ARG COMPLIANCE MANUAL - rathionline.com · COMPLIANCE MANUAL. 2 INDEX Sr. ... 20. Branch Audit Self Certification 72-73 ... - For opening Branch - For opening Bank A/c

COMPLIANCE

MANUAL

2

INDEX

Sr. No Particulars Pg No

1. Activity Schedule for Branch Opening 3-4

2. Display of Notice Board 5-11

3. Contract Notes & Appointment of Authorised Signatories 12-15

4. Allotment of Back office login ID 16-16

5. Allotment of Terminal ID 17-22

6. Client Information Sheet (One Pager) 23-23

7. CRF Procedure (KYC, Documentary Requirement, Checklist) 24-30

8. UCC Procedure & Client category 31-32

9. Shifting & Closure of Client 33-35

10. Guidelines to be followed before trade 36-37

11. RMS Process 38-54

WEB RMS

Margins and Limits

Auto Square off Procedure

12. Grievance Redressal Mechanism 55-55

13. Surveillance and Recovery Notice Performa Letter 56-60

14. Office Management 61-65

Checklist

Dealing with Client

Bank account

Balance Confirmation with Client

Miscellaneous Matters

15. Insurance Claim Pre-requisites 66-66

16. Trade Modification Undertaking 67-68

17. Reporting of Bulk & Block Deal 69-69

18. F&O Increased Position 70-70

19. Useful Web Sites 71-71

20. Branch Audit Self Certification 72-73

21. Insider/ Employee Trading Policy 74-76

22. Business Code of Conduct 77-83

23. Compliance Exchange Deadlines 84-91

24. Sub-broker Registration Checklist 92-105

25. PMLA Policy 106-123

26. Compliance Training 124-194

27. Commodities 195-208

3

ACTIVITY SCHEDULE FOR BRANCH OPENING

Sr.No. Particulars

1 Capex approved by Management

2 Manpower planning approved by VC

3 Sanctioned amount of Manpower

4 Working structure done at the branch

Computer & Printer installation/Wiring work done

Fixing of DP(for fixing cables)outside and Inside for fixation of internet and telephone lines

Earthing for VPN

Flex installation

Sign board installation

Reliance phone (……… nos)

2 BSNL / Other landline connections

Internet Connection (serivce provider)

5 Whether copy of Rent Agreement has been received - Not required incase of Regd. SB's office

6 NOC copy received by the branch

7 Intimation given to HECL

8 Site survey Conducted

9 Schduled date of the materail to reach the site

10 Checklist for connectivity to HECL

11 Connectivty done

12 Whether details of NCFM Approved User alongwith copy of certificate has been received

13 Board Resolution for -

- For opening Branch

- For opening Bank A/c

- For signing Contracts/Bills

14 Whether Clients Bank A/cs have been opened for NSE & BSE transactions separately. Please mention Bank A/c No.

15 Whether DP A/cs have been opened with NSDL / CDSL. Please mention DP A/c No.

16 Software installation & training at Branch location completed

17 CTCL IDs uploaded/intimated to NSE

18 Branch opening mail

19 Whether SEBI Certification has been despatched for displaying

20 Whether Notice Board has been despatched for displaying in the format as prescribed by NSE

21 Whether Email Id of the Branch has been created. Please mention email id

23 Prefix code

22 IPO Code

23 Mutual Fund Code

24 Date of commencement of business

4

ACTIVITY SCHEDULE FOR FRANCHISEE OPENING

Sr.No. Particulars

1 NOC copy received by the branch

2 Intimation given to HECL

3 Site survey Conducted

4 Schduled date of the materail to reach the site

5 Checklist for connectivity to HECL

6 Connectivty done

7 One pager info. Received alongwith MOU/AP agreement

8 NCFM Approved User alongwith copy of certificate has been received

9 Copy of Signed MOU and agreement sent to the branch along with the signing papers

10 BSE & NSE DD nos submitted with the papers to the compliance

11 Sub-broker/AP application has been prepared and sent to exchange for Regn.

12 Whether Remisier/AP application has been prepared and sent to exchange for Regn.

13 Board Resolution for -

14 - For opening Bank A/c/CMS authority(seg to be mentioned) and from which bank

15 - For signing Contracts/Bills

16 Whether Clients Bank A/cs have been opened for NSE & BSE transactions separately. Please mention Bank A/c No.

17 Whether DP A/cs have been opened with NSDL / CDSL. Please mention DP A/c No.

18 Software installation & training at Branch location completed(backoffice,a/c's ,DP training)

19 CTCL IDs uploaded/intimated

BSE /NSE /F&O/NCDEX/*MCX

20 Whether SEBI Certification has been despatched for displaying

21 Whether Notice Board has been despatched for displaying in the format as prescribed by NSE

22 Whether Email Id of the Branch has been created. Please mention email id

23 Prefix code

23 IPO Code

24 Mutual Fund Code

25 Date of commencement of business

Signatures

1 Business Development 2 Operations 3 Compliance

5

DISPLAY OF NOTICE BOARD Note: 1. All the notice Board BSE/NSE/MCX-SX/MCX/NCDEX are a mandatory display in the branch. The ideal size should be 4‟× 3‟ but due to space constraints it can be reduced but in any case will not be in A4 size. 2. Details that are blank (pertaining to branch) have to be filled by respective branch.

3. To be displayed in the main / branch office of the trading member and office of the Sub-broker / Franchise of the trading member

SEBI Registration certificates to be displayed on the notice Board

As per the Bye Laws of the Exchange all offices of the Broker have to display the SEBI

Registration certificates on their Notice Board.

With regards to the same, all branches are instructed to make sure that the certificates

attached are displayed at their branch. The attached certificates are mentioned below:

1. SEBI Registration for NSE Cash

2. SEBI Registration for NSE F&O

3. SEBI Registration for NSE CD

4. SEBI Registration for BSE cash

5. SEBI Registration for MCX-SX

6. Registration for NCDEX

7. Registration for MCX

8. Registration for NMCE

9. Registration for NSEL

10. Registration for ICEX

11. Notice Board for BSE

12. Notice Board for NSE.

13. Notice Board for MCX-SX

14. Notice Board for MCX/NCDEX

6

All the branches are required to take the printouts and laminate the certificates before

displaying on the notice board.

7

NOTICE BOARD:BSE

1. Name of the Trading Member of BSE (SEBI Registration No.)

Anand Rathi Share and Stock Brokers Limited

2. Address & Tel. No. of the Main office of the trading member (Also Name & Tel. No of the contact person in the main office

4th Floor, Silver Metropolis,Jay Coach Compound, Opp. Bimbisar Nagar,Goregaon (E), Mumbai - 400 063. Jugal Mantri 022-40013700

3. SEBI Registration No. of the trading member

INB011371557/INF010676931

4. BSE Investor Service Cell Tel. No. 022 - 22721233/34

Do’s a. Always deal with market intermediaries registered with SEBI/Exchanges. b. Give clear and unambiguous instructions to your broker/agent/depository participant. c. Always insist on contract notes for all the transactions from the main broker (name to

be specified) within 24 hours of the trade execution. In case of doubt of the transactions, verify the genuineness of the same on the Exchange website www.bseindia.com.

d. Always settle the dues through the normal banking channels with the market intermediaries.

e. Always make payment directly to the main broker (name to be specified). f. Always give delivery of shares directly to the main broker (name to be specified). g. Adopt trading/investment strategies commensurate with your Risk bearing capacity

as all investments carry risk, the degree of which varies according to the investment strategy adopted.

h. Always sign a Member-Client Agreement or the tripartite agreement with the trading member & SEBI registered sub-broker of the trading member of BSE as the case may be.

i. Please carry out due-diligence before registering as client with any Intermediary. Also, carefully read and understand the contents stated in the Risk Disclosure Document, which foRMS the part of client registration for dealing through intermediaries in the Stock Market.

Don’ts a. Don‟t deal with unregistered brokers/sub-brokers, intermediaries. b. Don‟t leave the custody of your Demat Transaction slip book in the hands of any

Intermediary. c. Don‟t fall prey to promises of guaranteed returns. d. Don‟t blindly imitate investment decisions of others who may have profited from their

investment decisions.

http://www.bseindia.com/

8

NOTICE BOARD:NSE

AnandRathi

DETAILS OF NSE TRADING TERMINAL

Name of theTrading Member of NSE

Anand Rathi Share and Stock brokers Limited

Address & Tel. No. of the Main office of the trading member

4th Floor, Silver Metropolis,Jay Coach Compound, Opp. Bimbisar Nagar,Goregaon (E), Mumbai - 400 063.

SEBI Registration No. of the trading member

Equity : INB230676935

F&O : INF230676935

CD : INE230676935

Address and Tel. No. of the branch office where trading terminal is located

Name & Designation of the person in-charge/managing the main/branch office

Name, designation & Tel. No. of the contact person in the Main office of the trading member

Mr. Deepak Kedia – Compliance Head

Tel. No.: 40013700 Fax No.: 40013770

Important points to be noted by constituents/investors

Investors desirous of dealing on NSE, should deal only through at trading member

(TM) of NSE or SEBI registered sub-broker of NSE trading member. Constituents should sign a Member-Constituent Agreement or Sub-Broker-

Constituent Agreement with the TM/SEBI registered sub-broker of NSE TM, as the case may be.

Investors should insist on getting contract note or purchase/sale not in the format prescribed by NSE within 24 hours of trade execution from the TM or registered sub-broker as the case may be.

For further details on Investor Rights and Obligations and other related issues, please refer to the Investor Forum Section on the NSE website @ www.nseindia.com or the booklet „Guiding Light for Investor‟ copy of which is available with the TM/registered sub-broker.

ANNEXURE IV: NOTICE BOARD: MCX-SX

http://www.nseindia.com/

9

AnandRathi

DETAILS OF MCX-SX TRADING TERMINAL

Name of theTrading Member of MCX-SX

Anand Rathi Share and Stock brokers Limited

Address & Tel. No. of the Main office of the trading member

4th Floor, Silver Metropolis,Jay Coach Compound, Opp. Bimbisar Nagar,Goregaon (E), Mumbai - 400 063.

SEBI Registration No. of the trading member

CD : INE 260676935

Address and Tel. No. of the branch office where trading terminal is located

Name & Designation of the person in-charge/managing the main/branch office

Name, designation & Tel. No. of the contact person in the Main office of the trading member

Mr. Deepak Kedia - Compliance Head

Tel. No.: 40013700 Fax No.: 40013770

Important points to be noted by constituents/investors

Please deal only through a SEBI registered trading member and ensure to carry out due

diligence before registering as a constituent of any trading member Please read carefully and then execute registration documents viz. Know Your Client

form, Member-Constituent Agreement and Risk Disclosure Document, before starting dealing with trading member

Insist on contract note of the trading member for all trades done by you, within 24 hours and bring any discrepancies to the notice of trading member immediately

Please make payments by account payee cheque / DD in favour of trading member or funds transfer through banking channel and do not involve in cash dealings

For further details on the rights and obligations of investors and other related issues, kindly contact the trading member or the Investor Service Centers of MCX Stock Exchange Limited

NOTICE BOARD:MCX

10

1 Name of the Trading Member (Commodity Broker) of MCX

M/s Anand Rathi Commodities Ltd

2 Name of the Exchange Multi Commodity Exchange of India Ltd

3 Address & Telephone No. of the Main office of the trading member

4th Floor, Silver Metropolis,Jay Coach Compound, Opp. Bimbisar Nagar,Goregaon (E), Mumbai - 400 063

4 Registration No. of the trading member FMC : MCX/TCM/CORP/ 0525 MCX: 10875

5 Name & Designation of the contact person in the Main office of the trading member


Additional details to be displayed in the Branch office

1 Address of the Branch office where trading terminal is located

2 Name & Designation of the person in-charge / managing the branch office

Additional detail to be displayed in the Sub-broker / Franchise office

1 Name of the Sub-broker / Franchise

2 Address of the Sub-broker‟s / Franchise office, where trading terminal of above TM is located

11

NOTICE BOARD:NCDEX

1 Name of the Trading Member (Commodity Broker) of MCX

M/s Anand Rathi Commodities Ltd

2 Name of the Exchange NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED

3 Address & Telephone No. of the Main office of the trading member


4 Registration No. of the trading member

FMC : NCDEX/TCM/CORP/0178 NCDEX : 00147

5 Name & Designation of the contact person in the Main office of the trading member


Additional details to be displayed in the Branch office

1 Address of the Branch office where trading terminal is located

2 Name & Designation of the person in-charge / managing the branch office

Additional detail to be displayed in the Sub-broker / Franchise office

1 Name of the Sub-broker / Franchise

2 Address of the Sub-broker’s / Franchise office, where trading terminal of above TM is located

12

CONTRACT NOTES (CN) & APPOINTMENT OF AUTHORISED SIGNATORIES

1. CN must be issued to ALL the clients within 24 hours. 2. Duplicate acknowledged copy of CN to be maintained. 3. CN No. must bear running serially no. by software starting with no. 1 every

calendar/financial year. 4. PAN of the Client must be printed on the CN mandatory. 5. Signature of client must be taken on duplicate copy/counterfoil of CN and Proper

records showing dispatch of CN be maintained. 6. CN to be signed by an Authorised Signatory duly authorized with a Board Resolution

to be passed by HO and the same after being signed by the authorized signatory will be submitted to the exchange for their records and approval and only after the same is intimated by the HO the Authorised Signatory will start signing and issue contracts.

Authorised Signatory would be appointed once the request is made by the branch, naming the authorized person

13

Authorised Signatory Format

Note: Print On respective letterheads (BSE – ARSSBL; NSE – ARSSBL; Commodities –Anand Rathi

Commodities Ltd) -2 copies. Send original copies with specimen signatures to HO

- NSE-

AUTHORISATION FOR SIGNING CONTRACT NOTES, BILLS ETC.

Pursuant to the resolution passed by the Board of Directors of Anand Rathi Share & Stock Brokers Ltd. at their meeting held on 10th January 2007 the undersigned persons are authorized to modify, add to and delete the list of authorized signatories for signing and issuing Contract Notes and Bills.

APPOINTMENT OF AUTHORISED SIGNATORIES

Under the authority delegated by the said resolution we hereby authorize the following persons to SEVERALLY deal, sign, and execute the Agreements, Bills, Contract Notes, Debit Notes etc. on behalf of the Company,with effect from (date)_______________ in respect of transactions executed on the National Stock Exchange of India Ltd. whereat the Company is a member.

Branch Name Authorised Persons Specimen Signatures .....................Branch .......................... ................................. REMOVAL OF AUTHORISED SIGNATORIES

.....................Branch .......................... .................................

For Anand Rathi Share & Stock Brokers Ltd.

Deepak Kedia/ Narendra Jain. Authorised Signatories

14

- BSE-


Pursuant to the resolution passed by the Board of Directors of Anand Rathi Share and Stock Brokers Ltd . at their meeting held on 22nd Mar 2010 the undersigned persons are authorized to modify, add to and delete the list of authorized signatories for signing and issuing Contract Notes and Bills.


Under the authority delegated by the said resolution we hereby authorize the following persons to SEVERALLY deal, sign, and execute the Agreements, Bills, Contract Notes, Debit Notes etc. on behalf of the Company, with effect from (date)_______________ in respect of transactions executed on the Bombay Stock Exchange Ltd. whereat the Company is a member:


.....................Branch .......................... .................................

For Anand Rathi Share and Stock Brokers Ltd

Deepak Kedia/ Narendra Jain. Authorised Signatories

15

-COMMODITIES-


Pursuant to the resolution passed by the Board of Directors of Anand Rathi Commodities Ltd. at their meeting held on 10th June 2006, the undersigned persons are authorized to modify, add to and delete the list of authorized signatories for signing and issuing Contract Notes and Bills.


Under the authority delegated by the aforesaid resolution, we hereby authorize, for a limited purpose, the following persons to SEVERALLY deal, sign, and execute the Member Constituent Agreements, Bills, Contract Notes, Debit Notes etc. on behalf of the Company, with effect from (date) _______________, in respect of transactions executed on the National Commodity and Derivatives Exchange Ltd. and Multi Commodity Exchange of India Ltd.Where at the Company is a member. The authorization may be withdrawn at any time without any prior intimation.


.....................Branch .......................... .................................

For Anand Rathi Commodities Ltd.

Deepak Kedia/ Narendra Jain Authorised Signatories

16

ALLOTMENT OF BACK OFFICE LOGIN ID

Branch opening information for Backoffice access

Level-I Name of the Branch

(Here give the name of citi , if only one branch is

there , if more than one then give place name also)

Address of the Branch

(Give Full address , with the state also)

Franchise/Own

(Please specify own/Franchise)

Name of authorised person

(Give name of the person who will sign the contract notes)

Existing/New

Class Login Required Yes/No

Segments

Prefix Required

Telephone No. and Email Id

Level-II Name of the Sub-Branch/Sub-Broker

(Here give the name of citi , if only one branch is

there , if more than one then give place name also)

Address of the Sub-Branch


Franchise/Own




Existing/New

Class Login Required Yes/No

Segments

Prefix Required

Name and Address of the Branch under which this

sub-Branch is placed


Level-III Name of the Trader

(Please specify full name also short name)

Address of the Traders


Franchise/Own




Existing/New

Class Login Required yes/No

Segments

Prefix Required

Name and Address of the Branch/Sub-Branch under

which this Trader is placed.


Notes:

1. Please fill the full form , if any column is not applicable , please write n.a.

2. If only branch is to be created , fill up the level I only.

3. If only sub-Branch/Sub-Broker is to be created , fill up the level I and II only rest mark as n.a

4. If trader is to be created fill up the all the level

5. Please send duly signed copy to EDP deptt for needful.

Name of Regional Director/BD Head

Signature

Date

17

ALLOTMENT OF TERMINAL ID 1. Persons operating the trading terminal (NEAT/CTCL) must have compulsorily

passed the NCFM certification exam for Cash/ Derivatives/ Commodities. 2. Prior approval of HO/NSE is required to be taken before allotment of NEAT/CTCL

terminal Id‟s.

3. Operation of trading terminal without passing NCFM exam leads to heavy penalty being charged by NSE including suspension.

4. Change in person operating the NEAT/CTCL terminal required to be informed to

HO/NSE

BSE Ids Cash: Certificates to be provided

As per our earlier mail with reference to BSE Notice No.20070522-25 dated 22nd May 2007 it has been made clear that all the BSE CASH Ids (BOLT TWS / IML(CTCL) IDS) running in respective branches will have to provide the mandatory BCSM certificate for their respective User Ids. Incase of failure to provide the same their respective Ids will be deactivated. All existing Id details in IML format available in Intra.rathi.com FAQ- Excel along with their relevant certificate/marksheet should be mailed to [email protected] ; [email protected] The details of registration and examination centre along with the contact details have been provided below. All are instructed to get in touch with their nearest centre and get their users registered and send across the certificates/marksheet along with the said format before the due date. The list of your respective User Ids along with the User Names will be mailed to you shortly.

mailto:[email protected]


18

Procedure to be followed by branches to get through BCSM Exam There are 6 centers available all over India. Branches can directly co-ordinate with nearest center of that region. http://www.bseindia.com/training/zedca.asp

1. Visit site bseindia.com/Bse Training institute/BTI Information/BCFM certification/BCSM module/ at the end of page will see link for registration form and admit card http://www.bseindia.com/training/bccsmtest.asp

2. Rs. 843/- as fees for each candidate/ cheque at payable at par or D. D. payable at Mumbai for all over India candidates. (Member‟s cheque is acceptable)

3. Group of 20 or more candidates can apply together with single cheque payment. 4. Schedule for exam is

a. Monday to Friday between 11 a.m. to 4 p.m. b. Saturday between 11 to 1

5. http://www.bseindia.com/training/faqcert.asp for more questions related to BCSM Exam

http://www.bseindia.com/training/zedca.asp

http://www.bseindia.com/training/bccsmtest.asp

http://www.bseindia.com/training/faqcert.asp

19

Connectivity Layout

ONLINE

BSE NSE MCX /

NCDEX

NEST

OMNEYSIS NEST

OMNEYSIS

ODIN

DIET- FT

CTCL

DEALER

CLIENT CTCL

DEALER

CLIENT CTCL

DEALER

CLIENT

ONLINE

CLIENTS

ONLINE

CLIENTS

ONLINE

CLIENTS

OFF

LINE

BSE NSE MCX NCDEX

TWS

BOLT

VPN

CTCL

ODIN

NEAT

USER ID

VPN

CTCL

ODIN

USER ID VPN

CTCL

ODIN

USER ID VPN

CTCL

ODIN

20

LOCATION OF TRADING TERMINALS Trading terminals to be located at -

1. Members‟ Office -- Rented/Owned/Licensed premises

2. Members‟ Branch Office 3. Registered Sub-Brokers Office

4. Terminal located at place other than above mentioned places, will be deemed

to be office of Member

Internet trading terminals used by clients may be located at the clients place. TWS Bolt ID – Details to be provided

1 TWS(0)

2 PIN CODE

3 TWS ID

4 USER ID

5 PROG-TRAD

6 VENDOR-CODE

7 BCSM Reg. No

8 Validity of BCSM

9 Reg Office Address

10 Office City

11 Office State

12 Office Pin

13 Nature of Office

14 Phone/Fax No

15 Employee Code/ Franchisee Code

16 First Name

17 Middle Name

18 Last Name

19 Mapin Id

20 Sebi Reg No

21 Relation with approved user

22 Date of Birth

23 Date of Activation

24 Date of Deactivation

25 Residence Address

26 Residence City

27 Residence Stat

28 Residence Pin

29 Active Terminal

30 Mode of Connectivity

21

NSE CTCL ID :- Details to be provided

1. Market Segment

2. NEAT User Id

3. CTCL Terminal Id

4. CTCL LogIn Id

5. Purpose of CTCL

6. Date of Allotment

7. Date of Disablement

8. Office Status

9. Office Address1

10. Office Address2

11. Office Address3

12. State

13. City

14. Office Pin Code

15. Telephone No.

16. Connectivity Mode

17. NCFM Reg. No.

18. Employee Code/ Franchisee Code

19. Approved Person Name

20. Approved Person's Father Name

21. Date of Birth

22. validity Date

23. MAPIN No.

24. PAN No.

25. Relation

26. Sub-Broker SEBI code

27. Sub-Broker name

28. Authorised Person name

29. CTCL Status

22

NCDEX CTCL ID :- Details to be Provided

1 SR NO

2 RECORD TYPE

3 SEGMENT

4 VPN/LEASED LINE ID

5 USER ID

6 TERMINAL ADDRESS 1



9 CITY

10 PIN CODE

11 STATE

12 TEL NO

13 FAX NO

14 EMAIL ID

15 CONTACT PERSON

16 DESIGNATION

17 MODE

18 Employee Code

19 APPROVED PERSON

20 FATHERS NAME

21 DOB

22 RES ADD 1

23 RES ADD 2

24 RES ADD 3

25 CITY

26 PIN CODE

27 PERMANENT ADD 1

28 PERMANENT ADD 2

29 PERMANENT ADD 3

30 CITY

31 PIN CODE

32 RELATIONSHIP with A P

33 CTCL ID

34 DATE OF ACTIVE

35 DATE OF DISABLE

36 PAYMENT

37 NCFM REGN

38 VALID UPTO

39 PURPOSE

40 AUTH PERSON

41 VENDOR

42 STATUS

23

CLIENT INFORMATION SHEET (ONE PAGER) 1. Branch to obtain information of client in one pager form i.e. Client Information Sheet (CIS). 2. Client Code to be allotted based on the said information and respective prefix allotted to branch.

CLIENT INFORMATION SHEET

Exchanges Applicable: BSE NSE F&O

Name of the Client

Client Code

Status of the Client Individual/HUF/Firm/Corporates Individual

Client Address

Residence

Office

Phone no Res. Office no. / Mobile no.

PAN No. Email

Date of Birth Passport No Date Of Issue

Expiry Date Place of Issue

Client Bank Details Client DP Details

Bank Name Name of the DP

Branch DP ID

Bank A/c No. Client ID

ARSPL Bank Details NCSPL Bank Details

Name of the Bank

HDFC Bank Name of the Bank

HDFC Bank

Branch Mumbai Branch Mumbai

Bank A/c No. 0‟12320000343

Bank A/c No. 0‟600340005097

Broker DP Details

DP Name ARSPL NCSPL

DP ID 10600(CDSL)

IN301803(NSDL)

IN 301803

CM BP ID 030 (CMID)

IN651983(NSDL)

IN 559169

Brokerage Structure

Square Up _______% _______Min Delivery _______ % ________Min

(Both Sides / Single Side) + Other Charges *

+ Other Charges *

Service Tax (as per applicable) presently 10.2%, (* Other charges include Turnover tax, Transaction Charges & Stamp duty )

Specific Instructions for Operations

Date : Signature : Prepared by : Signature : Name of EDP dept person : Signature : Name of Authorised person : Signature :

24

CRF PROCEDURE - OFFLINE

START

CRF to AOT from

Branches

With Excel format of KYC

mailed to AOT Dept.

And Pending CRF status

Fully checked with

the mandatory fields

and proofs.

Entered in the system,

CRF to be filed,

Alloted a file no.

For permanent record

AOT . updated on daily

basis about the file no and

the CRF in that file.

IF SATISFIED

Follow up

with

Branches

IF N

OT

SA

TIS

FIE

D

END

For proofs,

completed

documents

and pending

CRF status

25

CRF PROCEDURE

1. CRF will be dispatched to branches / Franchisee out of Mumbai on the receipt of their

requisition letter via e-mail. For Branches and Franchisee situated in Mumbai region, the respective branch office personnel‟ can collect the CRF from the HO on Saturday’s before 2.30 PM, on producing properly filled and duly signed [by the branch head] requisition letter.

2. CRF’s shall be dispatched by branches / Franchisee to HO on daily basis, to below mentioned address with email of KYC format [ of those CRF‟s which are sent to us through courier ] at, [email protected] ,and [email protected]

Address to send CRF: Anand Rathi Share and Stock Brokers Limited Compliance dept. 4th Floor, Silver Metropolis,Jay Coach Compound, Opp. Bimbisar Nagar,Goregaon (E), Mumbai - 400 063 Tel: (B) :+91-022-40013 700 (D) :+91-022-4001 3894/3752, (F) :+91-022-4001 3770

3. On the receipt of the CRF‟s, the confirmation will be made to the branch / Franchisee

through the KYC mail received earlier by branch / Franchisee [ Without KYC Check] 4. Kindly send CRF details in KYC format as ( soft copy and hard copy of KYC format),

while sending it to HO. 5. On the receipt of CRF at HO, it shall be franked [Without KYC Check]. Please ensure

that the client does not trade before the CRF gets franked at our ends. 6. After franking, CRF KYC check shall take place. KYC checklist attached. 7. For the CRF‟s completed in all respect, confirmation receipt [KYC Check] shall be

made to branches / Franchisee by the Account opening Team[AOT] via e-mail. 8. Incomplete CRF‟s [ in any respect ] shall be returned by HO to the respective Branch

/ Franchisee and the same shall be intimated via www.intrarathi.com. 9. Follow up for the incomplete CRF‟s would be done by AOT

AOT shall check, audit and keep a track on the CRF. You may find attached the CRF procedure, email audit format and KYC format, which will be practiced at HO, Mumbai, by the AOT. Further, it is proposed that all the branches have to scan the CRF [KYC only] along with the supporting documents and upload it on www.intrarathi.com as per the Unique Client code allotted.


http://www.intrarathi.com/

http://www.intrarathi.com/

26

FORMAT FOR CRF REQUISITION

Date :

To,

Head Office

Compliance Dept

Dear Sirs,

Subject: Requisition Letter – Offline Segment

We require Client Registration Form. The details are mentioned below.

Particulars BSE NSE/CD/MCX-SX COMBINE BSE/NSE COMMODITY

Ind Non Ind Ind Non Ind Ind

Stock as on date - NIL

Less: CRF sent to HO

Balance CRF -

Add : Requirement -

Total Stock -

Note: Kindly give BSE & NSE/CD/MCX-SX Franking forms separately.

Kindly give the CRF‟s who holds this requisition letter.

Regards,

Name of the Branch

Name & Signature of Branch Manager

27

KYC CHECKLIST

1. The AOT shall check the CRF’s in totality with proofs. No mandatory field should be left blank and necessary supporting documents should be attached. List of mandatory fields and supporting documents attached.

2. All the supporting documents shall be self attested by the client. 3. NO CRF SHALL BE ACCEPTED WITHOUT COPY OF PAN CARD (both sides) [

verified with the original by the branch / franchisee ] 4 AOT shall audit and any incomplete CRF shall be returned back and be treated as

not received. Those branches sending incomplete CRF‟s will be kept a track of and the management will take a strict action against the defaulting branches.

5. AOT shall maintain KYC in excel format of all the completed CRF‟s. 6. CRF‟s complete in all respect shall be allotted a file number and be placed in the

same for future references

7. Follow up with branches for pending CRF‟s

8. Monthly audit report shall also be sent to respective Branches / Franchisee

9. Under mentioned are the mandatory fields: 1. Name 2. Date of Birth 3. Residential Status 4. Residential Address/Office Address(City & State, Country, Nationality, Pin

Code) 5. Details of Bank Account (Bank Name, Address, Account No., Nature of

Account)

6. Details of Depository Participant 7. Details of Introducing Client 8. Check Signatures of the client wherever (x) is marked and also cross

signature on photograph

9. Franked page should be fully filled up with date, name and address. 10. Generally Branch manager‟s are being authorized to act and sign as

authorized signatory and thus should sign on the member – client agreement. In exceptional circumstances any other authorized signatory from the branch may do so. Check Client‟s signature on the MCA. One witness each should sign from our side and client side.

28

DOCUMENTARY REQUIREMENTS

[ check the Supporting Documents as per the list ]

For Individual

PAN card (2 Copies)[ both sides ]

One color passport size photograph

Bank Proof and Income Proof

Address proof [ List of documents acceptable as Add. Proof mentioned below ]

For Sole Proprietorship

PAN card (2 Copies)

Proof of Address [ List of documents acceptable as Add. Proof mentioned below ]

One color passport size photograph of the Proprietor

Letter from the banker, certifying the Account Number

For Partnership Firm :

PAN card copy of the firm and of atleast 2 partners (2 Copies each) [both sides] One color passport size photograph of atleast each of the two Partners Copy of Partnership Deed. [ Duly certified ] Sharing pattern [revised to be submitted every six month ]. Declaration on the letterhead of the Partnership firm, signed by all partners,

agreeing to open a trading account with members and stating the authorized Signatory to deal with members

Copies of Annual Report of last three years. [audited] Networth Certificate [of minimum two partners ] Letter from the banker, certifying the Account Number Copy of Income Tax Return of the Firm and of minimum two partners. Personal Details of Partners [ to be filled in the CRF at the space provided ] Address proof of Office and Residence proof of minimum two partners Other mandatory requirements for opening partnership accounts:

1) Investment clause to invest in commodities [ in the partnership deed] 2) Demat account in the name of the partner.

29

For Corporate accounts:

Copy of PAN card of company and of atleast two Directors(2 Copies each)

One color passport size photograph of atleast each of the two Directors

Copy of MOA and Copies of balance sheet for last 3 financial years.

Share holding Pattern [ revised to be submitted every six month ]

Copy of the resolution of board of directors approving participation in commodity trading and naming authorized persons for dealing in commodities.

Address proof of company and Residence proof of minimum two Directors

Letter from the banker, certifying the Account

Networth Certificate [of the company and of minimum two Directors.]

Personal Details of Promoters/Directors [ to be filled in the CRF at the space provided ]

GENERAL INSTRUCTION

Please ensure that the form is properly filled up, attached with the copies of the required documents and complete in all respect [ please do not leave any column blank ]

Please check weather full signature are affixed where ever an “X” mark is found. Check initials where ever blank space is filled in by the hand in the “member-client agreement”.

Each client should use separate registration form. Individual has to affix 6 full signatures where “X” marks is found and 1 initial at the

beginning of the “Member-Client Agreement” where “X” mark is found i.e a total of 7 signatures [ excluding signatures across the photograph ]

Each Partner has to affix 7 full signatures where “X” marks is found and 1 initial at the beginning of the “Member-Client Agreement” where “X” mark is found i.e a total of 8 signatures [ excluding signatures across the photograph ]. Please put the rubber stamp of the Partnership on every full signature

Each Director has to affix 7 full signatures where “X” marks is found and 1 initial at the beginning of the “Member-Client Agreement” where “X” mark is found i.e a total of 8 signatures [ excluding signatures across the photograph ]. Please put the rubber stamp of the company on every full signature.

30

List of documents approved as Address proof.

Particulars Address

Proof

Driving License (name, address and

photo page)

Yes

Passport (copy of name, address and

photo pages)

Yes

Voter‟s Identity Card (front and back) Yes

Bank Passbook / Bank Statement Yes

Ration Card Yes

Electricity Bill Yes

Telephone Bill Yes

Leave- License Agreement Yes

Flat Maintenance Bill Yes

Flat Agreement Yes

FORMAT FOR DISPATCH OF CRF Date of Dispatch

P.O.D No.

Courier Name

Email Id:

Total Forms

Branch Name

Sr No Date CRF

Series No.

Client Code

Name of

Client

PAN No

BSE NSE F&O COMMODITY TRADE DATE

Remark

31

UCC PROCEDURE & CLIENT CATEGORY 1. NSE & BSE UCC will be uploaded at HO, branches will be required to upload proper

UCC details in Pradnya (Back Office) for the same. In addition the name of the client should be uploaded as per the name in PAN card , copy of the Pan card should be sent to HO.

2. NCDEX & MCX UCC will also be uploaded from HO. Branch has to provide all the

relevant UCC details while adding a client

To make it a successful implementation, you all are requested/instructed to enter proper details of the client at the time of adding the client into Pradnya. The following fields are to be entered compulsorily and properly at the time of adding the client:

1. Branch code

2. Client type

3. Party code

4. Name (Long Name and Short Name)

5. Residential Address (Permanent / correspondence) (City & State, Country, Pin Code)

6. PAN Card No

7. Sub broker code,

8. Trader code

9. Client Status

10. Region code

11. Area code

12. Dealer code

13. Details of Bank Account (Bank Name, Address, Account No., Type of Account)

14. Details of Depository Participant

15. Date of Birth

16. Gender

17. Introducer Details

Please note that getting successfile of the client codes uploaded at exchange level purely depends upon the data entered into Pradnya. Therefore branches will be held responsible for rejection of the codes and the penalty levied by the exchange would thus be passed on to the defaulting branch.

32

Appropriate UCI category to be allotted to client in Pradnya

With reference to the circular issued by National Stock Exchange (NSE/INVG/2006/32) it

has been made mandatory for displaying the appropriate UCI status of the client to the

exchange. Acting on the same the necessary changes have been made in Pradnya

software.

All the branches are required to upload the details of the client with the appropriate UCI

category status of the client from the table mentioned below:

Category Code

Individuals 1

Partnership Firms 2

HUF 3

Public & Private Companies / Bodies Corporate 4

Trust / Society 5

Mutual Funds 6

Domestic Financial Institutions (Other than Banks & Insurance companies) 7

Banks 8

Insurance Companies 9

Statutory bodies 10

NRIs 11

FIIs 12

Overseas Corporate Bodies 13

The client mapping in Cash and F&O will not take place for all the branches failing to do so as the codes will be rejected by Exchange. Please comply with immediate effect. The queries in this regard can be addressed to the Compliance Department

33

SHIFTING & CLOSURE OF CLIENT

Note:1. Incase a client is shifting from one branch to other the formalities to be carried out by the branch is provided in this format. Account closure format must be collected in case of client shifting 2. Branch manager in the Old as well as New has to make sure all the formalities are completed before shifting. Activation and deactivation will take place on the same day once a mail is sent with the Old and New client codes along with the scan copy of the format to EDP; RMS and Settlement Dept. 3. Printout on plain paper. CRF will be collected only if Old CRF is missing. All the fields in the format are to be filled before submission of the scanned copy to all concerned depts..([email protected] (RMS); [email protected] (EDP); [email protected] (Settlement) and cc to [email protected] ). If any field is empty the form will be rejected

FORMAT FOR APPLICATION FOR SHIFTING OF CLIENT Date : To,

Anand Rathi Financial Services Ltd/ Anand Rathi Share & Stock Brokers Ltd/ Anand Rathi Commodities Ltd

Dear Sir, I _________ (Name of Client) having trading account with you, _______ (Client Code) would like to shift my trading account from your _______(Branch) to _______(Branch) due to___________________________________________________(Reason for change). I authorize you to deactive my earlier account and issue a new client code________ as per _____Branch. Thanking You, (Name of Client & Signature) Branch Manager





34

Checklist to be confirmed by Branch Manager before submission to compliance Dept:

Sr No Particulars Confirm From

Yes / No

1. CRF Confirmed by the Branch Branch

2 Client code Deactive from Mapping RMS

3 Old Client Code & DP details Deactive in Back Office Software. EDP

4 Letter from the Client for closing of Trading A/c Client

5 Account must be Zero Branch

6 Shares must be Transfer to Client A/c Branch

7 New client Code ------------------ New Branch

Note: If all the answers are not Yes the transfer will not be valid from Compliance point of view.

35

ACCOUNT CLOSURE Note: 1. Incase a client is closing his account the formalities to be carried out by the branch is provided in this format.

FORMAT FOR REQUEST LETTER FOR CLOSURE OF TRADING ACCOUNT

To The Branch Manager Branch: Dear Sir,

I am having a trading a/c with *(Anand Rathi Financial Services Ltd/ Anand Rathi Share & Stock Brokers Ltd/Anand Rathi Commodities Ltd.) vide client code ____________ and D-Mat ID ____________________. I would like to close my trading account as

Reasons:

Unhappy with service.

Moving residence, no Anand Rathi Branch near residence/ office.

Moving from the city, no convenient branch in new city.

Others

If Others: -------------------------------------------------------------------- I request to please close my account bearing client code __________ with immediate effect. Client Details

Name

Address

Contact No.

I certify that there are no dues pending w.r.t funds and securities in my account. Yours truly,

Signature of Client:

Verification by branch Manager: Branch: Dated:

Remark On Date Confirmed by Yes/No

CRF Collected * BSE/NSE/F&O/Commodities Branch

Deactivated from RMS & EDP By ………… By …………

RMS & EDP Dept.

Complaint pending (if any) Branch Head

Ledger Balance Amount: Rs Branch Head

Shares Transferred Branch Head

Remarks: Branch Head

If Client shifting (New code) New Branch

Strike out if not applicable.

Note: If all the answers are not Yes the transfer will not be valid from Compliance point of view

Signature & Name of branch manager:

36

Guidelines to be followed before trade in Client Codes

Kind Attn: OPM/ Branch Managers Especially Dealers/ Backoffice Staff The term „Branch‟ wherever mentioned includes own branch as well as franchisees. For NEAT(Direct terminal for NSE Cash & F&O Codes): Use F12 : Supplementary menu/ Client Master Maintenance: Add all the active list of clients in NSE (or File upload facility) For BOLT (Direct terminal for BSE cash): Use Shift+F12: Add clients active in BSE (or File upload facility) No trade should be carried out in codes which are not available in the list. Instructions: 1. Ensure that all the data entered in Backoffice software (PRADNYA) & WEBX are cross

checked and verified with relevant supporting documents (self attested by client) accepted along with CRF (Registration/ Trading forms) (CRF should be completely filled in all respects) E.g. Verify Name of Client with PAN card; PAN details with the website http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp. OR https://onlineservices.tin.nsdl.com/TIN/PANVerification.do Income slab with Salary slip (for Individuals) / Net worth certified by CA(for Non- Individuals) every 6 months For more go through the circular folder available in intra.rathi.com / Compliance Any discrepancies found at this level should be immediately reported.

2. Mapping of clients to respective terminals should be carried out after success received from the respective Exchanges. Active list of clients should be checked before mapping.

3. Any changes to be made in PRADNYA(to EDP..) or Exchange (to Compliance in UCC format to [email protected] ) will have to be sent in format already stipulated.

4. No special request will be entertained to allow trade in a code that is not there in the active list

5. Any client who wants to discontinue his account and dispose his shares but has no proper mandatory details like PAN will have to rematerialize his shares. But no trade must be allowed in the client codes.

6. Any shifting or account closure of client will be done as per procedure available in Intra.rathi.com / Compliance folder.

7. Branches are requested to go through the attachments thoroughly before placing a call to HO. Also keep yourself updated on a daily basis with the circulars and details provided in Intra.rathi.com / Compliance folder as per the path mentioned below.

http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp

https://onlineservices.tin.nsdl.com/TIN/PANVerification.do


37

Branches failing to comply to these instructions will be strictly dealt with by Compliance dept. including termination of BOLT & NEAT of defaulting branches without any further notice. The action taken by the department will be binding.

Guidelines to be followed for mapping Clients in commodities This is to bring to your notice that all the clients in MCX & NCDEX that are sent to the EDP dept. for mapping will be taken for uploading on same day to the Exchange only if the details are received before 5 pm every day. Any client details received thereafter will be added for upload to the Exchange the next day. The success of all the codes is received by the Exchange in a day if not rejected by Exchange. Thus any client details provided i.e fed in Pradnya before 5 pm will be activated the next day in MCX & NCDEX following the Exchange success file received around 11am. The reject codes will be intimated to branches. Inorder to reduce the rejection rates please note the mandatory fields in Commodities as under:

1. Segment 2. Client Name 3. Client Code 4. Complete Address including STATE ;COUNTRY & PINCODE 5. PAN details (without any special characters or space and after verification with

Income tax site. http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp.) 6. Date of Birth incase of Individual and Registration date for Corporates along with

Place of registration. 7. Select similar client Status & Category (e.g:If status Is HUF the category will by

default be HUF)

All Branches are instructed to follow procedure for smooth operation of the account opening process. No special request will be entertained for activation of new clients without proper success received from Exchange.

http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp

38

RMS PROCESS FLOW

MARGINS AND LIMITS

AUTOSQUAREOFF PROCEDURE

COMMON RMS

Limit Calculation for online client & offline client

All exchange limit - Sum of Following (For all Online / Offline client) o Clear Cash balance

o 1/3 of unclear cheque and CMS in Cash segment

o NSECDS and F&O Ledger

o NSECDS and F&O Collateral

o CMS in F&O and NSECDS segment

o Minus Unsettle sale value

o Collateral benefit on holding lying in DP. Pool and BTST

NSECDS and F&O Limit – Only for NON LOA (Offline):

Sum of Following o NSECDS and F&O Ledger

o NSECDS and F&O Collateral

o NSECDS and CMS in F&O segment

Some point to be noted: o Non Loa client will able to take Cash market position on the basis of free F&O and CDS

Limit.

o Non LOA client couldn‟t take position in F&O or in CDS segment on the basis of free

cash balance.

o No separate F&O and CDS limit is calculated for LOA client.

o Client can use free F&O and CDS deposit for additional buying in cash segment and vice-

versa.

Summary of Limit Status

Client Type LOA Type Combined Limit ( Cash + F&O + NSECDS ) F&O Limit CDS Limit

Online LOA YES NO NO

Online NON LOA YES NO NO

Offline LOA YES NO NO

Offline NON LOA YES YES YES

39

o Limit consumption of online client will be same as per offline client..

Proposed System of Online client Client Type Scrip which is to be bought Intraday Limit Delivery Limit

LOA Client / Non LOA Client

VAR +ELM < 25% 25% 25%

VAR +ELM > 25% Actual Margin % Actual Margin %

Calculation of Collateral Benefit (Online / Offline)

Collateral benefit will be available on the basis of scrips which are lying in Client DP, Pool

and BTST. Hair cut will be actual VAR +ELM Margin but Minimum of 25 %.

40

AUTO SQUARE OFF – BSE AND NSE CASH SEGMENT (AGEING BASED)

Applicability

1. Client having net debit balance on t+4th working day will be squared off on t+5th morning (irrespective of coverage).

2. Minimum Ageing / Square off amount will be Rs. 5000. 3. Auto Square off orders will be generated at 105% of required Square off/ Debit amount.

However, actual square off amount could be less than or equal to the actual square off amount depending on market price.

Criterion

1. Will be considering F&O free ledger balance while calculation of square off amount. 2. CMS entries entered in WEBRMS by branches until 8.15 a.m. on T+5th day will be taken

into consideration while calculation of square off amount. 3. Any shortfall amount remaining after square off has to be collected by the branches.

Procedure: 1. RMS will generate Square Off report at 6.30 pm on t+4th day’ evening and Final Square

off report will be generated on t+5th day morning around 8.30 am. Simultaneously, these reports shall be made available to front offices on WebRMS.

2. Ho- RMS will carry-out square off as per final Square Off report between 9.00 am to 9.20

am via file upload on direct terminal.

3. Square off Client codes’ holding which is to be squared off will not be uploaded into the

Omnesys. 4. Scrip identification: Scrip identification for auto square off, will be on the basis of least

impact cost** with adequate quantity nearest to the square off amount. In case of insufficient value of scrip having least impact cost, the scrip having next least impact cost

(nearest to the square off amount) will be selected for square off.

5. Holding location : POA client- Order priority to square off will be Pool, DP and BTST respectively.

Non POA Client: order priority to square off will be Pool and BTST respectively. Scrip identification process will be in the given order in each holding location.

6. Pool and BTST holding will be squared off in respective exchange at which purchases are made by the client. In case client having both segment rights then DP (POA) holding will

be squared off in NSE segment and otherwise DP (POA) will be squared off in the segment where client has right to trade.

**Meaning of Impact Cost =

Impact cost is calculated by taking four snapshots in a day from the order book in the past six months. These four

snapshots are randomly chosen from within four fixed ten-minutes windows spread through the day.

The impact cost is the percentage price movement caused by an order size of Rs.1 Lakh from the average of the

best bid and offer price in the order book snapshot. The impact cost is calculated for both, the buy and the sell side

in each order book snapshot

The buy side impact cost (or sell side impact cost) is the simple average of the buy side impact cost (or sell side

impact cost) computed for all the snapshot observations in the past 6 months.

Impact cost for the purpose of all computations shall be Mean of such buy side impact cost and sell side impact cost.

41

AUTO SQUARE OFF – FUTURE & OPTION SEGMENT: (similar to present procedure in

Commodity Market)

POLICY CHART

(A) (B) AUTO SQUARE OFF AMOUNT

REPORTABLE MARGIN (includes Ledger balance in F&O, ledger balance in BSE Cash Market, Ledger balance in NSE cash market, collaterals accepted by us, family a/c credits - mapped in back-office at the end of day or CMS entries received before 8.15 a.m. on the square off day)

REQUIRED MARGIN (includes initial margin/ exposure margin/ M TO M /any other Adhoc or special margin imposed by Exchange on time to time at the end of day)

1. Reportable margin (A) is less than 30% of Required Margin (B) Auto Square will take place to the extent of shortfall, in the morning between 9.00 a.m. to 10.00 a.m. on next day

2. Reportable margin (A) is below 75% of Required Margin (B) for 3 consecutive days ; Auto Square will take place to the extent of 50% of shortfall in the afternoon between 2.00 p.m. to 2.45 p.m. on 4th day

Type of Risk Reports:

Square off Report – This report will include list of clients in Auto square-off categories.

Priority & procedure:

1. The branch has to enter CMS Slip No. in Webrms before the cut off time for square off.

Additional collateral given by the client has to be confirmed by the branch via an email for

necessary exclusion of the client from the auto square off list.

2. RMS will take out the square off report at around 9.00 a.m and 1.45 p.m once the collection of

cheques / Securities collateral is updated in the back office system.

3. Square off will be done in morning and afternoon session on the Basis of F&O Square off

report.

4. Scrips consuming higher margins will be squared off from OMNESYS Admin terminal to the

nearest tradable lot size covering the shortfall amount.

5. In case the overall margin required is short by Rs. 20000 or less then the client will be

excluded from the Square off list.

6. The amount of square off will be the amount remaining after the difference of Reportable

margin and the Total Margin required.

Information to the branches:

1. Auto Square Report will be informed to Regional Director and Operation Manager at 8.30

a.m.

2. The squared off position will be informed to the branches after position squared off through

intranet.

Format of Square off Report:

Followings details will be provided in the reports –

42

Square Off Report

Party Code

Rep Margin

BSE Bal

NSE Bal

Other Seg Credit

Family Credit

Total Rep Margin

Total Margin Required Shortfall

Margin Availability % Morning/Afternoon

Client A -88979 0 13626 13626 -5819 -75353 938196 -1013549 0 Morning

Client C 193891 8227 20000 28227 0 222118 405902 -183784 54.72 Afternoon

1. party code

2. Rep. Margin - (ledger bal + cash collateral +non cash collateral )

3. bse bal – ledger balance of bse segment 4. nse bal – ledger balance of nse segment

5. other segment Credit – col. 3+4 6. Family credit – sum of ledger balances of client’s family

Note: only family credit will be considered in calculation of shortfall. Family means – those clients which will exist in back office as family members and

also include his parents Balances – as per above calculation for bse ,nse, fno, mcx, ncdex

7. Total Rep .margin – col. 2+5 total available deposit of client against open position.

8. total margin required – total margin consumed by open position of the client (initial margin + exposures margin(if any))

9. shortfall – (col. 7 minus col. 8) PLUS col. 6 10. margin availability % - (col. 7 plus col.6(if credit) / col.8 . total margin available against

the margin required

NOTE: if we click on any row than there is display of family members of that client with free

balances of the entire segment.

Overall position Report --

Above details regarding overall position of the clients, which are shown in square off client report –

Overall Position Report

Party Code symbol

instrument_type

option_type

Expiry Date

Trade able Lot

No. Of Lots

Available Quantity

closing Rate

closing Value Per Lot

Contract Value

Margin %

Margin Per Lot

Total Margin Required

Total Report-able_ Margin ShortFall

Margin Availability % Morning/Afternoon

Client A MAHSEAM FUTSTK 29-Nov-07 600 13 7800 480 287850 3742050 20.31 58462 760010

Client A ORCHIDCH FUTSTK 29-Nov-07 1050 5 5250 224 235253 1176263 15.78 37123 185614

Client A TOTAL 945624 -75352.93 -1013549 0 Morning

Client B CAIRN FUTSTK 29-Nov-07 2500 1 2500 210 524875 524875 18.54 97312 97312

Client B DIVISLAB FUTSTK 29-Nov-07 310 1 310 1551 480717 480717 25.77 123881 123881

Client B HCC FUTSTK 29-Nov-07 1400 1 1400 193 270760 270760 24.55 66472 66472

Client B IDFC FUTSTK 29-Nov-07 2950 1 2950 173 511088 511088 24.67 126085 126085

Client B KTKBANK FUTSTK 29-Nov-07 1250 1 1250 216 269375 269375 16.96 45686 45686

Client B OMAXE FUTSTK 29-Nov-07 650 1 650 296 192205 192205 20.47 39344 39344

Client B TOTAL 498780 226838.9 -267307 46 Afternoon

Client C ESCORTS FUTSTK 29-Nov-07 2400 1 2400 109 260640 260640 24.13 62892 62892

Client C IDBI FUTSTK 29-Nov-07 2400 1 2400 152 363720 363720 25.22 91730 91730

Client C RPL FUTSTK 29-Nov-07 3350 1 3350 210 704003 704003 35.96 253159 253159

Client C TOTAL 407781 222118 -183784 54 Afternoon

1. party code

43

2. symbol – scrip name

3. Inst_type – futstk (future) or Optstk (option) 4. Option type - ca/ce or pa/pe

5. expiry date – expiry of the scrip 6. trade able lot – minimum qty of scrip which can be trade

7. no of lot – no of lot retain by clients ( net qty / tradable lot) 8. Available qty – open position of the client in back office

9. Closing rate – closing price of the respective scrip . 10. closing value per lot – closing price of the scrip x tradable lot

11. contract value – closing value of all contract

12. margin % - margin % as per previous day Scrip wise margin report 13. margin value per lot – col 11 x col. 12

14. total margin required – col. 13 x col. 7 15. total rep. Margin – total reportable margin plus other segment credit(if credit)

16. margin shortfall – total margin required minus total rep margin 17. margin availability % - col. 15 / col.14 margin available against the margin required

Square off position Report – Followings details showing overall position of the clients with the square off qty which will be square off by HO.

Time of Display - beginning of the day -– 8.30 a.m

Square Off Position

Party Code symbol inst_type

Option type

Expiry date

Available Quantity

Contract Value

Qty Sq Off

Square Off Value

Margin Percentage

Margin value ShortFall Morning/Afternoon

Client A MAHSEAMLES FUTSTK 29-Nov-

07 7800 3742050 7800 3742050 20.31 760010

Client A ORCHIDCHEM FUTSTK 29-Nov-

07 5250 1176263 5250 1176263 15.78 185614

Client A TOTAL 945624 -1013549 Morning

Client B IDFC FUTSTK 29-Nov-

07 2950 511088 2950 511088 24.67 126085

Client B DIVISLAB FUTSTK 29-Nov-

07 310 480717 310 480717 25.77 123881

Client B TOTAL 249966 -

133653.5 Afternoon

Client C RPL FUTSTK 29-Nov-

07 3350 704003 3350 704003 35.96 253159

Client C TOTAL 253159 -91892 Afternoon

1. party code

2. symbol – scrip name 3. inst_type – position in future or option

4. option type - option type index option(ce/pe) and stock option (ca/pa) 5. expiry date – expiry of the scrip

6. Available qty – open position of the client in back office 7. contract value – closing value of all contract

8. Qty square off - Qty which are to be square off later in the day (calculated as per shortfall of

the clients)

9. Square off value – square off qty x closing rate of the scrips 10. margin % - margin % as per previous day Scrip wise margin report

11. margin value – col. 9 x col. 10 12. shortfall - shortfall of the client

44

Final Auto Square Off Report - followings details will be shown regarding Actual qty square off by HO

Party Code symbol

Expiry date Inst_type Option type

Available Quantity

Square Off Quantity

Actual Sq. Off Quantity ShortFall

Client A MAHSEAMLES FUTSTK 29-Nov-07 7800 7800 7800

Client A ORCHIDCHEM FUTSTK 29-Nov-07 5250 5250 5250

Client A TOTAL -1013549

Client B IDFC FUTSTK 29-Nov-07 2950 2950 2950

Client B DIVISLAB FUTSTK 29-Nov-07 310 310 310

Client B CAIRN FUTSTK 29-Nov-07 2500 2500 2500

Client B TOTAL -267307.1

Client C RPL FUTSTK 29-Nov-07 3350 3350 3350

Client C TOTAL -183784

1. party code

2. symbol – scrip name 3. expiry date – expiry of the scrip

4. inst_type – position in future or option

5. option type - option type index option(ce/pe) and stock option (ca/pa) 6. Available qty – open position of the client in back office

7. Qty square off - Qty which are to be square off later in the day (calculated as per shortfall

of the clients)

8. today‟s square off Qty – Actual square off qty by Ho 9. shortfall - shortfall of the client

Some Points

1. Calculation of scrip wise margin in overall position report is on the basis of FNO Daily margin report

uploaded on intra rathi.com. There could be a minor difference from actual total margin calculated by the exchange at the time of actual square off.

2. Family includes member clients and parent. 3. The clients whose trades have been executed on direct terminal due to connectivity problem will get squared off on the direct terminal only.

B. Square off Policies

B. 1. AUTO SQUARE OFF – BSE AND NSE CASH SEGMENT:

Category of client:

4. Client having debit bal. more than 3 days will be squared off on 4th day morning.

Important terms: Square off Amount – Ageing bal. for more than 3 days OR Actual Debit Bal. 4th day (Which ever

is lower)

45

Criteria & Condition 4. Consideration of Free Ledger balance in F&O segment assessing the risk.

5. Client having square off amount less than 5 thousand will be excluded. 6. Loan against Shares (LAS) clients will be excluded.


1. Respective branches/Region has to take up responsibility to clear up the debit of all such client whose debit is outstanding for more than 3 days within the period covered under

this report.

2. RMS will take out the final square off report at around 9.30 am on 4th days morning after collection status updated in the back office system upto 9.30 A.M

3. Square off Client A/c will remain suspended from Odin up to 10.30 A.M. in morning and

Reactivate by 11.00 A.M. 4. Scrip which will be picked up for auto square up balances will be calculated on the basis

of highest value of shares held in our beneficiary.In case the shares are not sufficient to cover the square off amount then the scrips under BTST (unsettled) will be considered.

5. The file updated on 3rd day at night 10.00p.m will be considered finally for auto sq. at 4th

day Morning.

6. The square off transaction will be done on the direct terminals via a file upload as the

ODIN system doesn’t provide any file upload facility at present.

7. There will not be any buying limit available for the client on the day of square off.

8. The square off report of the branches and their franchisees will be emailed to the regional

head at the beginning of the day which will consist of the latest square off clients as well as report. The entire square off reports for the next days consecutively will not be

emailed to them.

Information to the branches / Regions: 3. Branches will be informed square off reports from 3rd day to 4th day for each day’s square

off clients.

4. The HO squared off position will be informed to the branches at around 11.15 p.m again

about the position squared off through intranet.

Note:

1. Square off report consist of the clients having a debit balance for more than 2 days which

remained unpaid till 4 th day. This report will reduce the amount of sell done by the branch on 3th

day but before the square off day.

2. CMS Entry against square off Client will be only considered up to 4th

day.

3. Fake Cms entries will be considered seriously.

4. The clients whose other segment balance is considered for the purpose of auto square off transfer

.The fund of client will be directly moved by RMS.

5. Further exposures to square off clients will be seriously monitored.

B .2 AUTO SQUARE OFF – FUTURE & OPTION SEGMENT

POLICY CHART

(A) (B) AUTO SQUARE OFF AMOUNT

46

REPORTABLE MARGIN (includes Ledger balance in F&O, ledger balance in BSE Cash Market, Ledger balance in NSE cash market, collaterals accepted by us, family a/c credits - mapped in back-office at the end of day or CMS entries received before 9.30 a.m. on the square off day)

REQUIRED MARGIN (includes initial margin/ exposure margin/ M TO M /any other Adhoc or special margin imposed by Exchange on time to time at the end of day)

1. Reportable margin (A) is less than 30% of Required Margin (B) Auto Square will take place to the extent of shortfall, in the morning between 9.55 a.m. to 10.30 a.m.on next day

2. Reportable margin (A) is between 30 to 60% of Required Margin (B); Auto Square will take place to the extent of 50% of shortfall in the afternoon between 2.00 p.m. to 2.45 p.m.on next day

3. Reportable margin (A) is below 75% of Required Margin (B) for 3 consecutive days ; Auto Square will take place to the extent of 50% of shortfall in the afternoon between 2.00 p.m. to 2.45 p.m. on 4th day


Square off Report – This report will include list of clients in Auto square-off categories.


7. The branch has to enter CMS Slip No. in Webrms before the cut off time for square off.

Additional collateral given by the client has to be confirmed by the branch via an email for

necessary exclusion of the client from the auto square off list.

8. RMS will take out the square off report at around 9.30 a.m and 1.45 p.m once the collection of

cheques / Securities collateral is updated in the back office system.

9. Square off will be done in morning and afternoon session on the Basis of FNO Square off

report.

10. Client will be suspended from ODIN in FNO segment for 35 minutes in morning (Between

9.55 – 10.30 a.m.) and 45 minutes in Afternoon. (Between 2:00 – 2.45 p.m.)

11. Scrips consuming higher margins will be squared off from ODIN Admin terminal to the

nearest tradable lot size covering the shortfall amount.

12. In case the overall margin required is short by Rs. 20000 or less then the client will be

excluded from the Square off list.

13. The amount of square off will be the amount remaining after the difference of Reportable

margin and the Total Margin required.

14. The client will be reactivated again at 10.30 a.m and 2.45 p.m respectively.

47


5. Branches and their business heads will be informed vide Auto Square Report at

9.30 a.m.

6. The squared off position will be informed to the branches at 3.00 p.m again about the position

squared off through intranet.

Format of Square off Report:

Followings details will be provided in the reports –

Square Off Report Party Code

Rep Margin

BSE Bal

NSE Bal

Other Seg Credit

Family Credit

Total Rep Margin


Shortfall

Margin Availability %

Morning/Afternoon

Client A -88979 0

13626

13626 -5819 -75353 938196

-101354

9 0 Morning

Client B

221979

-1973

0 2459

0 4860 -6842 22683

9 494146 -267307 45.91 Afternoon

Client C

193891 8227

20000

28227 0

222118 405902 -183784 54.72 Afternoon

11. party code

12. Rep. Margin - (ledger bal + cash collateral +non cash collateral ) 13. bse bal – ledger balance of bse segment

14. nse bal – ledger balance of nse segment

15. other segment Credit – col. 3+4 16. Family credit – sum of ledger balances of client’s family

Note : only family credit will be considered in calculation of shortfall. Family means – those clients which will exist in back office as family members and

also include his parents Balances – as per above calculation for bse ,nse, fno, mcx, ncdex

17. total Rep .margin – col. 2+5 total available deposit of client against open position. 18. total margin required – total margin consumed by open position of the client (initial

margin + exposures margin(if any))

19. shortfall – (col. 7 minus col. 8) PLUS col. 6 20. margin availability % - (col. 7 plus col.6(if credit) / col.8 . total margin available against

the margin required

NOTE: if we click on any row than there is display of family members of that client with free

balances of all the segment.

Overall position Report --

Above details regarding overall position of the clients, which are shown in square off client report –

48

Overall Position Report

Party Code symbol

instrument_type

option_type

Expiry Date

Trade able Lot

No. Of Lots

Available Quantity

closing Rate

closing Value Per Lot

Contract Value

Margin %

Margin Per Lot


Total Report-able_ Margin

ShortFall


Morning/ Afternoon

Client A MAHSEAM FUTSTK

29-Nov-07 600 13 7800 480 287850 3742050 20.31 58462 760010

Client A ORCHIDCH FUTSTK

29-Nov-07 1050 5 5250 224 235253 1176263 15.78 37123 185614

Client A TOTAL 945624 -

75352.93 -1013549 0 Morning

Client B CAIRN FUTSTK 29-Nov-

07 2500 1 2500 210 524875 524875 18.54 97312 97312

Client B DIVISLAB FUTSTK

29-Nov-07 310 1 310 1551 480717 480717 25.77

123881 123881

Client B HCC FUTSTK 29-Nov-

07 1400 1 1400 193 270760 270760 24.55 66472 66472

Client B IDFC FUTSTK 29-Nov-

07 2950 1 2950 173 511088 511088 24.67 12608

5 126085

Client B KTKBANK FUTSTK

29-Nov-07 1250 1 1250 216 269375 269375 16.96 45686 45686

Client B OMAXE FUTSTK 29-Nov-

07 650 1 650 296 192205 192205 20.47 39344 39344

Client B TOTAL 498780 226838.9 -267307 46 Afternoon

Client C ESCORTS FUTSTK

29-Nov-07 2400 1 2400 109 260640 260640 24.13 62892 62892

Client C IDBI FUTSTK 29-Nov-

07 2400 1 2400 152 363720 363720 25.22 91730 91730

Client C RPL FUTSTK 29-Nov-

07 3350 1 3350 210 704003 704003 35.96 25315

9 253159

Client C TOTAL 407781 222118 -183784 54 Afternoon

18. party code

19. symbol – scrip name 20. Inst_type – futstk (future) or Optstk (option)

21. Option type - ca/ce or pa/pe 22. expiry date – expiry of the scrip

23. trade able lot – minimum qty of scrip which can be trade

24. no of lot – no of lot retain by clients ( net qty / tradable lot) 25. Available qty – open position of the client in back office

26. Closing rate – closing price of the respective scrip . 27. closing value per lot – closing price of the scrip x tradable lot

28. contract value – closing value of all contract 29. margin % - margin % as per previous day Scrip wise margin report

30. margin value per lot – col 11 x col. 12

49

31. total margin required – col. 13 x col. 7

32. total rep. Margin – total reportable margin plus other segment credit(if credit) 33. margin shortfall – total margin required minus total rep margin

34. margin availability % - col. 15 / col.14 margin available against the margin required


Time of Display - beginning of the day – 9.30 a.m - Before square off -- 1.45 p.m.

Square Off Position

Party Code symbol inst_type

Option type

Expiry date

Available Quantity

Contract Value

Qty Sq Off

Square Off Value

Margin Percentage

Margin value ShortFall Morning/Afternoon

Client A MAHSEAMLES FUTSTK

29-Nov-07 7800 3742050 7800 3742050 20.31 760010

Client A ORCHIDCHEM FUTSTK

29-Nov-07 5250 1176263 5250 1176263 15.78 185614

Client A TOTAL 945624 -1013549 Morning

Client B IDFC FUTSTK

29-Nov-07 2950 511088 2950 511088 24.67 126085

Client B DIVISLAB FUTSTK

29-Nov-07 310 480717 310 480717 25.77 123881

Client B TOTAL 249966

-133653.5 Afternoon

Client C RPL FUTSTK

29-Nov-07 3350 704003 3350 704003 35.96 253159

Client C TOTAL 253159 -91892 Afternoon

13. party code

14. symbol – scrip name 15. inst_type – position in future or option

16. option type - option type index option(ce/pe) and stock option (ca/pa) 17. expiry date – expiry of the scrip

18. Available qty – open position of the client in back office 19. contract value – closing value of all contract

20. Qty square off - Qty which are to be square off later in the day (calculated as per shortfall of the clients)

50

21. Square off value – square off qty x closing rate of the scrips 22. margin % - margin % as per previous day Scrip wise margin report

23. margin value – col. 9 x col. 10 24. shortfall - shortfall of the client

Final Auto Square Off Report - followings details will be shown regarding Actual qty square off by HO

Time Of Display – 3.00 p.m.

Party Code symbol

Expiry date Inst_type Option type

Available Quantity

Square Off Quantity

Actual Sq. Off Quantity ShortFall

Client A MAHSEAMLES FUTSTK 29-Nov-07 7800 7800 7800

Client A ORCHIDCHEM FUTSTK 29-Nov-07 5250 5250 5250

Client A TOTAL -1013549

Client B IDFC FUTSTK 29-Nov-07 2950 2950 2950

Client B DIVISLAB FUTSTK 29-Nov-07 310 310 310

Client B CAIRN FUTSTK 29-Nov-07 2500 2500 2500

Client B TOTAL -267307.1

Client C RPL FUTSTK 29-Nov-07 3350 3350 3350

Client C TOTAL -183784

10. party code

11. symbol – scrip name 12. expiry date – expiry of the scrip

13. inst_type – position in future or option

14. option type - option type index option(ce/pe) and stock option (ca/pa) 15. Available qty – open position of the client in back office

16. Qty square off - Qty which are to be square off later in the day (calculated as per shortfall of the clients)

17. today‟s square off Qty – Actual square off qty by Ho 18. shortfall - shortfall of the client

Some Points

1. Calculation of scrip wise margin in overall position report is on the basis of FNO Daily margin report uploaded on intra rathi.com. There could be

a minor difference from actual total margin calculated by the exchange at the time of actual square off.

2. Family includes member clients and parent. 3. The clients whose trades have been executed on direct terminal due to connectivity problem will get squared off on the direct terminal only.

51

B.3 AUTO SQUARE OFF – COMMODITY SEGMENT:

Important terms:

Reportable Margin = Ledger + Cash Collateral+ Non Cash Collateral

Total Margin = Initial Margin + Exposure Margin

Criteria:

1. Consideration of Ledger as well as securities balance in other segment & also family accounts for

assessing the risk.

Category of client:

Category A:

Reportable margin is less than 50% but not below 25% of the total margin required (Initial plus exposure)

then the position of these clients will be squared off on T+2 day only if the Reportable margin of the client

is less than 75% of the total margin required.

Category B:

Reportable margin is less than 25% of the total margin required (Initial plus exposure) then the square

off the position on the day when it occurs.


Shortfall Report – This report will include the list of the clients available in Category A.

Square off Report – This report will include the list of the clients who are from Category B as well as the

Category „A‟ clients who have not cleared their margin shortfall before T+2 day.


1. The branch has to enter the cheque received from the clients in the back office system immediately.

2. RMS will take out the square off report at around 3:45 p.m once the collection of cheque / Securities

collateral is updated in the back office system.

3. Client is to be suspended from ODIN for an hour. (Between 4-5 p.m.)

4. Scrips consuming higher margins will be squared off from ODIN Admin terminal to the nearest

tradable lot size covering the shortfall amount.

5. The amount of square off will be the amount remaining after the difference of Reportable margin and

the Total Margin required.

6. The client will be reactivated again at 5:15 p.m.


1. Branches will be informed certain reports at morning 9.30 a.m.

2. The squared off position will be informed to the branches at around 5:15 p.m again about the position

squared off through intranet.

52

For e.g - Client A

Particulars Tradeday

+1

Trade day +2

Situation 1 Situation 2

Reportable margin (a) Rs. 8,00,000 Rs. 10,00,000 Rs. 12,00,000

Other segment credits (b) Rs. 1,50,000 Rs. 2,00,000 Rs. 2,00,000

Total Margin Required (c) Rs.

20,00,000

Rs. 20,00,000 Rs. 20,00,000

Additional fund deposit (d) Nil Rs. 2,00,000 Rs. 2,00,000

Total Av. Rep. Margin (e) Rs. 9,50,000 Rs. 14,00,000 Rs. 16,00,000

Margin Availability (%) (f) 47.50 70 80

Auto square off (Yes/No) (g) Yes Yes No

Amount of Auto Square off (h) Nil Rs. 600000 Nil

Format of Shortfall Report / Square off Report:

Followings details will be provided in both the reports --

Party Code

Rep Margin

BSE Bal

NSE Bal

FNO Bal

MCX Bal

Other Seg Credit

Family Credit

Total Rep Margin

Total Margin Required Shortfall


Client A -8643 0 0 0 15290 15290 0 6647 24641 -17994 26.98

Client B 8675 0 0 0

-113059 0 0 8675 24779 -16104 35.01

Client C -40203 0 0 0 59775 59775 0 19572 53570 -33998 36.54

Client D 40383

-120002 0 0 0 0 0 40383 105216 -64833 38.38

Client E 206656 -57713 0 63732 0 6019 49280 212675 645255 -383300 40.6

Client F 3596 0 0 0 2613 2613 0 6209 14793 -8584 41.97

Client G -12699 0 0 0 19900 19900 0 7201 15216 -8015 47.33

Client H 23549 0 0 0 0 0 0 23549 48876 -25327 48.18

Client I 3978 -6220 0 0 18348 18348 0 22326 44755 -22429 49.88

1. party code

2. Rep. Margin - (ledger bal + cash collateral +non cash collateral ) 3. bse bal – ledger balance of bse segment

4. nse bal – ledger balance of nse segment

5. fno bal - (ledger bal + cash collateral +non cash collateral ) minus (initial margin+ exposures margin)

6. mcx / ncdex - (ledger bal + cash collateral +non cash collateral ) minus (initial margin+ exposures margin)

7. other segment total – col. 3+4+5+6(cash +fno+mcx/ncdex) 8. Family credit – sum of ledger balances of client’s family

i. Note : only family credit will be considered in calculation of shortfall. ii. Family means – those clients which will exist in backoffice as family members and

also include his parents

iii. Balances – as per above calculation for bse ,nse,fno,mcx,ncdex 9. total Rep .margin – col. 2+7+8 total available deposit of client against open position.

53

10. total margin required – total margin consumed by open position of the client (initial margin +

exposures margin(if any)) 11. shortfall – col. 9 minus (col. 7 PLUS col. 8)

12. margin availability % - (col. 9 plus col.8(if credit) / col.10 . total margin available against the margin required

NOTE : if we click on any row than there is display of family members of that client with

free balances of all the segment.

Overall position Report -- Followings details regarding overall position of the clients, which are shown in square off client

report –

1. party code

2. symbol – scrip name 3. expiry date – expiry of the scrips

4. trade able lot – minimum qty of scrip which can be trade 5. no of lot – no of lot retain by clients ( net qty / tradeable lot)

6. Available qty – open position of the client in backoffice

7. closing rate – closing price of the respective scrip . 8. closing value per lot – closing price of the scrip x tradeable lot

9. contract value – closing value of all contract 10. margin % - margin % as per previous day Scripwise margin report

11. margin value per lot – col 11 x col. 8 12. total margin required – col. 11 x col. 9

13. total rep. Margin – total reportable margin plus other segment credit(if credit) 14. margin shortfall – total margin required minus total rep margin

15. margin availability % - col. 13 / col.14 margin available against the margin required


Time of Display - beginning of the day – 9.30 a.m - before square off -- 3.30 p.m

Party Code symbol Expirydate

Available Quantity

Contract Value

Qty SqOff

SquareOff Value

Margin Percentage

Margin value ShortFall

Client A STLINGGZB 20-Mar-08 -30 835200 -10 278400 5.53 15396

Client A TOTAL 15396 -11920

Client B COCUDCAKL 20-Mar-08 -100 863200 -40 345280 6.07 20960

Client B TOTAL 20960 -17675

54

Client C SYBEANIDR 20-Mar-08 -10 227450 -10 227450 6.53 14852

Client C TOTAL 14852 -8584

1. party code 2. symbol – scrip name

3. expiry date – expiry of the scrips 4. Available qty – open position of the client in backoffice

5. contract value – closing value of all contract

6. Qty square off - Qty which are to be square off later in the day (calculated as per shortfall of the

clients)

7. Square off value – square off qty x closing rate of the scrips 8. margin % - margin % as per previous day Scripwise margin report

9. margin value – col. 7 x col. 8

10. shotfall - shortfall of the client

Final Auto Square Off Report - followings details will be shown regarding Actual qty square off by HO.

Time Of Display -- 5.30 p.m

1. party code

2. symbol – scrip name 3. expiry date – expiry of the scrips

4. shortfall - shortfall of the client 5. Available qty – open position of the client in backoffice

6. Qty square off - Qty which are to be square off later in the day (calculated as per shortfall of the

clients)

7. Todays square off quantity – Actual square off qty out of available qty

Party Code symbol ExpiryDate shortfall

Available Quantity

Square Off Quantity

Todays Square Off Quantity

DSREL003 SILVERM 29-Feb-08 -28430 -10 -10 -5

LU12P1 COPPER 30-Apr-08 -15079 -1 -1 -1

PCHN0125 GOLD 05-Apr-08 -44676 -1 -1 -1

55

GRIEVANCE REDRESSAL MECHANISM

All Exchange level grievances are being handled by Compliance Department. All Branch level Grievances are being handled by Branch Heads / Regional Heads and all telephonic grievances are being handled by Customer support department, after going through the pros & cons of nature of the issues involved.

All India Toll Free no. for Customer support : 1800 - 222 - 234 Email ID for Grievance Redressal : [email protected] Email ID for Customer support : [email protected] In the interest of justice, equity and good conscience, and as a organization,as we observe high standards of commercial honour of just and equitable commitment to business ethics, We are glad to announce that we are in the process of building a comprehensive investor grievances mechanism to carry out the entire operations seamlessly at all levels towards a more systematic and professional service to customers. Kindly send us the copy of complaint register maintained at your ends alongwith pending grievances. Further, you are required to send this report on a bimonthly basis (as per format Attached) to ensure complete client satisfaction. Format for Grievance Register to be maintained by each Branch

SEGMENT

SR. NO.

COMPLAINT DATE

RECEIPT DATE

COMPLAINANT'S NAME

NATURE OF GREVIANCE

AMT OF CLAIM

REPLY SENT REMARKS


56

Undertaking to be procured from client as a Surveillance Measure

Client Code : <<Client Code>>_______

From <<Client Name>>_____________

Address :_________________________

_________________________________

Date : ___________________

To,

Anand Rathi Share and Stock Brokers Ltd /


Dear Sir / Madam

Sub. : Trades done in Scrip Name on trade date

I/ We hereby confirm that I / We, our associate(s), relatives, sister companies, Partner(s), Promoter(s) /

relative(s) and / or directors are not in any manner counter party to the buy /sell trades of __________ shares in

the scrip of _____________________ listed on BSE – Cash Segment and / or NSE – Cash Segment nor I/we

am/are acting on behalf of any third party and/ or purchase of the shares is from our own funds.

I/We hereby confirm with, that we have complied with all the guidelines and circulars issued by SEBI and

Exchanges or any other regulatory authority in this regard.

I/We also declare that I / We am / are not trading in above mentioned security for influencing any change in

price, but purely for the Investment purpose. The same is / was bought from my / our own funds.

I/We further declare that I/We am/are not associated with the promoter of the aforesaid company.

I/We furthermore assure you that the trading in the aforesaid scrip does not tantamount to any unfair trading

practice and I/we am/are not involved in any circular trading and not trading with a view to create false market

I/We will be submitting you or concerned agency(s) any information asked within 24 hours of receipt of

notice.

I/We further agree to indemnify and keep indemnified Anand Rathi Share and Stock Brokers Ltd /Anand Rathi

Financial Services Ltd. in case of any query / liability or action taken by the Exchange / SEBI or any other

regulatory authority in this matter.

Yours Truly,

Authorised Signatory

57

Client Code : <<Client Code>>_______ PERFORMA LETTER FOR DEBT RECOVERY FROM CLIENT

(On letter head of ARSSBL / ARCL as the case may be)

By Courier / By Hand Delivery

Date: __ / __ / 10

To,

M/s/Mr. / Ms.________

(Complete Name and Address of Client)

Ref: Non- Payment of outstanding dues/ debit balances in your account

under client code No. ________

=================================================

Dear Sirs/Madam,

** strike whichever is not applicable

You are aware that pursuant to the Member – Client Agreement signed by you, we are operating your trading

account as per your instructions in ** shares / securities / contacts and other instruments through ** BSE / NSE /

MCX / NCDX till ______ under your aforesaid client code. The contract notes/ bills in respect whereof have

been delivered to you in due course, which you have received and accepted by you without any

objection whatsoever.

In respect of the aforesaid transactions, your ledger account is showing debit balance of Rs._________

/- due and payable by you.

You are therefore, requested to pay to us the aforesaid outstanding dues / debit balance of Rs. ______/-

with in seven days from the date of receipt of this letter by you in order to maintain cordial business

relations between us.

Thanking you,

Yours truly,

For ** M/s. Anand Rathi Share and Stock Brokers Ltd

M/s. Anand Rathi Commodities Ltd

(Authorised Signatory / Branch Manager)

58

Under Certificate of Posting

Date: __ / __ / 10

To,

M/s/Mr. / Ms.________


Sub. : Non- Payment of outstanding dues/ debit balances in your

account under client code No ________

=================================================

Dear Sirs/Madam,


Please refer to our letter dated ______________, on the captioned subject.

We regret to note that in spite of sufficient time has since elapsed; you have failed and neglected to pay to us the

outstanding dues / balances lying in your aforesaid account till date.

Our representative has made numerous (Check) visits and telephonic calls to you to pay and clear the said outstanding

dues but you have failed and neglected to pay the amount of outstanding dues or any part thereof. It is, therefore, clear

that you had absolutely no intention ab initio to make the payment but to cheat us.

You are therefore, once again called upon to pay to us the aforesaid outstanding dues / debit balance of Rs.

______/- immediately on the receipt of this letter failing which we will adopt such legal proceedings against

you as may be advised to us to recover the said outstanding dues, which please note.

Yours truly,

For ** M/s. Anand Rathi Share and Stock Brokers Ltd

M/s. Anand Rathi Commodities Ltd

(Authorised Signatory / Branch Manager)

59

By Regd. Post A/D

Date: __ / __ / 10

To,

Mr. /Mrs. /Ms. _____________


Ref: Non- Payment of outstanding dues/ debit balances in your account

under client code No. ________

=================================================

Dear Sirs,


1. You approached our Company **M/s. Anand Rathi Securities Limited / M/s. Navratan Capital and Securities

Limited., / Navratan Commodities Limited with a request / desires of investing / trading in shares / securities / contacts

and other instruments admitted to deal on the Exchange as per the Rules, Bye-laws and Regulations of the Exchange and

circulars issued thereunder from time to time and strictly in accordance with the terms and conditions mentioned in

member-client agreement executed between yourself and my clients as well as risk disclosure documents and annexure

attached thereto.

2. As per your instructions we have effected transactions through ** BSE / NSE (cash as well as F&O) / MCX /

NCDX under your above stated client code No ________ on your behalf in shares / securities / contacts and other

instruments your account from _______ to _______ and the contract notes/ bills in respect whereof have been

delivered to you in due course, which you have received and accepted by you without any objection

whatsoever.

3. In respect of the aforesaid transactions an aggregate sum of Rs. ___________/- is due and payable by you to my

clients. Pursuant to the Member- Client agreement, you were to pay my clients the amount due by you to meet your

obligations immediately.

4. We have demanded the aforesaid amount from time to time, and you promised to clear the said outstanding dues

within short period, however you have failed and neglected to pay the amount of the outstanding dues or any part thereof.

We state that from the aforesaid, it is apparent that you have intentionally, deliberately and with malafide intention not

paid the said outstanding dues for the transactions done on your behalf.

60

5. We further state that believing your representations to be true, we acted upon in good faith and provided you the

trading facilities as aforesaid, which have been availed by you without paying your legitimate dues. It is thus, very clear

from your representations and subsequent conduct that you have misrepresented the facts to us and by deceitful means

obtained lawful gain to yourself/yourselves and caused corresponding loss to us and thereby committed breach of trust.

6. In the circumstances, we hereby call upon you to pay the aforesaid sum of Rs.____ /- (Rupees

___________only) towards outstanding dues / debit balance in your account together with interest thereon @18%

per annum from its due date till payment within 7 (seven) days from the date of receipt of this notice by you. In

default, we will be constrained to adopt criminal proceedings or other appropriate legal proceedings including

arbitration under the Rules, Bye-laws and Regulations of the Exchange as we may be advised at your entire

risk as to costs and consequences, which please note.

Yours faithfully,

For ____________________

** (Authorised Signatory)

(Branch Manager)

61

OFFICE MANAGEMENT

Anand Rathi Group

Customer Service Standards (Branches to their clients)

Sr. No

Customer Service

Standards HNI MNI

Retail Investor - Small

Retail Traders

Confirmation of transaction to client by Fax / Phone

Within 10 minutes of executing the transaction


Within end of Day


Confirmation of entire days transactions

By 5.00 PM By 5.00 PM By 5.00 PM By 5.00 PM

Contract Note to be given to client - dispatch through hand delivery or courier: Cash Market F&O segment

7:30 PM 7:30 PM 7:30 PM 7:30 PM

Outstanding Position to Clients - Payment as well as shares

7.00 PM 7.00 PM 7.00 PM 7.00 PM

Scrip wise Open Position in F&O segment

Next day before 9:30 AM




Margin statement / Dues to clients in F&O segment

7:30 PM 7:30 PM 7:30 PM 7:30 PM

Payout cheques to clients

On payout day - before 6:00 PM




Payout deliveries to clients





62

Sr. No

Customer Service

Standards HNI MNI


Retail Traders

Ledger to clients: Weekly Monthly

Every Saturday before 10:00 AM 2nd of next month before 6:00 PM


Nil 2nd of next month before 6:00 PM


Daily Notes on E - mails

Every day before 9:45 AM




Other important and relevant messages to be forwarded to the client either on phone or email, which ever is preferred by the client

Atleast thrice a day

Atleast twice a day

As and when required

Through notice board in office or by email if required

Frequency of visit to clients place by Branch Head / FP

Atleast thrice a month

Atleast twice a month

Atleast Twice a month (meeting in our office)

Atleast once a week (meeting in our office)

Frequency of telephone calls by Branch Head / FP

Atleast thrice a week

Atleast twice a week

Atleast once a week

Atleast twice a week

Handling / Solving query

Communicate within 2 working hours, and solve the query within 2 working days




Documentation

All relevant interactions and action points should be documented in file/folder prepared for each individual client to avoid evaporation

One or two common file could be prepared

Through common dairy for all clients

Through common dairy for all clients

Empathy All All All All

63

Sr. No

Customer Service

Standards HNI MNI


Retail Traders

recommendations should be made keeping ourselves in the clients shoes




Monthly Meetings

Have monthly meetings with key clients to discuss procedural matters

Have monthly meetings with key clients to discuss procedural matters

-

-

Other Customer Service parameters:

All clients and prospectives to be offered water, tea or coffee in office No guest should be left unattended in office

Employees should have high degree of courteousness while interacting with clients Office Ambience:

Reception area and lady receptionist Main sign board (as per design enclosed) Office to be air conditioned or air cooled

Physical Appearances: Uniform to be provided to all office boys Staff to be dressed in formals, preferably in ties. Saturday – Casuals Identity cards to be given to all employees

SEBI Registration Certificate should be displayed

64

DEALING WITH CLIENTS

1. Branch must make full payment/delivery from/to clients within 24 hours of receipt of

cheque/shares from HO.

2. All payments shall be received / made by the Branch from/to the clients strictly by account payee crossed cheque/demand draft only.

3. No payments/receipts be made/accepted in CASH from clients.

4. Each clients ledger A/c to be made NIL atleast once in a Year by way of actual

payment/receipt of funds.

5. Funds/Delivery of shares must not be made/accepted to/from third party‟s demat A/c. 6. Securities due to one client should not be transferred to other clients A/c and vice-versa.

7. Securities due to clients should not be used for meeting own/other clients pay-in obligations. 8. Payments/delivery due to BSE clients should be made from BSE Bank (Clients)/DP A/c and

payments/delivery due to NSE clients should be made from NSE Bank (Clients)/DP A/c. only.

9. Shares of clients may be kept on hold by the Branch if there is any debit balance in clients A/c.

10. In case payment is not received from clients in spite of repeated written reminders (records of

reminder sent be maintained), shares of clients can be sold by the BRANCH after taking prior approval of HO to recover its dues. The same is permissible by SEBI/Exchanges.

11. Dividend amounts to be paid/credited to clients A/c as and when received. 12. Branch to ensure that his clients are not acting as un-registered intermediaries (unregistered

sub-brokers). .

65

BANK ACCOUNTS 1. As per SEBI, all operational expenses to be made from own bank account. Example –

Salary expenses, telephone expenses, printing & stationery expenses, etc. 2. Payments may be made to clients from Clients A/c only. 3. Amount received from clients NOT to be deposited in Own A/c. 4. Amount received as Margin from clients to be deposited in to Clients A/c.

Pay-out Cheques received from ARSFL/ARSSBL to be deposited in Clients A/c ONLY. 5. In case of funds shortage in Own A/c for incurring operational expenses, amount to the

extent of Brokerage Income may be transferred from Clients A/c to Own A/c. Weekly/Monthly transfers may be made.

BALANCE CONFIRMATION WITH CLIENTS

1. Branch to reconcile their accounts with HO on a day-to day basis.

2. Ledger confirmation to be taken from clients for Funds/Securities at the end of each quarter within 10 days of the end of the quarter.

3. Statement of Accounts for funds and securities would be sent from HO to all the clients on a

quarterly basis

MISCELLANEOUS MATTERS

1. Branch should not release any mode of advertisement for business purpose without prior written approval of HO..

2. Off-Market trades (i.e trades not executed on terminal) not permitted in any securities.

66

ISSUES PERTAINING TO INSURANCE CLAIM We are in the process of creating general awareness amongst us all with reference to the Insurance Claims that are being requested by branches for punching errors in trading activities to the Insurance Company; as there is an urgent need to impart know how about the claim procedures general requirements list has been provided below for the benefit & interests of the company All are requested to kindly go through the mandatory list mentioned below and follow the same. Incase there are any amendments that needs to be carried out by the branch to bring the branch procedures in line with the mandatory requirements; you can contact the Compliance Dept. List of mandatory requirements for Insurance claim: Pre- requisites

1. Name of the Dealer who committed error along with proof of employment in the name of the same company and also screen print out of the USER ID registered in his NCFM certificate

2. When the order was put, when and how the mistake was realized, what actions were taken subsequently and supporting the facts mentioned therein with documentary evidences.

3. Client agreement (CRF) and know your clients (KYC) form – Very Important 4. Brief history and profile of your employee who had done fraud. (furnish his Bio-data and

photograph) 5. Intimation to the exchange for cancellation of the said transaction 6. In case of Sub-broker / Franchisee & Pro- Trade only Rate claim is acceptable 7. New branch / Franchisee should be informed to the Insurance company immediately to get

covered. 8. Insurance company will not be liable to pay more than one claim in respect of the action of

any one employee. 9. System failure is not covered under the policy from current year 10. Branches are to be covered on all or none basis 11. Voice recording system (to identify the person responsible for the error dealer mistake or

client mistake) 12. Punishment to the Dealer. 13. Transaction to be squared Up immediately on realization if not possible on the same day very

next day in the morning. 14. In case of error in option transaction for illiquid option you may square up in future market to

minimize the loss

67

TRADE MODIFICATION UNDERTAKING

Annexure 1

We hereby declare that no trade will be executed by us (Branch Name) in any of the segments without getting the success of the codes from the respective Exchange from any of the BOLT / NEAT / ODIN terminals allotted to us by HO. Incase of any discrepancy like wrong punching or erroneous sauda executed by us we will intimate as well as clarify the same to HO (Compliance team) on immediate basis. We will be solely responsible for any penal action taken against us incase of deviation from the said declaration. Certified by Branch Manager Name of BM

68

UNDERTAKING Annexure 2

We hereby intimate that a trade in the client code (details mentioned below)has been executed without registering the proper details of client with the Exchange. We have collected the closure letter from the client(s) and suspended the client(s) from all our terminals. We hereby undertake that no trade will be carried out in the said code. The penalty levied by the Exchange will be totally borne by the client. We will be solely responsible for any penal action taken against us incase of deviation from the said declaration.

Sr. No. Client Name Client Code

Trade Date

Scrip Code Segment

Login Id

Certified by Branch Manager Name of BM

69

REPORTING OF BULK DEAL / BLOCK DEAL

With reference to Circular No.: NSE/CMO/0092/2004 it is informed to all

that Branches shall make disclosures to the Head Office with respect to all transactions in a scrip

Bulk Deal: where total quantity of shares bought / sold is more than 0.5% of the number of

equity shares of the company listed on the Exchange.

Block Deal: All transactions where the total quantity of shares is equal to or greater than 5

lakhs or in total value equal to above 5 Crores whichever is earlier

The price should be within +/- 1% of the last traded price or previous closing price.

The details of the same will be reported on the same day of the transaction between 3 pm to

3.45 pm in the format attached to [email protected]/[email protected] . The

subject of such deal sent through mail must be BULK DEAL- NSE corresponding to the segment

in which the transaction has been carried out.

Any branch failing to report such transactions on the same day will be penalized at Rs 5000 per

transaction.

The queries in this regard can be addressed to the Compliance Department and also can be discussed with the under mentioned.

Details to be provided for Bulk Deal Reporting

1 Exchange

2 Client

3 Client Name

4 Instrument Type

5 Symbol

6 Scirp Code

7 Scrip Name

8 Buy Qty

9 Buy Val

10 Buy Avg.

11 Sell Qty

12 Sell Val

13 Sell Avg.

14 Net Qty

15 % of Equity

16 Equity Of Company

mailto:[email protected]/[email protected]

70

INCREASED POSITION IN F&O MARKETWIDE LIMIT

As per the Bye Laws of the Exchange and Circular No. NSCC/F&O/C&S/365 dated August 26,

2004 wherein inter-alia it is specified that when the open interest in an underlying crosses 95% of

the specified Market Wide Position Limit, clients / members shall trade only to decrease their

positions through offsetting positions, till normal trading in the scrip is resumed.

You are advised to take due caution that no new positions are taken by the client/constituent and

that the client/constituent trades only to decrease his positions through offsetting positions till the

market wide open interest in the aforesaid underlying comes down to 80% or below of the market

wide position limit.

Hence it has been amended that with effect from 9th May 2006 the branch will directly be

responsible for the open positions and for every penalty imposed by the Exchange the following

action would be taken:

Penalty Levied = Debit to Dealers Salary A/c (Rs.1000) + Debit to Branch Managers A/c /

Franchisee A/c(Balance Amount Against Incentive.

71

USEFUL WEB SITES

www.bseindia.com

www.nseindia.com

www.sebi.gov.in

www.fmc.gov.in

www.mcxindia.com

www.ncdex.com

www.nmce.com

www.mcx-sx.com

http://www.bseindia.com/

http://www.nseindia.com/

http://www.sebi.gov.in/

http://www.fmc.gov.in/

http://www.mcxindia.com/

http://www.ncdex.com/

http://www.nmce.com/

72

BRANCH AUDIT CHECKLIST

Inaugaration date

Active Segments

Sr No Particular Remarks Complied (Y/N)

Reason for Non Compliance

1 Registered Branch registered under the Shops & Establishment Act/ Local Authority

2 Certificates Relevant SEBI & FMC registration certificates displayed at branch

3 Notice Board Relevant Notice Board displayed at Branch (BSE/NSE/MCX/NCDEX)

4 Terminals

All terminals alloted are used by relevant employee dealers registered in their name with their NCFM having validity for next 3 months

5 Agreement

Client agreements executed;maintained & intimated to HO for all clients and confirmed by HO

Incase of registered Sub brokers Tripartite agreements executed

6 KYC Track of all clients details maintained in softcopy

7 CRF Total Clients = Total CRF; NO CRF no UCC;One client one code

8 Missing CRF New CRF collected from existing client as per HO list

9 PAN

PAN copy of clients maintained after verification with original card & income tax site and screenprint attached with CRF

10 Authorised Signatory

AS appointed in Branch and intimated to HO in relevant format for Exchange Submission

11

Cheque Payment must be received / paid in cheque in the name of Broker Company/Client not in the name of any other company/party

12 Cash No broker shall receive / pay cash to the

clients

13 Securities Not to accept / issue third party securities

14 Payment Not to issue / recd payment from third party

15

F & O Trading Trading in Ban period – Rs 5000 Penalty charges by NSE (Increase in open position over 95%)RMS alerts

16

Complaint Register Branch/Sub-Broker must maintain - Client complaint Register.To send it bimonthly to Compliance Dept– HO

17

Pay-in of Fund Client should issue us a cheque same day of Purchases of Shares ( Trading Day)

18 Pay-Out of Fund Branch should issue cheque on T+2 to the

Clients

19

F & O Upfront Margin must be collected by the branch before executing the sauda in case of F & O Segment

20 F & O M To M Margin should be collected on a

daily basis

21

Contract Note Contract Note must be issued to the client within 24 hours of trading. Acknowledgement register maintained for the same.

22

Pay in of Shares Client should deliver the shares to the broker same day of sales or maximum T+1 day

23

Pay Out of shares Client should receive shares from the broker within 24 hours from the payout recd from the Exchange

24 Family No family Adjustment allowed

73

25

Statement of accounts Securities ledger and Account / Fund Statement to be sent to the Client on Quarterly basis

26

Reporting of bulk deal To report bulk deal to us on or before 3.30 pm on a daily basis (BSE)

27 Minor Not to open minor trading account/ trust

account

28

UCC registration Trade carried out in Code only after Exchange successful registration of UCC

Note: Employees are requested to update themselves regularly via http://intra.rathi.com/Compliance folder

Income tax Link:http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp

74

23 August 2006

Policy for Trading in Shares & Commodities by Employees of AnandRathi Group

Employees of AnandRathi Group their spouses, dependent parents and dependent children wishing to deal in securities are required

to abide by the following code of conduct:

As per SEBI Guidelines:

1. An order of value greater than Rs. 25 Lakhs or 25000 shares whichever is lower for any single day should be placed only

after prior written approval from the Compliance department (Mr.kapila Kabra/ Mr.Pravin Kamble – 022 4001

3951/3958,([email protected], [email protected] , [email protected] ). Approval shall be valid

for one week from the date of approval.

2. Secondary market trading in shares of FPOs (Follow up Public Offers) Lead Managed by us would not be allowed for a

period of 30 days prior to date of opening of FPO. Investment Banking Division would inform all employees about this 45

days prior to date of opening of FPO.

3. All the employees shall maintain the confidentiality of all Price Sensitive Information. (Price sensitive information in our

business will be bulk trades of Clients/Institutions executed in our office, any information acquired during the course of

conducting research which may not be available to general public and any information acquired during the course of

business which otherwise would not have been available to general public)

4. Department & persons for whom restrictions for buying and selling of securities is applicable (Directors, Heads of

departments (VP & above), Compliance, Equity dealing Department, Derivative dealing department, Research Department,

Risk Management Department) would strictly follow „Code of Conduct for Prevention of Insider Trading‟ (as per sheet

enclosed)

Organizations Guidelines:

5. Dealing in securities must be only through Anand Rathi Group. However, exceptions shall be allowed in case of the spouse

of a staff member who is working in some other broking house where similar policy is in place. Such exceptions shall be

granted only after prior approval is obtained from Compliance Officer at Anand Rathi Group.

6. DP account should be with Anand Rathi Group only and would be provided at a discount of Rs. 50 per account.

7. All the trades should be executed only through the Employee Central Dealing Desk in Mumbai; orders may be sent to Mr.

Kalpesh Pandey / Mr. Chintan through telephone (022 4001 3803) or email ([email protected]). Dealers at the

Central Dealing Desk would send confirmation of all the transactions executed through email on same day.

8. Concessional Brokerage Rates to be decided from time to time would be charged. Current rates would be 0.10% for cash

segment and 0.02% each side on F &O segment.

9. Buying and selling shares of the same company within the same settlement shall normally not be allowed.

10. Trading in F & O, would be permitted only for the limited purpose of hedging / arbitrage. Trading in commodities would be

allowed through investment in arbitrage – structured products.

11. Concerned Business Head / Head of Department should be vigilant about policy implementation by his/her team members

and should inform relevant authorities in case the policy is violated. However, the compliance officer shall have the right to

call for relevant information from any staff member. All the employees would submit a self certification of following this

policy to HR department; this would be coordinated by HR department.

12. If any employee is found to be breaking this policy, management may take strict disciplinary action, which may include

reflecting in the appraisal and even termination of services from the company.




75

Code of conduct for Prevention of Insider Trading for ARG Employees (as per SEBI guidelines)

Departments and persons for whom further restrictions for buying and selling of securities is applicable:

Directors

All Head of the Departments (VP & Above)

Compliance

Dealing Department

Research Department

Risk Department

For Applicable Persons

Not to communicate any Price Sensitive Information to any non-applicable person. In exceptional circumstances

confidential information can be given to non-applicable person on the basis of "need to know" criteria, under intimation to

the compliance officer.

Not to use Price Sensitive Information to buy or sell securities of any sort, whether for their own account, their relative‟s

account, Company's account or a client's account. (Relative to include self, spouse, dependant children and their spouses,

dependant parents, dependant grand parents, dependant brothers, sisters and their spouses)

Not pass on such information directly or indirectly by way of making a recommendation for the purchase or sale of

securities.

To transact in securities only after pre clearance from compliance officer in case of transaction value is Rs. 25 Lakh or more

or the number of securities is 25000 or more. This will include even to IPO‟s. Approval from Compliance shall be valid for

a period of one week.

Hold their investments for a minimum period of 30 days this will include even to IPOs. (From the date of allotment for

IPOs)

In case the sale of securities is necessitated by personal emergency before the minimum period, obtain confirmation from

the compliance officer

Declare all holdings in securities at the time of joining the organization or for existing persons on introduction of this code

to the Compliance Department.

Compliance Department would take record of all transactions and holdings of employees through DP AC on Quarterly and

Annual Basis.

For Research Team

To intimate compliance officer of all existing companies on which the research activity is carried out on the date of

introduction of this code

To intimate compliance officer any addition to the above list on initiation of research.

To disclose their share holdings/ interest in companies on which they are conducting research to the compliance officer.

Analysts who prepare research report of a listed company shall not trade in securities of that company

for 30 days from preparation of such report.

76

For Dealers:

To intimate the compliance officer immediately upon the execution of the order where the traded quantity either buy or sell

on account of any trade (client / proprietor) is more than 0.5% (Bulk Deal) of the number of equity shares of the company

listed on the stock exchange.

77

SECURITIES AND EXCHANGE BOARD OF INDIA (STOCK BROKERS AND SUB-BROKERS) REGULATIONS, 1992 CODE OF CONDUCT FOR STOCK BROKERS (REGULATION 7)

A. GENERAL

(1) Integrity: A stock-broker, shall maintain high standards of integrity, promptitude and fairness in the conduct of all his business.

(2) Exercise Of Due Skill And Care: A stock-broker, shall act with due skill, care and diligence in the conduct of all his business.

(3) Manipulation: A stock-broker shall not indulge in manipulative, fraudulent or deceptive transactions or schemes or spread rumours with a view to distorting market equilibrium or making personal gains.

(4) Malpractices: A stock-broker shall not create false market either singly or in concert with others or indulge in any act detrimental to the investors interest or which leads to interference with the fair and smooth functioning of the market. A stock-broker shall not involve himself in excessive speculative business in the market beyond reasonable levels not commensurate with his financial soundness.

(5) Compliance With Statutory Requirements: A stock-broker shall abide by all the provisions of the Act and the rules, regulations issued by the Government, the Board and the stock exchange from time to time as may be applicable to him.

B. DUTY TO THE INVESTOR

(1) Execution Of Orders: A stock-broker, in his dealings with the clients and the general investing public, shall faithfully execute the orders for buying and selling of securities at the best available market price and not refuse to deal with a Small Investor merely on the ground of the volume of business involved. A stock-broker shall promptly inform his client about the execution or non-execution of an order, and make prompt payment in respect of securities sold and arrange for prompt delivery of securities purchased by clients.

(2) Issue Of Contract Note: A stock-broker shall issue without delay to his client 42*[or client of sub-broker] a contract note for all transactions in the form specified by the stock exchange.

(3) Breach Of Trust: A stock-broker shall not disclose or discuss with any other person or make improper use of the details of personal investments and other information of a confidential nature of the client which he comes to know in his business relationship.

(4) Business And Commission:

(a) A stock-broker shall not encourage sales or purchases of securities with the sole object of generating brokerage or commission.

78

(b)A stock-broker shall not furnish false or misleading quotations or give any other false or misleading advice or information to the clients with a view of inducing him to do business in particular securities and enabling himself to earn brokerage or commission thereby.

(5) Business Of Defaulting Clients: A stock-broker shall not deal or transact business knowingly, directly or indirectly or execute an order for a client who has failed to carry out his commitments in relation to securities with another stock-broker.

(6) Fairness To Clients: A stock-broker, when dealing with a client, shall disclose whether he is acting as a principal or as an agent and shall ensure at the same time, that no conflict of interest arises between him and the client. In the event of a conflict of interest, he shall inform the client accordingly and shall not seek to gain a direct or indirect personal advantage from the situation and shall not consider clients' interest inferior to his own.

(7) Investment Advice: A stock-broker shall not make a recommendation to any client who might be expected to rely thereon to acquire, dispose of, retain any securities unless he has reasonable grounds for believing that the recommendation is suitable for such a client upon the basis of the facts, if disclosed by such a client as to his own security holdings, financial situation and objectives of such investment. The stock-broker should seek such information from clients, wherever he feels it is appropriate to do so.

43*[(7A) Investment Advice in publicly accessible media –

(a) A stock broker or any of his employees shall not render, directly or indirectly, any investment advice about any security in the publicly accessible media, whether real - time or non real-time, unless a disclosure of his interest including the interest of his dependent family members and the employer including their long or short position in the said security has been made, while rendering such advice.

(b) In case, an employee of the stock broker is rendering such advice, he shall also disclose the interest of his dependent family members and the employer including their long or short position in the said security, while rendering such advice.]

(8) Competence Of Stock Broker: A stock-broker should have adequately trained staff and arrangements to render fair, prompt and competent services to his clients.

C. STOCK-BROKERS VIS-A-VIS OTHER STOCK-BROKERS

(1) Conduct Of Dealings: A stock-broker shall co-operate with the other contracting party in comparing unmatched transactions. A stock-broker shall not knowingly and willfully deliver documents which constitute bad delivery and shall co-operate with other contracting party for prompt replacement of documents which are declared as bad delivery.

(2) Protection Of Clients Interests: A stock-broker shall extend fullest co-operation to other stock-brokers in protecting the interests of his clients regarding their rights to dividends, bonus shares, right shares and any other right related to such securities.

79

(3) Transactions With Stock-Brokers: A stock-broker shall carry out his transactions with other stock-brokers and shall comply with his obligations in completing the settlement of transactions with them.

(4) Advertisement And Publicity: A stock-broker shall not advertise his business publicly unless permitted by the stock exchange.

(5) Inducement Of Clients: A stock-broker shall not resort to unfair means of inducing clients from other stock- brokers.

(6) False Or Misleading Returns: A stock-broker shall not neglect or fail or refuse to submit the required returns and not make any false or misleading statement on any returns required to be submitted to the Board and the stock exchange.

44*[D (1) A stock broker shall enter into an agreement as specified by the Board with his client.

(2) A stock broker shall also enter into an agreement as specified by the Board with the client of the sub-broker.]

SECURITIES AND EXCHANGE BOARD OF INDIA (Stock Brokers and Sub-Brokers) Regulations, 1992 CODE OF CONDUCT FOR SUB-BROKERS (Regulation 15)

A. GENERAL

(1) Integrity : A sub-broker, shall maintain high standards of integrity, promptitude and fairness in the conduct of all investment business.

(2) Exercise Of Due Skill And Care : A sub-broker, shall act with due skill, care and diligence in the conduct of all investment business.

B. DUTY TO THE INVESTOR

(1) Execution Of Orders : A sub-broker, in his dealings with the clients and the general investing public, shall faithfully execute the orders for buying and selling of securities at the best available market price. A sub-broker shall promptly inform his client about the execution or non-execution of an order 45*[******]

46*[(2) A sub-broker shall render necessary assistance to his client in obtaining the contract note from the stock broker]

80

(2) A. Issue of Purchase or Sale Notes :

(a) A sub-broker shall issue promptly to his clients purchase or sale notes for all the transactions entered into by him with his clients.

(b) A sub-broker shall issue promptly to his clients scripwise split purchase or sale notes and similarly bills and receipts showing the brokerage separately in respect of all transactions in the specified form.

(c) A sub-broker shall only split the contract notes client-wise and scripwise originally issued to him by the affiliated broker into different denominations.

(d) A sub-broker shall not match the purchase and sale orders of his clients and each such order must invariably be routed through a member-broker of the stock exchange with whom he is affiliated.

(3) BREACH OF TRUST : A sub-broker shall not disclose or discuss with any other person or make improper use of the details of personal investments and other information of a confidential nature of the client which he comes to know in his business relationship.

(4) BUSINESS AND COMMISSION :

(a) A sub-broker shall not encourage sales or purchases of securities with the sole object of generating brokerage or commission.

(b)A sub-broker shall not furnish false or misleading quotations or give any other false or misleading advice or information to the clients with a view of inducing him to do business in particular securities and enabling himself to earn brokerage or commission thereby.

(c)A sub-broker shall not charge from his clients a commission exceeding one and one-half of one percent of the value mentioned in the respective sale or purchase notes.

(5) BUSINESS OF DEFAULTING CLIENTS : A sub-broker shall not deal or transact business knowingly, directly or indirectly or execute an order for a client who has failed to carry out his commitments in relation to securities and is in default with another broker or sub-broker.

(6) FAIRNESS TO CLIENTS : A sub-broker, when dealing with a client, shall disclose that he is acting as an agent 47*[******] ensuring at the same time, that no conflict of interest arises between him and the client. In the event of a conflict of interest, he shall inform the client accordingly and shall not seek to gain a direct or indirect personal advantage from the situation and shall not consider clients' interest inferior to his own.

81

(7) INVESTMENT ADVICE : A sub-broker shall not make a recommendation to any client who might be expected to rely thereon to acquire, dispose of, retain any securities unless he has reasonable grounds for believing that the recommendation is suitable for such a client upon the basis of the facts, if disclosed by such a client as to his own security holdings, financial situation and objectives of such investment. The sub-broker should seek such information from clients, wherever they feel it is appropriate to do so.

48*[7A – Investment Advice in publicly accessible media –

(a) A sub-broker or any of his employees shall not render, directly and indirectly any investment advice about any security in the publicly accessible media, whether real – time or non real-time, unless a disclosure of his interest including his long or short position in the said security has been made, while rendering such advice.

(b) In case, an employee of the sub-broker is rendering such advice, he shall also disclose the interest of his dependent family members and the employer including their long or short position in the said security, while rendering such advice.]

(8) COMPETENCE OF SUB-BROKER : A sub-broker should have adequately trained staff and arrangements to render fair, prompt and competent services to his clients and continuous compliance with the regulatory system.

C. SUB-BROKERS VIS-A-VIS STOCK BROKERS

(1) CONDUCT OF DEALINGS : A sub-broker shall co-operate with his broker in comparing unmatched transactions. A sub-broker shall not knowingly and willfully deliver documents which constitute bad delivery. A sub-broker shall co-operate with other contracting party for prompt replacement of documents which are declared as bad delivery.

(2) PROTECTION OF CLIENTS INTERESTS : A sub-broker shall extend fullest co-operation to his stock-broker in protecting the interests of their clients regarding their rights to dividends, right or bonus shares or any other rights relatable to such securities.

(3) TRANSACTIONS WITH BROKERS : A sub-broker shall not fail to carry out his stockbroking transactions with his broker nor shall he fail to meet his business liabilities or show negligence in completing the settlement of transactions with them.

49*[(4) Agreement between sub-broker, client of the sub-broker and main broker: A sub-broker shall enter into a tripartite agreement with his client and with the main stock broker specifying the scope of rights and obligations of the stock broker, sub-broker and such client of the sub-broker]

(5) ADVERTISEMENT AND PUBLICITY : A sub-broker shall not advertise his business publicly unless permitted by the stock exchange.

(6) INDUCEMENT OF CLIENTS : A sub-broker shall not resort to unfair means of inducing clients from other brokers.

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D. SUB-BROKERS VIS-A-VIS REGULATORY AUTHORITIES

(1) GENERAL CONDUCT : A sub-broker shall not indulge in dishonourable, disgraceful or disorderly or improper conduct on the stock exchange nor shall he wilfully obstruct the business of the stock exchange. He shall comply with the rules, bye-laws and regulations of the stock exchange.

(2) FAILURE TO GIVE INFORMATION : A sub-broker shall not neglect or fail or refuse to submit to the Board or the stock exchange with which he is registered, such books, special returns, correspondence, documents, and papers or any part thereof as may be required.

(3) FALSE OR MISLEADING RETURNS : A sub-broker shall not neglect or fail or refuse to submit the required returns and not make any false or misleading statement on any returns required to be submitted to the Board or the stock exchanges.

(4) MANIPULATION : A sub-broker shall not indulge in manipulative, fraudulent or deceptive transactions or schemes or spread rumours with a view to distorting market equilibrium or making personal gains.

(5) MALPRACTICES : A sub-broker shall not create false market either singly or in concert with others or indulge in any act detrimental to the public interest or which leads to interference with the fair and smooth functions of the market mechanism of the stock exchanges. A sub-broker shall not involve himself in excessive speculative business in the market beyond reasonable levels not commensurate with his financial soundness.

Foot notes

42. The words “or client of sub-broker” in sub-clause (2) of clause B were inserted by the SEBI (Stock Brokers & Sub Brokers) (Amendment) Regulations, 2003, published in the Official Gazette of India dated 23.09.2003.

43. Clause 7A in clause C in Schedule II was inserted by the SEBI (Investment Advice by Intermediaries) (Amendment) Regulations 2001, published in the Official Gazette of India dated 29.05.2001.

44. Clause D in Schedule II was inserted by the SEBI (Stock Brokers & Sub Brokers) (Amendment) Regulations, 2003, published in the Official Gazette of India dated 23.09.2003.

83

45. Following part of clause B in Schedule II was deleted by the SEBI (Stock Brokers & Sub Brokers) (Amendment) Regulations, 2003, published in the Official Gazette of India dated 23.09.2003

“and make payment in respect of securities sold and arrange for prompt delivery of securities purchased by clients. “

46. Sub-clause (2) to clause B in Schedule II was inserted by the SEBI (Stock Brokers & Sub Brokers) (Amendment) Regulations, 2003, published in the Official Gazette of India dated 23.09.2003.

47. The words in sub-clause (6) of clause B “ and shall issue appropriate purchase/sale note” were deleted by the SEBI (Stock Brokers & Sub Brokers) (Amendment) Regulations, 2003, published in the Official Gazette of India dated 23.09.2003.

48. Clause 7A in clause C of Schedule II was inserted by the SEBI (Investment Advice by Intermediaries) (Amendment) Regulations 2001, published in the Official Gazette of India dated 29.05.2001.

49. Following sub-clause (4) in clause C was substituted by the SEBI (Stock Brokers & Sub Brokers) (Amendment) Regulations, 2003, published in the Official Gazette of India dated 23.09.2003.

“ (4) LEGAL AGREEMENT BETWEEN BROKERS : A sub-broker shall execute an agreement or contract with his affiliating brokers which would clearly specify the rights and obligations of the sub-broker and the principal broker. “

84

Compliance Deadlines :

BSE: Sr. No.

Name of the report/statement/certificate/data

Due Dates Responsible Dept.

1 ANNUAL SUBMISSION Audit Report Networth Certificate Networth Certificate - PCM Audited Accounts

Half yearly Accounts

2 SSL Certificate for IBT Services 31-Jul Network

3 Net worth certificate for the half-year ended March 31 / September 30

30-Jun 31-Dec

Accounts

4 Networth Certificate for Margin Trading facility

30-Apr 31-Oct

Accounts

5 Margin Trading Compliance Certificate

30-Apr 31-Oct

Accounts

6 Statement of Accounts Accounts

7 Client Funding details 7 days from EOM

Operation Team

8 Client details for Margin Trading Facility

Between 9.00 am to 12:00 am on next Trading day

Operation Team

9 Client Margin Reporting Between 9.00 am to 12:00 am on next Trading day

BO Processing Team

10 Obligation Transfer File (OTR)* I upload 6.00 pm, On T day II upload 6.30 pm, On T day III upload 9.30 am, On T+1 day

Institutional BO Processing Team

11 Client Direct Payout File (CPD)* On T+2 day by 9.30 am

Settlements Team

12 CP Code Modification (CP)* On T day by 4.45 pm


13 Early Pay In (CEP) Client allocation file*

On T+2 day up to 10.30 am

Settlements Team

14 Pay in of Securities On T+2 day by 10.30 am

Settlements Team

15 Pay in of Funds On T+2 day by 10.30 am

Accounts

16 Bulk deals Execution (CM) On the same day of trade

Risk Management

17 Block Deals Reporting (CM) Between 5:30 pm to 6:00 pm

Risk Management

18 Unique Client Code (UCC) Prior to commencement

Account Opening Team

85

of Trading

19 Contract notes have been issued to all constituents

Within 24 hrs BO Processing Team

20 Trading terminal details Prior to activation of trading terminal

Network

21 Application for Approved User Prior Approval required

CTCL Team / Network

22 Upload of CTCL IDs Activation / Deactivation / Shifting of CTCL Ids

Prior Approval required

CTCL Team

23 Members trading through other members

Intimation / Prior Approval required

N. A.

24 Change in Shareholding/profit sharing pattern / directors. Prior approval(CM & F&O)

Prior Approval Required

Accounts

25 Advertisement. Prior approval required.(CM &F&O)

seven days in advance before its publication.

Compliance

26 Change in status and constitution Prior Approval required

Accounts

27 Appointment of Authorized personal in F&O segment


Account Opening Team / Operation

28 Appointment and change of Compliance Officer

Intimation to Exchange

Compliance

29 Appointment and change of Principal Officer


Compliance

30 Adoption of written procedures to implement the anti money laundering provisions as envisaged under the Anti Money Laundering Act, 2002

Compliance

31 Margin Trading in Cash Segment Prior Approval required

Compliance

32 CTCL Facility Prior Approval required

CTCL Team

33 Activation / Deactivation of Proprietary trading facility


N. A.

34 Application for providing IBT Prior Approval required

Network

35 Display of Notice Board Compliance

36 Display Copy of SEBI Registratoin No.

Compliance

37 Client Financial information periodically reviewed and updated in KYC


38 Maintainance of Investor Greviance Register

Compliance

39 Payment of SEBI fees

40 Statistics on Internet Trading

86

NSE: Sr. No.


Due Dates Responsible Dept.

1 Systems Audit Report Half yearly Compliance

2 ANNUAL SUBMISSION *Annual Accounts - Balance Sheet, P&L, Annual report, Auditors report *C-1 Networth Certificate alongwith the relevant computation C-2 Details of Stock Exchange membership C-3 Details of directors/proprietor C-6 Details of shareholding pattern/sharing pattern *C-7 Details of Dominant Group C-8 Undertaking for Relative Support to the Dominant Group C-9 Listing details of trading member corporates *mandatory

30-Sep Accounts

3 Proof of Indemnity Insurance cover 31-Jul Accounts

4 SSL Certificate for IBT Services 31-Jul Network

5 Annual Compliance Report as on March 31 30-Jun Compliance

6 Renewal of Certificate of Membership from NSE

Accounts

7 Net worth certificate for the half-year ended March 31 / September 30

30-Jun 31-Dec

Accounts

8 Networth Certificate for Margin Trading facility 30-Apr 31-Oct

Accounts

9 Margin Trading Compliance Certificate 30-Apr 31-Oct

Accounts

10 Statement of Accounts to Clients Accounts

11 Client Funding details 7 days from EOM Operation Team

12 Client details for Margin Trading Facility Before 9:00 pm on the trade day

Operation Team

13 Client Margin Reporting Within two days from trade date

BO Processing Team

14 Obligation Transfer File (OTR)* I upload 6.00 pm, On T day II upload 6.30 pm, On T day III upload 9.30 am, On T+1 day


15 Contraction of custodial Trades file (CC)* I upload 6.30 pm, On T day II upload 9.30 am,

Institutional BO Processing

87

On T+1 day Team

16 Client Direct Payout File (CPD)* On T+2 day by 9.30 am

Settlements Team

17 Reallocation of custodial Trades file (RC)* On T+1 day by 9.30 am


18 CP Code Modification (CP)* On T day by 4.45 pm


19 Client Code Modification File (CLD)* On T day by 4.45 pm

BO Processing Team

20 Early Pay In (CEP) Client allocation file* On T+2 day up to 10.30 am

Settlements Team

21 Pay in of Securities On T+2 day by 10.30 am

Settlements Team

22 Pay in of Funds On T+2 day by 10.30 am

Accounts

23 Bulk deals Execution (CM) On the same day of trade

Risk Management

24 Block Deals Reporting (CM) Between 5:30 pm to 6:00 pm

Risk Management

25 Unique Client Code (UCC) Prior to commencement of Trading


26 Contract notes have been issued to all constituents

Within 24 hrs BO Processing Team

27 Trading terminal details Prior to activation of trading terminal

Network

28 Application for Approved User Prior Approval required

CTCL Team / Network

29 Upload of CTCL IDs Activation / Deactivation / Shifting of CTCL Ids


CTCL Team

30 Members trading through other members Intimation / Prior Approval required

N. A.


Prior Approval Required

Accounts

32 Advertisement. Prior approval required.(CM &F&O)

seven days in advance before its publication.

Compliance

33 Change in status and constitution Prior Approval required

Accounts

34 Appointment of Authorized personal in F&O segment


Account Opening Team / Operation

35 Appointment and change of Compliance Officer


Compliance

36 Appointment and change of Principal Officer Intimation to Exchange

Compliance

37 Adoption of written procedures to implement the anti money laundering provisions as envisaged under the Anti Money Laundering Act, 2002

Compliance

38 Margin Trading in Cash Segment Prior Approval required

Compliance

88

39 CTCL Facility Prior Approval required

CTCL Team

40 Activation / Deactivation of Proprietary trading facility


N. A.

41 Application for providing IBT Prior Approval required

Network

42 Display of Notice Board Compliance

43 Display Copy of SEBI Registratoin No. Compliance

44 Client Financial information periodically reviewed and updated in KYC

Account Opening Te

45 Maintainance of Investor Greviance Register Compliance

46 Inspection of the active sub-brokers Internal Auditor

47 Payment of SEBI fees

48 Internet volumes - ENIT

89

SEBI-PMS

Sr. No.


Periodity Due Date

Remarks Half yearly

1 Monthly report on Portfolio Management Services

Monthly 3rd of every month

Letter submitted by Compliance Officer

2 Half yearly report on Portfolio Management Services

Half Yearly

Within one month


3 Half yearly Disclosure document of PMS to be filed with SEBI

Half Yearly

Within one month


90

NCDEX:

Sr.No. Name of the report/statement/certificate/data Periodity Remarks

1 Unique Client Code (UCC) Daily Electronic Upload

2 Annual Compliance Report as on March 31 Yearly Physical certificate

3 Audited Annual Statement of Accounts (which includes Balance sheet, P&L account, directors and auditors report) for the year ended March 31

Yearly Physical certificate

4 Net worth certificates duly cert by auditor for the year ended March 31


5 Change in Shareholding/profit sharing pattern / directors. Prior approval

Case to case basis

Letter signed by Director

6 Details of Compliance Officer to be intimated Case to case basis


7 Advertisement. Prior approval required. Case to case basis

Letter signed by Authorised Signatory

8 Statement of accounts every three months Quarterly Electronic if Digitally signed otherwise hard copy

9 Investor Grievance Register is maintained Case to case basis

Soft copy

10 Uploading Of CTCL activation -deactivation prior to actual activation - deactivation

Case to case basis

11 CTCL Volume reporting

Fortnight before 7th & 22nd

91

MCX: Sr.No. Name of the report/statement/certificate/data Periodity Remarks Apr-

07 May-07

1 Unique Client Code (UCC) Daily Electronic Upload

Half yearly

2 Annual Compliance Repor for the year ended March 31


3 Audited Annual Statement of Accounts (which includes Balance sheet, P&L account, directors and auditors report) for the year ended March 31


4 Net worth certificates duly cert by auditor for the year ended March 31



Case to case basis


6 Details of Compliance Officer to be intimated Case to case basis


7 Advertisement Prior approval required Case to case basis

Letter signed by Authorised Signatory

8 Statement of accounts every three months Quarterly Electronic if Digitally signed otherwise hard copy

9 Investor Grievance Register is maintained Case to case basis

Soft copy

92

SUB-BROKER REMISER AND AUTHORISED PERSONS REGISTRATION PROCESS 1)Remiser Concept - Only in BSE - normally the exchange allots a Remiser registration in one month a)A member can employ a remiser

b)A remiser has to operate from broker’s office c)A broker cannot remunerate with a share exceeding fifty percent of the brokerage charged to the client introduced by remiser d)A Remiser cannot be a corporate body e)A Remiser cannot be a sub broker elsewhere

f)There is no fees charged by the exchange.

Reasons for rejection

a) Name mismatch in One Pager provided by the franchisee & his PAN no. We have to thereafter provide a affidavit and after doing so again the exchange takes one month to allot registration

2) Subbroker – In BSE – normally the exchange allots within 2 months , In NSE – normally the exchange takes four to six months a)A sub-broker may be an individual, a partnership firm or a corporate. In case of corporate or partnership firm, the directors or partners and in the case of an individual sub-broker applicant, each of them shall comply with the following requirements: b)They shall not be less than 21 years of age; c)They shall not have been convicted of any offence involving fraud or dishonesty; d)They shall have at least passed 12th standard equivalent examination from an institution recognized by the Government; e)They should not have been debarred by SEBI f)The corporate entities applying for sub-brokership shall have a minimum paid up capital of Rs. 5 Lakh and it shall identify a dominant shareholder who holds a minimum of 51% shares either singly or with the unconditional support of his/her spouse. g)There is a fees of Rs10000/- for a period of five years h)Broker cannot share a brokerage of more than 1.5% of the brokerage if charged maximum allowed to client which is 2.5% i)If the proposed subbroker is only 10th pass then a experience prior to 1992 is required to be submitted j)In case of a married woman desiring to become a subbroker requires to submit a marriage certificate or a affidavit for name change on a fifty rupees stamp paper

93

k) An undertaking should be submitted that applicant will deal directly with investors and not through any other sub-broker on being registered with SEBI.

Reasons for rejection

a)After four months of submitting the application the exchange returns the whole application back for revalidation of Demand Draft as the exchange requires a DD with four months of validity remaining. We are at total mercy of exchange and after revalidation again it is processed afresh. We have to also upload details in ENIT before filing the application again.

b)After submission the exchange rejects it on the grounds that the proposed subbroker is already registered with some other broker.

c)Mismatch in name in mark sheet given by the franchisee and One pager.

d)Proposed subbroker is debarred / restricted / prohibited by SEBI to do any kind business in securities. After submission of Undertaking the exchange takes another two months to complete the procedure.

3)Authorised Person – in NSE Cash / F & O – normally the exchange takes 15 days in confirming a AP subject to clearance of Sub-broker registration application

in NSE u can very well be a AP in Cash & F & O without applying for Subbroker

Features of AP concept - NSE Cash & F & O w.e.f 4/12/09

1. It is carrying a branch model concept and would be treated as a Brokers' branch 2. All acts and ommissions committed by our AP is Broker's responsibilty 3. Bilateral agreement needs to be executed between clients of AP and Broker 4. Gestation period of getting registered is only 7 days 5. Existing Registered subbrokers can also apply for AP 6. One time processing fee is Rs1000/- + tax for allotment of AP number 7. Existing Registered AP's in F & O segment would continue to hold thier status till

further notice/consensus 8. Cancellartion /Termination of AP would require one month notice and newspaper ad

alongiwth separate checklist to be adhered to 9. Disputes of clients of AP would be thru NSE redressal machinery of IGC /

Arbitration 10. Broker can block/withhold AP' payments in case of recoveries pending from his

clients 11. Broker can share fees/commission/salary with AP as mutually decided upon

between them

94

.

ONE PAGER Approval Letter

Database Prefix Code :__________

Branch Code:__________

Date:_____________

1)

2)

3)

Segment for Registration

(Tick)

REMISER

OR

BSE NSE F &O NCDEX MCX

Name of the Applicant:_____________________________________

Trader Name :_____________________________________________

Address Of the Branch:___________________________________________

________________________________________

City :____________ Pin code:_____________ State:_____________________

Email id:_________________________ Tel.No._______________ Fax no:_______________

Approval by Business Head: ________________ Sharing Ratio:____________

a) Settlement/Account

Department

b)Account Department

c)RMS Department

d) IT Department

C) Compliance Department

Narendra Jain: :_______________________

Narendra Taparia:__________

Mahesh Bang:_____________________________

Hemant Gandhi:____________________________

Deepak Kedia : _________________

95

Final Approval

Jugal Mantri _______________________

(Group CFO)

Approval Letter

Franchise- Database

(Surrender of Franchise)

Date:_____________

1)

Registration No.

1) Remiser ___________________________

OR

1) BSE ___________________________

2) NSE ____________________________

3) NCDEX _____________________________

4) MCX _____________________________

2)

Name of the Applicant: _____________________________________

Trader Name : ______________________________________

Address Of the Branch:__ ______________________________________

_______________________________________

City :____________ Pin code:_____________ State:_____________________

Email id:_________________________ Tel.N0._______________ Fax n0:_____________

3) Approval by Business Head: ________________ Sharing ratio ___________

a) Settlement/Account

Department

b)Account Department

c)RMS Department

d) IT Department

e) Compliance Department

Narendra Jain: :_______________________

Rajesh Bhutra :_________________________

Mahesh Bang:_____________________________

Hemant Gandhi:____________________________

Deepak Kedia : _______________

Final Approval

Jugal Mantri _______________________

(Group CFO)

96

Note:

01 Cancellation of Authorised Person :- Give Name of the Person 02 Cancellation of CTCL User id 03 Surrender of Vsat/VPN 04 Document give to the Compliance department for cancellation of franchises 05 List of Clients and Details of Payment and Recd / Paid – Must be zero 06 List of Clients and their CRF must be submit to the Compliance Department 07 Undertaking from franchises for no claim due from clients if any claim will raise he will be responsible 08 Deposit must be pay after 6 month of cancellation

97

CHECKLIST For Individuals/Sole Proprietor NSE

No Completeness of Application Form Y/N

1 Registration Fee of Rs 10000/- Favoring SEBI

(Ensure DD is Valid for next 4 months)

2 Application form for Registration with SEBI – „Form B‟

3 Recommendation letter to be given by the Trading Member on Letterhead – Form C

4 Copy of Agreement between trading member and sub-broker on stamp paper as per Cir. Ref. No. NSE/INSP/5387,

Dt.27-08-2004

5 Reference letter from the Applicant‟s Banker

6 Reference letter from any other Third Party (Such as CA or Lawyer/Notary/other Stock Broker)

7 Declaration from Sub-Broker about Non-Conviction or presently not under trial for any offence (On the letterhead of the

sub broker)

8 Undertaking from Sub-Broker about Dealing directly with investors (On the letterhead of the sub broker)

9 Confirmation from sub-broker that he has not applied through any other TM (On the letterhead of the sub broker)

10 Annexure J or K – Letter from Trading Member to NSE giving Undertaking about dealing in fake and forged shares by

the sub-broker

11 Annexure I – Letter from trading member undertaking to settle the obligations of the sub-broker

12 Annexure O – Certificate from sub broker relating to shareholding pattern and crossholding as per Cir.Ref. No.

NSE/MEM/7157, dt. 09-02-2006

13 Annexure 3– Undertaking for “Fit & Proper Person” as per Cir. Ref. No. NSE/MEM/7743, dt. 09-08-2006

Eligibility Criteria

13 Qualifications – Minimum HSC Passed or Equivalent

14 Applicant should be Resident of India..

15 Proof of age (Either School Leaving / Birth / SSC Certificate / PAN card) – To be above 21 years of age

16 Proof of name change - if applicable (Certified Copy of Marriage Certificate/ Affidavit)

17 Applicant holding more than 10% is

Not a TM of the Exchange

Not a shareholder/ Partner of any other TM

Not an Authorised Person of any other TM

Not a Dominant shareholder/ partner of any other Authorised Person

Not a registered Sub-broker of any other TM

Not a shareholder/ Partner of a registered Sub-broker

Not having a cross holding of 10% or more with any other TM/SB/AP

Not a director of the trading member

Not appearing in the JPC report

Not appearing in the NOC Excel Sheet

18 Sub-Broker is:

Not a defaulter in any other Stock Exchange.

Not appearing in SEBI debarred Directors/ Vanishing Companies List

20 TM is not disabled or suspended or any disciplinary action has been taken

21 Not appearing in CIS and Non CIS list

22 Not appearing in CIBIL database

23 Check if the sub broker is an active AP in CM Segment & if applicant is registered/application is returned, cancel the AP

in CM Segment

Checked by: NOC Sent On: DSU on:

BSE

CHECKLIST FOR SUBMITTING DOCUMENTS FOR SUB-BROKER REGISTRATION BY INDIVIDUAL/PARTNERSHIP/CORPORATE APPLICANT

1 Application in the prescribed format (available on website bseindia.com) for obtaining recognition as sub-broker with Member of BSE Ltd., duly signed/stamped by the applicant together with the DD of Rs.10000/- in favour of SEBI as a registration fee of SEBI for the block of five years.

98

2 Form-B (Original) in the prescribed format, duly signed and bearing rubber stamp/name of the applicant.

3 Form-C (Original) in the prescribed format on the Member’s Letterhead, duly signed and bearing SEBI Registration number stamp of the recommending member.

4 Letter from the member in the prescribed format (available on website bseindia.com) for authorising the Exchange to debit member’s general charges account maintained with the clearinghouse for Rs.1000 per application as sub-broker SEBI registration processing fee.

5 Two original reference letters including one from the banker recommending the applicant. (In case of partnership/corporate all partners/directors names should be included in reference)

6 Declaration from the applicant that he/she/they have not been convicted of any offence involving fraud or dishonesty and no trial is pending against them in court of law. (For all partners/directors in case of partnership/corporate)

7 Two undertaking from the applicant (1) that he/she/they will deal directly with investors and not through any other sub-broker (2) undertaking in the prescribed format (available on website bseindia.com).

8 Confirmation/Declaration/undertaking by Recommending member on their letterhead as per the prescribed format (available on website bseindia.com).

9 Certified true copy of agreement between Recommending Member broker and Sub-broker on Rs.100/- Stamp paper / Franked paper along with signatures of witnesses.

10 Certified true copy of age & education proof of individual / all partners / all directors of applicant/s. (Minimum age & education qualification are 21 years and qualification should be HSC or equivalent to HSC).

11 Market Experience Certificate in case of the education qualification of any Individual/Partners/Directors of the applicant is less than HSC (at least two years of experience in Capital Market required in hard & soft copy duly scanned in JPEG/BMP format should be submitted).

12 Details relating to Sharing of Profit ratio & No. of Partners in case applicant is partnership and Shareholding Pattern & No. of Directors in case applicant is corporate and details of office infrastructure like no. of computers, Fax, Scanning Machine, Printers, no. of employees etc should be submitted.

13 In case applicant is a partnership/corporate, certified true copy of Partnership Deed (Duly certified by C.A/member) in case of partnership firm and Memorandum & Articles of Association in case of corporate to be submitted.

14 In case applicant is a corporate, board resolution authorizing director/s of the applicant to sign documents for registration of sub-broker signed by all directors and certified as true copy by a Chartered Accountant/Company Secretary/member with registration number and date.

15 Certified true copy of ROC Form 32 (if applicable) in case of corporate application.

16 In case the applicant is member of the regional/multiple stock exchange certified true copy of turnover figures of the members (applicant) concerned intending to act as sub-brokers from the date of their registration as broker on the regional stock exchange & other stock exchanges if he is a multiple member till the date of submission of application for acting as a sub-broker. Turnover figures of such members (applicant) should be submitted as per SEBI's circular No:SMD/POLICY/Cir-07/2002 dated 28th March,2002.

17 In case the applicant is member of the regional/multiple stock exchange certified true copy of turnover figures of the transferor also should be submitted as per SEBI's circular No:SMD/POLICY/Cir-07/2002 dated 28th march,2002 from the date of their registration as a broker on the regional/multiple stock exchange in cases where member (applicant) concerned intends to act as sub-brokers. In case, there is no change in the constitution of the member (applicant) since 1991-92, turnover figures of transferor is not applicable.

18 Broker database certificate in case the applicant is a member of a regional stock exchange to be certified by the Exchange.

19 In case the applicant is member of the regional/multiple stock exchange a letter from the subsidiary/multiple Exchange stating whether, the applicant is entitled for continuity benefits as per SEBI's circular No. SMD/POLICY/CIR-4/98 dated 4th February 1998.

20 In case of individual/partnership/corporate applicant, individual / any partner/director is a Married female and there is change of name, then, copy of marriage certificate / affidavit duly attested by notary supporting change of name should be submitted.

21 In case the applicant is already registered or applied as remiser with the Exchange, an undertaking in the prescribed format (available on website bseindia.com) from the applicant for cancellation of remisership from the Exchange should be submitted at the time of submitting an application for sub-broker registration.

Updated on 30/05/2007

99

For Partnership/Corporates SUB-BROKER APPLICANT NAME: ___________________________________________________________

TRADING MEMBER AFFILIATED TO _________________________________________________________

No Completeness of Application Form Complete

Y/N

Remarks

1 Registration Fee of Rs 10000/-

2 Application form for Registration with SEBI – „Form B‟

3 Recommendation letter to be given by the Trading Member on Letterhead – Form C

4 Copy of Agreement between trading member and sub-broker on stamp paper as per Cir. Ref. No.

NSE/INSP/5387, Dt.27-08-2004

5 Reference letter from the Applicant‟s Banker

6 Reference letter from any other Third Party (Such as CA or Lawyer/Notary/other Stock Broker

7 Declaration from Sub-Broker about Non-Conviction or presently not under trial for any offence#

8 Undertaking from Sub-Broker about Dealing directly with investors#

9 Confirmation from sub-broker that he has not applied through any other TM#

10 Annexure J or K – Letter from Trading Member to NSE giving Undertaking about dealing in fake and forged

shares by the sub-broker

11 Annexure I – Letter from trading member undertaking to settle the obligations of the sub-broker

12 Duly signed Copy of Board Resolution for appointment/ resignation of directors along with Form 32

13 Annexure L – For Corporate - Shareholding Pattern

14 Annexure L – For Firms – Sharing Pattern

15 Annexure O – Certificate from sub broker relating to shareholding pattern and crossholding as per Cir.Ref.

No. NSE/MEM/7157, dt. 09-02-2006#

16 Registered Partnership Deed/ MoA & AoA Along with the Certificate of Incorporation

Eligibility Criteria Complies

Y/N

Remarks

17 Qualifications – Minimum HSC Passed OR SSC Passed along with Experience Certificate required in

Capital Market for period not less than 2 years prior to 1992 for all the partners/directors/

18 PAN card of the Firm/Corporate and all the partners/directors

19 Proof of age (Either School Leaving / Birth / SSC Certificate / PAN card) – To be above 21 years of age for

all the partners/ directors

20 Proof of name change - if applicable (Certified Copy of Marriage Certificate/ Affidavit)

21 Applicant/ Any Shareholder/ Partner/ or Director holding more than 10% is

Not a TM of the Exchange

Not a Dominant shareholder/ Partner of any other TM

Not an Authorised Person of any other TM

Not a Dominant shareholder/ partner of any other Authorised Person

Not a registered Sub-broker of any other TM

Not a dominant shareholder/ Partner of a registered Sub-broker

Not having a cross holding of 10% or more with any other TM/SB/AP

Not a director of the trading member

Not appearing in the JPC report

Not appearing in the NOC Excel Sheet

22 Sub-Broker/ Any Shareholder/ Partner/ Director is:

Not a defaulter in any other Stock Exchange.

Not appearing in SEBI debarred Directors/ Vanishing Companies List

Cleared by Investigation/Inspection

23 TM is not disabled or suspended or any disciplinary action has been taken

24 Not appearing in CIS and Non CIS list

25 Not appearing in CIBIL database

@ Check if the sub broker is an active AP in CM Segment, if application is returned, intimate TM and get date of disassociation of AP in

CM Segment

# To be signed by applicant/ all partners/ all directors * All photocopies Should be duly certified by the Trading Member/CA/Trading

Member

Checked by : NOC Sent On: DSU on:

100

Form No 2

Proposal for New Franchisee / Remiser Sanction

Proposed Town / Location: Cluster: Franchsiee / Remiser (strike one) Region:

Town / Location Potential Potential (Associate) Client Acq

Revenue

Town Broking MF Total

Location 3 months

Town Population 6 months

No of NSDL/CDSL Accounts in town 12 months

Banks (as applicable) HDFC / UTI /

Other Information Proposed Launch date

Our Existing Branches (no)

Our Existing Number Franchisees (no)

Particulars of the Associate To be filled only if the party is currently assocaited with some other broker

Name Broker name

Office Owned / Rented / ARG Office (Pl mention name of branch) Current Client base

Office Size Monthly revenue

Any previous association as Franchisee with some other broker* Yes / No

Reason for change from assocaition with existing broker

Investment Capability

Qualification

Existing occupation

Brokerage Sharing Terms

Other Information

Top 10 Competitors

Name of Player No of Clients

No of Dealers

Revenue Other Remarks Broking Distribution Total

Signatures: Franchisee Development Manager Cluster Head Regional Director

Recommendations of Product Team:

Approved by (signature):

Note:

Franchisee - Associate setting up a full fledged office to source and service clients. Would be registered as Sub broker in BSE & NSE cash and as Authorised Person in NSE F & O Remisers - Assocaites would not set up own office and would operate through ARG branch. Would be registered as Sub broker in BSE & NSE cash and as Authorised Person in NSE F & O or as

101

Remiser in BSE Cash Segment

102

Memorandum of Understanding – Sub Broker /Authorized Person (Franchisee)

Date:

Sub broker Name / AP:

Contact No:

Mail id:

Pan No:

Address:

Sub: Memorandum of Understanding for associating as a Sub broker/ Authorized Person (AP)

with Anand Rathi Group

Based on our discussions with you, you hereby agree to associate with ANAND RATHI GROUP

(ARG).

Registration: You will be registered with Anand Rathi Share and Stock Brokers Ltd (Formerly

Known as Navratan Capital and Securities Ltd.) as a sub broker in the cash segment (for

revenue sharing purpose) and registered as an Authorized Person in F & O segment of

NSE. You will also be registered with as a Sub broker of Anand Rathi Share and Stock

Brokers Ltd. (Formerly known as Anand Rathi Securities Ltd.) in the Cash Segment of

BSE. There may be changes in registration process incase of any amendments in the

regulations by the Exchanges or SEBI. You will also be registered in MCX as Sub broker

and with NCDEX as Authorized Person of Anand Rathi Commodities Ltd. (ARCL)

ARG – Offering: Products Offered:

o Broking - Equities, Derivatives, Commodities & Currency

o Internet Trading

o IPO

o DP

o Mutual Funds

o Loans (As per tie up with External agencies/Companies)

o Fixed Deposit(As per tie up with External agencies/Companies)

o Other products as may be specified from time to time.

BSE & NSE registration fee to be debited to Sub broker/AP ledger

Security Deposit

o 1 Lac for One Segment ment (Only Cash)

o 2 Lac for More than One Segment (Minimum Cash deposit Rs. 1,00,000/- rest

deposit can be Collateral – Shares)

o Interest will be paid annually on Cash deposits

Deposit Amount (Cash) Interest % p.a.

1,00,001 to 2,00,000 6

2,00,001 to 3,00,000 7.5

3,00,001 and Above 9 o Example: If the deposit is Rs. 4,00,000/-, then the interest % p.a will be paid on Rs.

3,00,000/- i.e. Rs. 4,00,000-Rs.1,00,000 (on the base minimum cash deposit, we will

not provide any interest).So the deposit for interest calculations will be @ 7.5% p.a.

on Rs. 3,00,000/- (not Rs. 3,00,001/-).

a) Interest will be calculated on simple rate of interest method after reducing Rs.1 lac out

of cash deposit available & the interest will be credited to brokerage account on financial

year basis.

b) Waiver of interest in any client account will be reduced out of Interest calculated

above.

Note: In case of closing of Sub broker/AP, deposit will be released 3 months after

103

completion of all the closure formalities.

Revenue Sharing: Revenue Segment (Cash, Derivative, and Commodities & Currency Segment): The

Brokerage will be shared in the following ratio, post statutory cost.

Sharing Ratio Brokerage to be generated per month

(ARG : S.B) (Post Stat. Cost)

50 : 50 Up to 25,000/-

45 : 55 Rs. 25,001/- to Rs. 50,000/-

40 : 60 Rs. 50,001/- to Rs.75,000/-

35 : 65 Rs. 75,001/- to Rs.1,00,000/-

30 : 70 Rs. 1, 00,001/- and above.

Note: Any brokerage rate below 0.30% and 0.03% to be offered only with prior

approval from ARG

o For both online and offline sharing will be same as mentioned in the above slab.

o Payment will be made monthly as per the applicable slab for that particular month,

however quarterly average will be taken at the end of every quarter for applicability

of slab related to that quarter.

o Internet trading clients would be required to transact as per standard risk management

and settlement procedures as applicable under the ARG Internet Trading client

policy.

IPO : Depending on the IPO, remuneration to the Sub broker/AP could be in the

following ways:

a). On a „Per Application basis‟ or

b). Brokerage sharing in the ratio of 80:20 (80% of revenue to Sub

broker/AP & 20% of revenue ARG)

DP : Sub broker/AP will be paid Rs.100/- on renewal of AMC as well as Rs. 100/- on

new demat account opening. This policy is applicable for all schemes.

Other Products: For Products offered to Sub broker/AP, other than the ones mentioned above, like MF,

Loans, PMS etc. sharing ratio would be decided by HO and communicated to Sub

broker/AP from time to time.

o Present Product offering is as per the policy and on the sole discretion of Anand

Rathi Group. ARG reserves the right to change the structures at any time with notice

on immediate effect

o Product offering can also change in future subject to prevailing policies of different

Authorities.

o In case of loans, the sharing will be given as per the sharing ratio applicable at the

time of disbursement of loan amount.

o All Brokerages/incentives are gross and inclusive of all statutory levies including

service tax & other taxes. Net amount after deducting the statutory levies will be paid

to the Sub broker/AP.

Expectations from Sub broker/AP:

o Revenue:

a) Starting the 4th Month onward, every Sub broker/AP is expected to generate net

revenue of Rs.50000/- for ARG.

b) Sub broker/AP to start business on activation of 50 Accounts. ARG to provide

support to Sub broker/AP to source clients – Marketing Collaterals.

o Sub broker/AP criteria

a) Clear NCFM exams for Cash, Derivatives as well as Commodities segment (if

activated in respective segment)

b) Get AMFI certified to sell Mutual Fund (Optional)

c) Have a team of minimum 2 dealers and 1 BO executive

d) Minimum 250 Sq ft office and Office ambience to be in line with ARG office

104

ambience standards

e) Adherence to compliance norms

f) Any brokerage rate below 0.30% and 0.03% to be offered only with prior

approval from ARG

g) Should possess good relationship building skills

h) Understanding of equity broking business

Support from ARG to Sub broker/AP ARG Newsletters (Wealth N Wisdom) - Free

Brochures - 50% cost to be borne by Sub broker/AP

First Flex (Glow sign Board) - 1 Free*

Posters to decorate his office - Free

Canopy - 50% cost to be borne by Sub broker/AP

Umbrella for promotional activity- 50% cost to be borne by Sub broker/AP

Note: * First flex for “Main Glow Sign Board” would be provided by ARG (Free up to the size of 18 sq.

feet only).

Charges: You will be debited with charges for the following:

Client Registration Form

Bills / Contract Notes stationery if provided from ARG office

One side bank charges for fund transfer to Head Office in case of remote locations,

not having HDFC network

Inter settlement charges of the above depositories

Certain marketing activities like investors conference would be on equal cost

sharing basis or as decided and mutually agreed on case to case basis

Risk Management:

Complete risk of the business is borne by the Sub broker/AP.

Client wise risk monitoring –Upfront margins would be required for placing orders.

Responsibility of managing client‟s risk, collections.

Payment of delay pay-in charges in case not borne by client.

Compliance:

SEBI/Exchange registration must to commence the business

NCFM certification (NSE Cash, F&O, DP and

NCDEX.

Client registration must before trade execution.

No Third party payments and securities, cash Transactions, unauthorized transfer of

funds

one client to other.

All marketing and brand norms to be adhered to completely.

Liabilities: You shall be fully responsible for your client‟s trades and will ensure that the client

fulfills all his settlement obligations (deliveries/payments) in respect of trades done

through ARG.

Other Points: You are expected to carry out ethical business practices while fully complying with the

rules applicable, regulations and byelaws of SEBI, NSE, BSE, MCX, NCDEX, FMC,ARG

& other statutory authorities that may be issued from time to time.

You must ensure that all your clients are registered with ARG.

All the expenses such as rent, electricity, traveling, conveyance, staff salary & welfare etc

for your set up would be borne by you.

In the due course of registration, you will submit to ARG duly filled client

enrollment form, Risk disclosure document, member - client agreement along

105

with brokerages to be charged to client and letter of authority from the client

before the commencement of business.

Client billing would be centralized from Mumbai. You would be responsible for printing their

bills and getting it delivered to them as per the customer standards that are set by ARG.

If any dispute arises between the parties in relation to this MOU, then the parties shall meet

to discuss the matter and shall negotiate in good faith to Endeavour to resolve the issue. In

default, the parties to resolve the dispute under the provision of the Arbitration and

Conciliation Act, 1996 or through the arbitration mechanism of the respective stock

exchange, as the case may be.

This MOU shall be governed in accordance with the laws of India and shall be subject to

the exclusive jurisdiction of the courts in Mumbai only.

Connectivity: Sub broker/AP to be provided connectivity through VPN (VSAT) & Broadband Connectivity (VSAT & Broadband) Charges are given in Annexure I

We look forward to a continuing and fruitful association with you.

Thanking You

For Anand Rathi Group For Sub Broker/AP (Name of the Company)

Authorized Signatory:

___

Date: Date:

Annexure 1

VPN (VSAT) Charges

Scheme - I Scheme - II Scheme - Broadband

III with ODIN /

Omnesys

Own Your VSAT VSAT

VSAT Finance Rent

V-sat Purchase and Installation cost -

Upfront 75,000 25,000 Nil Nil

Monthly Installments (Rs.) Nil 5,000 Nil Nil

No. of Installments Nil 12 Nil Nil

VSAT Rent Nil Nil 1500 Nil

Monthly Charges

ID Charges (Per ID Per Segment) 750 750 750 500

Available Exchanges and Segment BSE (Cash), NSE (Cash & F&O), NCDEX and MCX

Shifting Charges (V- sat) As per Actual

106

MANUAL FOR PREVENTION OF MONEY LAUNDERING

ACT 2002 (PMLA)

INDEX

Sr. No. Particulars Page No.

Part I OVER VIEW 2-5

A Introduction 2

B Back Ground 3

C Guiding Principles 4 -5

Part II DETAILED GUIDELINES 6-13

A Customer Due Diligence

I. One Pager Information 6

II. Know Your Client 7

III. Dealing With Clients 10

B Code of conduct for Prevention of Insider Trading for ARG

Employees (as per SEBI guidelines) 11

C Employee Trading

I. Policy for Trading in Shares & Commodities by

Employees of Anand Rathi Group 12

II. Dealing With Employee Clients 13

Part III TRANSACTION MONITORING & REPORTING 14-17

A Internal Report Generation 14

B Monitoring & Reporting

I. Cash Transaction 15

II. Suspicious Transaction 16

III. Branch / Associates Inspection 17

Appendix 18

107

PART -I OVER VIEW

A. Introduction

1.1. The Guidelines as outlined below provides a general background on the subject of money

laundering and terrorist financing summarizes the main provisions of the applicable anti-money

laundering and anti-terrorist financing legislation in India and provides guidance on the practical

implications of the Act. The Guidelines also sets out the steps that Branches / Business Associates

and any of its representatives, should implement to discourage and identify any money laundering

or terrorist financing activities. The relevance and usefulness of these Guidelines will be kept under

review and it may be necessary to carryout amendments from time to time.

1.2. These Guidelines are intended for use primarily by our company and its Branches / Business

Associates. While it is recognized that a “one-size- fits-all” approach may not be appropriate for the

securities industry in India, each Branch / Business Associates should consider the specific nature

of its business, organizational structure, type of customers and transactions, etc. when implementing

the suggested measures and procedures to ensure that they are effectively applied. The overriding

principle is that they should be able to satisfy themselves that the measures taken by them are

adequate, appropriate and follow the spirit of these measures and the requirements as enshrined in

the Prevention of Money Laundering Act, 2002. (PMLA)

108

B. Back Ground:

2.1. The Prevention of Money Laundering Act, 2002 has come into effect from 1st July 2005. Necessary

Notifications / Rules under the said Act have been published in the Gazette of India on 1st July

2005 by the Department of Revenue, Ministry of Finance, and Government of India.

2.2. As per the provisions of the Act, every banking company, financial institution (which includes chit

fund company, a co-operative bank, a housing finance institution and a non-banking financial

company) and intermediary (which includes a stock-broker, sub-broker, share transfer agent, banker

to an issue, trustee to a trust deed, registrar to an issue, merchant banker, underwriter, portfolio

manager, investment adviser and any other intermediary associated with securities market and

registered under section 12 of the Securities and Exchange Board of India Act, 1992) shall have to

maintain a record of all the transactions; the nature and value of which has been prescribed in the

Rules under the PMLA. Such transactions include:

All cash transactions of the value of more than Rs 10 lacs or its equivalent in foreign

currency.

All series of cash transactions integrally connected to each other which have been valued

below Rs 10 lakhs or its equivalent in foreign currency where such series of transactions take

place within one calendar month.

All suspicious transactions whether or not made in cash and including, inter-alia, credits or

debits into from any non monetary account such as d-mat account, security account

maintained by the registered intermediary.

It may, however, be clarified that for the purpose of suspicious transactions reporting, apart from

„transactions integrally connected‟, „transactions remotely connected or related‟ should also be

considered.

109

C. Guiding Principles

3.1.1. These Guidelines have taken into account the requirements of the Prevention of the Money

Laundering Act, 2002 as applicable to the intermediaries registered under Section 12 of the SEBI

Act. The detailed guidelines in Part II have outlined relevant measures and procedures to guide the

Branches / Business Associates in preventing money laundering and terrorist financing. Some of

these suggested measures and procedures may not be applicable in every circumstance. Each

Branch / Business Associates should consider carefully the specific nature of its business,

organizational structure, type of customer and transaction, etc. to satisfy itself that the measures

taken by them are adequate and appropriate to follow the spirit of the suggested measures in Part II

and the requirements as laid down in the Prevention of Money Laundering Act, 2002.

3.2 Obligation to establish policies and procedures

3.2.1. International initiatives taken to combat drug trafficking, terrorism and other organized and serious

crimes have concluded that financial institutions including securities market intermediaries must

establish procedures of internal control aimed at preventing and impeding money laundering and

terrorist financing. The said obligation on intermediaries has also been obligated under the

Prevention of Money Laundering Act, 2002. In order to fulfill these requirements, there is also a

need for registered intermediaries to have a system in place for identifying, monitoring and

reporting suspected money laundering or terrorist financing transactions to the law enforcement

authorities.

3.2.2. In light of the above, senior management of a Branch / Business Associates should be fully

committed to establishing appropriate policies and procedures for the prevention of money

laundering and terrorist financing and ensuring their effectiveness and compliance with all relevant

legal and regulatory requirements. The Registered Intermediaries should:

(a) issue a statement of policies and procedures, on a group basis where applicable, for dealing

with money laundering and terrorist financing reflecting the current statutory and regulatory

requirements;

(b) ensure that the content of these Guidelines are understood by all staff members;

(c) Regularly review the policies and procedures on prevention of money laundering and

terrorist financing to ensure their effectiveness. Further in order to ensure effectiveness of

policies and procedures, the person doing such a review should be different from the one

who has framed such policies and procedures;

(d) adopt customer acceptance policies and procedures which are sensitive to the risk of money

laundering and terrorist financing;

(e) undertake customer due diligence (“CDD”) measures to an extent that is sensitive to the risk

of money laundering and terrorist financing depending on the type of customer, business

relationship or transaction; and

(f) develop staff members‟ awareness and vigilance to guard against money laundering and

terrorist financing.

3.2.3. Policies and procedures to combat Money Laundering should cover:

(a) Communication of group policies relating to prevention of money laundering and terrorist

financing to all management and relevant staff that handle account information, securities

transactions, money and customer records etc. whether in branches, departments or

subsidiaries;

(b) Customer acceptance policy and customer due diligence measures, including requirements

for proper identification;

110

(c) Maintenance of records;

(d) Compliance with relevant statutory and regulatory requirements;

(e) Co-operation with the relevant law enforcement authorities, including the timely disclosure

of information; and

(f) Role of internal audit or compliance function to ensure compliance with policies,

procedures, and controls relating to prevention of money laundering and terrorist financing,

including the testing of the system for detecting suspected money laundering transactions,

evaluating and checking the adequacy of exception reports generated on large and/or

irregular transactions, the quality of reporting of suspicious transactions and the level of

awareness of front line staff of their responsibilities in this regard.

PART II DETAILED GUIDELINES

A Customer Due Diligence

I. One Pager Information

3. Branch to obtain information of client in one pager form and sent to HO through mail/fax, etc.

4. Client Code will be mapped by HO to the trading/back office system for the purpose of executing

trades/generation of contracts.

5. Client Registration Form (CRF) be collected from the client as per SEBI/Exchange requirement on

the same day.

6. No CRF No UCC allotment

List of Mandatory Fields in Pradnya (Back office Software).

18. Branch code

19. Client type

20. Party code

21. Name (Long Name and Short Name)

22. Residential Address (Permanent / correspondence) (City & State, Country, Pin Code)

23. PAN Card No

24. Sub broker code,

25. Trader code

26. Client Status

27. Region code

28. Area code

29. Dealer code

30. Details of Bank Account (Bank Name, Address, Account No., Type of Account)

31. Details of Depository Participant

32. Date of Birth

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33. Gender

34. Introducer Details

II. Know Your Client

CLIENT REGISTRATION FORM (CRF)

1. CRF are of 2 types –

a. Individual / HUF

b. Non-Individual– Company/Firms/Trust

2. Separate CRF must be collected from clients for ARSL/NCSL/ARCL in the format as provided to

you.

3. CRF to be collected from ALL the clients i.e. both existing and new clients.

4. CRF to be collected before commencement of business with new client.

5. CRF to be collected with the relevant supporting documents I.e. ANY ONE out of the

prescribed documents.

6. Details which are required to be collected COMPULSORILY

INDIVIDUAL CLIENT‟S

Photo with signature across.

Name, Address, Tel. No.

Birth Date & Occupation

Bank A/c Details & Letter from Client‟s Bank

DP A/c Details – Xerox copy for proof of DP No. to be taken

IT PAN No. Xerox copy for proof of PAN No. to be taken

Copy of any one of the specified documents (PAN Card, Voters ID Card, Passport,

Driving Licence, Ration Card)

Introducer‟s Name & Signature

Signature of Client(self attestation on all supportings)

Branch Manager‟s signature

ADDITIONAL INFORMATION FROM NON-INDIVIDUAL CLIENT‟S

Certified true copy of Board Resolution

Certified true copy of Audited Final A/cs for the latest year

Copy of IT Return, if possible

Certified true copy of MOA/AOA/ Partnership Deed/Trust Deed

Details of 2 key persons

Photo with signature across.

Name, Address, Tel. No.

Birth Date & Designation

Copy of any one of the specified documents (similar to those collected in respect of

individuals)

Signature of key person.

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MEMBER-CLIENT AGREEMENT

1. Member-Client Agreement to be collected from ALL the clients i.e. both existing and new

clients.

2. Format for both individual and non-individual clients is common.

3. Separate Member-Client Agreement to be collected from clients for BSE, NSE & NSE F&O

4. Member-Client Agreement will be provided by the HO on requisition of Branch.

Requisition must be given to HO 15 days in advance.

5. Date of Agreement must be prior to date of commencement of business with new client.

6. Blanks of Agreement to be duly filled.

7. Agreement to be duly signed by Branch Manager & Client.

8. Signature of Branch Manager & Client to be countersigned by 1 witness each.

RISK DISCLOSURE DOCUMENT (RDD)

1) New requirement introduced by SEBI/Exchanges w.e.f. 15-10-2003.

2) RDD in the prescribed format is required to be collected from ALL the clients i.e. both existing

and new clients.

3) RDD must be signed by the client acknowledging that he has read and understood the risk

/benefit of buying/selling in shares.

Duly completed CRF‟s to be sent to HO on a weekly basis.

Client Code to be written on CRF before sending the same to HO.

Note: Detailed Process available in Operational Manual.

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Process Flow

START

CRF to AOT from

Branches

With Excel format of KYC

mailed to AOT Dept.

And Pending CRF status

Fully checked with

the mandatory fields

and proofs.

Entered in the system,

CRF to be filed,

Alloted a file no.

For permanent record

AOT Dept. updated on

daily basis about the file

no and the CRF in that

file.

IF SATISFIED

Follow up

with

Branches

IF N

OT

SA

TIS

FIE

D

END

For proofs,

completed

documents

and pending

CRF status

114

III. Dealing With Clients

1. Branch to receive only account payee crossed cheque/demand draft from clients and the same

must be deposited on same/next day.

2. No payments/receipts be made/accepted in CASH from clients.

3. Securities due to one client will not be transferred to other clients A/c and vice-versa.

4. Securities due to clients will not be used for meeting own/other clients pay-in obligations.

115

B. Code Of Conduct For Prevention Of Insider Trading For ARG Employees (As Per SEBI Guidelines)

Departments and persons for whom further restrictions for buying and selling of securities is applicable:

Directors

All Head of the Departments (VP & Above)

Compliance

Dealing Department

Research Department

Risk Department

For Applicable Persons

Not to communicate any Price Sensitive Information to any non-applicable person. In exceptional

circumstances confidential information can be given to non-applicable person on the basis of "need

to know" criteria, under intimation to the compliance officer.

Not to use Price Sensitive Information to buy or sell securities of any sort, whether for their own

account, their relative‟s account, Company's account or a client's account. (Relative to include self,

spouse, dependant children and their spouses, dependant parents, dependant grand parents,

dependant brothers, sisters and their spouses)

Not pass on such information directly or indirectly by way of making a recommendation for the

purchase or sale of securities.

For Research Team

To intimate compliance officer of all existing companies on which the research activity is carried

out on the date of introduction of this code

To intimate compliance officer any addition to the above list on initiation of research.

To disclose their share holdings/ interest in companies on which they are conducting research to the

compliance officer.

Analysts who prepare research report of a listed company shall not trade in securities of that

company for 30 days from preparation of such report.

For Dealers:

To intimate the compliance officer immediately upon the execution of the order where the traded

quantity either buy or sell on account of any trade (client / proprietor) is more than 0.5% (Bulk

Deal) of the number of equity shares of the company listed on the stock exchange.

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C. Employee Trading

I Policy For Trading In Shares & Commodities By Employees Of Anand Rathi Group

Employees of Anand Rathi Group their spouses, dependent parents and dependent children wishing to deal

in securities are required to abide by the following code of conduct:

13. Dealing in securities must be only through Anand Rathi Group. However, exceptions shall be

allowed in case of the spouse of a staff member who is working in some other broking house where

similar policy is in place. Such exceptions shall be granted only after prior approval is obtained

from Compliance Officer at Anand Rathi Group.

14. All the trades should be executed through the Dealing Desk at the respective Branch. Dealers at the

Dealing Desk would send confirmation of all the transactions executed through email on same day.

15. Buying and selling shares of the same company within the same settlement shall normally not be

allowed.

16. Trading in F & O, would be permitted only for the limited purpose of hedging / arbitrage. Trading

in commodities would be allowed through investment in arbitrage – structured products.

17. Concerned Business Head / Head of Department should be vigilant about policy implementation by

his/her team members and should inform relevant authorities in case the policy is violated.

However, the compliance officer shall have the right to call for relevant information from any staff

member. All the employees would submit a self certification of following this policy to HR

department; this would be coordinated by HR department.

18. If any employee is found to be breaking this policy, management may take strict disciplinary action,

which may include reflecting in the appraisal and even termination of services from the company.

19. To transact in securities only after pre clearance from compliance officer in case of transaction

value is Rs. 25 Lakh or more or the number of securities is 25000 or more. This will include even to

IPO‟s. Approval from Compliance shall be valid for a period of one week.

20. Hold their investments for a minimum period of 30 days this will include even to IPOs. (From the

date of allotment for IPOs)

21. In case the sale of securities is necessitated by personal emergency before the minimum period,

obtain confirmation from the compliance officer

22. Declare all holdings in securities at the time of joining the organization or for existing persons on

introduction of this code to the Compliance Department.

23. Compliance Department would take record of all transactions and holdings of employees in soft

copy through DP AC on Quarterly and Annual Basis.

24. All employees shall submit the Undertaking for the trading account held by him / her and their

dependents before initiating any trades.

117

II. Dealing With Employee Clients

1. Employees of the Branch Offices (including Branch Manager) can buy / sell securities

through the Dealing Desk at their respective Branch.

2. Client Codes allotted to employees will start with prefix „E……‟

3. Validity of Compliance Approval to be ensured for the transaction exceeding the threshold limit

specified above for employee trading.

4. Trading Account Undertaking to be submitted to the Compliance Department.

118

PART II TRANSACTION MONITORING & REPORTING

A. Proposed Internal Alert Generation

Following Alerts to be generated as a PMLA Measure :

1. Cash Transaction above 1Rs.

2. Trades carried out by a client exceeding 25% or more of Gross Exchange Turnover (For All

Segments).

3. Continuous buying / selling in a particular scrip by a particular client or Group of clients for more

than 7 trading days.

4. Transaction in Dormant/passive accounts amounting to a value Rs. 10 Lakhs or more.

5. Transaction of particular client or group of clients, having value more than the total transaction of

previous 10 days transaction value.

6. Transactions in Derivative/options segment executed at price having difference of 25% or more

from the previous day closing price of underlying value in Cash Segment.

7. Off Market Transactions above Rs. 5 Lakhs.

8. Third Party pay in / pay out of Funds / Securities.

9. Multiple clients having same address.

10. Clients having more than 3 DP accounts.

11. Same PAN No. entered for more than one trading account.

12. Same DP ID mapped to more than one account.

Following Alert to be generated for the Employee trades:

1. Square off transaction is within 30 days. (Applicable for IPO also)

2. Transaction value is Rs. 25 Lakh or more or the number of securities is 25000 or more.

Note: Alerts will be generated periodically, randomly & sample basis, as and when deemed to be

appropriate across branches.

119

B. Monitoring & Reporting

I. Cash Transaction

Responsibility

All the Branches / business associates shall report all Cash Transaction to Compliance Department

immediately on observation.

On basis of the report generated as above / on basis of continuous monitoring, Compliance department has

to furnish the information of the cash transactions of a month to the Principal Officer by the 7 working

days of the succeeding month.

Compliance Department shall accumulate the information received from Branches / business associates and

shall furnish the same to Principal Officer in accordance with the requirement of SEBI circular, and shall

prepare the required file and complete the procedures as prescribe in PMLA Act / PMLA Rule / the

circulars in that regards.

Due Date

The Principal Officer has to furnish the information of the cash transactions of a month to Director, FIU-IND by the

15th day of the succeeding month.

Format

Cash Transaction Reports in manual format consists of following forms:

Form Information

Cash Transaction Report for an Business Associates Details of account and cash

transactions

Annexure A- Individual Detail Sheet for an Business Associates Identification details of individual

Annexure B- Legal Person/ Entity Detail Sheet for an Business

Associates (Non Individual)

Identification details of legal

person /entity

The above forms are given in the Appendix

120

II. Suspicious Transaction

Responsibility

All the Branches/business associates shall report all Suspicious Transaction to Compliance Department

immediately on observation.

On basis of the alerts generated as above / on basis of continuous monitoring, Compliance department has

to furnish the information of the suspicious transactions to the Principal Officer immediately.

Compliance Department shall accumulate the information received from business associates and shall

furnish the same to Principal Officer in accordance with the requirement of SEBI circular, and shall prepare

the required file and complete the procedures as prescribe in PMLA Act / PMLA Rule / the circulars in that

regards.

Due Date

The Principal Officer has to furnish the information of the suspicious transactions to Director, FIU-IND

within 7 working days of establishment of suspicion at the level of Principal Officer

Format

Suspicious Transaction Report in manual format has to be filed in following forms:

Description of Form Information

Suspicious Transaction Report for an Business Associates Details of suspicious transactions

Annexure A- Individual Detail Sheet for an Business Associates Identification details of individual

Annexure B- Legal Person/ Entity Detail Sheet for an Business

Associates (Non Individual)

Identification details of legal

person /entity

Annexure C- Account Detail Sheet for an Business Associates Details of account and

transactions

The above forms are given in the Appendix.

121

III. Branch / Associates Inspection

All Operational Managers will visit their Branches / BusinessAssociates periodically on surprise basis and

will verify the business activity and ensure the adherence of the checklist.

All Operational Managers will than forward the report for the discrepancies found if any to the compliance

Department.

Branch / Business Associate Audit Check list

Active Segments

Sr No Particular Remarks Complied (Y/N)

Reason for Non Compliance

1 Registered Branch registered under the Shops & Establishment Act/ Local Authority

2 Certificates Relevant SEBI & FMC registration certificates displayed at branch

3 Notice Board Relevant Notice Board displayed at Branch (BSE/NSE/MCX/NCDEX)

4 Terminals

All terminals alloted are used by relevant employee dealers registered in their name with their NCFM having validity for next 3 months

5 Agreement

Client agreements executed;maintained & intimated to HO for all clients and confirmed by HO

Incase of registered Sub brokers Tripartite agreements executed

6 KYC Track of all clients details maintained in softcopy

7 CRF Total Clients = Total CRF; NO CRF no UCC;One client one code

8 Missing CRF New CRF collected from existing client as per HO list

9 PAN

PAN copy of clients maintained after verification with original card & income tax site and screenprint attached with CRF

10 Authorised Signatory

AS appointed in Branch and intimated to HO in relevant format for Exchange Submission

11

Cheque Payment must be received / paid in cheque in the name of Broker Company/Client not in the name of any other company/party

12 Cash No broker shall receive / pay cash to the

clients

13 Securities Not to accept / issue third party securities

14 Payment Not to issue / recd payment from third

party

15

F & O Trading Trading in Ban period – Rs 5000 Penalty charges by NSE (Increase in open position over 95%)RMS alerts

16

Complaint Register Branch/Sub-Broker must maintain - Client complaint Register.To send it bimonthly to Compliance Dept– HO

17

Pay-in of Fund Client should issue us a cheque same day of Purchases of Shares ( Trading Day)

18 Pay-Out of Fund Branch should issue cheque on T+2 to the

Clients

19

F & O Upfront Margin must be collected by the branch before executing the sauda in case of F & O Segment

122

20 F & O M To M Margin should be collected on a

daily basis

21

Contract Note Contract Note must be issued to the client within 24 hours of trading. Acknowledgement register maintained for the same.

22

Pay in of Shares Client should deliver the shares to the broker same day of sales or maximum T+1 day

23

Pay Out of shares Client should receive shares from the broker within 24 hours from the payout recd from the Exchange

24 Family No family Adjustment allowed

25

Statement of accounts Securities ledger and Account / Fund Statement to be sent to the Client on Quarterly basis

26

Reporting of bulk deal To report bulk deal to us on or before 3.30 pm on a daily basis (BSE)

27 Minor Not to open minor trading account/ trust

account

28

UCC registration Trade carried out in Code only after Exchange successful registration of UCC

123

Appendix

Cash Transaction Report

Suspicious Transaction Report

Annexure A- Individual Detail Sheet

Annexure B- Legal Person/ Entity Detail Sheet (Non Individual)

Annexure C- Account Detail Sheet

124

1

Compliance Training – Capital Market

Compliance means ensuring conformity and

adherence to regulatory acts, rules, procedures, laws,

regulations, directives and circulars.

125

2

Why Comply ?

Stand alone benefits:

Prevents internal frauds & losses

Structuring an effective risk management system

Boosts Client confidence

Reduces the risk of disciplinary action

Ensures continuity of business

Increases efficiency in operations

Above all, guarantees peace of mind

126

3

Why Comply? (Contd…)

Larger benefits:

Ensures risk containment and safer market place

Increases confidence of investor community

Increases credibility of Stock Market operations

Protect the interest of Investors

Improved Awareness and putting a check on the malpractices

Uniform practices - No compliance arbitrage

127

4

SCOPE OF COMPLIANCE

Compliance requirement broadly flow from the relevant

provisions of :-

• Securities Contracts (Regulation) Act, 1956

• Securities Contracts (Regulation) Rules, 1957

• SEBI Act, Rules, Regulation and Circulars

128

5

SCOPE OF COMPLIANCE (Contd…)

NSEIL / NSCCL

• Rules and Byelaws of NSEIL

• Rules and Byelaws of NSCCL

• Capital Market - Regulations of NSEIL & NSCCL

• F&O Segment - Regulations of NSEIL & NSCCL

• F&O Segment - Rules and Byelaws of NSCCL

• WDM Segment - Regulations of NSEIL

• NSEIL/ NSCCL Circulars and Directives

129

6

Broad Areas Covered

Major compliances relating to

Dealing with Clients

Trading requirements

Dealing with Intermediaries

Membership requirements

Maintenance of Books of Accounts & Records

Code of Conduct

130

7

Compliances relating to

Dealing with Clients

131

8

REGISTRATION OF CLIENTS

Know Your Client Form (KYC)

Member Constituent Agreement (MCA)

Risk Disclosure Document (RDD)

Maintenance/Upload of Unique Client Code

132

9

REGISTRATION OF CLIENTS (Contd…)

Salient features of Know Your Client Forms– Client information / Status– Bank and Depository Account details– Financial details of the constituent – Investment/ Trading experience– References– Financial documents (for Non Individual Constituents)

133

10


Attachments to KYC form

− Photograph

− Proof of identity and address

− Board Resolution from corporate clients permitting trading in

derivative products

− KYC to be obtained duly signed by all the clients

134

11

REGISTRATION OF CLIENTS (Coned…)

Salient features of Member Constituent Agreement

– Printed on a non-judicial stamp paper of appropriate value

– To be signed by both the TM and the client & dated

– To be witnessed

– Must contain clauses prescribed by SEBI / NSE from time to time

135

12


Salient features of Member Constituent Agreement (Coned…)

– Additional clauses may be included, but shall not contradict with

Rules, Byelaws, Regulations

– Requirements of MODEL TRIPARTITE AGREEMENT made

effective from 01-04-2005

– Trading Member and FI / FII clients may at their discretion decide

about the requirement of entering into Member Constituent

Agreement

136

13


Salient features of Risk Disclosure Document

− Client to acknowledge the risk disclosure document

and be aware that certain basic risks are involved in

trading in equity and derivative products

− Client to be solely responsible for the losses

− Client to be aware that NSE/NSCCL/SEBI are not

responsible for losses

− Client to fulfill certain formalities as a requirement for

trading

137

14


Salient features of Risk Disclosure Document

− Client to be aware that contracts cannot be rescinded

on the ground of lack of awareness or any other

ground

− Trading Member to obtain acknowledgement in

prescribed format of RDD

− Additional clauses may be introduced by the trading

member but shall not contradict with the basic format

or the Rules, Byelaws, Regulations, etc.

138

15


Salient features of Unique Client Code

− Every client to be assigned one Trading code only

− Mandatory collection and upload of PAN for all

− PAN to be treated as Unique Client Code

− Fool proof mapping of unique client code with trading code allotted to the respective client to be maintained in back office

− Both trading code and unique client code to be printed on contract notes

139

16


Unique Client Code (Exchange’s Requirement)

− TM to upload on a daily basis all the trading codes allotted and corresponding unique client codes prior to commencement of trading

− Rectification of errors in client codes during order entry to be done & uploaded within prescribed time and not beyond

− Request for Unique Client Code for NRI Clients -allotment by the Exchange (in F & O segment)

− Own trades to be done with PRO code only

140

17

DEALING WITH CLIENTS

Compliance related to Contract Notes

− To be issued as per format prescribed by NSE

− Trading Code & Unique Client Code of the Constituent to be printed

− Running serial number (reset to one at the beginning of the Financial Year)

− To be issued within 24 hours of the trade

− To be issued only for transactions executed in the trading system

− Acknowledgement of client / Proof of delivery

141

18

DEALING WITH CLIENTS (contd..)

Compliance related to Contract Notes

− To be issued on a pre-printed stationary or in electronic form

− To be signed by an Authorised Signatory mentioning name/ certified digital signatory

− Revision in the format from time to time to be up-dated (including revised legal jurisdiction & arbitration clause)

− Can be issued in continuation sheet as per prescribed format

142

19

Electronic issue of Contract notes

Issuing ECNs when specifically consented

ECNs to be digitally signed, encrypted and non tamper able in

compliance with provisions of IT Act, 2000

Delivery of ECNs to e-mail of client, Preserve Log reports for

mails sent and bounced back .

In case of non delivery sent it by physical mode

Simultaneously publish ECNs on the web-site.

Enable access to clients in a secured way by allotting unique

user name and password.

143

20


Funds and Securities of constituents

– Separate Bank and Demat Account to be maintained for client funds and securities

– Segregation of own and clients funds/ securities– Funds / securities to be received by TM only from

respective clients accounts directly– Pay-out of funds / securities directly to respective clients

by TM within one working day of pay-out by Exchange– Funds / securities of a client should not be transferred

to the account of the trading member / another client

144

21


Funds and Securities of constituents

– Funds / securities of a client should not be used for pay-in obligation of another constituent / pro-trades

– Client funds to be used only for the purposes specified– Clients funds / securities not to be misused

– TM not to receive/ pay cash to clients for margin/ Settlement

– Dividends received on clients’ securities to be disbursed within 30 days

145

22


Statement of funds and securities

− Sending statement of funds and securities to clients on a

quarterly basis within one month from the end of the relevant

period

− Statement of funds and securities/ margin and settlements should

contain an error reporting clause of 30 days

− Proof of dispatch/ delivery to be maintained

146

23


Margins from Constituents (CM Segment)

−TM to have prudent Risk Management System

−Margins to be an important element of RMS

−RMS to be documented and made accessible to clients and the Exchange.

−Quantum of Margins, form and mode of collection are left to the discretion of members.

Margins from Constituents (F&O Segment)

TM to madatorily collect initial margin (MG 13 file) upfront on a daily basis from the clients.

• Daily reporting of Initial Margin collected • Non-reporting considered as 100% shortfall• Penalty for shortfall in collection• Wrong reporting (Considered as serious violation with stringent

disciplinary actions)

147

24


Margins Collection

Mode of collection

• Funds

• Securities

• FDR and Bank Guarantee favoring TM

Other requirements

• Maintenance of adequate records for identifying client-wise margin collection

• If securities collected as margins, statement of securities to be issued to the clients

148

25


Brokerage

− Brokerage not to exceed 2.5% of value of contract.

− Brokerage not to exceed 1.5 % in case of sub- brokers

− Maximum brokerage of 25 paise per share if trade price of a share is Rs. 10/- or less

− Incase of option contract, brokerage to be charged on option premium amount which shall not exceed 2.5% of premium amount or Rs. 100/- per lot whichever is higher

149

26


Straight Through Processing (STP)

− All institutional trades to be mandatorily processed through STP system

Transfer of Trades

− No Transfer of trades from PRO to client and vice versa

− No transfer of trades from one client to another

150

27


Others

− Exclusive e-mail ID for registering Investor Complaints, to be displayed on website/ other material

− Not charging excess rates for the trades

− Declaration of PRO trading to clients

− Confidentiality of client information

− No false inducement to trade by giving misleading advice or information to clients

− Client trades to be done with CLI code only

− Not resorting to unfair means to induce clients from other stockbrokers

151

28


Trading requirements

152

29

MARGIN TRADING

• Prior permission to be obtained for providing Margin Trading Facility to the clients

• Agreements to be entered into with all the clients

• Margin Trading Facility to be provided only for the specified securities.

• Trading members to upload the details of margin trading in the prescribed file formats

• Separate records to be maintained detailing funds used for the purpose of margin trading

153

30

MARGIN TRADING

• Maintenance of separate demat account for every client for holding client-wise securities purchased under margin trading facility

• Funds if borrowed should be either from scheduled commercial banks and/ or NBFC

• Total indebtness not to exceed 5 times of networth

• Funds of any client not to be used for providing margin trading facility to another client

154

31

MARGIN TRADING

• Maximum allowable exposure not to exceed the borrowed funds plus 50% of net worth

• Exposure to any single client not to exceed 10% of the total lendable resources

• Collection of initial and maintenance margin in form of Cash / FDR / Bank Guarantee

• Enabling client to observe movement of securities from his/ her demat account through internet

155

32

Financing of securities transactions and

transfer of securities and funds

TM not to be a party to any agreement or arrangement, directly or indirectly, entered into between their clients and any other person financing such clients

TM not to entertain any instructions to trade or transfer funds or securities from any other entity other than the clients to facilitate financing

TM not to obtain any authorisation or POA to exclusively operate bank or demat account of client to facilitate financing

TM not to act as a conduit or front for financing any secondary market transactions except in accordance with the provisions of margin trading facility.

TM not to transfer funds or securities to joint bank or demat account of clients with financer

156

33

INTERNET TRADING

• Prior permission to be obtained for providing Internet

Trading Facility to the clients

• Agreements to be entered into with all the clients in the

prescribed format

• Prior approval to be obtained incase of use of internet

trading software other than that of empanelled vendors

• Trading member to ensure reliability, security and

confidentiality of internet trading system

157

34

INTERNET TRADING

• Client specific user id and password to be used for execution of trades

• Password policy to be adhered for security, reliability and confidentially

• Trading Member to ensure clients do not deal on behalf of others

• Submission of SSL Certificate (Yearly) & Internet Trade Statistics (Weekly)

• Trading Member to submit system audit certificate on a yearly basis

158

35

OFFICE MANAGEMENT

Notice Board

• Display of permanent nature Notice Board (viz. painted

board) containing required details, at all places where

trading terminals are located including registered offices

and branch offices of trading member /sub-broker

• Display of copy of SEBI Registration Certificate

159

36

OFFICE MANAGEMENT (contd..)

Compliance related to trading terminals

• Trading Terminal to be located at registered office and/

or branch offices of trading member /sub-broker

• No extension of NEAT terminal without prior approval of

the Exchange

• Trading terminal to be operated by approved persons

only

160

37


Compliance related to trading terminals

• Upload of CTCL terminal to the Exchange before activation

• All information to be correctly uploaded in the prescribed format particularly user name, location of the terminal and CTCL id

• Any change in the uploaded details to be immediately uploaded to the Exchange

• Due diligence to be exercised while allotting trading terminal and prevent misuse

• PRO trading to be done only from trading terminals enabled for PRO trading

161

38


Compliance related to NCFM certification

• Trading terminals in the F&O segment to be operated by users

having valid NCFM certification only

• Capital market Segment

• NEAT Terminal – only Corporate Manager ID and Branch

Manager ID requires NCFM certificate.

4 users can be attached to one branch manager ID.

• CTCL Terminal – for every 5 CTCL users or part thereof in a

BRACH 1 user should be NCFM certified

• Each CTCL location is identified as a separate branch.

162

39


Compliance Officer Trading member to appoint compliance officer Compliance officer to monitor the compliance with

regulatory requirements and redress investor’s grievances.

Inspection Trading member to inspect on a yearly basis

- 10% of active sub-brokers ;- 10% of active branches ;- each active sub-broker/ branch to be inspected

atleast once in every 5 years

163

40

Prevention of Money Laundering Act,

2002 (PMLA)

Obligations of intermediaries under Prevention of Money Laundering Act, 2002 (PLMA)

Appoint a Principal Officer who would be responsible for ensuring compliance of provisions of PMLA

Name, designation, address and e-mail address of such Principal officer be intimated to Office of Director – FIU (Financial Intelligence Unit), Delhi

Adopt written procedures to implement the anti-money laundering provisions

164

41

PMLA ( continue)

Stcock Broker/Sub-Brokers to maintain record and report

All cash transactions of the value of more than Rs.10 Lacs or its equivalent in foreign currency

All series of cash transactions integrally connected which have been valued below Rs. 10 Lacs where such series of transactions take place within 1 month

All suspicious transactions whether or not made in cash

including credits or debits into from account such as dmat account.

165

42


Dealing with Intermediaries

166

43

DEALING WITH INTERMEDIARIES

The trading member should not deal with any unregistered entities and should have dealings

• directly with clients; or

• through Registered sub-brokers (CM Segment); or

• through Authorised Persons (F&O segment only)

167

44

DEALING WITH INTERMEDIARIES (Contd..)

Trading member to exercise due diligence and care that none of its clients, authorized persons or any other entity with which it is dealing act as an unregistered intermediary and ensure that :

• Contract notes are issued to clients for the client code entered while executing the order

• Funds / Securities for margin and pay-in/ pay-out are received / delivered directly from/ to respective clients bank and de-mat accounts only

• Remarks column is not misused for doing unregistered intermediary activities

168

45

DEALING WITH INTERMEDIARIES (Contd..)

• Dealing with sub-broker/ authorized person to commence

only after receipt of approval from Exchange/Sebi

• For client introduced by sub-broker, tripartite agreement to

be entered

• Inspect Sub-brokers on a periodic basis

169

46


Membership Requirements

170

47

MEMBERSHIP REQUIREMENT

• Trading member should not undertake fund based activities

• Approval of the Exchange/ SEBI to be obtained for any change in status and constitution/transfer of membership

• Prior approval of the Exchange must be taken for any change in the shareholding pattern / profit sharing ratio / change in other directors

• Written prior approval of the Exchange to be obtained before releasing any advertisement and advertisement code to be adhered

171

48

MEMBERSHIP REQUIREMENT

• Trading member to obtain prior approval for acting through or on behalf of another trading member / sub-broker for trading on the Exchange

• Trading member to deal with one broker / sub-broker of another Exchange for proprietary trading only with intimation to the Exchange

• Trading member to deal with broker of another Exchange for clientele trading only after registration as a sub-broker

172

49


maintenance of

Books of Accounts & Records

173

50

MAINTENANCE OF BOOKS

AND RECORDS Securities Contracts (Regulation) Rules, 1957 (SCRR)

and the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 specifies maintenance of proper books of accounts.

Members to maintain Exchange-wise separate books of accounts, other records and documents, in accordance with the Rules, Regulations, Bye-laws and relevant circulars of Stock Exchanges.

174

51


AND RECORDS (Contd…)

What is Required ?

− Maintenance of books of accounts, records and

documents

− Maintenance in prescribed format

− Preservation of books, records and documents

175

52



Regulation 17 (1) of SEBI Regulations provides for

maintenance of following books, records and documents by

the Brokers.

– Register of transactions (Sauda Book)

– Clients ledger

– General ledger

– Journals

– Cash book

176

53



– Bank pass book

– Register of Securities

– Members’ contract books

– Counterfoils or duplicates of contract notes issued to

clients;

– Written consent of clients in respect of contracts entered

into as principals ;

– Margin deposit book;

177

54



– Register of accounts of sub-brokers;

– Tripartite Agreement between broker, sub-broker and clients

specifying scope of authority and responsibilities of the Broker and

such sub-broker.

All these books of accounts and other records are to be preserved by the

broker for a minimum period of five years as per Regulation 18 of SEBI

(Stock Brokers and Sub Brokers) Regulations,1992

178

55



Other Books and Records

− Register of Complaints

− Records of Particulars of Approved Users

− Record of Brokerage Collected

− Dividend Ledger

− Statement of funds and securities obligations received from the

Clearing Corporation

179

56



Register of Transactions should contain :

− Name of the Constituent

− Rates both gross and net of brokerage

− Name of the Security (CM) /Contract Specification

(F&O)

− Value of the security (CM) / derivatives contract (F&O)

− Date of expiry of Contract (F&O)

180

57



Register of securities to be maintained client-wise scrip-wise

and should provide for following details

− Date of receipt / delivery

− Quantity received / delivered

− Entity from / to whom received / delivered

− Balance Quantity

− Purpose of receipt / delivery

181

58


Code of Conduct

182

59

CODE OF CONDUCT

Trading Member shall Maintain integrity and fairness in the conduct of all

his business Act with due diligence, care and skill Ensure compliance with statutory requirements Abide with its duties towards the investors Render fair, prompt and competent services to its

clients Co-operate to protect the interest of the clients

183

60

CODE OF CONDUCT (Contd…)

Misconduct : Fraudulent conduct Violation of governing statutes Improper conduct Breach of Rules, Bye laws & Regulations Failure to comply with Circulars, Arbitration award,

testify or give information, submit Special Returns / Audited Accounts, pay dues and fines, etc.

Filing malicious complaints

184

61


Unbusiness-like conduct : Transacting in fictitious names Conducting fictitious dealings Circulating rumours Prejudicial business for upsetting market equilibrium Market manipulation / rigging Unwarranted or reckless or excessive business Dishonouring cheques Refusing to undertake committed business for the

client without proper reason

185

62


Unprofessional conduct : Business in securities in which dealings not permitted Business for insolvents, employees of other trading

members (without other TM consent) Business when under suspension Dealings for / with suspended, expelled or defaulter

trading members

186

63

OBLIGATIONS OF A TRADING

MEMBER

─ To produce such books, accounts and other

documents and furnish such statements and

information within such time as the inspecting

officials may require.

─ To allow the inspecting team to have reasonable

access to the premises occupied by the Trading

Member

187

64

OBLIGATIONS OF A TRADING

MEMBER (contd…)

─ To extend reasonable facilities for examining any

books, records, documents and computerized data,

and also provide copies of documents or other

materials which in the opinion of the inspecting

officials are relevant.

─ To provide all assistance in connection with the

inspection which the Trading Member may be

reasonably expected to give.

188

65

RIGHTS OF THE INSPECTING

OFFICIALS

─ To examine the records relating to the Trading Member’s financial affairs held with its bankers or any other agency which the inspecting officials may find it relevant.

─ Access to accounts and other records relating to the Trading Member or such access as authorized by the Exchange to accounts and other records relating to any associate of the Trading Member as are within the power of the Trading Member to provide.

189

66

RIGHTS OF THE INSPECTING

OFFICIALS (contd..)

─ To examine and seek clarifications/ explanationsin relation to our observation during inspection from any member, director, officer or employee of the Trading Member or of any associate of such Trading Member.

─ To collect such evidence/ proof of violation observed

─ To take signature of the trading member (director/ compliance officer) on the observation list

190

67

PERIODIC SUBMISSIONS

Annual Submissions

– Annual Compliance Report – Proof of Insurance Cover– Certified Annual Financial Statements and forms– SSL Certificate (internet trading)– System Audit Report (CTCL /Internet trading)

Half yearly Submissions

– Net worth Certificate– Auditors Compliance certificate (margin trading)

191

68


Monthly Submissions– Client Funding Disclosure

Weekly Submissions

– Internet trading statistics

Daily submissions – Trade details of bulk/ block deals of trade date– Disclosure of exposure to margin trading facility – Client margin reports on trade date– Unique Client Code

192

69


Other submissions

– CTCL 12-digit file and information regarding CTCL terminals before activation of terminal

– Change in share holding pattern/profit sharing ratio / directors

– Change in Authorised Persons / Compliance officers

– Compliance Calendar – Please refer Circular NSE/MEM/8536 dated February 19, 2007

193

70

Trading members to comply with the provisions of the Rules, Byelaws, Regulations and Circulars of the Exchange / NSCCL / SEBI, as may be applicable from time to time, in addition to the requirements illustrated in the presentation

194

71

THANKS

195

Commodities

Contents

1 Maintenance Of Books Of Accounts/Documents/Records 1

1.1 Order Book 1

1.2 Trade Files 1

1.3 Register of Transactions 2

1.4 Margin Deposit Book 2

1.5 Client Ledger 2

1.6 Commodity Ledger 2

1.7 Bank Book and Cash Book 2

2 Registration Of Clients 4

2.1 Know Your Client (KYC) Forms / Client Registration Forms 4

2.2 Member-Client Agreement 5

2.3 Risk Disclosure Document (RDD) 6

3 Unique Client Code (UGC) 7

3.1 Creation and allotment of Unique Client Code (UCC) 7

3.2 Modification of Client Code 7

4 Collection Of Margin From Clients 8

4.1 Margin Collection 8

4.2 Forms of Margin Deposit 8

4.3 Accounting of Margin Deposit 8

4.4 Utilization of Margin Amount And Margin Call 8

5 Contract Notes 10

5.1 Requirements on Issue of Contract Notes to Clients 10

6 Trading Terminals 12

6.1 Terminal Location 12

6.2 User Id And Approved Users 12

7 Computer To Computer Line (CTCL) 14

7.1 Development of CTCL Software 14

7.2

Some of the guidelines/requirements for use of CTCL

terminals 14

8 Pro-Account Trading Terminals 16

8.1 No. of Terminals 16

8.2 Approval from Exchange 16

9 Internet Based Trading (IBT) 17

10 Sub Broker Of Member 18

10.1 Execution of Member-Sub broker Agreement 18

i

196

11 Handling Of Commodities Of Clients For Deliveries 20

11.1 Type of Demat Account 20

12 Client's Fund Management 21

12.1 Review of Client /Own bank 21

12.2 Bank Book 22

12.3 Issue of Statement of accounts/funds to Clients 22

13 Miscellaneous 23

13.1 Appointment Compliance Officer 23

13.2 Investor Grievances 23

13.3 Advertisement 23

13.4 Membership Requirement 23

13.5 Submission of Annual Returns 25

13.6 Submission of Annual Compliance Report(ACR) 26

13.7 Display of Notice Board 26

1. MAINTENANCE OF BOOKS OF ACCOUNTS/DOCUMENTS/ RECORDS

Following Books of Account / Records / Registers / details, are required to be maintained

by the Member as per Bye-law 11.5, Circular No. MCX/12/2006 dated January 10, 2006:

a) Order Book

b) Trade File

c) Register of Transaction

d) Margin Deposit Book

e) Exchange wise separate client ledger

f) Clients Bills along with bill summary

g) Commodity register/ledger

h) Records in respect of premium/discount

i) Records in respect of brokerage

j) Journals (JVs)

k) Cash Book

l) Bank Book and bank pass Book/bank statements

m) Daily Margin Statement and Client wise Margin reports

n) Trade Confirmation Slip

o) Records of transaction of all purchases and sales of commodities / contracts

p) Record of all statement received from the appropriate agencies and record of all

correspondence with them.

q) Reports like Trade log/Order log

r) Copies of all instructions obtained in writing from client s including participants

for order placement, order modification, order cancellation, trade cancellation.

s) Record of contract wise Deliveries received / Tendered.

t) Any other books of accounts/documents/records as prescribed by the FMC, MCX

and / or any relevant authority from time to time.

1.1. Order Book

Member should maintain the details of order placed by its clients, records of time

when a client has placed the order. This information is required to be maintained

by the Member in his Order Book.

197

1.2. Trade Files

Trade file is downloaded by the Member from the Exchange on daily basis. This

file shows the details of all the transactions executed by a Member across all his

Compliance Guide terminals for a particular trading day. It shows trade date, trade no., order no.,

time of execution of a trade, quantity, rate, commodity code, Client ID etc.

1.3. Register of Transactions

All Members are required to maintain a register of transaction, which contains

details of all trades transacted by them. This is a basic record, which each

Member is required to maintain regularly on day-to-day basis. It contains the

details regarding the name of commodity, name of the client on whose behalf the

deals have been done, rate and quantity of commodity brought or sold. These

details are maintained date-wise.

1.4. Margin Deposit Book

The Members are required to maintain a margin deposit book wherein details of

all the margins collected from the clients are recorded.

1.5. Client Ledger

As per Circular No. MCX/357/2006 dated September 02, 2006, every Member of

the exchange is required to segregate and maintain exchange wise client ledger.

This ledger should contain details of all the bills raised by the Member on the

clients and the payment received from or made to them for trade executed and /or

any other charges debited by Member to clients are recorded in client ledgers.

1.6. Commodity Ledger

A Member is also required to maintain a Register of Commodities where delivery

taken/received Commodity wise client wise.

1.7. Bank Book and Cash Book

All Members are required to open following three types of bank accounts.

a) Settlement bank account

As per Business Rule 19 (c), Every Member of the Exchange shall have

designated bank accounts with any of such branches of the designated

Clearing Bank, which has electronic funds transfer facility. Members shall

operate the Settlement account only for the purpose of settlement of deals

Compliance Guide entered through the Exchange, for the payment of margin money and for

any other purpose as may be specified by the Exchange, where the

member will not have cheque book facility for issuing cheque to any

outsiders. He can only issue cheque from this account for transfer of

money from this account to his Client Account. Apart from such transfer,

only the Exchange will have power to withdraw money from this account

by way of direct debit instruction.

b) Client bank account

As per Business Rule 19 (C), he member can deposit all cheques received

from the client and from this account he should issue cheque/DD to his

clients towards their receivable amount in client bank account. The

member will have cheque book facility in this account and he will also be

entitled to issue transfer instructions to the bank for transferring money

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from this account to the Settlement account to meet his pay in or margin obligations.

c) Business/Own/Expense account

(i) As per Circular no. MCX/012/2006 dated January 10, 2006; all

Members are required to ensure that he has maintained separate

bank account for their own account and clients account.

(ii) As per Business Rule 37 (q), Exchange Member shall at all times

keep the money of the Client in the Member Clients account

maintained with the Clearing bank. He shall not use this money for

his own transactions or for transactions of such other client or for

any purpose other than margin and pay in relating to transactions

entered into by such client paying the margin.

2. REGISTRATION OF CLIENTS

2.1 Know Your Client (KYC) Forms / Client Registration Forms

The Members of the Commodity Exchanges have to complete all the details

pertaining to the clients in Know Your Client Forms and obtain all necessary

documents in support to information provided by the clients.

2.1.1 Format of KYC Form

a) When establishing a relationship with a new Client, Members of

the Exchange must take reasonable steps to assess the background,

genuineness, beneficial identity, financial soundness of such

person, and his trading objectives by registering the client with

them in the format prescribed as CLIENT REGISTRATION

FORM as per Business Rule 27(b), Annexure XII. The same has

been subsequently modified by the Exchange and a revised format

is given vide Circulars no. MCX/088/2006 dated March 01, 2006

& MCX/555/2006 dated December 15, 2006.

b) The KYC form should include all the details as prescribed by the

Exchange from time to time.

c) Member are advised to evolve and put in place an appropriate

mechanism to assess financial strength, performance tracking,

trading pattern vis-à-vis their clients position and dealings in

respect of all clients

2.1.2 Documents Required

Following documents required from Clients along with KYC forms as per

Circulars no. MCX/088/2006 dated March 01, 2006 & MCX/555/2006

dated December 15, 2006.

a) For individuals:

Address proof, identity proof, proof of bank account number, copy

of latest Income Tax Return, PAN proof

b) For Corporate clients:

Address proof, PAN proof, proof of bank account number, copy of

latest Annual Report, proof of date of incorporation, copy of

Memorandum of Association & Articles of Association.

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(Applicable to Corporate Entity), Copy of Partnership Deed

(Applicable to Partnership Firm), Board Resolution authorizing the

company officials to execute all the deeds/ operations with the

Exchange on behalf of the company, Letter of Partnership firm

(letterhead) authorizing partners to execute all the deeds /

operations with the Exchange on behalf of firm.

The client, who does not possess PAN, would have to furnish

necessary declaration to that effect in form prescribed by the

Income Tax Department. He will, however, have to furnish other

identification documents as already provided.

2.2 Member-Client Agreement

2.2.1 Execution of Agreement

As per Business Rule 27(a), Every Member of the Exchange shall enter

into an agreement with all his clients before accepting / placing orders on

behalf of clients.

This agreement has to be on a valid non-judicial stamp paper with

adequate value, duly signed by the parties to the agreement, complete in

all respect with date of execution of agreement.

2.2.2 Format of Agreement

Member-Client agreement shall include provisions specified by the

Exchange as per of Business Rule 27(a), Annexure-XI. Further, it should

include all the provisions as decided and informed by the Exchange from

time to time.

As per Business rule 27(a), Members are free to add more clauses in the

specified agreement; however, no additional clause should in any way

dilute the content or purpose of the clause stated in the specified

agreement by the Exchange. The responsibility of the Member shall not in

any way be reduced due to non-execution of agreement with the Clients.

2.3 Risk Disclosure Document (RDD)

2.3.1 Format of RDD

Exchange has specified the format of RDD in Business Rule 27 (c),

Annexure-XIII, through which Member of the Exchange shall make the

Client aware of particulars of Member‟s registration number allocated by

the Exchange, employee primarily responsible for the Clients affairs, the

precise nature of business to be conducted, the risk associated with

business in trading in contracts listed in the exchange including any

limitations on that liability and the capacity in the Member of the

Exchange acts and the Client‟s liability thereon and etc.

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2.3.2 The Member of the Exchange shall furnish a copy of the Risk Disclosure

Document to all his clients and to get and maintain their acknowledgement

on second copy of the same document.

3. UNIQUE CLIENT CODE (UCC)

3.1 Creation and allotment of UCC

Members shall submit their client details through UCC software on or before 7th

of the subsequent month for a new client is registered, during the month as per

Circular no. MCX/T&S/109/2007 dated March 24, 2007.

3.2 Modification of Client Code

3.2.1 A special facility is provided to Members for client code modification by

the Exchange. The same is presented as below:

a) Member can change client ID of executed trades only in the post

closing session of that commodity as per Circular no.

MCX/T&S/166/2007 dated April 30, 2007.

b) The system driven restriction has been implemented by MCX

which do not allow client code modification during intra-day. The

same is implemented by MCX with effect from May 19, 2007 as

per Circular No. MCX/T&S/198/2007 dated May 25, 2007.

4. COLLECTION OF MARGIN FROM CLIENTS

4.1 Margin Collection

As per Business Rule 27(r), the Member shall collect adequate margin from his

client before entertaining any order from him and as per Bye-Law 8.2.2, every

member of the Exchange executing transactions on behalf of clients, shall collect

from the clients the margins specified from time to time, against their open

positions within such time as may be prescribed by the Relevant Authority from

time to time.

4.2 Forms of Margin Deposit

As per Bye-Law 8.6.8, Members of the Exchange shall accept margin deposits

from clients only in such form as may be permitted by the Re levant Authority.

4.3 Accounting of Margin Deposit

a) Margin deposits received by Members from their client in any form shall

be accounted for and maintained separately in segregated accounts and

shall be used solely for the benefit of the respective clients‟ positions.

b) As per bye-Law 8.6.10, Margin accounts of clients of the Members shall

be marked to market daily by Clearing Members and further margin

should be collected when necessary to maintain the appropriate margin.

4.4 Utilization of Margin Amount And Margin Call

The margin account of client Members shall be utilized by clearing Members only

for settling the dues to the clearing Member upon marking-to-market or for

fulfilling the obligations resulting from their open positions.

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a) As per Bye-law 8.6.5, the member may close out an open position of a

client when the call for further margin or any other payment due is not

complied with by the client;

b) As per Bye-law 8.6.10 Members shall furnish their clients in writing such

reports and at such intervals for margin collection and its utilization as

may be specified by the Relevant Authority.

5. CONTRACT NOTES

The Contract notes is a document through which a contractual obligation is established

between a Member of the Exchange and its client. This is the prime document on the

basis of which all the dispute between the Member and his clients are settled.

Every Member has to issue contract notes to their clients for the commodities traded by

him on behalf of them in compliance of, Rules, Bye-laws, Business Rule 27(p), and

Circulars nos. MCX/012/2006 dated January 10, 2006 &. MCX/409/2005 dated

December 06, 2005 of the Exchange.

5.1 Requirements on Issue of Contract Notes to Clients

Following are the some of the requirements from Member of the Exchange to

follow on issue of Contract notes to their clients:

a) Member shall issue contract note for trades executed in prescribed format

with all the relevant details duly filled in within 48 hours from the close of

trading hours when the trade is executed.

b) Member may also issue digitally signed contract note / confirmation slip at

the request of his clients subject to the compliance of all the provision of

IT Act. 2000.

c) The Member should obtain a written consent from their clients for issue of

digital contract notes to their clients.

d) The Member shall maintain and preserve proper record for dispatch of

contract notes to the clients if the same are dispatched through post,

courier etc

e) Every Member shall maintain duplicate of the contract notes issued to the

clients for a period of three years.

f) The Members are required to issue contract notes to clients, which are

serially numbered. The cont ract notes issued to the clients shall be Compliance Guide

numbered with unique running serial number commencing from one

which shall be reset only at the beginning of every financial year.

Financial year for the purpose of resetting the serial number of contract

note is April to March.

g) Members are required to charge brokerage separately and the same is

indicated separately from the price in the contract note.

h) The Contract notes are required to sign either by the Member himself or

his authorized signatory.

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i) The power of attorney / board resolution(s) together with specimen

signature of authorized signatories of contract notes are required to be

filed with the Membership Department of the Exchange.

j) The Member should print UMC (Unique Membership Code) on Contract

note along with its Membership no. obtained from MCX.

k) The Members are also required to print the Unique Client Code (UCC)

allotted to the client along with name and address of clients on the contract

note.

6. TRADING TERMINALS

6.1 Terminal Location

As per Business Rule 29(b), Trading on the Exchange shall be allowed only

through approved Workstation(s) located at approved locations for the office(s) of

a Member.

If an approved workstation of a Trading Member is connected by LAN or any

other way to other workstations at any place it shall require an approval of the

Exchange. For every TWS, a member shall be required to specific permission

from the Exchange and obtain user id in advance.

6.2 User Id And Approved Users

6.2.1 Approved users

As per Circular no. MCX/010/2005 dated January 11, 2004,

a) For every TWS to be used by a Member shall be required to obtain

registration of the Approved User in the specified format who will

be responsible for such TWS.

b) Such Approved Users can be his own employees responsible for

such TWS or branch, sub-Members, franchisees.

c) Before termination of such Approved Users, the Member shall be

required to obtain prior permission of the Exchange.

6.2.2 User ID

As per Circular MCX/006/2005 dated January 03, 2005,

a) No user ID should be given by Members to any persons who have

not been registered by the exchange as approved user so that the

risk in the market is reduced.

b) Members are required to ensure that all the trading IDs are being

used by only such approved users who have been approved by the

exchange.

7. COMPUTER TO COMPUTER LINK (CTCL)

7.1 Development of CTCL Software

Members of Exchange are allowed to develop their own trading front end (CTCL)

software in-house using the API of the Exchange or procure CTCL software from

Non-empanelled vendors. Exchange shall provide the technical specifications

(message formats/protocols etc.) i.e. API for the interface with the Exchange

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trading system after submission of application form, undertaking and the

documents as mentioned in Annexure 1 of Circular no. MCX/CTCL/043/2007

dated February 02, 2007 and relevant circular/directive s from time to time.

Exchange permits only single CTCL ID per VSAT and Leased Line on which

CTCL facility can be used. Members shall not be permitted to use any other user

id for the purpose of CTCL.

7.2 Some of the guidelines/requirements for use of CTCL terminals

Following are some of the requirements for the use of CTCL terminals as per

Circular no. MCX/CTCL/043/2007 dated February 02, 2007:

a) Members developing CTCL software in-house/procuring CTCL software

from Non-empanelled vendors shall pay prescribed charges to the

Exchange from time to time.

b) Members are required to provide list of Approved Persons who would

handle each CTCL terminal of the Member. Approved person may be an

employee or any Authorised Person of the Member who has been

approved by the Exchange. Members shall not entrust the CTCL terminals

to their clients or to any unregistered intermediary other than Approved

Persons. Necessary written approval of the Exchange is required to be

obtained before CTCL terminal is entrusted to an Authorised Person,

failing which it shall be treated as violation.

c) A Member shall also ensure to undertake periodic audit of their CTCL

systems.

8.PRO-ACCOUNT TRADING TERMINALS

8.1 No. of Terminals

a) As per Circular no. MCX/241/06 dated June 15, 2006, The Members shall

place orders in „Pro-Account‟ / OWN Account from not more than 2

terminals from one location and details of the terminals shall be informed

to the Exchange in the format enclosed as Annexure 1 of the said circular.

b) Further, Member desires to have facility of placing „Pro-Account‟ / OWN

Account orders from more than one location, the Member has to submit an

undertaking in the format enclosed as Annexure 2 of circular no.

MCX/241/06 dated June 15, 2006, to the Exchange stating the reason for

use of such facility from more than one location. In such case, the number

of total terminals used for „Pro-Account‟ / OWN account after Exchange

approval shall not exceed 5 terminals across all locations.

8.2 Approval from Exchange

a) The Members having CTCL terminals are required to obtain approval

from the Exchange for Pro-Account trade facility in the required as per

Circular no. MCX/241/06 dated June 15, 2006.

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b) The Exchange by default shall not permit Pro-Account facility if the approval is not obtained

within the stipulated time.

9. INTERNET BASED TRADING (IBT)

As per Circulars no.: MCX/28/2004 dated May 7, 2004 the Members are advised

to comply with guidelines such as Network Security, Risk Management, Order

matching etc.

Further, the Exchange has come up with the Circular no. MCX/26/2004 dated April

29, 2004 and MCX/CTCL/042/2007 dated January 31, 2007 for use to Internet based

trading for expanding Members‟ Trading terminal.

10. SUB-BROKER OF MEMBER

10.1 Execution of Member-Sub broker Agreement

Members of the Exchange desirous of appointing sub-brokers for expanding their

business must execute an agreement with such sub-brokers/ franchises (format

prescribed in Circular No. MCX/MCX/056/2004 dated July 09, 2004 and a copy

of such agreement shall be made available to the Exchange, as and when required

by the Exchange.

a) Member has to ensure compliance by its sub-broker in accordance with

the Rules, Bye-Laws, Business Rules, and Circulars etc. of the Exchange

and the requirements of FMC from time to time.

b) Member has to maintain separate records including accounts in respect of

the dealing with futures contract entered into on behalf of the sub-brokers

and preserved for the prescribed period in respect of the Head Office and

branches.

c) Member has to ensure the settlement of all deals which is entered into by

him even through the orders in respect of the deals may have originated

from its sub-Member.

d) Member has to ensure that its sub-broker may represent himself only as a

sub-broker of the respective Member.

e) Member has to ensure that the total brokerage (including the share of

brokerage of the Member and the sub-broker) payable by the client of its

sub-broker does not exceed the maximum brokerage (currently) 1% in

case of non-delivery transactions and 2% plus expenses in case of

transactions relating into delivery) exclusive of statutory levies.

f) The registered sub-Members have not extended /eligible to any of the

rights and / or privilege that are extended to the Members by the

Exchange.

g) A sub-Member should affiliate with only one Member of the MCX.

However, he may affiliate with the registered Member of another

recognized Commodity Exchange. Compliance Guide

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11. HANDLING THE COMMODITIES OF CLIENTS FOR DELIVERIES

11.1 Type of Demat Account:

As per Circular No. MCX/238/2005 dated June 29, 2005 and MCX/267/2005

dated July 22, 2005, all Members are required to open two accounts with their

Depository Participants for handling the receipt and deliveries of commodities in

demat form. They are:

a) Beneficiary Owner (BO) Account:

It is opened by an investor or a Member of the Exchange who wants to

hold and transact commodities through dematerialised warehouse receipts.

The beneficial owner account can be opened in the name of Individual,

Corporate, and Registered Trusts etc.

b) Pool account:

It is popularly known as CM Pool Account. In CM Pool account clearing

Members are authorised to make pay-in and receive pay-out from a

Clearing Corporation / Clearing House against trades done by them or

their clients. This account is meant only to transfer commodities to and

receive delivery of commodities from the clearing corporation/clearing

house and hence, the Member does not have any ownership (beneficiary)

rights over the commodities held in such an account.

A Clearing Member (CM) is required to open both Clearing Member

(Pool) Account as well as a BO Account with each of the depositories (i.e

NSDL and CDSL).

Members are required to maintain a proper record of all commodities

received and delivered from their Pool Account and transferred to BO, if

any. Further Member should preserve acknowledged copies of the

Delivery Instruction Slip (DIS) given/to their DP for transferring the

commodities from the Pool Account to the clients‟ account after Pay-out

from the Exchange.

12 . CLIENTS‟ FUNDS MANAGEMENT

It is responsibility of the Members to use clients‟ funds only to meet exchange obligation

on their behalf for trading in commodity market.

12.1 Review of Client /Own bank

While reviewing the bank accounts, the Inspecting officials should consider the

following:

a) As per Business Rule 27(q), every Member of MCX keeps the money of

the Constituent/client in the Member Clients‟ account maintained with the

Clearing bank. He is not using this money for his own transactions or for

transactions of such other client or for any purpose other than margin and

pay in relating to transactions entered into by such client paying the margin.

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b) All monies received from the clients and all the payment made to the

clients should be routed through the clients‟ bank accounts. A Member

may open a single client account or multiple client accounts. Whenever

Member trades as a principal (Pro trade), he cannot use the client‟s

account for payment.

c) Every Member who holds or receives money on account of a client is

required to forthwith deposit such money in the designated clients

account.

d) No money should be withdrawn from clients account other then money

required for payment towards payments of a debt which is due to the

Member from clients or money drawn on clients‟ authority or money in

respect of which there is a liability of clients to the Member, provided that

the money so drawn should not exceed the total of the money so held for

the time being for each such client.

e) Member has not used clients‟ money for making payment for office

expenses such as salary, telephone bills, TDS payments, purchase of office

equipment etc. It should be noted that amounts withdrawn from client

bank to own bank on account of brokerage, should be an amount due to

the Member towards brokerage receivable from clients on transactions

entered into with clients.

12.2 Bank Book

Member should have segregation of clients funds & own funds and should not

use clients‟ fund for the purpose other than specified. Member should not misutilized

clients‟ funds

12.3 Issue of Statement of accounts/funds to Clients

Disputes can arise between the Member and their clients pertaining to payments

due to /from the clients. This may be due to non-submission of statement of

accounts / funds by the Member to the clients on a regular basis.

As per Circular no. MCX/357/2006 dated September 02, 2006; all Members are

required to send a quarterly statement of accounts/funds to all the clients.

13. MISCELLANEOUS

13.1 Appointment of Compliance Officer

a) Every Member shall appoint a Compliance Officer and keep the Exchange

informed of the appointment of a Compliance Officer as per Circular no.

MCX/207/2006 dated May 19, 2006.

b) It is necessary that the Exchange be also informed for any change in the

compliance officer.

13.2 Investor Grievances

Member should be prompt in redressing investor grievances. Member is required

to ensure that Complaint of any client is not pending for more than thirty days as

per Circular no. MCX/012/2006 dated January 12, 2006.

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13.3 Advertisement

a) Member of the Exchange are permitted to issue advertisement on prior

approval from Exchange to advertise their products and services offered to

their clients as per Circular no. MCX/007/2005 dated January 03, 2005

and MCX/003/2006 dated January 03, 2006.

b) Exchange has prescribed guidelines for advertisements as per said circular.

13.4 Membership Requirement

Following are some of the requirement to be followed by each Member:

a) Each Member should ensure that they shall not undertake their trading

activities with /on behalf of any Member of the, who has been suspended,

expelled or declared defaulter by the Exchange / FMC / SEBI / NSE / BSE

or any regulatory body/authority.

b) Every Member of the Exchange shall promptly notify the Exchange in

writing about any change in the information provided by the Member of

the Exchange at the time of admission or at a later stage to the Exchange

as per Rule 26(b). The Exchange shall indicate the changes in respect of

which the Member of the Exchange should take prior approval from the

Exchange. In case the Member fails to do so, then the Exchange shall

charge penalty and/or take further disciplinary action as may be required.

c) In the case of Partnership firm, no partner is a partner at the same time in

more than one Partnership firm carrying on the business of the

commodities trading and/or clearing.

d) As per Circular No. MCX/012/2006 dated January 10, 2006, Member is

required to ensure that minimum amount of net-worth as prescribed by the

Relevant Authority/Exchange from time to time is maintained throughout

the year.

e) As per Rule 19(d) “A Member of the Exchange shall not assign, mortgage,

pledge, hypothecate, or charge his right of membership or any rights or

privileges attached thereto, and any such attempt shall not be effective as

against the Exchange.

f) As per Rule 27(a), Every Member of the Exchange shall pay the

subscription, fee, deposit or any other charges as may be fixed by the

Board, from time to time.

g) Members are advised to enroll for MCX Certified Commodity

Professional (MCCP) examination and to obtain the MCCP certificate or

to have atleast one person in their office who have passed this examination

and respond to Training department of the Exchange confirming the

passing of the examination.

h) Members should not indulge in any Portfolio Advisory Services, Portfolio

Management Services and such other services directly or indirectly as per

Circular no. MCX/551/2006 dated December 13, 2006.

i) As per Bye- law 8.6.1, no clearing member shall directly or indirectly enter

into any arrangement or adopt any procedure for the purpose of evading or

assisting in the evasion of the margin requirements prescribed under the

Bye-Laws, Rules and Regulations or any orders issued there under.

13.5 Submission of Annual Returns

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Members of the Exchange are required to furnish the following documents on an

annual basis to the Exchange at the end of respective financial year. Members are

required to submit following documents in the specified format.

a) Audited Annual Financial Statements duly certified (-for Corporate

Members : Balance Sheet, Profit and Loss Account, Directors report,

Auditors reports – For Partnership Firm : Balance Sheet, Profit & Loss

Account – For all other Members – Balance Sheet & Profit & Loss

Account).

b) Net worth Certificate in the format as specified.

c) Shareholding/Sharing Pattern in the format as specified.

d) Details of Directors/Partners/Proprietor/Society Member in the format as

specified.

e) Dominant Promoter Group (DPG) details in the format as specified.

(Applicable to Corporate Members / Partnership firms).

13.6 Submission of Annual Compliance Report (ACR)

a) CR is the gist of compliances to be followed by Members which is self

analysed by Members and submitted to the Exchange annually.

b) All Members are required to submit ACR to the Exchange with the

timeline as prescribed by the Exchange.

13.7 Display of Notice Board

As per Circular No MCX/295/2006 dated July 28, 2006 all the Members of the

Exchange are required to display Notice board at prominent place in the

prescribed format.