In-person verification (IPV) of clients by subsidiaries of stock exchanges acting as stock brokers
Summary
SEBI clarifies that subsidiaries of stock exchanges acting as brokers may rely on in-person verification (IPV) conducted by their sub-brokers. The ultimate responsibility for ensuring IPV compliance remains with the subsidiary, which must retain the necessary documents. Stock exchanges are instructed to disseminate this circular, amend bye-laws for uniformity, and report implementation status.
Text
SEBI mandated stock brokers to carry out ‘in-person’ verification of clients by their staff while registering them and ensure that this function is not outsourced.
‘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 if they are the same entity or related by holding/subsidiary relationship.
Subsidiaries of stock exchanges requested SEBI to consider ‘in-person’ verification carried out by their sub-brokers as due compliance since subsidiaries are not permitted to register direct clients.
Subsidiaries of stock exchanges acting as stock brokers may rely upon the ‘in-person’ verification done by their sub-brokers for their respective clients, but ultimate responsibility remains with the subsidiaries who shall obtain necessary IPV documents for records.
Stock exchanges are advised to bring the provisions of this circular to the notice of the stock brokers and disseminate the same on their websites.
Stock exchanges must make necessary amendments to relevant bye-laws, rules and regulations for implementation in coordination with one another to achieve uniformity.
Stock exchanges must communicate to SEBI the status of implementation of the provisions of this circular in the Monthly Development Report of the following month.
This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect investor interests and regulate markets, effective from the date of the circular.
Source: SecMarx — In-person verification (IPV) of clients by subsidiaries of stock exchanges acting as stock brokers. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.