NATIONAL STOCK EXCHANGE OF INDIA LIMITED

CAPITAL MARKET OPERATIONS

CIRCULAR

Circular No. NSE/CMO/0002/2000

Download No. NSE/CMT/1424

Date : Jan 31, 2000

Securities and Exchange Board of India (SEBI) Board has approved the report on Internet Trading brought out by the SEBI Committee on Internet Based Trading and Services. A copy of the circular issued by SEBI (SMDRP/Policy/Cir-6/00 dated January 31, 2000 is enclosed the contents of which are self-explanatory.

Members who are desirous for applying to the Exchange for approval for provision of internet based trading services shall apply in the format enclosed.

For and on behalf of

National Stock Exchange of India Limited

Assistant Vice President

Capital Market Operations

Application form for approval for provision of Internet based trading services

We/I, ------having my/our Registered Office/Office at ------am/are trading member/s of the capital market segment of National Stock Exchange of India Limited, here by apply for the approval of the exchange for providing internet based trading facility.

A.General

1. / Name of the Trading Member / :
2. / Registered Office/ Office address
Telephone: Fax No. / :
3. / Name of the Authorised Signatory and designation / :
4. / Contact address of the authorised signatory ; Telephone numbers, fax number
6. / SEBI Registration number
7. / Whether the proposed internet based facility is being provided by the member on his own / YES/NO
8. / If not, name of the service provider (ISP) for providing the internet trading facility
9. / Address , name of the contact person and telephone, fax numbers of ISP (Copies of the agreement/MOU entered into with the ISP to be enclosed.)
10. / Net worth of the member (Copy of the latest Networth certificate calculated as per SEBI circular no.FITTC /DC/ CIR-1/98 dated June 16, 1998 and provided to the Exchange shall be attached) / Rs. Lakhs
B. Network Security, Standards for Web interfaces and Protocols
1. / Whether the system has provision for security, reliability and confidentiality of data through use of encryption and in line with the SEBI’s directives on Standars for web interfaces and protocols (a write up and a certificate from the software vendor in this regard as per annexure I shall be enclosed) / YES / NO
Whether adequate provisions for back up systems and data storage capacity are in place with the member ( A detailed certificate from the member in this regard shall be enclosed)

C. Systems Operations

/ Whether the requirements of systems operations as stipulated by SEBI in this regard are complied with ( A certificate in this regard as per annexure 1 shall be enclosed)

D.Personnel requirements

/ Total number of personnel currently employed with break up of dealers, back office personnel etc.
/ No. of personnel to be dedicated to handle internet trading service with break up for communication handling, back office etc.
/ Names of personnel, qualification, etc. of personnel specified in point b above
E. Risk Management
1. / Whether the requirements of systems operations as stipulated by SEBI in this regard are complied with ( A certificate in this regard as per annexure 1 shall be enclosed)
We certify that all the statements are true and correct to the best of our knowledge. We are aware that in case any of the statements are found to be incorrect or false, we are liable for disciplinary action . We undertake to comply with the requirements of the Exchange, DOT policy and regulations with regard to levels of encryption, etc and SEBI directives and other statutory requirements etc. in this regard as may be issued from time to time.
Signature of the Authorised signatory
Date:
Place:

ANNEXURE I

WE ------, having our registered office at ------and represented by ------and hereinafter referred to as VENDOR have sold to M/s.------, having their registered office at ------who are trading members of the capital Market segment of National Stock Exchange of India Limited, and hereinafter referred to as MEMBER, a software for internet based trading services . We hereby certify that the software provided by us complies with all the stipulations and directives of SEBI in this regard.
NOTWITHSTANDING the generality of the above, the software provided by us complies with the following provisions in particular as directed by SEBI.
  • The access for order routing is permitted only through the use of client specific User ids
  • The access is permitted only through the use of client specified password ( private code)
  • The system provides for automatic expiry of passwords at the end of a reasonable duration and reinitialising of access on entering fresh pass words.
  • All transaction logs are maintained with proper audit facilities ( a write-up in this regard shall be enclosed)
  • Secured socket level security for server access through internet is available.
  • Suitable firewalls between trading set-up and internet trading set up is available.
  • The optional advanced security products used for e-commerce, including SMART cards, dynamic password and 64 bit/128 bit encryption, second level pass words are available. If so, details of the same.
  • Between the trading web server and trading client terminals, interfaces standards as per recommendations of IETF and W3C ( e.g. HTTP ver 4 or above, HTM ver 4/XML) are adopted.
  • The logic similar to the logic/priorities used by the Exchange is adhered to treat client orders.
  • Provision for maintenance of all activities / alerts log with audit trail available
  • The members’ web server internally generates unique numbering for all client orders/ trades.
  • Adequate provisions for maintaining back up systems and data storage capacity are available.
  • Any alternative means of communication is arranged for in case of internet link failure ( A write up shall be provided in this regard)
  • The web site providing the internet based trading facility contain information meant for investor protection such as rules and regulations affecting client broker relationship, arbitration rules, investor protection rules, etc. The web site also provides and displays prominently hyper link to the web site/page on the web site of the Exchange displaying rules/regulations/circulars. Further the web site also displays the ticker/quote/order book of the Exchange along with the time stamp.
  • The software provides for sending of the order/trade confirmation through email at clients’ discretion at the time period specified by the client in addition to the other mode of display of such confirmations on real time basis on the web site. The web site allows for specifying the time interval on the web site itself by the client.
  • The software provides for reconfirmation of orders which are larger than that as specified by the member’s risk management system . In this regard the system is capable of assessing the risk of the client as soon as the order comes in and shall inform the client of acceptance/rejection of the order within a reasonable period.
  • The software provides a system based control facility on the trading limits of the clients and exposures taken by the clients.
  • The software has the facility of providing the reports on margin requirements, payment and delivery obligations etc through the system.

Signed sealed and delivered by the authorised representative of the VENDOR

Date

Place:

We, ------having our registered office at ------and represented by ------are trading members on the capital market segment of the Exchange. We confirm and certify that the software provided by the vendor for internet based trading has undergone tests by us and we are satisfied that it complies with the stipulations of SEBI. We also undertake to get the software modified, if necessary to continue compliance with the requirements of the Exchange, DOT policy and regulations with regard to levels of encryption, etc and SEBI directives and other statutory requirements etc. as may be issued in this regard from time to time.

Countersigned, sealed and delivered by the authorised representative of the MEMBER

Date:

Place: