Policies and Procedures

You are requested to read all the attached policies and procedures followed by us in conduct of our business. Please note that information of these to investors is our mandatory duty and reading these is within the scope of investors.

Acceptance of Prefunded instruments

PRE-FUNDED INSTRUMENTS / ELECTRONIC FUND TRANSFERS

Demands drafts / Pay-orders / Banker’s cheques are some of the various forms of payment instruments used by the clients to make payment towards their pay-in obligations. The detailed guidelines in respect of Demands draft /Pay-orders / Banker’s cheque / Electronic Funds transfer have been issued by SEBI in terms of its circular no. CIR / MIRSD /03 / 2011 dated June 03, 2011. While accepting the instruments our staff should exercise necessary due diligence to ensure that the funds are coming from the concerned client’s bank account only. The procedure to be followed for acceptance of various modes of payment is as under:-

If the aggregate value of pre-funded instruments is Rs. 50,000/- or more, per day per client then the instruments may be accepted if the same is/are accompanied by the name of the bank account holder, number of the bank account debited for the purpose and duly certified copy of the bank statement / bank pass book of the issuing bank account

The mode of certification may include the following:

1. Receipt of payments through Demand Drafts / Pay-Orders / Banker’s Cheques.

· Check whether name of the client and his account number is mentioned on the instrument and same matches with our record.

· Accompanied by certificate from the issuing bank on its letterhead or on a plain paper with the seal of issuing bank.

· Accompanied by certified copy of bank retained requisition slip (banker’s part).

· Accompanied by certified copy of the passbook / bank statement for the account debited to issue the instrument.

2. Receipt of payment by electronic funds transfer i.e. transfer through NEFT/RTGS

Before passing the entry in our books of account the account details of the client should be ascertained from the narration of the bank statement and same should be matched with our records so as to ensure that the funds have been transferred from the concerned client’s account only. In case, it is difficult to ascertain the account details then necessary documents should be obtained from the client so as to ensure that the funds are not received from third party.

BOARD RESOLUTION for NISM certification Series VII

BOARD RESOLUTION PASSED AT TOSHNIWAL EQUITY SERVICES PRIVATE LIMTIED BOARD OF DIRECTORS MEETING HELD ON 31^st DECEMBER 2014 AT REGISTERED OFFICE AT SURYA MAHAL 4^TH FLOOR, 5 BURJORJI BHARUCHA ROAD, MUMBAI 400001 AT 4:30PM

The Board was informed about regulatory requirement of NISM certification Series VII on Securities Operations and Risk Management, for persons designated to oversee and authorize handling assets or funds of clients, redressal of investor grievances, internal control or risk management, activities having a bearing on operational risk. Such designated persons having valid NISM certification can oversee the other persons who are engaged in performing basic clerical / elementary functions in the above stated work including inwarding of receipts, seeking documents, making entries in records and database, photocopying printing scanning of documents, preparing MIS, sending letters, attending calls, etc. Such persons are not required to have NISM certification.

“RESOLVED THAT the company appoints Mr. Jaykumar Toshniwal, Director & Compliance Officer, to obtain required NISM certification including Series VII and other certifications which may be renewed from time to time as per regulatory requirements”.

For Toshniwal Equity Services Pvt Ltd

Jaykumar Toshniwal – Director

Anilkumar Toshniwal – Director

Anita Toshniwal – Director

Conflict of Interest policy

Policy made as per Securities Exchange Board of India (SEBI) directive vide its CIR/MIRSD/5/2013 dated August 27, 2013. All the staff / Associated Person are required to follow the same and take due care for its proper implementation.

This policy is made to facilitate effective implementation of Conflict of Interest in our organization.

As per the SEBI Circular a Registered Intermediaries / Stock Exchanges / Clearing Corporations / Depositories to “manage conflicts of interest fairly, both between itself and its Clients and between a Clients and another client.” M/s TOSHNIWAL EQUITY SERVICES PVT LTD (TESPL) is required to maintain and operate effective organizational and administrative arrangements with a view to taking all reasonable steps to identify, monitor and manage such conflicts of interest and put in place a policy to meet this obligation and set out below is a summary of that policy and the key information that is needed by clients and counterparties to understand the measures is taking to safeguard the interests of its Clients.

Identify circumstances which may give rise to conflicts of interest entailing a material risk of damage to Clients’ interests;
Establish appropriate mechanisms and systems to manage those conflicts; and
Maintain systems in an effort to prevent actual damage to Clients’ interests through the identified conflicts.

What is a conflict of interest?

A conflict of interest is a conflict that arises in any area of business in the course of providing its Clients with a service which may benefit whilst potentially materially damaging another Client where M/s TESPL owes a duty to the Client.

Is likely to make a financial gain (or avoid a loss) at the expense of its Client;
Is interested in the outcome of the service provided to its Client where the interests of M/s TESPL is distinct from that of the Client;
Has a financial or other incentive to favour the interests of one Client over another;
Carries on the same business as a Client;
Receives money, goods or services from a third party in relation to services provided to a Client other than standard fees or commissions.

M/s TESPL has sought to identify conflicts of interest that exist in its business and has put in place measures it considers appropriate to the relevant conflict in an effort to monitor, manage and control the potential impact of those conflicts on its Clients. The conflicts identified include:

Those between Clients with competing interests;
Those between Clients and TESPL where their respective interests in a particular outcome may be different; and
Those between the personal interests of staff and the interests of company or its Clients where those interests may be different.

Policies and procedures

TESPL has adopted numerous internal policies and procedures, in order to manage recognized conflicts of interests.

Integrity and Standards of Conduct:- We insists that in its dealings with Clients its staff must use the highest standard of integrity in their actions at all times. The induction programme, training and competency procedures and monitoring programme are designed to ensure that all relevant staff is familiar with and observe, inter alia, the Principles for Businesses, the Statements of Principle and Code of Practice for Approved Persons.
Client Orders:- In order to ensure as fair treatment as possible for Clients, the Execution Policy requires us to take all reasonable steps to achieve the best overall trading result for Clients; to exercise consistent standards; and operate the same processes across all markets, clients and financial instruments in which it operates. In order to ensure a fair and orderly dealing environment within the market, we ensures that its staff comply with the relevant directives, as well as the relevant Rules, which aim to prevent insider trading, the misuse of information and market manipulation.
Confidentiality and Information barriers:- We have put in place procedures to control or prevent the flow of information where the interests of Clients may be affected. Further, we insists on strict Client confidentiality to ensure that information is disclosed only to those entitled to receive it or otherwise with the prior approval of the Compliance Department.

We ensure that our staff / Associated Person not deal in securities while in possession of material non published information / not to communicate the material non published information while dealing in securities on behalf of others / not in any way contribute to manipulate the demand for or supply of securities in the market or to influence prices of securities /not have an incentive structure that encourages sale of products not suiting the risk profile of their clients/not share information received from clients or pertaining to them, obtained as a result of their dealings, for their personal interest.

Inducement to Staffs from Client:- Staff are not allowed to accept gifts, entertainment or any other inducement from any person which might benefit one Client at the expense of another when conducting investment business. Staff is not allowed to place undue pressure upon Clients to persuade the Client to trade through the firm to the extent that this might give rise to a conflict of interest between that Client and its own underlying Clients.
Disclosure:– If there is no other means of managing the conflict or where the measures in place do not, in the view of TESPL , sufficiently protect the interests of Clients, the conflict of interest will be disclosed to Clients to enable an informed decision to be made by the Client as to whether they wish to continue doing business with us in that particular situation.

The Conflict of Interest policy shall be conducted under overall supervision of the Compliance Officer / Designated Director / Associated Person.

Internal auditor shall review the Conflict of Interest policy, its implementation, effectiveness and review the same for the purpose of audit. Internal auditor shall record the observations with respect to the same in their report.

Insider Trading Policy

Introduction

This policy aims to define and establish TOSHNIWAL EQUITY SERIVES PRIVATE LIMITED (TESPL) (herein after referred to as “Stock Broker”), position and rules with respect to:

· Prevention of Insider trading securities

· Adherence to Securities and Exchange Board of India’s (‘SEBI’) applicable guidelines by all Connected or Deemed Connected persons including Director, Officer and Designated Employee for prevention of Insider trading.

SEBI has subsequently amended the existing regulations. The amended regulations are now called SEBI (Prohibition of Insider Trading) (Second Amendment) Regulations, 2002 (hereinafter referred to as “ the Regulations”), which have substantial implications for mostly all market intermediaries like TOSHNIWAL EQUITY SERVICES PRIVATE LIMITED. Pursuant to the said regulations it is necessary that TOSHNIWAL EQUITY SERVICES PRIVATE LIMITED. being a capital market intermediary has to comply and follow the prescribed procedures in order to prevent the misuse of price sensitive information which a Director and/or employee/officer (hereafter ‘Designated Employees’) of the company may have access to.

Designated employees/directors are required to follow the code formulated by us both in letter and spirit.

Stock Broker is committed to the preserving the confidentiality and preventing the misuse of any un-published price sensitive information. Stock Broker is further committed to adherence to all applicable laws and regulations set forth by the Securities and Exchange Board of India (“SEBI”) or the Stock Exchanges with regards to prevention of Insider trading. Trading on insider information is not illegal, but also tarnishes Stock Broker’s corporate credibility. Stock Broker is committed to ensuring transparency and fairness in dealing with all stakeholders of the Stock Broker.

Definitions of some of the key terms used in this policy are given below:

i. “Insider Trading” means when insiders use unpublished price sensitive information to arrive at securities trading / dealing (including buying as well as selling) decisions, the action is referred to as insider trading;

ii. “Insider” means any person who is or was a “Connected Person” or “Deemed Connected Person” and who is reasonably expected to have access to unpublished price sensitive information in respect of securities of the Company or who has received or has had access to such unpublished price sensitive information;

iii. “Connected Persons” means any person who is”

· A Director of the Company;

· An Officer or Designated Employee of Company;

· Has a professional or business relationship with the Company, such that he/she may be reasonably expected to have access to price sensitive information in relation to the Company, which includes but not limited to the legal Advisors, solicitors, Auditors Consultants and tax Advisors.

iv. “Deemed Connected Persons” means and includes:

· Dependent family members of Connected Persons;

· Any group Company, Company under the same management or subsidiary of the Company;

· Bankers of the Company;

· Merchant banker, share transfer agent, registrar to an issue, debenture trustee, broker, portfolio manager, investment advisor, sub-broker or any employee thereof having a fiduciary relationship with the Company;

· Trustees of any trust the beneficiaries of which include any of the Connected Persons;

· Trustees of any trust who are conferred with the Power of Attorney to act on behalf of beneficiaries in respect of securities of the company;

· Any person who was a Connected Person, whether temporary or permanent six months prior to an act of insider trading;

· Any other person or category of persons mentioned in Regulation 2 of the SEBI (Prohibition of Insider trading) Regulations,1992.

v. “Dependent Family Members” shall mean spouse, dependent parents and dependent parents and dependent children and any other person dependent on the Officer and Designated Employee;

vi. “Officer of a Company” means any person as defined in clause (30) of section 2 of the Companies Act,1956 (1 of 1956) including an auditor of the Company;

vii. “Designated Employee” shall mean:

· Manager and above in the Finance, Accounts, Secretarial and Corporate Communications departments;

· Such employees designated and notified by the Compliance Office from time to time with the approval of the Managing Director;

viii. “Dealing in Securities” means an act of subscribing, buying, selling or agreeing to subscribe, sell or deal in any securities either as principal or agent;

ix. “Price Sensitive Information” shall mean any information which relates directly or indirectly to Company and which if published is likely to materially affect the price of securities of Company.

The following shall be deemed to be price sensitive information:

· Periodical financial result of the Company;

· Intended declaration of dividends (both interim and final);

· Issue of securities or buy-back of securities;

· Any major expansion plans or execution of new projects;

· Amalgamation, mergers or takeovers;

· Disposal of the Whole or substantial part of the undertaking;

· Any significant changes in policies, plans or operations of the Company;

x. “Unpublished” means information which is not published by the company or Its agents and is not specific in nature.

xi. “Compliance Office” means an office appointed by the Board for the purpose of monitoring, observing, educating the employees, setting forth the policies and administration of the procedure under the overall supervision of the Managing Directors of the Stock Broker in relation to Compliance with this policy.

Words and expressions not defined in these Regulations shall have the same meaning as contained in SEBI (Prohibition of Insider Trading) Regulations, 1992 or the Securities and Exchange Board of India Act, 1992.

RESTRICTIONS:

Prohibition on dealing, communicating or counseling on matters related to insider trading: Designated Employees/Directors/relatives should not deal in securities of any listed company on any exchange when in possession of unpublished price-sensitive information. Designated Employees/Directors should not communicate or counsel, directly or indirectly, any unpublished price-sensitive information to any person.

Preservation of Price-sensitive information: Designated Employees/Directors/relatives shall maintain the confidentiality of all price sensitive information. Designated Employees/directors/relatives shall not pass on such information directly or indirectly by way of making a recommendation for the purchase or sale of securities.

Need to Know: Price sensitive information is to be handled on a “Need to know” basis i.e. such information should be disclosed to only those within the organisation who need the same to discharge their duties and whose possession of such information will not give rise to a conflict of interest or appearance of misuse of the information.

Limited access to confidential information: Files containing confidential information shall be kept secure. Computer files containing confidential data must have adequate security of login and password etc.

Chinese Walls: Research Department, Dealing Department of the Company shall be categorised as Inside Areas. All other Departments of the Company shall be categorised as Public Areas. The employees in the Inside Areas shall not communicate any Price Sensitive Information to any one in Public Areas.

Any persons who trades in securities or communicates any information or counsels any person in trading in securities in contravention of code of conduct may be penalized & action may be taken under the SEBI Regulations.

Front running transactions are strictly prohibited. Front running means transacting in a security knowing fully well that TESPL / TESPL’s clients also intends to transact in the same security.

When any securities are on the restricted/grey list, trading in these securities by Designated Employees/Directors/their dependents may be blocked or dis-allowed at the time of pre-clearance.

The Compliance Officer shall place before Board as frequently as required, all the details of dealings in the securities by Directors/Designated Employees of the Company and the accompanying documents that such persons had executed under the pre-dealing procedure.

INFORMATION TO SEBI IN CASE OF VIOLATION

The Compliance Officer shall inform SEBI the cases of any violation of the Regulations so that appropriate action may be taken by SEBI.

Internal Control and Risk Management Policy and Procedures

Policy for Acceptance of Client & checking “beneficial ownership” of clients:

Persons are added as clients only after they are introduced by known references like existing clients, relatives, friends, business associates, employees. There is personal meeting and / or telephonic talk (like an interview) to ascertain the nature of investment activity the proposed client desires to undertake, financial capability of the client, explanation of our role as brokers, settlement systems followed by the exchange and us, cross checking regarding the reference.
The Client Registration Form (including KYC, RDD, etc. statutory and voluntary documents) duly franked are issued after the interview above.
KYC form is duly completed by the client with assistance from us, complying with the mandatory requirements specified by the SEBI & Exchange.
The company checks the “beneficial” owner of the client to ensure that no client account is opened as “proxy” for any other person.
The company follows the “maker-checker” concept of internal control. The compliance officer of the company verifies all the KYC forms received.
The company has the policy of approval of all KYC forms by the compliance officer of the company before creating the Unique Client Code (UCC) in the trading (ODIN & NOW) and back office (Spark) systems and setting up trading limits for the applicant.
Company has also advised its branch heads to carry out proper diligence about the client including “In person verification” before introducing him to the organization.
Welcome letter is sent to the client informing client about his master data entered in our system like UCC, Trading Code, Address, Bank Account details, Demat account details, email id, phone numbers, brokerage rates, etc alongwith our website address, investor grievance email id, our office contact details, settlement cycle details, etc.
Copies of the documents executed are given to the client after execution.
KRA for the clients is verified and record fetched if done; and if not done then we complete the KRA process.
CKYC for the clients is verified; and if not done then we complete the CKYC process.
This activity is carried in-house and no outsourcing is done for this.
The KYC records are kept in filing cabinets/ cup boards in the office and / or at the record room located at Naigaon (65 km away).

Sales Practices followed by the company:

Marketing function is carried out by the dealers who interact with the clients based upon discussions with the Directors, World News, Local news and market news-views, etc.
The views are communicated alongwith the associated risks and the client risk profile and past trading record are taken into account.
No promotional schemes and no freebees are offered to clients

Closure of Client accounts, Transfer of Client account between branches and control over Dormant / Inactive accounts:

Whenever any client desires to close account, a written intimation to this effect from the client. Immediately, the client code is “suspended” in ODIN & NOW software so that no orders can be entered for the client by any dealer on ODIN & NOW.
The client account is scrutinized, account confirmations and “no pending querries” confirmation is taken, securities and funds accounts are then settled.
In case any client desires to shift account from one branch to another, a written request is taken, new KYC filled up, new client code (UCC) allotted where the last 5 digits of the code are retained and only the 1^st digit (which is branch id) is changed, data uploaded to NSE, old code suspended and new code activated in ODIN, client mapped to dealers in new branch and limits set.
In case of dormant accounts, the compliance office checks with the branch heads in case trades are executed in such accounts (post trade activity), client is requested to provide copies of PAN/ Aadhar etc to establish identity of the client and the account is checked for funds and securities settlement to avoid chances of errors, deliberate or otherwise.

Receiving, validating, entering the orders of clients in trading platform & Handling of Cumulative Unexecuted Orders :

The Organization setup is small and all the client are personally known to management, their financial position is known and the dealer is aware of the risk appetite of the each and every client which helps in better control.
The company has restricted the access to the dealing office only to the authorized persons who are dealers of the company.
The approved clients are informed of the dealers who would be responsible for receiving, validating and entering the orders on behalf of them.
The orders are received over phone and personal instructions when they are in the office. Orders received from clients in morning by dealers at home or during travel to office before market opens are later validated/ confirmed with clients.
Voice recording system has been installed to comply with regulatory requirements. Clients are discouraged to call on mobile phones except in case of emergency / urgency.
To give better & personal service to the clients they are divided group wise among the dealers so that particular dealer can serve a particular group of clients which helps dealer to understand client investment strategy in a better way & serve them accordingly. The concerned dealers have access of back office system in which the clients balance positions are updated daily and on the basis of the same the exposure is determined by the dealer. The orders are entered instantly as given by the client without any delay.
On execution of valid order into trade, dealers confirm the trade with the client so as to avoid any future dispute.
At the end of the trading hours, the dealer informs the clients about the execution of the orders placed by the clients through phone/ fax/ mail.
After market hours, back office team informs the client about their executed trades for the day and also about their obligation towards Pay-in & Pay-out of funds & securities for the particular day.
All orders unexecuted at EOD are purged from the order book by the exchange and clients place fresh orders for the next trading day.

Collection & maintenance of margins:

The company transacts on behalf of clients in cash and derivatives segments and it has mandatory requirement of collecting margins.
With respect to the collection of margin in cash segment, the company now mandatorily collect and report margin with effect from 1^st January, 2020 as per circular dated 31 Dec, 2019_BSE_20191231-52. However, all efforts are made to see that none of the cash segment transaction leads to any loss for the organization. The Risk Management Team/Management collect upfront margin(VaR margins and Extreme loss Margin (ELM)) on T day & M2M on T+2 day before execution of the trades.
No transaction is executed for clients until the Initial Margin(VAR + ELM) has been collected from the clients.
Shares received from clients as Margin are kept in a separate (Client Margin Demat Account).
The Company daily uploads the span margin file to the exchange.
The Upfront margin can be collected in below mention forms
- Consolidated fund balance across exchange/segment,
- Cheques, bank credits, fixed deposit, bank guarantee, Mutual Fund Units, Government securities / T Bills and list of securities which are actively traded on National exchange, and not declare as illiquid Securities by such exchange. Securities that will be taken, haircut will be applied on the basis of VAR or as may be required by the exchange.
- Securities, which are provided as margin, but are sold in the cash market can be considered up-to T+1 day from the date of sale without any haircut.
- M2M can be collected through Cheques received / recorded in the books of Member on or before T+1 day and deposited by member by T+2 day (excluding bank holiday, if any), can be considered, provided the same is cleared within T+5 working days.
- The option of reporting the margin can be done upto T+5 days, however the back office department is authorized to do the uploading from T+1 day itself on the basis of the valuation of the total margin lying to the credit of the ledger(Across all exchange) plus the value of the other margin securities provided by the client. In case any corrections are required in the file due to dishonor of any client cheque, etc then the new file will be uploaded after due consultation and permission of the seniors and the last file uploaded will be considered to be the final file
The margin file uploaded is checked and then only uploaded to the exchange
In case where the margin requirements is more than necessary margins are collected in any of the following form the clients (1) Early Pay-in of Shares, (2) Collection of Cheques on T/T+1 day, (3) Collection of funds and/or securities as Margin.
Any Penalty paid by the company to the exchange due to shortfall of margin of any client, will be recovered from the client by debiting the client’s ledger through a JV and intimating the client by providing a copy of JV (manually or electronically), as a proof for the penalty charged to their account. which will effect from 1^st April, 2020 as per circular BSE circular no: 20191213-40 dated 13 December, 2019 & NSE circular no: 369/2019 dated 12th December, 2019.
The company is not providing a margin trading facility.
- With respect to collection and maintenance of margins in the F&O segment the same is as detailed below:
  - F & O Margins

- - No transaction is executed for clients until the Initial Margin has been collected from them. Funds or shares are received from the clients as Margin.
  - Shares received from clients as Margin are kept in a separate ‘Client Margin Demat Account’.
  - The Company daily uploads the span margin file to the Exchange.
  - The clients are regularly sent the collateral margin report updating them on their margin requirement and the margin given by them to the organization and the surplus/shortfall in the margin, so that effective steps can be taken by the clients on the same.
  - Any Penalty paid by the company to the exchange due to shortfall of margin of any client, will be recovered from the client by debiting the client’s ledger through a JV and intimating the client by providing a copy of JV (manually or electronically), as a proof for the penalty charged to their account.
  - The option of reporting the margin can be done upto T+5 days, however the back office department is authorized to do the uploading from T+1 day itself on the basis of the valuation of the total margin lying to the credit of the ledger(Across exchange) plus the value of the other margin securities provided by the client. In case any corrections are required in the file due to dishonor of any client cheque, etc then the new file will be uploaded after due consultation and permission of the seniors and the last file uploaded will be considered to be the final file.
  - The margin file uploaded is checked and then only uploaded to the exchange.
  - The margin can be collected in through cheques, bank credits, fixed deposit, bank guarantee, Mutual Fund Units, Government securities / T Bills and approved list of securities. With respect to the securities that will be taken, haircut will be applied on the basis of VAR or as may be required by the exchange.
  - The margins are to be collected from all the clients in the F&O as well as Cash segment, “Securities kept in “Unpaid securities account” can be considered towards reporting of client’s margin obligation in the derivative segment after adjusting any debit balances in such client ledger, across all segments and Exchanges as per circular dated 27^th Sept,2019 NSE/INSP/42229 & BSE circular no. 20190927-39.
  - The company has a system where the stocks not approved by the exchange will not be considered in collaterals calculation, however the company may retain the same for extra security.

The accounts department periodically reconciles the total collaterals received from clients with the total securities available in the Client Margin Demat Account

Collection & delivery of securities to “beneficiary” account of client and:

The company has received authority from clients to maintain running accounts on their behalf to avoid inconvenience of receiving / paying securities on daily basis. In any case, the company prefers bill to bill settlement for funds and securities with most clients unless the client prefers otherwise. Proper record for securities held of clients is maintained.
The company receives the deliveries of securities from the clients from their own beneficiary accounts in the pool accounts intimated to the clients.
If securities are received from any demat account not belonging to the client, then the securities are returned to the respective demat account from which they have been received. This ensures that there is no case of receipt of securities from third parties.
For delivery of securities, company uploads direct payout file to the NSCCL to ensure faster delivery of securities to clients.
The company also reconciles its pool and client beneficiary/ Clients unpaid securities account account regularly.
The company has subscribed for Speed-e facility and e-DIS policy to receive securities online and to monitor online the activities of pool and other accounts.
Securities are normally released to client’s own beneficiary accounts registered with us through KYC and KYC amendments only if the client account does not have any debit balance or shortfall including margins. But, in few instances, if senior management approves, then securities can be released even if the client account has debit balance or shortfall of funds including margins.
In case the client account has debit balance the securities on payout are transferred to the “Client Securities” bene account of the company to be held till 5 trading day from the date of payout, If debit balance is cleared within T+7 days then the securities are released in due course. The “Client Securities” bene account includes “Client Unpaid Securities Account” as specified by SEBI and/or other similar accounts as approved by regulatory authorities from time to time.

Pledge-Repledge of Securities for Margin:

After directions by SEBI, the company has discontinued the above listed practice of receiving securities for margin from clients and has commenced accepting securities from clients for margin by way of pledge in favour of company. For this purpose the company has opened specific demat account designated as “CSMPA (Client Securities Margin Pledge Account”. On receipt of pledge, the company confirms the pledge. Subsequently the securities pledge received are repledged to Clearing corporation / Clearing Member to enable the client get full benefit of the securities margin directly upto UCC level from CC/CM.

Further, to enable clients get full benefit of securities margin to meet CC requirements of minimum 50% cash equivalents, the company encourages its clients to provide cash equivalent securities in addition to non-cash equivalent securities.

The above process enables adequate risk management in its business.

Collection & release of payments to “beneficiary” account of clients

Some of the clients have given consent to the company to maintain running accounts on their behalf to avoid inconvenience of receiving / paying funds on daily basis. In any case, the company prefers bill to bill settlement for funds and securities with most clients unless the client prefers otherwise.
The company collects and releases funds through banking channels i.e. Account Payee Cheques / RTGS / NEFT only.
With reference to NSE Circular no. NSE/INSP/43250 dated 16th January, 2020 , In case of running account settlement we are not investing the actual settlement amount (Monthly / Quarterly) of the clients with the consent/without consent of the client / through POA in any scheme or investment products including mutual funds, Exchange traded funds such as liquid bees etc. And we credit the settlement amount (Monthly/Quarterly) to the client bank account directly and not run any schemes to invest the actual settlement amount (Monthly / Quarterly) with the consent/without consent of the client / through POA in any scheme or investment products from 16th January,2020.
In partial modification to the Exchange Circular NSE/INSP/36889 dated February 02, 2018 on running account settlement, it is clarified that henceforth We do not retain the value of funds & securities to the extent of the value of turnover (gross turnover) executed on date of settlement(Quarterly/Monthly) in cash market segment from 16th January,2020.
As per SEBI Circular CIR/HO/MIRSD/DOP/CIR/P/2019/139 dated November 19, 2019 wherein SEBI has mandated the collection & reporting of margins from clients in capital market segment. In view of the same it is clarified that apart from the retention of 125% of the margin liability in derivative segment as on the date of settlement, We may additionally retain the margin liability in Capital market segment as on the date of settlement and additional margin (up to 125% of the margin requirement as on the date of settlement)
The account team keeps proper co-ordination with DP team regarding Pay-in of securities by clients and then releases the Pay-out cheques to the client. In case of shortage the amount is released as per the decision of directors to release part money or not.
Company releases payments of the clients either by hand delivery to the authorized persons intimated by the clients or by courier to the client’s correspondence address as informed by the clients. In some cases cheques are directly deposited into client’s account. RTGS / NEFT are sent to the client bank account directly.
The collections of funds from clients are also transacted in above manner; cheques are sometimes directly deposited by the clients. Receipt entry is made in back office based on receipt of email/ SMS/ WhatsApp or other intimation from the branch and/ or client giving details of the client’s cheque number, bank name, amount, bill/ settlement number, etc. RTGS/ NEFT are received in our bank account directly from the client bank account.

Policy for handling internal shortage:

In case one client has sold a security but delivered the same from demat account of another family member, then we execute a sale transaction for the delivering client and a buy transaction for the selling client so as to match the security movement.
In case one client has sold and not delivered the security and another client has purchased the same, then we require the selling client to deliver the security in the same settlement’s auction settlement or execute a purchase transaction delivery of which is given to the original purchasing client. In any case, the selling client who has not delivered is informed that in case the buying client sells the security any time after purchase before delivery and the same is auctioned due to short delivery by the internal selling client, then the market auction would be to the account of the defaulting seller.

Transfer of Trades:

Transfer of trades from one client to other client is not permitted. Transfer of trades executed in wrong client code is transferred to ERROR code. These trades are reviewed regularly to avoid any mischief by any dealer and/or client.

Operations & Compliance requirements:

The role of Compliance officer is to monitor the operations and compliance requirements of the organization.
The company has the system of getting its accounts audited half-yearly and to see all compliances are been done on a timely basis.
The company has also implemented compliance calendar to keep proper control over the operations and compliances.

Monitoring of branches & DP operations:

The branches send daily report regarding funds collections and securities payout instructions.
The head office prepares a daily branch operations report covering the daily branch trial balance, branch brokerage client wise, branch debtors ageing, total debit/ credit for the branch on aggregate basis. This is discussed with the branch on daily basis.

Payment of Dividend:

The company receives dividend on the client shares directly in the client bank account from companies and/or from clearing member.
The company pays all the dividends received on behalf of clients within the stipulated time to the clients after receiving the same. The client dividend account is nullified every month to see that client dividend is credited to respective client account and cheque issued to the client.

Investor Grievances Redressal Mechanism:

The company maintains a compliant register centrally with the compliance officer.
Constituents are publicly informed the investor grievance contacts at the exchange and the email id of the company for investor grievances through the KYC and company’s website.
Details of investor grievance contact are put up on notice board.
Constituents can provide written complaints to the branch heads and or compliance officer. The complaints are noted in the complaint register, concerned department informed and efforts are made to resolve the complaint within the time specified.

Connectivity Continuity Planning / Disaster Planning:

For Front office operations the company has provided with the UPS battery backed power backup to all dealing terminals so as to compensate for power supply interruption. The front office has connectivity to exchange via three media viz. VSAT, leased line and internet (NOW).
For Back office Operations Company takes periodic backup into portable hard disk which are kept away from the office.
Multiple trading platforms are use like NEAT, NEAT Plus, NOW, ODIN are used so that in any eventuality, it is possible to trade from NSE Contingency Pool at Bandra, through internet from other locations and using Mobile internet connections.

Sending Contract Notes, Daily Margin statement, Quarterly Statement of Accounts to clients and Annual Global Statement:

Contract notes for transactions executed are sent in ECN form to each client using the ECN and Digital Signature software which is integrated with the back office software. Physical contracts are sent to clients on the same day by courier, hand delivery (in or outside office). POD of courier are maintained.
Confirmation of transactions executed is given to clients online after execution of trades, by phone and later backed up by email/ fax/ telephone.
Daily Margin Statements in Cash Market are sent on T day. Telephonic information is also provided alongwith sauda confirmations.
Daily Margin Statements in Derivatives are sent by email on T day after the same are generated by the back office software. This activity is now automated with minimum human intervention.
The client accounts are settled as per client preferences, generally at least once in a quarter, when Statement of Accounts and Securities are sent along with specified statement regarding margin retention.
Annual Global Statement send to the clients within 30 days after the end of the every financial year in physical/electronically.

Limits setting & Granting Exposure & turnover for clients, terminals, branches, sub-brokers and “surveillance” of account activity:

In CM limits are set in the CTCL software (ODIN / NOW/ BOW) for clients, terminals, branches, dealers based on their past trading track record, financial position, settlement record and level of business.
In FO limits are set based on margins available as on T-1 day including collaterals.
In case of orders being rejected by the CTCL Manager, the ADMIN takes decision to provide additional intra day limits based on additional requirements based on MTM position, request received, additional margins being sent by client, etc.
Periodic and regular “surveillance” is conducted on the client activity to avoid situations of any client doing any rogue trade. This is with respect to volume of transactions, value of transactions, value of exposures, price limits for orders, number of orders, frequency of trades, order splitting between various related accounts.

Monitoring of Debit Balances:

Party ledger trial balances are regularly scrutinized for recovery of debit balances.
Age analysis is also carried out periodically to ascertain long overdue debit balances and follow up is made with the client and / or branch heads to recover the same.
In case of non-recovery of long overdue debit balances after persistent efforts, they are treated as bad debts and legal action is taken to recover (if amounts are large and there are no collaterals available).

Allotment and Surrender of Trading Termninals:

Terminals are allotted to eligible persons viz. employees, branch employees after verification of their NCFM (or equivalent) certification and its validity.
In case of allotment of CTCL ids, a 12 digit code (pincode+branch id+terminal id) is allotted and the same is uploaded to the exchange.
When any employee leaves the organization, the respective id is deactivated at the exchange and in the CTCL system also.
It is ensured that only authorized dealers operate the designated terminals.

Opening & Closing of Branches / Sub-broker offices:

Proposals for opening branch / sub-broker are received from various locations or initiated internally.
Personal meeting, visit to remote location, market potential study is done and terms of business / business plan or budgets are discussed before decision is taken to open branch or sub-broker. Care is taken to inform the branch / sub-broker staff about the exchange rules and regulations and our commitment to comply with the same in true spirit.
When any branch or sub-broker desires to close operations / disassociate with us / is not viable inspite of efforts to reinvigorate it, then decision is taken to close the branch / sub-broker. Intimation is given to all clients about the decision.
On closure, all clients are informed a choice to shift to our other branch / sub-broker if available in vicinity or convenience, all clients are provided statement of account and securities and confirmations obtained. In case of any queries of any client, the same are attended to and resolved within stipulated time.
The objective is to maintain cordial relations with all clients and staff even after closure.

Square off of positions / Liquidation of securities without consent of clients:

In case there is margin or MTM shortfall not covered by collaterals, follow up is done with the clients to collect additional cash and/or collaterals.
If there is persistent shortfall, a risk assessment of the client is made in light of the client track record, promise to meet the shortfall and time limit sought. If the call is taken, then positions are not squared off and securities not liquidated without the consent or intimation to the client.

PMLA:

Principal Officer is appointed under PMLA and informed to FIU office
Principal Officer scans through daily transactions to spot transactions which might need reporting under PMLA
All transactions especially cash transactions which give rise to suspicion are noted and report sent to the FIU office.
Policies and procedures are laid down to comply with the statutory provisions of PMLA.

Power of Attorney:

As a practice, no power of attorney is taken from resident clients
Power of attorney is taken only in case of non-resident clients and that too if they desire so for their operational convenience.

Capacity of Systems with reference to volume:

The systems including hardware and software are periodically updated and upgraded or replaced with higher end versions to ensure satisfactory level of service to all users and clients.

Connectivity to Exchange / Branches / Sub-brokers/ Clients:

We are connected to NSE via VSAT and Leased Line (multiple connectivities) under A3 scenario to minimize chances of downtime in connectivity with NSE. For other exchanges connectivity is through leased line (single connectivity) and there is loss of business in case of downtime which is not high.
Branches / Sub-brokers are offered connectivity through multiple modes and multiple softwares. ODIN is offered through private VSAT system offered by HCL Comnet Ltd. ODIN is also offered through internet VPN. NOW is offered through internet/ broadband connectivity at remote location.
Clients are offered internet trading facility through NOW for which they use their internet connection at the remote location.
ADMIN is carried on at the Head Office for both ODIN and NOW under LAN as the ODIN server and NOW server are located at Head Office.

Policy for avoiding Conflict of Interest:

With a view to service the investors’ interests, our company follows a policy to avoid conflict of interest.
Conflict of interest can occur where the interests of the investor client may not be aligned with the interest of the company.
Investor clients’ orders are first executed before execution of any “proprietor” order.
In case of securities payout received in pool account, securities are first allocated to investor clients and then to proprietor account.
In case of funds payout, the funds are released to the clients within the time permitted by regulations.

Investor Grievance Redressal Mechanism

We adhere to all specified regulations for provision of investor grievance redressal mechanism. The various mechanisms created include:

We have created a separate email id for investor grievance where the investors can mail their grievances.
We maintain a Complaints Register / Investor Grievance Register where the investors can note their grievances.
We send daily contracts, emails for confirmations, positions, margins, etc. to inform investors about their transactions. The investors can inform us of discrepancies, if any, in them.
We send quarterly confirmations to investors about their transactions, both financial and securities. The investors can inform us of discrepancies, if any, in them.
The Compliance Officer is authorized to attend to all investor grievances and ensure redressal within the specified time limits.
The investors are also informed about the investor grievance mechanism available with the stock exchanges where they can note their grievances, if we do not redress them suitably in the specified time limit.
The communication of the various investor grievance redressal mechanisms are made through the various means like contract notes, bills, signboard, website, etc.

Outsourcing Policy

Scope of the Policy

The policy incorporates the criteria for selection of the activities that may be outsourced, risks arising out of outsourcing, management of these risks, delegation of powers, etc.

Definition of Outsourcing

For the purpose of this policy, Outsourcing shall refer to DSPL’s use of a third party (either an affiliated entity within a corporate group or an entity that is external to the corporate group) to perform activities on a continuing basis (including agreements for a limited period), that would normally be undertaken by the KRC, now or in the future.

Activities outsourced by DSPL

At present, we have not outsourced any function since all the activities are carried out by us in house.

Responsibilities of compliance officer

Our compliance officer shall be responsible for:-

Evaluating the risks and materiality of all existing and prospective outsourcing, based on the framework approved by the Board.
Framing necessary clause for the confidentiality of all the contents in the account opening forms.
Developing and implementing sound and prudent outsourcing policies and procedures commensurate with the nature, scope and complexity of the outsourcing.
Reviewing periodically the effectiveness of policies and procedures.
Communicating information pertaining to material outsourcing risks to the Board in a timely manner.
Ensuring that contingency plans, based on realistic and probable disruptive scenarios, are in place and tested.
Ensuring that there is independent review and audit for compliance with set policies.

Prior to agreement expiry, the compliance officer will liaise with the outsourced serviceprovider to arrange a continuation letter or new contractual agreement. If there are contractual differences, the new agreement will be subjected to the internal risk review and approval process.

PMLA policy

TESPL means TOSHNIWAL EQUITY SERVICES PVT LTD. The policy has been reviewed periodically covering the various circular issued by SEBI. The below mentioned policy on PMLA has been approved by the Board of Directors in their meeting and has been adopted by the company. All the employees are required to follow the same and take due care for its proper implementation and efforts are to be made to make this known to the clients who deal with the company. Procedures with respect to implementation of Anti Money Laundering Measures under the Prevention of Money Laundering Act, 2002.

Objective:
Appointment of Principal Officer:
Appoint a Designated Director:

Designated Director

Information’s to be recorded:

The nature of the transactions.
The amount of the transaction and the currency in which it was denominated.
The date on which the transaction was conducted.
The parties to the transaction.
The origin of the transaction.

Transactions to Record:

All cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign currency.
All series of cash transactions integrally connected to each other, which have been valued below rupees ten lakhs or its equivalent in foreign currency where such series of transactions have taken place within a month.
All cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place.
All suspicious transactions whether or not made in cash and including, inter-alia, credits or debits into from any non-monetary account such as demat accounts.

Records Maintenance:

All necessary records on transactions, both domestic and international, should be maintained at least for the minimum period of 05 years as prescribed in PMLA, 2002 or in any other legislations, regulations, exchange byelaws or circulars.
In situation where the records relate to on-going investigations or transactions, which have been the subject of a suspicious transaction reporting, they should be retained until it is confirmed that case has been closed.
The company should record and maintain and preserve the information regarding the transaction as provided in Rule 3 of the PML rules and the information of the same should be maintained for a period of 05 years or until the closure of the trail for the trade.

Procedure and manner of maintaining information:

The company shall maintain information in respect of above transactions with its client in hard and soft copies and in accordance with the procedure and the Reserve Bank of India or the Securities and Exchange Board of India may specify manner as, as the case may be, from time to time.
The company shall maintain such information in form specified above and at such intervals as may be specified by the Reserve Bank of India, or the Securities and Exchange Board of India, as the case may be, from time to time.
The company to observe the procedure and the manner of maintaining information as specified by the Reserve Bank of India or the Securities and Exchange Board of India, as the case may be.

Monitoring & Reporting of Transactions:

The company has a system of monitoring the transactions by the principal officer which are required to reviewed. The principal officer also considers the alerts provided by the exchanges, depository participants & SEBI and the same is reviewed so as to enquire the genuineness of the transaction. Additional alerts through back office system & manual working are made and the details for the same are enquired so as to determine the authenticity of the trade..
The company should carry out due diligence and scrutiny of transactions to ensure that the transactions being conducted are consistent with the business and risk profile of the client and the information are periodically updated with the data / information of the clients.
The person responsible for the department shall immediately notify to the principal officers or any other designated officer within the intermediary giving details of the alerts and the nature of suspicious activity. The principal officer would further investigate the transactions and call for further information to assess the genuinity of the transaction. If felt suspicious the principal officer would inform immediately the Financial Intelligence Unit (FIU) giving details of the transaction in the Suspicious Transaction Report (STR).
The proper documents and supporting for the transaction should be maintained with the intermediary and forward the details as may be called by the regulators.

Customer Due diligence:

Identification / Verification of clients:

The Application forms for opening an account are issued only when the prospective client provides the valid reference & introducer for his account.
All accounts are opened only when the prospective client is present in person before the company official..
The company collects the details of location (permanent address, correspondence address and registered office address), occupation details, nature of business activities, financial details etc. before new clients is registered.
The company shall collect the various mandatory documents as required by law, including the proof of identity of the client. The company should check the reliability of the document by reviewing / checking the same from independent source like verifying the PAN from the income tax website, etc.
The company has procedures to determine whether existing / potential client are not Politically Exposed Person (PEP) and in case of any person found to be a PEP entity then approval of senior management is necessary and systems to verify the source of funds of clients.
Check that the identity of the clients does not match with any person having known criminal background or is not banned in any other manner, whether in terms of criminal or civil proceedings by any enforcement agency worldwide
The company has a system in place to ensure that accounts are not opened in the name of anyone whose name appears in the UN or other specified list and the scan of all existing accounts has been carried out and the same is to be regularly reviewed.
The company periodically reviews the trading volumes of the clients and their financial strength in terms of annual income, net worth etc.
The company also monitors the financial transactions with clients for pay in payout of funds and securities.
The company has the policy not to deal in cash with any of the clients, all transactions, receipt or payment, are carried out only through account payee cheque or Electronic Fund Transfer only.
The company transacts only in Indian Rupees and no other currencies are being used for trades with clients.
All funds are released to the client by account payee cheques and with details of the bank account of the client written on the cheque so as to restrict the client to deposit cheques in only those bank accounts for which details are provided to us.

Policy for acceptance of Customers

No Trading account is opened in a fictitious / benami name, Suspended / Banned Organization and person.
Factors of risk perception (in terms of monitoring suspicious transactions) of the client are clearly defined having regard to Customers’ location (registered office address, correspondence addresses and other addresses if applicable), nature of business activity, trading turnover etc and manner of making payment for transactions undertaken. These parameters enable classification of Customers into low, medium and high risk. Customers of special category (as given below) are classified under higher risk. Higher degree of due diligence and regular update of Know Your Clients profile are carried for these Customers.

Clients of special category (CSC) include the following:

Non-resident clients
High net-worth clients,
Trust, Charities, Non-Governmental Organizations (NGOs) and organizations receiving donations,
Companies having close family shareholdings or beneficial ownership
Politically Exposed Persons (PEP)
Companies offering foreign exchange offerings
Clients in high risk countries where existence / effectiveness of money laundering controls is suspect, where there is unusual banking secrecy, countries active in narcotics production, countries where corruption (as per Transparency International Corruption Perception Index) is highly prevalent, countries against which government sanctions are applied, countries repute any of the following – Havens / sponsors of international terrorism, offshore financial centers, tax havens, countries where fraud is highly prevalent.
Non face to face clients
Clients with dubious reputation as per public information available etc.

It should be specified in what manner the account should be operated, transaction limits for the operation, additional authority required for transactions exceeding a specified quantity / value and other appropriate details. Further the rights and responsibilities of both the persons (i.e. the agent-client registered with Company).
Necessary checks and balance to be put into place before opening an account so as to ensure that the identity of the client does not match with any person having known criminal background or is not banned in any other manner, whether in terms of criminal or civil proceedings by any enforcement/ regulatory agency.
In case of non-individual clients the intermediary would call for information regarding the shareholding / ownership of the entity and also the details regarding the persons operating the account so as to identify the persons who are the decision makers and who are the beneficiary of the account.

Know your Customer information
1. Know Your Customer information should be obtained prior to commencing the relationship and should be updated on a regular basis during the course of the business relationship. A risk based approach should be applied depending on the type of customer, nature of the business relationship, product and any other risk factor that may be relevant, as well as any specific local requirements.
2. The client should be identified by the Company by using reliable sources including documents/ information. Adequate information to satisfactorily establish the identity of each new client and the purpose of the intended nature of the relationship should be obtained by the Company.
3. The information to be adequate enough to satisfy competent authorities (regulatory / enforcement authorities) in future that due diligence was observed by the Company in compliance with the SEBI Guidelines. Each original document should be seen prior to acceptance of a copy and all copies of the documents should be self certified by the customer.
Identification / Verification Measures – Where a potential client has not dealt with the Company in the past and wishes to open a trading account, the procedure is that:
1. The client provides the necessary information required, including relevant documents
2. The client account opening form / client registration form is duly completed by the dealer / sales executive / client (for private clients)
3. The client account opening form is approved by Dealing (for institutional Customers)
4. Information on the new client is given to Operations who will only effect settlement if the KYC form duly filled and signed, is in place.
5. The client registration form together with the Risk Disclosure Document duly filled and signed.
6. All material amendments or alterations to client data (e.g. financial information or standing instructions) are in writing.
Note: Photo proofs for identification of the client to be verified against originals and taken before opening a trading account with a new individual client. In case of non individual client, photo identities of the directors / authorised persons are to be verified against original and taken on record.
Risk Profiling of Customers
1. Customer’s acceptance to the potential money laundering risk associated to it. Based on the risk assessment, customers should be grouped into the following three categories viz:
  1. Low Risk
  2. Medium Risk
  3. High Risk
2. All customers should be assigned one of these categories.
3. The category of risk assigned to an account/customer will determine the applicable Customer Identification Procedures, subsequent monitoring & risk management.
4. Customers who may pose risk to the Company or to Money Laundering Deterrence Programme and can affect the Company’s reputation, should be treated as high risk and should be subject to enhanced Customer Due Diligence, include, but are not limited to the following:-
Members of the Company must not establish accounts or relationships involving unregulated money service businesses or unregulated businesses involved in aiming / gambling activities.
- Offshore Trusts, Special purpose Vehicles, International Business Companies which are established in locations with strict bank secrecy or confidentiality rules, or other legislation that may impede the application of prudent money laundering controls.
- Private companies or public companies not subject to regulatory disclosure requirements that are constituted in full or in part by bearer shares.
- Customers with complex account relationships – e.g. multiple accounts in one, customers with high value and/ or high frequency transactional behavior.
- No account should be opened in anonymous or fictitious/benami name(s) i.e. to say the anonymous or fictitious / benami customers shall not be accepted.
- No account should be allowed to do further transactions if any judgment has been issued by SEBI or FIU regarding any order against them and thus will effectively and expeditiously implement the order.
- No account should be opened if appropriate due diligence measures cannot be applied to a customer for want of verification documents on account of non co-operation of the customer or non-reliability of the data/information furnished of the Company.
Reliance on third party for client due diligence:
Non Face to Face Businesses: Members of the Company should apply Customer Due Diligence procedures which ensure that the process is equally as effective for non face to face customers as for face to face customers. Financial services and products are now frequently provided to non face to face customers via postal, telephone and electronic facilities including the Internet. Customer identification procedures in these circumstances should include appropriate measure to mitigate the risks posed by non face to face business. Ongoing due diligence and scrutiny of transactions and trading account should be conducted.
Correspondent Accounts: The Company is not permitted to open or maintain “payable through accounts”, (being correspondent accounts that are used directly to transact business on their own behalf) without the written and ongoing annual approval of the Head of Compliance.

Hiring of Employees:
Training

All new and existing staff who are involved in customer business must receive suitable and timely induction training and further ongoing training to ensure that they understand the Company’s approach to money laundering deterrence to provide them clarity on some points like:

What money laundering is?
The Company’s requirements under the Policy, Company Policies & Procedures and additional policy and standards issued under the Company’s Money Laundering Deterrence Programme, as appropriate.
Legal or regulatory requirements and the risk of sanctions for themselves, the Company.
Reporting requirements as prescribed by SEBI.
The role played by their Principal / Compliance Officer in money laundering deterrence.
The need to protect the Company’s reputation.
The company should also carryout Investors’ Education by preparation of AML and CFT specific literature / pamphlets which would be forming a part of the KYC or will be separately give to the clients for their educate about PMLA.
Updation on the PMLA requirements after considering the circulars issued by the Financial Action Task Force (FATF), SEBI, Exchanges, DP’s, etc as applicable to the broking operations.

Staff in high-risk areas should receive appropriate training to enable them to understand the money laundering techniques which are likely to be used in their area, and to remind them of their personal responsibilities under the Policy, Company Policies & Procedures other applicable Company Policy and standards and local legal requirements. Refresher training should be provided as appropriate and should as a minimum remind staff in high-risk areas annually of their responsibilities and alert them to any amendments to the Company’s Money Laundering Deterrence Programme or local legal and / or regulatory requirements, as well as any new money laundering techniques being used.

Reporting to Financial Intelligence Unit-India:

http://fiuindia.gov.in

Cash Transaction Reports (CTRs):

The CTRs (wherever applicable) for each month should be submitted to FIU-IND by 15th of the succeeding month;

Suspicious Transaction Reports (STRs):

All suspicious transactions shall be reported by the Principal Officer to Director, FIU-IND within 7 working days of establishment of suspicion at the level of Principal Officer. The Principal Officer should record his reasons for treating any transaction or a series of transactions as suspicious. It should be ensured that there is no undue delay in arriving at such a conclusion.

The Principal Officer will be responsible for timely submission of CTRs and STRs to FIU-IND;
Utmost confidentiality should be maintained in filing of CTRs and STRs to FIU-IND. The reports may be transmitted by speed/registered post/fax at the notified address.
No NIL reporting needs to be made to FIU-IND in case there are no cash/suspicious transactions to be reported.

Procedure for freezing & unfreezing of funds, financial assets or economic resources or related services of individuals or entities engaged in or suspected to be engaged in terrorism:

If the particulars of any of customer/s match the particulars of designated individuals/entities, the Company shall immediately, not later than 24 hours from the time of finding out such customer, inform full particulars of the funds, financial assets or economic resources or related services held in the form of securities, held by such customer on their books to the Joint Secretary (CTCR), Ministry of Home Affairs, at Fax No.011-23092569 and also convey over telephone on 011-23092736. The Company would also convey the information through e-mail at jsctcr-mha@gov.in

The Company would inform the IS-I Division of MHA so that they may take effective action like informing the State Police and /or the Central Agencies for conducting the verification of the individuals/ entities identified by the registered intermediaries.

The Company to provide full support to the appointed agency for conducting of the verification so that the verification gets completed within a period of 5 working days.
The Company would not provide any prior notice to the designated individuals/entities

Procedure for unfreezing

Any individual or entity, if it has evidence to prove that the freezing of funds, financial assets or economic resources or related services, owned/held by them has been inadvertently frozen, shall move an application giving the requisite evidence, in writing, to the broker. Broker shall inform and forward a copy of the application together with full details of the asset frozen given by any individual or entity informing of the funds, financial assets or economic resources or related services have been frozen inadvertently, to the nodal officer of CTCR Division of MHA as per the contact details given above within two working days.
The Joint Secretary (CTCR), MHA, being the nodal officer for (CTCR) Division of MHA, shall cause such verification as may be required on the basis of the evidence furnished by the individual/entity and if he is satisfied, he shall pass an order, within fifteen working days, unfreezing the funds, financial assets or economic resources or related services, owned/held by such applicant under intimation to the broker. However, if it is not possible for any reason to pass an order unfreezing the assets within fifteen working days, the nodal officer of CTCR Division shall inform the applicant.

Identification of Beneficial Ownership:

For clients other than individuals or trusts:

other than an individual or trust

The identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control through ownership or who ultimately has a controlling ownership interest.

More than 25% of shares or capital or profits of the juridical person, where the juridical person is a company;
More than 15% of the capital or profits of the juridical person, where the juridical person is a partnership; or
More than 15% of the property or capital or profits of the juridical person, where the juridical person is an unincorporated association or body of individuals.

In cases where there exists doubt under clause 4 (a) above as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity of the natural person exercising control over the juridical person through other means.
Where no natural person is identified under clauses 4 (a) or 4 (b) above, the identity of the relevant natural person who holds the position of senior managing official.

For client which is a trust:

trust

Exemption in case of listed companies:
Applicability for foreign investors:

Applicability of Aadhaar

Definitions:

“Aadhaar number” means an identification number as defined under sub-section (a) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016;

“Authentication” means the process as defined under sub-section (c) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016;

“Resident” means an individual as defined under sub-section (v) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016;

“Identity information” means the information as defined in sub-section (n) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016;

“e – KYC authentication facility” means an authentication facility as defined in Aadhaar (Authentication) Regulations, 2016;

“Yes/No authentication facility” means an authentication facility as defined in Aadhar (Authentication) Regulations, 2016;

Implementation of Aadhaar

Individual
Other than Individual i.e. Entities

In case of Individual

In case of other than Individual i.e. Entities

Aadhaar Numbers;

However In view of the Supreme Court judgement dated 26.09.2018 regarding Aadhar Card not being mandatory for registration of clients in the Capital Market, the provision of the above points is not applicable and hence the above point is no longer valid

Others Points:

x-x-x

Policy for Client code and CP code modification

As per the provisions made by the Exchange to enter Client Code at the time of order entry, our dealers enter the respective client code alongwith the order entry so that all trades executed against the specific order would carry the client code and go to the respective client account. But is has been observed that due to human error, sometimes an incorrect client code is entered by the dealer leading to the trades going into wrong client accounts. Such trades include:

Client Code / Name sounding or reading in a similar fashion.
Client Code / Name within same family group due to miscommunication.
Genuine punching error or mistake by dealer

This necessitates rectification of the error. In order to prevent any misuse of this “error” rectification procedure, we have made this “Error” rectification guidelines as part of our Internal Control Procedures. Detailed information of the Error Rectification Procedures is given below:

Transfer of Trades (Client to Client):

Transfer of trades from one client account to another is prohibited. If the dealer is able to know of any erroneous client code entry during market hours, then the dealers are requested to execute offsetting transactions on the trading system with the clients consent if the amounts of difference are insignificant. If clients do not agree, then the trade is transferred to ERROR code another only after verification of the circumstances under which punching error has taken place, the time delay between execution of the trade, discovery of the error and reporting the same to HO Compliance.

Penalty for Client Code modification:

CP Code Modification: The company is not doing any business for institutions and custodians, hence there is no requirement of any policy for CP Code modification.

Policy for Unauthentic News Circulation

As per code of conduct for Stock Broker in SEBI (Stock Brokers and Sub‐brokers) Regulations, 1992 and SEBI circular Cir/ISD/1/2011 dated March 23, 2011, all SEBI registered market intermediaries are required to have proper internal code of conduct to govern the conduct of its Employees. In view of same, we implement code of conduct for communicating through various modes of communication. Employees are prohibited from:

Circulation of unauthenticated news related to various scrips in blogs/chat forums/e‐mail etc.
Encouraging or circulating rumors or unverified information obtained from client, industry, any trade or any other sources without verification.
Either forwarding any market related news received in their official mail/personal mail/blog or in any other manner except after the same has been seen and approved by the Compliance Officer.

Our employees are restricted from circulation of rumors or unverified information obtained from client, industry, any trade or other sources without verification.

The employees will have to seek prior approval from our designated Compliance Officer on his e‐mail id before forwarding any market related news received by them either in their official mail/personal mail/blog or in any other manner and all the reporting with regard to violation of the same shall be done to the designated Compliance Officer. If an employee fails to do so, he/she shall be deemed to have violated the various provisions contained in SEBI Act/Rules/Regulations etc. and shall be liable for disciplinary action.

In view of above, all the Employees of our organization are directed that:

They should not encourage or circulate rumors or unverified information obtained from client, industry, any trade done by other person or any other sources without verification.
Access of Blogs/Chat, Forums/Messenger, Websites, etc. should be only under the supervision of Compliance Officer or any person authorized by him. Please note that no access to above modes will be granted without the approval of the Compliance Officer.
If accessed, logs for any usage of such Blogs/Chat, Forums/Messenger Websites (called by any other name) shall be treated as records and the same should be maintained.
Be aware that any market related news received in your official mail/ personal mail/ blog or in any other manner, should be forwarded only after the same has been seen and approved by the Compliance Officer.

Other points:

As a policy we do not circulate any information or news to clients without checking authenticity from published sources.
We do not encourage nor circulate any reports based on rumours, hear-say, etc.
The client hereby confirms that thought he may obtain views / advice of the stock broker in the course of this dealing with the stock broker, he acknowledges that the stock broker is not professionally qualified to do the same and the client shall not rely upon the same and the client shall obtain professional advice as deemed necessary. The client agrees that he shall not have any right to claim any loss from the stock broker on this account whatsoever.
All information given to our clients is with a disclaimer which is contained in written reports & also as part of the voluntary KYC documents.

Surveillance Policy

As per the requirement of Regulators our Compliance Officer is in-charge of surveillance related all activities.

He shall download the surveillance alerts both Regulatory and Non-regulatory from the BSE’s E-Boss on daily basis.

The process of Due Diligence & scrutinizing each alert (client-wise/scrip-wise separately) should be carried out & completed within one week.

He shall call for necessary documents of each Client, Scrutinize all documents for necessary analyses and prepare conclusion against each alert.

After reasonable analyses, he will report the conclusion against each alert to Designated Director. The same shall be reported to the Exchange within reasonable time.

After due discussion, the necessary actions shall be taken under instructions of the Designated Director, if required.

In case of any suspicious / manipulative undue activities of any Client, the same will be reported to the Exchange immediately.

Proper records of each alert and documents scrutinized should be maintained.

A quarterly MIS shall be put up to our Board of Directors on the number of alerts pending at the beginning of the quarter, generated during the quarter, disposed off during the quarter and pending at end of the quarter. Reasons for pendency shall be discussed and appropriate action taken. Also, the Board shall be apprised of any exception noticed during the disposition of alerts.

Graded Market Surveillance scrip (GSM) (equity segment)

NSE vide its circular NSE/SURV/34262 dated February 23, 2017 and BSE vide its circular 20170223-44 dated February 23 2017 introduced Graded Market Surveillance (GSM) as introduced by equity exchanges, is on securities which witness an abnormal price rise not commensurate with financial health and fundamentals like Earnings, Book value, Fixed assets, Net-worth, P/E multiple, etc.

In addition to existing Surveillance action being imposed from time to time, securities shall be monitored for price movement by equity exchanges and based on pre-determined objective criteria shall attract following additional graded surveillance measures:

Stage	Surveillance Actions
I	Transfer to trade for trade with price band of 5 % or lower as applicable.
II	Trade for trade with price band of 5 % or lower as applicable and Additional Surveillance Deposit (ASD) of 100% of trade value to be collected from Buyer
III	Trading permitted once a week trading and ASD 100% of trade value to be deposited by the buyers ( Every Monday)
IV	Trading permitted once a week trading with ASD 200% of trade value to be deposited by the buyers ( Every Monday)
V	Trading permitted once a month trading with ASD 200% of trade value to be deposited by the buyers (First Monday of the month)
VI	Trading permitted once a month with no upward movement in price of the security with ASD 200% of trade value to be deposited by the buyers (First Monday of the month)

In view of the above we have incorporated in our in-house software about records of the trading done in such scrips

The records so generated are compared visa vis. exchange volumes, repeated days of trading, price volatility in the scrip.
Additionally the financials of the company are also analyzed to ascertain whether the trading volumes and price movements are justified.
In case any trading is found to be abnormal, initial alerts are sent to the branches. If repeated, after proper verification and analysis the scrip may also is blocked from further trading.

In case of any further regulatory developments, the same would be implemented in spirt and accordingly deemed to be part of this policy.

Additional Surveillance Measure (ASM) (equity segment)

NSE vide its circular SE/SURV/37262 dated March 22 2018 and BSE vide its circular 20180321-46 dated March 21 2018 had informed that Securities and Exchange Board of India (SEBI) and Exchanges in order to enhance market integrity and safeguard interest of investors, have implemented that along with other measures there shall be Additional Surveillance Measures (ASM) on securities with surveillance concerns viz. Price variation, Volatility etc.

Accordingly, exchanges would review identification of securities for placing in ASM Framework has been carried out. In addition to this, exchanges have issued other circulars from time to time reviewing the parameters for the ASM framework and accordingly updating the scrips in the said framework

In view of the above we have incorporated in our in-house software about records of the trading done in such scrips

The records so generated are compared visa vis. exchange volumes, repeated days of trading and price volatility in the scrip.
Additionally the financials of the company are also analyzed to ascertain whether the trading volumes and price movements are justified.
In case any trading is found to be abnormal, initial alerts are sent to the branches. If repeated, after proper verification and analysis the scrip may also is blocked from further trading.

In case of any further regulatory developments, the same would be implemented in spirt and accordingly deemed to be part of this policy

Treatment Of Inactive Accounts

TESPL means TOSHNIWAL EQUITY SERVICES PVT LTD as a matter of policy accepts and realizes that the investor community is made of traders as well as investors. Whereas traders trade frequently, the investors trade with long gaps. The inactive client policy is framed keeping the same in mind:

What happens when a client is declared inactive?

On a client being declared inactive,

All the securities of the client are transferred into the last known demat account of the client
All the funds of the client are returned to the client
In cases where TESPL are unable to trace such clients in spite of all efforts taken, TESPL are will take the following steps:
1. Open one separate Client Bank/Client collateral Demat account and immediately set aside the funds and securities of these clients in such account.
2. Maintain audit trail of UCC wise client funds transferred to/from such bank account and UCC wise / BO ID wise securities transferred to/from such demat account (as the case may be).
3. Submit UCC wise/BO ID wise and fund/securities information of such account to the Exchange on quarterly basis. The mechanism and the format of the same will be shared in due course
4. In case of receipt of any claims from such clients, members are advised to settle the accounts immediately and ensure that the payment/delivery is made to the respective clients only

Trading in the client account is stopped & Appropriate disciplinary actions may be initiated in case of any trades are executed in any account flagged as ‘Inactive’.

Client declared inactive voluntarily

A client may write to TESPL stating that he wishes to transfer his “inactive” account into “active” status or vice-versa, based on which the account will be marked as requested by the client.

Client declared inactive by passage of time

Any client who has not traded across exchange continuously for a period of 12 months will automatically be moved to the “inactive” category.

The inactive accounts identified based on the above criteria shall be flagged as ’Inactive’ by the TESPL in UCC database of all the respective Exchanges

Client declared inactive by law

Any client will be moved to the “inactive” category if required by law.

Procedure to activate the client

To reactivate the account, the client is expected to write to TESPL requesting for activation of the account along with updated information related to KYC, based on which the account would be activated after due diligence (including IPV) by TESPL

Cumulative Unexecuted Order

We hereby assure to put-in place a mechanism to limit the cumulative value of all unexecuted orders placed from their terminals to below a threshold limit set by the Members.

We enhance monitoring of the operating controls to ensure implementation of the checks.

Member has reviewed the limits:-

Quantity limit for each order
Value limit for each order
User value limit for each User ID
Branch value limit for Branch ID
Spread order Quantity and Value Limit

Compliance officer is responsible for the submission of Compliance Certificate for the All the Exchanges on a quarterly basis including below mentioned confirmation.

The limits are setup after assessing the risks of the corresponding user Id & Branch Id.
The limits are setup after taking into account the member’s capital adequacy requirement.
All the limits are reviewed regularly and the limit is in the system are up to date.
All the branch or user have got limits defined and that No user or branch in the system is having unlimited limits on the above stated parameters.
Daily record of these limits is preserved.