Direct Market Access - Clarification
Summary
This SEBI circular clarifies the operational requirements for Institutional Investors utilizing Direct Market Access (DMA) facilities through investment managers. It mandates specific authorizations, agreements, and audit trails to ensure accountability and proper identification of ultimate clients. The directive is issued under Section 11 of the SEBI Act to protect investor interests and regulate the securities market.
Text
Institutional investors may use DMA facility through investment managers after due authorization and upon furnishing to the broker/ exchange suitable agreements/ undertakings between the institution and investment manager stating, inter alia, that the institutional investor shall be responsible for all actions undertaken by its authorized investment manager.
The Broker-Client Agreement shall provide complete details of such investment manager, including, inter alia, details of their registration/ regulation in their relevant jurisdiction, specify the role and responsibilities of the investment manager, and contain adequate safeguards to ensure that DMA facility is utilized to execute trades of only those institutions for which the investment manager is authorized.
The exchange/ broker shall ensure that proper audit trails are available to establish identity of the ultimate client.
The exchange may put in place such other safeguards as it deems fit to mitigate any concerns it may have.
This circular is issued in exercise of powers conferred under Section 11 of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Direct Market Access - Clarification. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.