Master Circular for Stock Exchanges and Depositories
Summary
This part of the SEBI Master Circular establishes mandatory annual system audit requirements for stock exchanges and depositories. It outlines guidelines for the execution of Power of Attorney (PoA) by clients in favor of stock brokers, emphasizing that PoA is optional and not a condition precedent for services. The document restricts PoA scope to specific securities transfers, pledges, fund transfers for settlement, and applications for financial products based on client instructions. This section details permissible fund transfers from client accounts for settlement, recovery of dues, and other specific obligations. It outlines mandatory requirements for Power of Attorney (PoA) documents executed in favor of stock brokers and depository participants. Additionally, it lists prohibited actions for PoAs and provides clarifications on the implementation of SEBI circulars regarding PoA execution. The document outlines specific clarifications for Power of Attorney (PoA) provisions executed by clients with stock brokers and depository participants. It mandates that PoAs must list related-party bank and demat accounts, be revocable at any time without notice, and strictly prohibit facili
Text
Stock Exchanges are advised to get systems audit conducted on an annual basis by a reputed independent auditor and communicate the report/ findings to SEBI.
Depositories shall cause an inspection of controls, systems, procedures and safeguards to be carried out annually and forward a copy of the report to the Board and SEBI.
No stock broker or depository participant shall deny services to the client if the client refuses to execute a PoA in their favour.
PoA should be limited to transfer of securities held in beneficial owner account(s) towards stock exchange related margin / delivery obligations arising out of trades executed by the client(s).
PoA allows pledge of securities in favour of Stock Broker for meeting margin requirements in connection with trades executed by the client(s), with necessary audit trail.
PoA allows applying for Mutual Funds, Public Issues, rights, tendering shares etc. pursuant to instructions of the client(s), with proper audit trail maintained.
PoA allows transfer of funds from bank account(s) of the client(s) for meeting settlement obligations / margin requirements in connection with trades.
For recovering any outstanding amount due from the client(s) arising out of clients trading activities on the stock exchanges through the same stock broker.
For meeting obligations arising out of the client subscribing to such other products/facilities/services through the stock broker like Mutual Funds, Public Issues...
Towards monies/fees/charges, etc. due to the stock broker /depository participant /principal payable by virtue of the client using /subscribing to any of the facilities /services availed by the client at his /her instance.
Necessary audit trail should be available with the stock broker for such transactions.
identify /provide the particulars of the beneficial owner account(s) and the bank account(s) of the client(s) that the stock broker is entitled to operate.
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Source: SecMarx — Master Circular for Stock Exchanges and Depositories. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.