DEATILED RISK MANAGEMENT POLICIES
Client Registration, Documents maintenance
-Approximately 100 clients are active in day-to-day trade.
-As per Exchange regulatory references Circulars- Download no. NSE/INSP/11324 dated 18-Sep-2008we used to maintain client registration documents duly filled in prescribed format.
-Yes, we had properly implement the maker-checker concept as a part of our Internal Check system and by virtue of that we duly allocate the work between the two personnel for filling of form and approval of it in order to avoid any misuse of data on unfilled areas.
-No, we do not entertain walk in clients.
-Yes we had opted the practice of assessment of financial capability of all our prospective clients and for that purpose our Principal Officer have well documented policy to ascertain the creditworthiness of such prospective clients.
-No we do not outsource client registration modalities.
-The Company has maintained proper records of all the clients in the orderly manner and therefore it will be easy to retrieve the client registration documents as and when required.
-For that purpose, we had maintained the practice of calling of fresh financials like Bank details, IT return, etc. from the suspected clients on regular basis.
Sales Practices followed by the Trading Member
-No, we don’t have any separate marketing division.
-No, we never launched any promotional scheme till date.
-In RDD we ensure that Client acknowledges the risk disclosure document and would aware that certain basic risks are involved in trading in equity and derivative products.
-No, we never offer any freebies to our clients.
Closure of Client accounts/ Dormant accounts
-For the closure of Account, we accept a formal written request letter from the client and thereafter we did an exercise at our end like to find whether there is any debit or credit balance standing in the account of such client, if there is no such balance, then we forward the confirmation letter to those respective clients.
-Under such instances, before execution of any transaction in their account, asked for some details like updation of clients financial and others, etc. and if think fit that such transaction can be done without any risk then we allow them to do trade in their account.
-Though, no such instances come across us till yet, but, on the occurrence of any such instance, we had opted a policy to execute a fresh KYC, MCA/TPA, RDD in the prescribed formats and the same is executed before execution of trade for the client in another (new) Branch though the client code will remain same.
-where such dormancy remain for 2 or more years old, then we request the client to do all the needful formalities as we did in case of new client like execute a fresh KYC, MCA/TPA, RDD in the prescribed formats, assess their financial capabilities, etc. under the same code.
Order Receipt and Execution
-No we do not install any telephone recording system for receipt of orders.
-Yes we have a Trade Confirmation mechanism under which we gave necessary feedback/Confirmation to all those clients whose trades has been executed. Moreover, we provide an online facility, under which, the clients can view their executed trade along with other details.
-None of our client gave us any discretionary powers to execute their orders.
-As we have very limited number of active clients (approximately 100) which we had allocated among our authorized users (in Branches as well as Head office) and the person authorized for punching the order has been instructed to entertain only those clients which pertains to their groups only, therefore, it will reduce the probability of any error or mistake on our part. Moreover, we had maintained a checks & Balance as defined in the system.
Sending Contract Notes, Daily Margin statement, Quarterly Statement of Accounts to clients
-As a business practice, at the time of execution of the client agreement, we obtained consent from all our clients regarding the issue of ECN and as per references Circular Download no. NSE/INSP/11324 dated 18-Sep-08, the Contract Note which are authenticated by means of digital signatures,encrypted and comply with the provisions of the IT Act, 2000 obtained from certifying authority which we send within 24 hours of execution of trades and margin details are send on daily basis to our respective clients, the proof of delivery / dispatch are maintained regularly. Further, in addition to the e-mail communication of the ECNs in the manner stated above, we simultaneously publish the ECN on our designated web site in a secured way and enable relevant access to the clients.
- No, we haven’t sent the above-said documents through outsourcing etc.
-The Contract Notes and Margin Statement are send via email .
-Quarterly statement of account alongwith d-mat holding is send by e-mail. But if client requires statement in physical form we send the statement accordingly.
-Normally the Contract Notes and Daily Margin statement are send on the evening of same day and that too between 6:00 p.m. to 7:00 p.m.
-No we hadn’t maintained the duplicate copies/record.
-We have maintained the logbook of all the emails which is generated by the system and trail for bounce mails.
-With reference to circular no NSEIL/ INSP/ 2002/14, Download Reference No. NSE/ INSP/3685 Date: 17th October 2002, we made all the compliances related to the issue of Electronic Contract Note, maintenance of log book, etc. and that too in the Non Tamper able form.
Collection of pay in, margin, limits setting for exposures & turnover for clients, terminals, branches & sub-broker level:
- We had a practice to inform the client and keep him appraised about his pay-in obligation as per schedule notified by the Exchange from time to time.
- As per circular reference no. NSE/INSP/10367 dated 28th February 2008, In Future & Option Segment, we collect the necessary initial margin, withholding margins, special margins and other margins as considered necessary from all our constituents and also report them on a daily basis of the details in respect of such margin due and collected.
- At the time of entering into agreement with the clients, Branches and Sub-Broker we make them agrees to abide by the exposure limits set by us from time to time subject to the availability of funds in their accounts.
Monitoring of debit balances
-Everyday we generate a Payment Control Report (PCR) from our back office package and on that basis we took necessary follow ups with the clients who have debit balances as on date.
-The Company provide platform to its clients in the form website in a secured way which they can access with their unique name and password, this will ensure our clients to check their balances and for any further clarification, the client do have an option to call us and get any necessary information for their satisfaction.
-Follow-ups on phone, Personal visits, family accounts adjustments (if any), etc.
-We will not allowed any further trading to those clients who are having outstanding debit balances.
Allotment, Surrender of trading terminals
-The limit of the clients are fixed subject to Initial Margin deposited or the funds given by the client, Branch or Sub Broker, as the case may be.
-In case of surrender of terminal, we provide facility to the clients for carrying out trade at other terminal by mapping the same at the earliest.
-Before any allotment or surrender of any trading terminal, the same will be informed to Exchange via ENIT.
-We monitor the circulars released by the NSE on regular basis in order to ensure that the vendor has still on the panel of NSE with whom we had made tie up for the Internet/CTCL based trading.
-At the time of entering into agreement with the Branch and sub-broker, we obtained necessary undertaking and declaration in the relevant annexure from them with regard to the usage of terminals at their locations. Further, we regularly made a comparative statement for all the Branches with regard to their viability i.e. whether it will beneficial to run those branches or not.
Opening & Closing of branches / sub-broker offices
-For the opening of Branch and Sub Broker Offices, in accordance to the circulars reference no. 604, NSE/MEM/9421 dated 31st August 2007, circular reference no. 580, NSE/MEM/8607 dated 02nd March 2007 and circular reference no. 534, NSE/MEM/7743 dated 09th August 2006, Company opted the detailed procedure as prescribed in the above mentioned circulars. For the closure of Branch and Sub-broker office, in accordance to the circular reference no. 428, NSE/MEM/5548 dated 26th October 2004, all the requirements as prescribed are complied with.
-Before closure, we informed all the constituents of that sub-broker about such closure via email, telephone, etc. so that they can settle their payments/securities due to or due from us, beside that, we notify the same in regional newspaper of that area where that sub broker carrying on its business about such proposed closure.
-For the closure of Branch and Sub-broker office, in accordance to the circular reference no. 428, NSE/MEM/5548 dated 26th October 2004, all the requirements like request from Trading Member for surrender of registration of sub-broker, application from Sub-broker for surrender of registration, public notification intimating the investors/general public of the surrender, issued in the local newspaper and public notification intimating the investors/general public of the surrender, issued in the local newspaper are complied with.
Payment, Receipt of funds from / to clients
Receipts from Clients:
(A)From New Clients: Normally new clients gave us a cheque at the time of opening of their account, otherwise, we enforce them to make the payment subsequently whenever it will be become due in their account i.e., either on the same day on which any debit balance emerge in their account or at the most on subsequent day.
(B) From others: the day on which any debit balance emerge in their account or on subsequent day. Further, the Clients, Branch Manager(s) and Sub-Broker send a mail to us for the cheque which they had deposited directly in our Bank Account along with the necessary details like Client code, amount, Cheque no.etc. for recording the same in our back office.
Payments to Clients: Any client, Branch Manager(s) and Sub-Broker, who claim any payment from us has primarily send a mail along with amount, thereafter, we determine actual claim balance for which he/she will be entitled after adjusting the margin(s) against the open position in F&O segment.
Receipt, Delivery of Securities from / to clients
Receipts of Securities from clients: As and when clients sold their shares and deposited their respective delivery instruction slip with their depository participants, we got the delivery of the same from the market in our pool account.
Delivery of Securities to clients: As and when we got the delivery of securities from the market against the purchase of client, we immediately transfer the same to relevant demat accounts of those clients, i.e. respective shares will be transferred from the Company pool account to the beneficiary account of those clients who maintained either nil or credit balance.
Square off of positions / Liquidation of securities without consent of clients
-Even after regular reminders, if client will fail to make the payment of the margin or pay-in, then we would squared off his/her position and before taking such action in this direction, we telephonically explain all the details to the client about our proposed action in this regard.
-Principally, company followed the practice of giving reasonable opportunity of being heard and gave a verbal show cause notice to such type of clients, thereafter, if company thinks it is just and reasonable to square off their position, then action will be taken in that direction. However, in exceptional cases, like in case of those clients with whom company think it has long term bonding with them and they will make the payment in due course of time, in those circumstances, company make some arrangements with them like imposition of interest, etc. and extend the time for carrying their position.
- We had opted a practice to send daily margin statement via email and for those clients who gave insufficient margin against their open position in F&O segment, such clients will be informed telephonically for compensating their margin.
Policy for internal shortages
- Company has not taken any permanent overdraft facility from the Bank, however, on the other hand, if there is any internal shortage, then as per arrangement made with the Bank, bank will provide a temporary overdraft facility against the cheque under clearing or subsequent day’s pay-out.
- No, the opted policy is in line with exchange recommendations.
Transfer of trades
-Due to efficient fool proof Internal Control System is in place, such type of activities are duly monitored by the authorized persons which restrained the occurrence of any such incident.
-Sometime punching of order has been done by the newly appointed dealer, which results in punching the order in the wrong code is the only reason for the transfer of such trades.
-We emphasize our dealers to actively participate in the mock trading sessions organized by the NSE and BSE from time to time in order to reduce such instances.
Investor Redressal Mechanism
-The register of complaints is maintained centrally.
-At the time of opening of account, we informed to our clients about the email where they can send their grievances and the email id is provided at our account opening form as well as we send a test mail to them for that purpose.
-Yes, we maintained an Investor compliant register in the prescribed format as per the requirement of the exchange.
-Complaints received, if any, by way of letter, telephonic call, personal representation, e-mail, etc are recorded in the Register of Complaints.
-Compliance Officer will take care of all those complaints.
-No, we haven’t implemented any escalation mechanism for redressal of long pending investor complaints.
-Till date we hadn’t received any compliant expect one of Mr. S.K.KAPOOR, therefore, we hadn’t got any opportunity for the analysis of such complaints, though, we had made a proper mechanism for the analysis of such complaints if at we received in near future. The complaint of S. K.KAPOOR has already been solved and NSE has already been informed.
-We have maintained a system, under which, we instruct all our Branch Managers and Authorized persons to send a email for the payment made/received to/from clients with necessary details like amount, client code, etc.
-No, we are using a single back office software viz. Shilpi for recording all client level information.
-None of our employee employees at HO and at branches are exercising POA to operate client’s bank and demat accounts.
-No there is no concentration of complaints at any specific branch as such.
Internal Audit System
- We have maintained the relevant books of accounts, records and documents for both the segments i.e., Capital Market & Future & Options in order to fulfill the Internal Audit requirement as prescribed by SEBI vide circulars dated August 22, 2008.
- The Internal Audit Report will be placed before the Board of Directors and they are under an obligation to discuss the irregularities/recommendations/suggestions, if any, raised by the Internal Auditor.
- The Board of Directors liable to take necessary steps in order to implement the recommendations and suggestions raised by the Internal Auditor and ensure not to occur it again in future.
Inactive Client account: Client account will be considered as inactive if the client does not trade for period of one year. Calculation will be done at the beginning of every month and those clients who have not traded even a single time will be considered as inactive the shares/credit ledger balance if any will be transferred to the client within one week of the identifying the client as inactive . The client has to make written request for reactivation of their account.