Modification of Client Codes of Non-institutional Trades Executed on Stock Exchanges (All Segments)
Summary
SEBI permits stock exchanges to allow modifications of client codes for non-institutional trades solely to rectify genuine entry errors. Stock exchanges must establish strict objective criteria, monitoring mechanisms, and audit coverage for such modifications. Penalties are levied on trading members based on the percentage of modified trades, with mandatory inspections if this exceeds one percent.
Text
Stock Exchanges may allow modifications of client codes of non-institutional trades only to rectify a genuine error in entry of client code at the time of placing / modifying the related order.
lay down strict objective criteria, with the approval of its Governing Board, for identification of genuine errors in client codes which may be modified, and disclose the same to market in advance
set up a mechanism to monitor that the trading members modify client codes only as per the strict objective criteria
ensure that modification of client codes is covered in the internal audit of trading members prescribed by SEBI through its Circular No MRD/DMSCir-29/2008 dated October 21, 2008
the Stock Exchanges shall levy a penalty from trading members and credit the same to its Investor Protection Fund
The Stock Exchange shall conduct a special inspection of the trading member to ascertain whether the modifications of client codes are being carried on as per the strict objective criteria... if ‘a’ as % of ‘b’... exceeds 1% during a month
SEBI shall examine implementation of this circular during inspection of the Stock Exchange
This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956
This circular supersedes the circular No. CIR/DNPD/01/2011 dated January 3, 2011 and shall come into force from August 1, 2011
Source: SecMarx — Modification of Client Codes of Non-institutional Trades Executed on Stock Exchanges (All Segments). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.