Modification of client codes of non-institutional trades executed on stock exchanges (All Segments)
Summary
This circular partially modifies the penalty structure for client code modifications of non-institutional trades previously outlined in a 2011 SEBI circular. It permits stock exchanges to waive penalties for genuine errors, subject to a limit of one waiver per broker per quarter. Additionally, it prohibits modifying proprietary trades as client trades and mandates quarterly reporting and disciplinary actions.
Text
Stock exchanges may waive penalty for a client code modification where stock broker is able to produce evidence to the satisfaction of the stock exchange to establish that the modification was on account of a genuine error.
Not more than one such waiver per quarter may be given to a stock broker for modification in a client code.
Proprietary trades shall not be allowed to be modified as client trade and vice versa.
Stock exchanges shall submit a report to SEBI every quarter regarding all such client code modifications where penalties have been waived.
Stock exchanges shall undertake stringent disciplinary actions against stock brokers who undertake frequent client code modifications.
take necessary steps to put in place systems for implementation of this circular, including necessary amendments to the relevant bye-laws, rules and regulations.
bring the provisions of this circular to the notice of the stock brokers / clearing members and also disseminate the same on their website;
communicate to SEBI the status of implementation of the provisions of this circular.
This circular is being issued in exercise of powers conferred under Section 11 (1) 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 — 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.