Mandatory requirement of ‘In-person’ verification of clients
Summary
This circular clarifies that in-person verification for beneficial owner accounts is valid for trading accounts if the Depository Participant and Stock Broker are the same or related entities. It mandates Stock Exchanges and Depositories to issue instructions, amend bye-laws, and report implementation status to SEBI by January 31, 2010. The directive is issued under Section 11(1) of the SEBI Act and Section 19 of the Depositories Act to protect investor interests.
Text
the ‘in person’ verification done for opening beneficial owner’s account by a Depository Participant (DP) will hold good for opening trading account by a stock broker and vice versa, if the stock broker and DP is the same entity or if one of them is the holding or subsidiary company of the other.
issue necessary instructions to bring the provisions of this Circular to the notice of their constituents and also disseminate the same on their websites;
make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above;
communicate to SEBI, the status of the implementation of the provisions of this Circular by January 31, 2010 .
This Circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 and Section 19 of the Depositories Act, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and shall come into effect from the date of this Circular.
Source: SecMarx — Mandatory requirement of ‘In-person’ verification of clients. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.