Annexure – 1
List of indicative penalty in respect of violations observed during inspections or
otherwise in Cash, Derivatives and Debt Segment
Sr.
No.
1
2
3
4
Details of contravention
I - Dealings with clients
Client registration documents
(a) Not provided / Not executed
(b) Inclusion of contravening clauses / omission of
material details
(c) otherwise not in the prescribed format
(a) Record of in person verification of clients at the time
of client registration not maintained
(b) Other discrepancies in carrying out in person
verification of clients
Copy of client registration documents not delivered /
Trading Code, UCC and mail id not communicated in
writing
Bank and demat account operations
(a) Separate clients bank or demat account not
maintained
(b) Pay in / payout not received from / delivered to
respective clients
(c) Non-segregation of own and clients' funds or
securities
5
6
Penalty (Fine in rupees)
Rs. 10,000/- per client
Rs. 10,000/Advice
Rs 500 per client
Advice
Advice
Rs. 10,000/In excess of 2% of number of instances,
fine of Rs 10,000/Otherwise, advice
In excess of 2% of number of instances,
fine of Rs 10,000/-
(d) Delay in release of payout of funds / securities
Otherwise, advice
In excess of 2% of number of instances,
fine of Rs 10,000/-
(e) Delayed / non-payment of dividend (delay in excess
of 90 days)
Use of multiple codes for a client or own trades
Daily Margin statement not sent
Otherwise, advice
0.5 % of the amount (Rs 10,000/- if
amount not known)
Advice
In excess of 2% of number of clients, fine
of Rs 5,000/-
7
Quarterly statement of accounts for funds or securities
not sent
Other discrepancies – Advice
In excess of 2% of number of clients, fine
of Rs 10,000/-
8
Cash dealings with clients
Other discrepancies – Advice
0.1% of the value in excess of Rs 10 lakh
9
Non-disclosure of trading on own account to clients
10
Exclusive e-mail id for investors' complaints not created
or not displayed
Transfer of trades / Errors at the time of order entry
Otherwise – Advice
Advice
In excess of 2% of number of orders
executed, fine of 0.1% of value of trades
transferred
Sr.
No.
Details of contravention
11
Evasion of margin
12
Improper use of funds raised by placing of clients
securities with bank / any other financial institutions viz.
funds not used for respective client obligation / margins
13
14
15
Mis-utilisation of clients’ funds and/or securities
Excess brokerage charged
Penalty (Fine in rupees)
0.3% of the value of trades subject to
minimum of Rs 25,000/-
Rs. 1,00,000/- or 0.1% of the value of
misuse whichever is higher
TM to be advised to refund the excess
brokerage charged to the constituents
and fine equal to the excess brokerage
charged or Rs 5,000/- whichever is
higher
If brokerage not charged at all
Advice
Sharing of brokerage/commission, except as permitted
under the Bye-Laws
Funding to clients (includes activity whereby member is
charging interest and allowing further exposure to clients
in spite of debit balances)
Non compliances related to Spot Transaction
Advice
Rs.50,000/If few Instances - Advice
Rs.10,000/-
II - Contract Notes
1
2
3
4
Non issue of Contract Notes
Issued with material discrepancies / Duplicates or copies
or proof of dispatch of contract notes not maintained/
Consent of client not obtained for sending ECN/ Not
issued within 24 hours of trade execution/ Not signed by
authorized signatory
ECN Log report not maintained in case of bounced back
mails, ECN not displayed on website, ECN's sent to
Email accounts other than those created / provided by
clients
Contract Note issued otherwise than in format
prescribed by the Exchange
Rs. 50,000/Rs.10,000/-
Rs. 5,000/-
Advice
III - Margin Trading
1
2
3
4
Margin trading facility in scrip’s other than permitted
Short collection of margin in excess of 20%
Other procedural contraventions
Agreement not executed with clients
Rs. 10,000/Rs. 10,000/Rs. 10,000/Rs. 5,000/- per client
Sr.
No.
Details of contravention
IV - Dealings with Intermediaries
Penalty (Fine in rupees)
1
Dealing with unregistered intermediaries in
Segment / intermediaries in Derivative Segment
Cash
2
Doing business for / through other TMs or sub-brokers of
other TMs of BSE without prior approval of the BSE
Rs.
1,00,000/per
unregistered
intermediary
Also, member to be advised to ensure
that the entities stop dealing as
unregistered intermediaries and be
directed to withdraw the terminal(s), if
any,
allotted
to
such
entities,
immediately.
In addition to monetary fine, suspension
of the trading membership may also be
considered depending upon the gravity
of the violation, in cases where dealings
with
more
than
5
unregistered
intermediaries (in the Cash Segment)
and / or intermediaries (in the Derivative
Segment) are observed
Rs. 10,000/-
With brokers / sub-brokers of other Exchanges
3
Inspection of sub-brokers / branches not done/ Inspection
report not made available to the inspecting team
Advice
Advice
V - Trading System & Office Management
1
Unauthorised extension of BOLT terminal / Non-upload of
IML terminals to the BSE / Upload of IML details with
incorrect terminal location / Location of terminal at a
place other than main / branch office of the member and
the offices of registered sub brokers of the member.
Rs. 50000/- per terminal
2
Errors in upload of trading terminal details to the BSE
3
Allowing trading terminals to be operated by persons
without BCSM certification
In excess of 5 terminals, Rs 5,000/- per
terminal
Cash - Advice
4
Operation of terminals by persons other than the
approved user / person as per Exchange records
Non-display of notice board or SEBI registration
certificate
Non-appointment of compliance officer
Execution of trades on own account from locations other
than those permitted by the Exchange
5
6
7
In cases where non-upload of details of
more than five IML terminals are
observed and such IML terminals are
also observed to be operated by entities
acting as unregistered intermediaries in
the Cash Segment or as intermediaries
in the Derivative Segment and / or such
terminals are observed to be used for
carrying out illegal trading activity,
suspension of the trading membership
may also be considered depending upon
the gravity of the violation
Derivative - Rs 1,000/- per terminal
Rs 1,000/- per terminal
Rs. 10,000/Rs. 10,000/Rs. 10,000/-
Sr.
No.
8
9
10
Details of contravention
Not following the advertisement code of the Exchange
Non-compliance with PMLA requirements
(a) Non maintenance of Written procedures relating to
PMLA
(b) Non Appointment of Principal Officer/ Non Intimation
of change of Principal officer to FIU Delhi
(c) Non-Implementation of systems in place to monitor,
identify suspicious transaction
and procedures for
reporting the same to FIU Delhi
(d) Non Adoption of customer due diligence
(e) Non Maintenance of records of transactions and on
going training to staff members
Submitting wrong Compliance Certificate
Penalty (Fine in rupees)
Rs. 5,000/-
Rs. 10,000/-
Advice
Advice
Rs. 15,000/-
VI - Books of Accounts
1
2
5
6
7
Non-maintenance of client ledger
Segregation of Exchange wise
client ledgers not
maintained
Client ledger not maintained properly
Client-wise Scrip wise Register of securities not
maintained
Register of Securities not in the prescribed format
Discrepancies / Incorrect details in Register of Securities
Books (Except Client ledger) not maintained
8
Books (Except Client ledger) not maintained properly
3
4
Rs. 50,000/Rs. 25,000/Rs. 25,000/Rs. 50,000/Advice
Rs. 10,000/Rs 10,000/- per book subject to
maximum of Rs.50,000/Rs 5,000/- per book subject to maximum
of Rs.25,000/-
VII - Margin Reporting requirements
1
(a) if % of factual wrong reporting of margin collection from constituents to total margin reported as
collected is :
Up to 5%
Advice
> 5% and up to 10%
0.5% of the wrongly reported amount
> 10% and up to 25%
2% of the wrongly reported amount
> 25% and up to 50%
2% of the wrongly reported amount and
suspension from trading for 1 day
> 50%
2% of the wrongly reported amount and
suspension from trading for 5 days
(b) if % of (margin available but not properly accounted for / received from related parties) to total
margin reported as collected is :
Up to 5%
Advice
> 5% and up to 10%
0.5% of the wrongly reported amount,
subject to maximum of Rs 25,000/> 10% and up to 25%
0.75% of the wrongly reported amount,
subject to maximum of Rs 50,000
> 25% and up to 50%
1% of the wrongly reported amount,
subject to maximum of Rs 75,000/> 50%
1.25% of the wrongly reported amount,
subject to maximum of Rs 1,00,000/-