

(iii)Before the closing date of IPO it should be ensured that all the applications have been successfully bided and physical forms sent to Lead Manager/Syndicate Member.

9. Mutual Fund

(i)All marketing officials should give Manual Acknowledgement to the client on receipt of completed application form and cheque. Also details of applications to be entered immediately in DISC.

(ii)In case the customer requires to invest at the NAV of the same day then the application should be submitted to the concerned Registrar & Transfer Agent before 3 p.m.

(iii) Application forms collected should be sent to AO/HO on the same day for submission to Registrar of MF.

10. Insurance

(i) All Marketing officials should give Manual Acknowledgement to the client on receipt of completed application form and cheque. Also details to be entered immediately in DISC.

(ii) Application forms collected should be sent to AO/HO on the same day for submission to Registrar/MF immediatel

C. Other Internal Compliances

(i)Branches should follow the code of conduct of the company.

(ii) Branches should not publish pamphlets, circular or any other literature or report or information relating to our services or the stock markets without the prior written permission of Head office.

(iii) Branch officials, dealers, etc., should not issue any contract note, bill, confirmation memo, debit/credit note etc., to the clients, other than that as per official records of the company.

(iv)Blank Delivery Instruction Booklet should not be obtained from the clients.

(v)Branches should ensure that the clients using or frequenting branch premises do not indulge in activities such as using the premises (holding private meetings etc.) name or accounts of the company.

(vi)Daily back up of records to be taken. Branch to have UPS system.

(vii)Branch officials should maintain utmost discipline and should not misrepresent before clients/public/media/other authorities.

(viii)Employees should follow the Insider Trading Policy of the Company while trading in shares of the company. Pre-clearance is required from Secretarial Department for trades above 1000 in the company shares.

(ix)In case the clients trade in their own group company shares then check whether disclosures are made to Stock Exchanges/Company etc.

D. Responsibility

(i)Each employee is responsible for compliance to the above requirements.

(ii)Every BM should check compliance by the Branch officials.

(iii)BM is responsible for implementation and compliance with all the above requirements at the branch.

(iv)AMs/ZMs should check the compliances at the branches during their regular visits and on random basis.

E. Actions

(i)Each employee is required to adhere to the above compliances. Non –

Compliance with the above provisions will lead to negative remarks in

Employees records, suspension, termination of employment.

In case any clarifications with regard to this manual you may contact on mail at

F. Reports

  1. Details of branch in the following format:

Sr. No. / Address of the Branch / / Dealing Office / User id allotted / Mode of connectivity / Branch/ Office In-charge / Whether decentralized/ centralized / No of Clients
  1. Name of Contact person with designation:
  2. Name of the Compliance Officer:
  3. Whether the trading member has adopted written procedures to implement the anti money laundering provisions as envisaged under the Anti Money Laundering Act, 2002?
  4. List of approved Users (Neat Terminals)

S. No. / User Id / Name of the User / Location of the terminal / Expiry date of NCFM Certificate / Validity Extended up to / Whether still in employment of / under contract with the TM
(Yes/No) / Whether enabled for PRO trading / Date of enablement for PRO trading

Note: Please keep NCFM certificates ready for verification.

6. Details of CTCL terminals: [for CM and F&O segment both]

CTCL Server location: - CTCL Software:-

No of licenses purchased (for NSE CM and NSE F&O) :

NEAT User-id (through which CTCL has been installed):

Sr No / CTCL -Id / Corresponding 12 digit code uploaded / Name of the approved person [as appearing in admin terminal] / Relationship of the approved person with the Trading Member / Location [address] of the CTCL terminal / Mode of connectivity to the CTCL terminal / Date of allotment of CTCL terminal / Date of commencement of trade / Expiry date of NCFM Certificate

Please attach the proof of purchase of licenses.

Note: - The above information should be given separately for each CTCL server location. Please keep NCFM certificates ready for verification

  1. List of clients who have traded (for the last 12 months) in the Exchange in the following format (for the branch): (Enclose as Annexure no-----) submitted in regular inspection.

Sr. No / Unique Client Code / Trading Codes Used for the client / Name of the Client / Address of the Client / Demat A/c Number/s / DP Name / Bank details [Bank, Branch and A/c (s) No (s)]
  1. Details of Cash transactions with the clients and the reason thereof.
  1. Details of advertisements issued, if any [please keep copies of advertisements, correspondence with NSE, Advertisement ledger etc. for verification.]
  1. Whether periodic review of the client information (financial information) as indicated in the know your client form, updating the same on an ongoing basis in view of the current trading activity of the client and reviewing of the client database to ensure its completeness and accuracy was undertaken?
  2. Whether there is periodic review of client database by the trading member to ensure completeness and accuracy?
  3. Statement of accounts / proofs of the same for funds and securities to all the clients have been sent containing clause for error reporting?
  4. Contract notes / proofs of the same being sent to the clients within the stipulate time?
  5. Whether you have authorized any person to transact on your behalf. If yes, whether such authorization is in writing?

G.Details of Branch/FAN