TaxTMI 
TaxTMI 
Master Circular for Depositories
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation of Aadhaar based e-KYC process 1.1.4 SARAL Account Opening Form for resident individuals 1.1.5 Clarifications with regard to KYC requirement for eligible Foreign Investors 1.1.6 Acceptance of third party address as correspondence address 1.2 Exemptions from and clarifications relating to mandatory requirement of PAN 1.3 Simplification of demat account opening process (DP-BO Rights and Obligation Document) 1.4 Opening of demat account in case of HUF 1.5 Operation of minor's demat account 1.6 Facility for a Basic Services Demat Account (BSDA) 1.7 Change of Name in the Beneficial Owner (BO) Account 1.8 Fees/Charges to be paid by BO 1.9 Safeguards on transfer of securities in dematerialized mode 1.10 Delivery Instruction Slip (DIS) Issuance and Processing 1.11 Transmission of shares 1.12 SMS alerts for demat accounts operated by Power of Attorney 1.13 Exemption from sending quarterly statements of transactions by depository participants (DPs) to clients in respect of demat accounts with no transactions and no security balances 1.14 Discontinuation of sending transaction statements by depository participants to clie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tablishment of connectivity by Clearing House / Clearing Corporation (CH/CC) with the Depository - Clarification 4.15 Computing and monitoring of the Aggregate Value of Portfolio of Securities (AVPS) of the BOs held in dematerialised form by Stock Broker DPs 4.16 Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS) 4.17 Principles of Financial Market Infrastructures (PFMIs) 4.18 Annual System Audit of Depositories 4.19 Guidelines for Business Continuity Plan (BCP) and Disaster Recovery (DR) 4.20 (Information Technology) IT Governance For Depositories 4.21 Guidelines for inspection of Depository Participants (DPs) by Depositories 4.22 Activity of Demat of warehouse receipts 4.23 Voting rights in respect of securities held in pool account 4.24 Risk Management Policy at the Depositories 4.25 Outsourcing by Depositories 4.26 Cyber Security and Cyber Resilience framework of Depositories 4.27 Database for Distinctive Number (DN) of Shares 4.28 Ticker on Website - For Investor awareness 4.29 Separate mobile number/ email id for the clients of Depository Participants (DPs) SCHEDULE List of Circulars & Communications Section 1: Beneficial Ow....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith a view to bring about operational flexibility and in order to ease the PAN verification process, the intermediaries may verify the PAN of their clients online at the Income Tax website without insisting on the original PAN card, provided that the client has presented a document for Proof of Identity other than the PAN card. ^Reference: Circular SEBI/MIRSD/01/2013 dated January 04, 2013 1.1.2 Proof of Address (PoA) ^Reference: Circular MIRSD/SE/Cir-21/2011 dated October 05, 2011 List of documents admissible as Proof of Address: (*Documents having an expiry date should be valid on the date of submission.) a. Passport/ Voters Identity Card/ Ration Card/ Registered Lease or Sale Agreement of Residence/ Driving License/ Flat Maintenance bill/ Insurance Copy. b. Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill - Not more than 3 months old. c. Bank Account Statement/Passbook -- Not more than 3 months old. d. Self-declaration by High Court and Supreme Court judges, giving the new address in respect of their own accounts. e. Proof of address issued by any of the following: Bank Managers of Scheduled Commercial Banks/Scheduled Co-Opera....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lient identification and authentication from UIDAI based on client authorisation, on voluntary basis, intermediaries who utilize the services of KYC Service Agencies (KSAs) would be registered as KYC User Agencies (KUA) with UIDAI. ^Reference: Circular: CIR/MIRSD/29/2016 dated January 22, 2016 i. For entering into account based relationship, the client may provide the following information to the intermediary: a) Name b) Aadhaar number c) Permanent Account Number (PAN) ii. The above information can be provided by the client electronically including through any web enabled device. iii. The intermediary shall perform verification of the client with UIDAI through biometric authentication (fingerprint or iris scanning). Mutual Funds can also perform verification of the client with UIDAI through One Time password (OTP) received on client's mobile number or on e-mail address registered with UIDAI provided, the amount invested by the client does not exceed Rs. 50,000 per financial year per Mutual Fund and payment for the same is made through electronic transfer from the client's bank account registered with that Mutual Fund. iv. PAN of such client is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....31, 2010 and SEBI Circular on AML dated March 12, 2014 shall also continue to remain applicable for set of individual investors mentioned in paragraph (ii) above. iv. For these set of individual investors, it has been decided to simplify the requirement of submission of 'proof of address'. The matter has been examined in the light of amendment to the PML Rules, 2005 and accordingly, the requirement of submission of 'proof of address' is as follows: a. Henceforth, individual investor may submit only one documentary proof of address (either residence/correspondence or permanent) while opening a trading account and / or demat account or while undergoing updation. b. In case the proof of address furnished by the said investor is not the address where the investor is currently residing, the intermediary may take a declaration of the residence/correspondence address on which all correspondence will be made by the intermediary with the investor. No proof is required to be submitted for such correspondence/residence address. In the event of change in this address due to relocation or any other reason, investor may intimate the new address for correspondence to the inte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctly or indirectly, Partners/Trustees, whole time directors/two directors in charge of day to day operations and persons authorized to deal in securities on behalf of company/firm/others. Not applicable. 4. For foreign nationals, (allowed to trade subject to RBI and FEMA guidelines), copy of passport/PIO Card/OCI Card is mandatory. Proof of Identity document duly attested by the entities authorized for the same as per SEBI Circular dated October 5, 2011 or authorised signatories as mentioned at point 1 above may be adequate in lieu of the passport copy. 5. For foreign entities, CIN is optional; and in the absence of DIN no. for the directors their passport copy should be given. CIN no. is provided as an example and requires the client's registration number in its respective country. If the foreign entity does not have CIN, the equivalent registration number of the entity may be mentioned. If it does not have any registration number, then SEBI Registration number may be mentioned. In case the directors (as per point 3 above), of the client do not have an equivalent of DIN in the client's respective jurisdiction, "Not Applicable" may be stated. Copy of the Pas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rney granted to its managers, officers or employees to transact on its behalf; and 2 An officially valid document in respect of managers, officers or employees holding an attorney to transact on its behalf. B. If Global Custodian/Local Custodian does not provide such undertaking as stated in A above, intermediary shall take required details from Foreign Investors. 10. Copy of SEBI registration certificate to be provided. Custodian shall verify the SEBI registration certificate copy with the originals or with the details available on SEBI website and provide duly certified copy of such verified SEBI registration certificate to the intermediary. 11. Every client has to provide the trading account related details, as required by Annexure 3 to the SEBI circular dated August 22, 2011. Annexure 3 to the circular dated August 22, 2012 pertaining to trading account related details is not applicable for FIIs and Sub Accounts. However, Intermediaries are required to update details of any action taken or proceedings initiated against the entity by the foreign regulators or SEBI/ Stock exchanges. For QFI, the intermediary shall collect the following details fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndividuals, Family Offices, etc. Annexure C Document Type Category - I Category - II Category - III Entity level Constitutive Docs Required Required Required Proof of Address Required Power of Attorney, mentioning the address, is acceptable as address proof Required Power of Attorney, mentioning the address, is acceptable as address proof Required - Address proof other than Power of Attorney should be submitted. PAN Card Required Required Required Financials Exempt Exempt Risk based Financial data sufficient. SEBI Registration Certificate Required Required Required Board Resolution Exempt Required Required KYC Form Required Required Required Senior Management (Whole Time Directors/ Partners/ Trustees/ etc.) List Required Required Required Proof Of Identity Exempt Exempt Entity declares on letterhead - full name, nationality and DoB OR Photo-identity proof' Proof of Address Exempt Exempt Declaration on letter head Photographs Exempt ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be allowed into such accounts. 1.2.2 Central and State Government and officials appointed by Courts ^Reference: Circular MRD/DoP/Cir-20/2008 dated June 30, 2008 PAN card may not be insisted upon in case of transactions undertaken on behalf of Central Government and/or State Government and where transactions are conducted by officials appointed by Courts e.g. Official liquidator, Court receiver etc. ^Reference: Rule 114C (1)(c) of Income Tax Rules However DPs, before implementing the above exemption, shall verify the veracity of the claim of the organizations by collecting sufficient documentary evidence in support of their claim for such an exemption. 1.2.3 Investors in Sikkim ^Reference: Circular MRD/DoP/Dep/Cir-09/06 dated July 20, 2006 Investors residing in the state of Sikkim are exempted from the mandatory requirement of furnishing PAN card details for their demat accounts. ^Reference: Hon'ble High Court of Sikkim judgment dated March 31, 2006 DPs shall verify the veracity of the claim of the investors that they are residents of Sikkim, by collecting sufficient documentary evidence in support of their address 1.2.4 UN entities and multilate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....implification of demat account opening process^ Reference Circular SEBI/MIRSD/ 12/2013 dated December 04, 2013 i. SEBI has taken a number of steps in the recent past to simplify the Account opening and KYC process in the securities markets. In continuation of the efforts in the same direction, it has now been decided in consultation with both the Depositories and Associations of stock brokers and Depository Participants to further simplify and rationalize the demat account opening process. ii. The existing Beneficial Owner-Depository Participant Agreements shall be replaced with a common document "Rights and Obligations of the Beneficial Owner and Depository Participant". The document annexed herewith shall be mandatory and binding on all the existing and new clients and depository participants. This will harmonize the account opening process for trading as well as demat account. This will also rationalise the number of signatures by the investor, which he is required to affix at present on a number of pages. iii. The Depository Participant shall provide a copy of Rights and Obligations Document to the beneficial owner and shall take an acknowledgement of the same. They sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as laid down under the relevant SEBI and/or Depository circulars/directions/notifications issued from time to time. 7. The DP shall not increase any charges/tariff agreed upon unless it has given a notice in writing of not less than thirty days to the Beneficial Owner regarding the same. Dematerialization 8. The Beneficial Owner shall have the right to get the securities, which have been admitted on the Depositories, dematerialized in the form and manner laid down under the Bye Laws, Business Rules and Operating Instructions of the depositories. Separate Accounts 9. The DP shall open separate accounts in the name of each of the beneficial owners and securities of each beneficial owner shall be segregated and shall not be mixed up with the securities of other beneficial owners and/or DP's own securities held in dematerialized form. 10. The DP shall not facilitate the Beneficial Owner to create or permit any pledge and /or hypothecation or any other interest or encumbrance over all or any of such securities submitted for dematerialization and/or held in demat account except in the form and manner prescribed in the Depositories Act, 1996, SEBI (Depositories and Parti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith another DP or to rematerialize the security balances held. 18. Based on the instructions of the Beneficial Owner, the DP shall initiate the procedure for transferring such security balances or rematerialize such security balances within a period of thirty days as per procedure specified from time to time by the depository. Provided further, closure of demat account shall not affect the rights, liabilities and obligations of either the Beneficial Owner or the DP and shall continue to bind the parties to their satisfactory completion. Default in payment of charges 19. In event of Beneficial Owner committing a default in the payment of any amount provided in Clause 5 & 6 within a period of thirty days from the date of demand, without prejudice to the right of the DP to close the demat account of the Beneficial Owner, the DP may charge interest at a rate as specified by the Depository from time to time for the period of such default. 20. In case the Beneficial Owner has failed to make the payment of any of the amounts as provided in Clause 5&6 specified above, the DP after giving two days notice to the Beneficial Owner shall have the right to stop processing of instruct....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... may be in force from time to time. 28. The Beneficial Owner and the DP shall abide by the arbitration and conciliation procedure prescribed under the Bye-laws of the depository and that such procedure shall be applicable to any disputes between the DP and the Beneficial Owner. 29. Words and expressions which are used in this document but which are not defined herein shall unless the context otherwise requires, have the same meanings as assigned thereto in the Rules, Bye-laws and Regulations and circulars/notices issued there under by the depository and /or SEBI. 30. Any changes in the rights and obligations which are specified by SEBI/Depositories shall also be brought to the notice of the clients at once. 31. If the rights and obligations of the parties hereto are altered by virtue of change in Rules and regulations of SEBI or Bye-laws, Rules and Regulations of the relevant Depository, where the Beneficial Owner maintains his/her account, such changes shall be deemed to have been incorporated herein in modification of the rights and obligations of the parties mentioned in this document. 1.4 Opening of demat account in case of HUF ^Reference: SEBI/ MRD/CDSL/ 149156 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en BSDA to all eligible individuals who open a demat account after the date of applicability of this circular; ii. To all the existing eligible individuals to convert their demat account into BSDA on the date of the next billing cycle based on value of holding of securities in the account as on the last day of previous billing cycle. iii. In order to facilitate the eligible individuals to avail the benefits of BSDA, DPs are advised to convert all such eligible demat accounts into BSDA unless such Beneficial Owners (BOs) specifically opt to continue to avail the facility of a regular demat account. 1.6.4 Charges: i. The charge structure may be on a slab basis as indicated below: a. No Annual Maintenance Charges (AMC) shall be levied, if the value of holding is upto Rs. 50,000. b. For the value of holding from Rs. 50,001 to Rs. 200,000, AMC not exceeding Rs. 100 may be charged. ii. The value of holding shall be determined by the DPs on the basis of the daily closing price or NAV of the securities or units of mutual funds, as the case may be. Where such price is not available the last traded price may be taken into account and f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at account. 1.6.6 Rationalisation of services with respect to regular accounts. In partial modification of the earlier directions, the following rationalisation measures shall be available for regular demat accounts: i. Accounts with zero balance and nil transactions during the year: DP shall send atleast one annual physical statement of holding to the stated address of the BO in respect of accounts with no transaction and nil balance even after the account has remained in such state for one year. The DP shall inform the BO that if no Annual Maintenance Charge (AMC) is received by the DP, the dispatch of the physical statement may be discontinued for the account which continues to remain zero balance even after one year. ii. Accounts which become zero balance during the year: For such accounts, no transaction statement may be sent for the duration when the balance remains nil. However, an annual statement of holding shall be sent to the BO. iii. Accounts with credit balance: For accounts with credit balance but no transactions during the year, half yearly statement of holding for shall be sent to the BO. 1.7 Change of Name in the Beneficial Owner....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the BO Account(s) at transferee DP and at transferor DP are one and the same, i.e. identical in all respects. In case the BO Account at transferor DP is a joint account, the BO Account at transferee DP should also be a joint account in the same sequence of ownership. 1.8.5 Account Maintenance Charges collected upfront on annual/ half yearly basis on demat accounts ^Reference Circular MRD/DP/20/2010 dated July 1, 2010 i. In the event of closing of the demat account or shifting of the demat account from one DP to another, the AMC collected upfront on annual/half yearly basis by the DP, shall be refunded by the DP to the BO for the balance of the quarter/s. For instance, in case annual AMC has been paid by the BO and if the BO closes/shifts his account in the first quarter, he shall be refunded the amount of the balance 3 quarters i.e. 3/4th of the AMC. Likewise, if a BO closes/shifts his account in the third quarter, he shall be refunded the amount for the balance one quarter i.e. 1/4th of the AMC. ii. For the purpose of the above requirement the year shall begin from the date of opening of the account in quarterly rests. iii. The above requirements sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st slip (contained in the previous booklet) duly complete in all respects, unless the request for fresh booklet is due to loss, etc., as referred to in clause (c) above vi. The DPs shall put in place appropriate checks and balances with regard to verification of signatures of the BOs while processing the DIS. vii. The DPs shall cross check with the BOs under exceptional circumstances before acting upon the DIS. viii. The DPs shall mandatorily verify with a BO before acting upon the DIS, in case of an account which remained inactive i.e., where no debit transaction had taken place for a continuous period of 6 months, whenever all the ISIN balances in that account (irrespective of the number of ISINs) are transferred at a time. However, in case of active accounts, such verification may be mandatory only if the BO account has 5 or more ISINs and all such ISIN balances are transferred at a time. The authorized official of the DP verifying such transactions with the BO, shall record the details of the process, date, time, etc., of the verification on the instruction slip under his signature. 1.10 Delivery Instruction Slip (DIS) Issuance and Processing ^Circular SEBI/MRD/DOP/....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... shall not be applicable for the instructions received from the clients by the DPs electronically in a manner approved by the Depository. xii. Once a new DIS booklet is issued to a BO as per provisions of this circular, old DIS issued to such a BO shall not be accepted by the DP. A period of one month may be given for receipt of DIS by the BOs. The DPs may accept old DIS during this transit period. ^Reference: CIR/MRD/DP/22/2014 dated July 04, 2014 All DIS issued prior to this circular shall be phased out within a period of 2 years from the date of this circular. The measures listed above under the head 'Monitoring of DIS' shall be made applicable to the DIS issued as per the provisions of this circular. 1.11 Transmission of shares ^Reference: MRD/DoP/Dep/VM/182963/2009 dated November 12, 2009, ^Reference: CIR/MIRSD/10/2013 dated October 28, 2013 1.11.1 In cases of transmission of shares of a deceased security holder, where the shareholding in the BO account of the deceased member, as calculated on the date of application for transmission, is within the threshold limit of Rupees Five lakh in value, the DPs shall not insist on additional documents other than any one....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee, STAs/issuer companies shall follow the standardized documentary requirement as given in Annexure A. ii. Where the securities are held in single name without a nominee, the STAs/issuer companies shall follow, in the normal course, the simplified documentation as given in Annexure A, for a threshold limit of Rs. 2,00,000 (Rupees Two lakh only) per issuer company. However, the Issuer companies, at their discretion, may enhance the value of such securities. 1.11.7 The timeline for processing the transmission requests for securities held in dematerialized mode and physical mode shall be 7 days and 21 days respectively, after receipt of the prescribed documents. 1.11.8 To improve the awareness of nomination facility, all Registrars to an Issue and Share Transfer Agents shall publicize nomination as an additional right available to investors, while sending communications to the investors. Annexure A Documentary requirement for securities held in physical mode 1 For securities held in single name with a nominee: i. Duly signed transmission request form by the nominee. ii. Original or Copy of death certificate duly attested by a Notary Public or by a Gazett....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nual Maintenance Charges are levied for such an account. d. Information which is required to be disseminated by Participants by way of a note in the Transaction Statements will be required to be communicated to such Clients separately. e. The Internal Auditor of the Participant shall comment in its internal audit report on compliance of the aforesaid requirements. ii. Further, depository may like to consider whether, DPs should send a consolidated Transaction Statements for the entire financial year in case of the BOs to whom quarterly Transaction Statements are not sent. 1.14 Discontinuation of sending transaction statements by depository participants to clients ^Reference: MRD/NSDL/VM/158886 /2009 dated March 30, 2009 SEBI allowed discontinuation of sending transaction statements by depository participants to clients subject to the following conditions: i. Transaction statements were returned undelivered on three consecutive occasions. ii. The depository participant (DP) maintains proof that the transaction statements were returned undelivered. iii. The transaction statements were returned undelivered for the reasons whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unt beyond the above period shall not be eligible either for delivery in the subsequent settlement(s) or for pledging or stock lending purpose, until the same are credited to the beneficiary accounts. iii. The securities lying in the Clearing member's pool account beyond the specified time period shall be identified based on the settlement number. The clearing corporation/houses of the stock exchanges shall provide the settlement-wise details of securities to the depositories and the depositories shall maintain the settlement-wise records for the purpose. iv. Further, stock exchanges shall execute direct delivery of securities to the investors. Clearing corporation/clearing house (CC/CH) shall ascertain from each clearing member, the beneficial account details of their respective clients due to receive pay out of securities. Based on this, the CC/CH shall send pay out instructions to the depositories so that the client receives pay out of securities directly to the extent of instructions received from the respective clearing members. To the extent of instruction not received, the securities shall be credited to the CM pool account. 1.17 Consolidated Account Statement (CAS)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h email, option shall be given to the investor to receive the CAS in physical form at the address registered in the Depository system. vii. A proper grievance redressal mechanism shall be put in place by the depositories and the AMCs/MF-RTAs which shall also be communicated to the investors through CAS. AMCs/MF-RTAs would be accountable for the authenticity of the information provided through CAS in respect of MF investments and timely sharing of such information with Depositories. The Depositories would be responsible for the timely dispatch of CAS to the investors serviced by them and the demat account information. viii. The depositories and the AMCs/ MF-RTAs shall ensure data integrity and confidentiality in respect of the shared information. The depositories shall utilise the shared data only for the purpose of providing CAS and shall not share the same with their Depository Participants. Where Depositories are required to share such information with unregulated entities like third party printers, the depositories shall enter into necessary data confidentiality agreements with them. ix. The CAS shall be implemented from the month of March 2015 with respect to the trans....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c. DPs are also required to put in place suitable internal control systems to ensure that all branches exercise due diligence in opening accounts, complying with KYC requirements, in ensuring systems safety in complying with client instructions, manner of uploading client instructions, in verifying signatures and maintaining client records, etc. DPs shall also ensure that the branches are suitably integrated. ii. Depositories shall examine the adequacy of the above mechanisms during their inspections of DPs. The Depositories shall also carry out surprise inspections/ checks of the DP branches apart from the regular inspection of the DPs. Depositories shall also put in place appropriate mechanisms for monitoring opening of branches by DPs. 2.2 Incentivisation to Depositories Participants (DPs) ^Reference Circular CIR/MRD/DP/18/2015 dated December 09, 2015 i. In order to compensate the DPs towards the cost of opening and maintaining Basic Services Demat Accounts (BSDA), the depositories shall pay an incentive of Rs. 100/- for every new BSDA opened by their participants in other than the top 15 cities. The name of the top 15 cities is given in following table: Top 15 Citie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aforesaid agreement, foreign financial institutions (FFIs) in India will be required to report tax information about U.S account holders/taxpayers directly to the Indian Government which will, in turn, relay that information to the U.S Internal Revenue Services (IRS). iii. For implementation of the MCAA and agreement with USA, the Government of India has made necessary legislative changes to section 285BA of the Income-tax Act, 1961. Further the Government of India has notified Rules 114F to 114H (herein after referred as "the Rules") under the Income Tax Rules, 1962 and form No. 61B for furnishing of statement of reportable account as specified in the Rules. The Rule is available at http://www.incometaxindia.gov.in/communications/notification/notification%20no.%2062%20dated%2007-08-2015.pdf iv. All registered intermediaries are advised to take necessary steps to ensure compliance with the requirements specified in the aforesaid Rules after carrying out necessary due diligence. 2.4 Printing of Grievances Redressal Mechanism on Delivery Instruction Form Book 52 To promote investor awareness regarding mechanism for redressing investor grievances, the information placed be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ffice, 7th Floor, Overseas Towers, 756-L, Anna Salai Chennai 600 0102 -24674000/ 24674150 ([email protected]) • SEBI, Ahmedabad Regional Office, Unit No: 002, Ground Floor, SAKAR I, Near Gandhigram Railway Station, Opp. Nehru Bridge Ashram Road, Ahmedabad - 380 009 Tel : 079-26583633-35 ([email protected]) For more information visit our website - http://scores.gov.in SECTION 3: Issuer Related 3.1 Charges paid by Issuers ^Reference Circular MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009 and Circular SEBI/MRD/SE/DEP/Cir-4/2005 dated January 28, 2005, ^Reference Circular CIR/MRD/ DP/05/2011 dated April 27, 2011 and Circular CIR/MRD/DP/18/2015 dated December 09,2015 i. With effect from April 27, 2011 depositories may levy and collect the charges towards custody from the issuers, on the basis of average no. of folios (ISIN position) during the previous financial year, as per the details given below: ii. Issuers to pay @ Rs. 11.00 (*) per folio (ISIN position) in the respective depositories, subject to a minimum as mentioned below: Nominal value of admitted securities (Rs.) Annual Custodial Fee payable by a Issuer to each Depository (Rs.) (*) U....
X X X X Extracts X X X X
X X X X Extracts X X X X
....istrar and Share Transfer Agent 3.3.1 Appointment of a single agency for share registry work ^Reference Circular D&CC/FITTC/Cir-15/2002 dated December 27, 2002 All work related to share registry pertaining in terms of both physical and electronic shares shall be maintained at a single point i.e. either in-house by the company or by a SEBI registered Registrar and Transfer Agent. 3.3.2 Inter-Depository transfers ^Reference Circular no. SMDRP/Policy/Cir-28/99 dated August 23, 1999 In case of inter-Depository transfers of securities, the Registrars shall communicate the confirmation of such transfers within two hours, failing which such transfers shall be deemed to have been confirmed. The Registrars shall not reject inter-Depository transfers except where i. A Depository does not have adequate balance of securities in its account or ii. there is mismatch of transfer requests from the Depositories. 3.3.3 Common Registrars and Share Transfer agents ^Reference Circular SMDRP/Policy/Cir-28/99 dated August 23, 1999 Every company shall appoint the same Registrars and Share Transfer agents for both the depositories. 3.3.4 Dematerialis....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Depositories shall ensure that the following information is provided to the domestic custodian holding the underlying shares on a regular basis: i. Total number of shares at the beginning of the month ii. Number of shares transferred into the account (credited) during the month iii. Number of shares transferred out of the account (debited) during the month. iv. Balance at the end of the month. This service can be availed of only by foreign investors other than the OCBs. 3.6 Electronic Clearing System (ECS) facility 3.6.1 Use of ECS for refund in public/ rights issues. Reference Circular SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006 and circular SEBI/CFD/DIL/DIP/29/2008/01/02 dated February 1, 2008 For locations where facility of refund through ECS is available details of applicants shall be taken directly from the database of the depositories in respect of issues made completely in dematerialised form. Accordingly, DPs shall maintain and update on real time basis the MICR (Magnetic Ink Character Recognition) code of Bank branch of BOs and other bank details of the applicants in the database of depositories. This is to ensure t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... SECTION - 4: Depositories Related 4.1 Activity schedule for depositories for T+2 rolling Settlement ^Reference Circular DCC/FITTC/Cir-19/2003 dated March 4, 2003 and Circular MRD/DoP/SE/Dep/Cir-18/2005 dated September 2, 2005 i. The activity schedule for T+2 Rolling Settlement is as under: Sr. No. Day Time Description of activity 1 T Trade Day 2 T+1 By 1.00 pm Completion of custodial confirmation of trades to CC/CH. (There is no separate extended time limit for late confirmations). By 2.30 pm Completion of process and download obligation files to brokers/ custodians by the CC/CH. 3 T+2 By 11.00 am Pay-in of securities and funds . By 1.30 pm Pay-out of securities and funds. ii. All Depositories shall adhere to the aforementioned activity schedule to implement T+2 rolling settlement. DPs shall adhere to the designated activities within the prescribed time limits as under: a. DPs shall accept instructions for pay-in of securities from clients in the physical form atleast upto 4 p.m. and in electronic form atleast upto 6 p.m. on T+1. b. DPs shall complete execution of pay-in instructions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ay. v. The Clearing Corporation/Clearing House of the Stock Exchanges shall execute Auto DO facility for all the settlements together, so as to make the funds and the securities available with the member on the same day for all the settlements, thereby enabling the availability of the funds/securities at the client level by the end of the same day. 4.3 Deadline time for accepting non pay-in related instructions^ Reference: MRD/VSS/ARR/ 12255/2004 dated June 10, 2004 i. The depositories are advised that any overrun of the time specified for 'spot delivery contract' in the SCRA would result in the contract becoming illegal under section 16 of the SCRA (unless it is put through the stock exchange). The DP-BO agreement cannot add anything to or subtract anything from this position. However, it should be the responsibility of the DP to ensure that the client's contract is not rendered illegal on account of delayed execution of the delivery instruction. ii. Keeping the hardships to change all the existing DP-BO agreements to enforce the above into consideration, it is advised that suitable bye laws can be made under section 26(2)(e) and (d) of Deposito....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ares through depository system ^Reference: MRD/DoP/MAS - OW/16723/2010 dated August 17, 2010 i. Section 12 of the Depositories Act and Regulation 58 of the SEBI (Depositories and Participants) Regulations, 1996 along with the relevant Bye Laws of the Depositories clearly enumerate the manner of creating pledge. It is felt that there is a need to communicate to the BOs that any procedure followed other than as specified under the aforesaid provisions of law shall not be treated as pledge. ii. In order to clarify the same, the depositories are advised to issue a communiqué to the DPs advising them to inform BOs about the procedure for pledging of shares held in demat form as enumerated in the relevant sections of the Depositories Act and SEBI (Depositories and Participants) Regulations, 1996. Depositories may also advise DPs that an off-market transfer of shares leads to change in ownership and cannot be treated as pledge. Further, this issue may also be taken up in the investor awareness programs wherein the manner of creation of pledge can be effectively communicated to the BOs directly. 4.7 Foreign investments in infrastructure companies in securities markets ^Refe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en Report (ATR) along with supporting documents electronically in SCORES. Updation of action taken shall not be possible with physical ATRs. Hence, submission of physical ATR shall not be accepted for complaints lodged in SCORES. ii. The SEs and Depositories shall do the following: a. indicate a contact person in case of SCORES, who is an employee heading the complaint services division/cell/department. Contact detail (i.e. phone no., email id, postal address) of the said contact person be made widely available for e.g. on the websites of Depositories. b. address/redress the complaints within a period of 15 days upon receipt of complaint on SCORES. In case additional information is required from the complainant, the same shall be sought within 7 days of receipt on SCORES. In such case, the period of 15 days will be counted upon the receipt of additional information. c. maintain a monthly record of the complaints which are not addressed/redressed within 15 days from the date of receipt of the complaint/information, alongwith the reason for such pendency. d. Upload/update the ATR on the SCORES. Failure to do so shall be considered as non-redress....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Date of Receipt Name of Complainant Type of Complaint* SEBI Ref. No. (if applicable Name of DP Status** Status Date## Date of Filing Arbitration Name of Arbitrator(s) Date of Arbitration Award 1 2 3 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; 2 3 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rbitration Advised Pending for redressal with Depository No. of Arbitration filed by BOs Decided by the Arbitrators Decided by Arbitrators in favour of the BOs Pending for Redressal with Arbitrators 1 2 3 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; N Total (In case of panel of arbitrators, the cases / awards would appear against every member of the panel) (Arrange the arbitrators in descending number of awards passed by them during the period) Report 3A: Penal Actions against Depository Participants (DPs) during 200....
X X X X Extracts X X X X
X X X X Extracts X X X X
....yy (to be updated every quarter) (in excel sheet) Sl. No. Name of DP Registration No. No. of Complaints received Action against DP, its authorized person and employees together No. of Penal Orders issued Monetary Penalties levied (Rs. lakh) No. of Arbitration Awards issued against DP For complaints For others For complaints For others 1 2 3  ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; N Total *Non actionable means the complaint that are incomplete / outside the scope of Depository (Arrange the companies in descending number of complaints filed against them during the period) Report 4B: Redressal of Complaints lodged by investors against Listed Companies during 2009 -10: Updated on mmm dd yyyy (to be updated every quarter) (In excel format) Sl. No. Name of the Company No. of Complaints ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....remat request Type III Transaction Statement Related III a Delay in/ Non-Receipt of Statements from DP III b Discrepancy in Transaction statement Type IV Improper Service Related IV a Insistence on Power of Attorney in its favour IV b Deactivation/ Freezing/ Suspension related IV c Defreezing related IV d Transmission Related IV e Pledge Related IV f SMS Related IV g Non-updation of changes in account (address/ signatories/bank details/ PAN/ Nomination etc.) Type V Charges Related V a Wrong/ Excess Charges V b Charges paid but not credited V c Charges for Opening/closure of Account Type VI Delivery Instruction Related (DIS ) VI a Non acceptance of DIS for transfer VI b Delay in/ non Execution of DIS VI c Delay in Issuance / Reissuance of DIS Booklet Type VII Closure VII a Non closure/ delay in closure of account VII b Closure of a/c without intimation by DP Type VIII Manipulation/ ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder Regulation 19(a)(viii) of SEBI (Depositories and Participant) Regulations, 1996, the securities held by bank and financial institutions as well as promoters holdings of a company held in dematerialised form, may be excluded ^Reference: SMDRP/RKD /NSDL/2494 /98 dated November 18, 1998, SMDRP/CDSL / 18300 /2000 dated November 16, 2000. ii. In view of the potential risk to the system and also to maintain the integrity of the market, the depositories are advised to develop an appropriate systemic alert in the depository system, so as to enable the system to generate and convey automatic alerts to those SBDPs that reach a pre-determined level of exposure. These alerts would serve as forewarnings to the SBDPs to the fact that they are approaching their respective maximum exposure limits. [Note: For this purpose, the depositories may monitor the value of securities with its SBDPs on an "end of the day" basis.] ^Reference: MRD/DRK/SU/16034/2003 dated August 22, 2003 4.16 Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS) ^Reference Circular CIR/MRD/DP/32/201 dated December 06, 2012 i. Vide notification 51/2012 dated November 23, 2012, Department of Revenue, Ministry of Finance ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the corporate actions shall be as given at Annexure A. iii. Stock exchanges shall furnish list of RGESS eligible stocks / ETFs / MF schemes on their website. Further, the list shall also be forwarded to the depositories at monthly intervals and whenever there is any change in the said list. For this purpose, Mutual Funds / AMCs shall communicate list of RGESS eligible MF schemes / ETFs to the stock exchanges. Annexure A Treatment of corporate actions (i) Involuntary corporate actions: In case of corporate actions where investors has no choice in the matter, for example: demerger of companies, etc, the compliance status of RGESS demat account shall not change. (ii) Voluntary corporate actions: In case of corporate actions where investors has the option to exercise his choice and thereby result in debit of securities, for example: buy-back, etc, the same shall be considered as a sale transaction for the purpose of the scheme. Consolidated list of 'corporate actions'. Sr. No. Corporate Action Classification (Involuntary or Voluntary) 1 Amalgamation Involuntary 2 Scheme of Arrangement Involuntary 3 Reduction of Capital Involunt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cture supporting global financial markets is robust and well placed to withstand financial shocks. iii. Full, timely and consistent implementation of the PFMIs is fundamental to ensuring the safety, soundness and efficiency of key FMIs and for supporting the resilience of the global financial system. In addition, the PFMIs play an important part in the G20's mandate that all standardized over-the-counter (OTC) derivatives should be centrally cleared. Global central clearing requirements reinforce the importance of strong safeguards and consistent oversight of derivatives CCPs in particular. Financial Market Infrastructure (FMI) iv. The Principles apply to systematically important financial market infrastructures entities such as Central Counterparty (CCP), Central Securities Depository (CSD)/ Securities Settlement System (SSS), Payment and Settlement systems, and Trade Repository (TR) which are responsible for providing clearing, settlement and recording of monetary and other financial transactions. The principles are international standards set forth to - a. Enhance safety and efficiency in payment, clearing, settlement, and recording arrangements, b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ler and the seller to every buyer and thereby ensuring the performance of open contracts. A CCP becomes counterparty to trades with market participants through novation, an open-offer system, or through an analogous legally binding arrangement. CCPs have the potential to significantly reduce risks to participants through the multilateral netting of trades and by imposing moreeffective risk controls on all participants. For example, CCPs typically require participants to provide collateral (in the form of initial margin and other financial resources) to cover current and potential future exposures. CCPs may also mutualise certain risks through devices such as default funds. As a result of their potential to reduce risks to participants, CCPs also can reduce systemic risk in the markets they serve. Trade Repositories (TR) A trade repository is an entity that maintains a centralised electronic record (database) of transaction data. TRs have emerged as a new type of FMI and have recently grown in importance, particularly in the OTC derivatives market. By centralising the collection, storage, and dissemination of data, a well designed TR that operates with effective ri....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sound risk-management framework for comprehensively managing legal, credit, liquidity, operational, and other risks. Credit and liquidity risk management. Principle 4: Credit risk An FMI should effectively measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes. An FMI should maintain sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence. In addition, a CCP that is involved in activities with a more-complex risk profile or that is systemically important in multiple jurisdictions should maintain additional financial resources sufficient to cover a wide range of potential stress scenarios that should include, but not be limited to, the default of the two participants and their affiliates that would potentially cause the largest aggregate credit exposure to the CCP in extreme but plausible market conditions. All other CCPs should maintain additional financial resources sufficient to cover a wide range of potential stress scenarios that should include, but not be limited to, the default of the participant and its affiliates that would ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....value settlement systems If an FMI settles transactions that involve the settlement of two linked obligations (for example, securities or foreign exchange transactions), it should eliminate principal risk by conditioning the final settlement of one obligation upon the final settlement of the other. Default management Principle 13: Participant-default rules and procedures An FMI should have effective and clearly defined rules and procedures to manage a participant default. These rules and procedures should be designed to ensure that the FMI can take timely action to contain losses and liquidity pressures and continue to meet its obligations. Principle 14: Segregation and portability A CCP should have rules and procedures that enable the segregation and portability of positions of a participant's customers and the collateral provided to the CCP with respect to those positions. General business and operational risk management Principle 15: General business risk An FMI should identify, monitor, and manage its general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that it can continue operatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isclosure of market data by trade repositories A TR should provide timely and accurate data to relevant authorities and the public in line with their respective needs. End of Annexure 1 Annexure 2 1. Clearing Corporations a. Indian Clearing Corporation Ltd. (ICCL) b. Metropolitan Clearing Corporation of India Ltd. (MCCIL) c. National Securities Clearing Corporation Ltd. (NSCCL) 2. Depositories a. Central Depository Services Ltd. (CDSL) b. National Securities Depository Ltd (NSDL) End of Annexure 2 4.18 Annual System Audit of Depositories ^Circular No. CIR/MRD/DMS/13/2011 dated November 29, 2011 i. The depositories should annually conduct System Audit as per the System Audit Framework. The system audit framework encompasses the System Audit Process, Auditor Selection Norms, Terms of Reference (TOR), and Audit Report Guidelines as per the annexure below. ii. The Systems Audit Reports and Compliance Status should be placed before the Governing Board of the depositories and the system audit report along with comments of depositories should be communicated to SEBI. Further, along with the audit report, depositories are advised to submit a declar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Audit Terms of Reference (TOR). 2. The Auditor must have experience in / direct access to experienced resources in the areas covered under TOR. It is recommended that resources employed shall have relevant industry recognized certifications e.g. CISA (Certified Information Systems Auditor) from ISACA, CISM (Certified Information Securities Manager) from ISACA, GSNA (GIAC Systems and Network Auditor), CISSP (Certified Information Systems Security Professional) from International Information Systems Security Certification Consortium, commonly known as (ISC)2. 3. The Auditor should have IT audit/governance frameworks and processes conforming to industry leading practices like CobiT. 4. The Auditor must not have any conflict of interest in conducting fair, objective and independent audit of the Exchange / Depository. It should not have been engaged over the last three years in any consulting engagement with any departments / units of the entity being audited. The Auditor may not have any cases pending against its previous auditees, which fall under SEBI's jurisdiction, which point to its incompetence and/or unsuitability to perform the audit task. Terms of Reference....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ince previous audit > Review of systems (hardware, software, network) performance over period > Review of the current volumes against the last Performance Test performed 9. Business Continuity / Disaster Recovery Facilities - It must include > BCP manual, including Business Impact Analysis, Risk Assessment and DR process > Implementation of policies > Back-up procedures and recovery mechanism using back-ups. > Storage of Back-up (Remote site, DRS etc.) > Redundancy - Equipment, Network, Site etc. > DRS installation and Drills - Management statement on targeted resumption capability (in terms of time required & extent of loss of data) > Evidence of achieving the set targets during the DRS drills in event of various disaster scenarios. > Debrief / review of any actual event when the DR/BCP was invoked during the year 10. IT Support & IT Asset Management - It must include > Utilization monitoring - including report of prior year utilization > Capacity planning - including projection of business volumes > IT (S/W, H/W & N/W) Assets, Licenses & maintenance contracts > Insurance > Disposal - Equipment, Media, etc. 11. Enti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....security of IT Systems. 4.19 Guidelines for Business Continuity Plan (BCP) and Disaster Recovery (DR) ^Circular No. CIR/MRD/DMS/12/2012 dated April 13, 2012 and clarification issued vide Circular No. CIR/MRD/ DMS/17/2012 dated June 22, 2012 i. The stock exchanges and depositories should have in place Business Continuity Plan (BCP) and Disaster Recovery Site (DRS) so as to maintain data and transaction integrity. ii. Apart from DRS, stock exchanges should have a Near Site (NS) to ensure zero data loss whereas, the depositories should also ensure zero data loss by adopting a suitable mechanism. iii. The DRS should be set up sufficiently away, i.e. in a different seismic zone, from Primary Data Centre (PDC) to ensure that both DRS and PDC are not affected by the same disasters. iv. The manpower deployed at DRS / NS should have similar expertise as available at PDC in terms of knowledge / awareness of various technological and procedural systems and processes relating to all operations such that DRS / NS can function at short notice, independently. v. Configuration of DRS / NS with PDC a) Hardware, system software, application environment, network and securit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e BCP - DR policy of stock exchanges and depositories should be well documented covering all areas as mentioned above including disaster escalation hierarchy. b) The stock exchanges should specifically address their preparedness in terms of proper system and infrastructure in case disaster strikes during business hours. c) Stock Exchanges / Depositories / Clearing Houses or Clearing Corporations of Stock Exchanges should also demonstrate their preparedness to handle any issue which may arise due to trading halts in stock exchanges and / or failure or stoppages at other Stock Exchanges / Depositories / Clearing Corporations d) The policy document and subsequent changes / additions / deletions should be approved by Governing Board of the Stock Exchange / Depositories and thereafter communicated to SEBI. viii. Considering the above, stock exchanges and depositories are advised to submit their BCP - DR policy to SEBI within 3 months from the date of this circular. Further, they should also ensure that point 1 (vi) (f) mentioned above is also included in scope of system audit as mentioned in the circular no. CIR/MRD/DMS/13/2011 dated November 29, 2011. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....R/MRD/DMS//17/2012 dated June 22, 2012. In Addition to the requirements of the aforementioned circulars, depositories shall designate a senior official as the head of BCP function. 4.21 Guidelines for inspection of Depository Participants (DPs) by Depositories ^Reference Circular SEBI/MRD/DMS/05/2014 dated February 07, 2014 i. Depository System Review Committee (DSRC) was constituted by SEBI to undertake a comprehensive review of the depository system of Indian Securities market. ii. As a first measure, DSRC has reviewed framework adopted by the depositories with regard to the inspection of depository participants (DPs). Considering the recommendations of the committee, it has been decided that depositories shall ensure the following while inspecting their DPs. Inspection Areas and Sample Size iii. For conducting inspection of DPs, depositories shall inspect the areas as mentioned in Annexure - I. During inspection, depositories shall cover implementation of circulars / guidelines issued by SEBI and guidelines / operating instructions / directions by depositories in respect of these areas. In addition, Depositories may include such other areas as felt appropriate. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed at Annexure - I. x. Depositories shall jointly inspect DPs which are registered with both depositories to have better control over DPs, avoid duplicity of manpower, time and cost and also to reduce the possibility of regulatory arbitrage, if any. Depositories shall share the risk rating / categorization of common DPs with each other. For the purpose of determining sample size and frequency of the joint inspection of such common DPs, the higher risk categorization assigned by any of the Depository shall prevail. Annexure -I List of Inspection Areas 1. Depositories shall inspect the areas mentioned at para 2 below during inspection of DPs with regards to any 1.1. Circulars / Guidelines issued by SEBI on the areas mentioned below. 1.2. Guidelines / Operating Instructions / Directions from depositories on the areas mentioned below. 2. In case there are built in system checks at the depository that ensure compliance of any of the inspection areas / sub -areas with regard to point 1.1 and 1.2 above, the depository may decide on the including the same during the inspection of DPs Inspection Areas A. Account Opening / KYC Documents A.1. Account ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sactions F.3. Transfer of all ISINs of BO account having 5 or more ISINs F.4. Any other area as may be specified by the depository G. Transaction Statement (TS) G.1. Validation of TS G.2. Maintenance of records of TS G.3. Issuance of TS to BOs G.4. Any other area as may be specified by the depository H. Compliance under Prevention of Money Laundering Act, 2002 (PMLA) H.1. Compliance with PMLA Act, 2002 and SEBI Guidelines on areas such as Customer due diligence, suspicious transaction monitoring , reporting and record keeping H.2. Appointment of Principal officer as required under PMLA Act,2002 H.3. Mechanism to deal with alerts provided by Depository H.4. Suspicious Transactions reports to FIU H.5. Any other area as may be specified by the depository I. Maintenance of record and documents I.1. Information regarding place(s) of record keeping I.2. Outsourcing of record keeping activities I.3. Any other area as may be specified by the depository J. Service Centre Opening and closing/ modification of service centers J.1. Procedure for Opening /Closure of Service centers J.2. Details of Service centre on Depository website ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Charges T.6. Delivery Instruction Related ( DIS ) T.7. Closure T.8. Manipulation / Unauthorized Action T.9. Monthly report for client complaints T.10. Other Complaints Annexure -II Adaptive Sample Size Determination methodology 1. Sample Size for inspection area of 'Account Opening' • The sample selection for account opening shall cover all categories of clients such as individuals, HUF, Corporate, FIIs etc. • Base sample size: 5% of Account Opening Forms (AOFs) or 150 AOFs whichever is higher, with a maximum cap of 1000 accounts. • Final Sample Size: The final sample size shall also be dependent on past rating / categorization of DP. The following multipliers shall be used to determine the final sample size for the current inspection. In case the total number of instances / cases is less than the final sample size, then 100% of the samples shall be verified. DP Rating / Categorization Multiplier High risk 3 Medium High risk 2 Medium risk 1.5 Low risk 1 • The selected sample shall maintain the proportion of new accounts opened in each category, except for Account Openin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....amples • Final sample size shall be arrived at after multiplying with the respective multiplier corresponding to the DP Risk rating / categorization as given below. In case the total number of instances / cases is less than the final sample size, then 100% of the samples shall be verified. DP Rating/ Categorisation Multiplier High risk 3 Medium High risk 2 Medium risk 1.5 Low risk 1 5. Other Aspects • A uniform Base sample size of 100 shall be adopted in case of all other activities. In case the total number of samples is less than 100, then 100% of the samples shall be verified. Annexure-III DP Rating / Categorization Model I. Quantitative Score Calculation: Specific weights shall be assigned to each area as decided by each depository. The Total Quantitative Score shall be the summation of all individual inspection scores. Table: Indicative Table for calculation of Quantitative Score Sr No Inspection Areas Weight (A) B = No of Instances divided by Sample size Inspection Score IS = A*B A. Inspection Area 1 A.1. Inspection Sub Area A 1 A.2. In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll be taken into account for arriving at above mentioned qualitative score: (a) Ownership and Governance 1. Constitution of Board of DP - Number of promoter directors, Independent Directors etc. 2. Role of non-executive directors / Independent directors. (b) Quality of Management 1. Experience, Fit and Proper and Qualification of Key Personnel. 2. Existence of Succession planning for top management especially in control functions. 3. Chinese walls between the activities in terms of manpower, resources etc. 4. Training and development of employees. 5. Adequacy of staff strength. 6. Compliance level of previous inspection observations/ directions of regulatory bodies (c) IT security and Business Continuity 1. High Availability. 2. Appropriate Interconnected Architecture. 3. Appropriate Recovery Time Objective (RTO) and Recovery Point Objective (RPO) and near "Zero Data Loss". 4. Periodic drills that simulate the real life disaster scenarios on a regular basis. 5. Technological glitches in the past period and remedies taken. 6. Information security. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ii. The Depositories shall put in place mechanism to implement the Risk Management Framework through a Risk Management Group/Committee which shall be headed by a Chief Risk Officer (CRO). The responsibilities of the said Committee shall include the following: a) t shall review and update the risk management framework periodically. The Board of the depository shall approve the Risk Management Framework and the Chief Risk Officer shall have access to the Board. The CRO shall be responsible, accountable and answerable to the board on overall risk management issues. 4.25 Outsourcing by Depositories ^Reference: CIR/MRD/DP/19/2015 dated December 09, 2015 Based on recommendations by DSRC, the depositories are advised to ensure the following: i. Depositories shall formulate and document an outsourcing policy duly approved by their Board based on the guidelines given below and the principles outlined in the SEBI circular CIR/MIRSD/24/2011 dated December 15, 2011. Core activities of Depositories ii. Core and critical activities of depositories shall not be outsourced. The core activities of the depositor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng policy document and outsourcing agreement/ service level agreements pertaining to IT systems shall be part of System Audit of Depositories. 4.26 Cyber Security and Cyber Resilience framework of Depositories ^Reference: Circular CIR/MRD/DP/13/2015 dated July 06, 2015 i. SEBI as a member of IOSCO has adopted the Principles for Financial Market Infrastructures (PFMIs) laid down by CPMI-IOSCO and has issued guidance for implementation of the principles in the securities market. ii. Principle 17 of PFMI that relates to management and mitigation of 'Operational risk' requires that systemically important market infrastructures institutions "should identify the plausible sources of operational risk, both internal and external, and mitigate their impact through the use of appropriate systems, policies, procedures, and controls. Systems should be designed to ensure a high degree of security and operational reliability and should have adequate, scalable capacity. Business continuity management should aim for timely recovery of operations and fulfilment of the FMI's obligations, including in the event of a wide-scale or major disruption." iii. Depositories (hereafter referred as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tify' critical IT assets and risks associated with such assets, b. 'Protect' assets by deploying suitable controls, tools and measures, c. 'Detect' incidents, anomalies and attacks through appropriate monitoring tools / processes, d. 'Respond' by taking immediate steps after identification of the incident, anomaly or attack, e. 'Recover' from incident through incident management, disaster recovery and business continuity framework. 4. The Cyber security policy should encompass the principles prescribed by National Critical Information Infrastructure Protection Centre (NCIIPC) of National Technical Research Organisation (NTRO), Government of India in the report titled 'Guidelines for Protection of National Critical Information Infrastructure' and subsequent revisions, if any, from time to time. 5. MII should also incorporate best practices from standards such as ISO 27001, ISO 27002, COBIT 5, etc., or their subsequent revisions, if any, from time to time. 6. MII should designate a senior official as Chief Information Security Officer (CISO) whose function would be to assess, identify and reduce cyber security risks, respond to incidents, establish appropriate st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....position should have any intrinsic right to access confidential data, applications, system resources or facilities. 15. Any access to MII's systems, applications, networks, databases, etc., should be for a defined purpose and for a defined period. MII should grant access to IT systems, applications, databases and networks on a need-to-use basis and based on the principle of least privilege. Such access should be for the period when the access is required and should be authorized using strong authentication mechanisms. 16. MII should implement strong password controls for users' access to systems, applications, networks and databases. Password controls should include a change of password upon first log-on, minimum password length and history, password complexity as well as maximum validity period. The user credential data should be stored using strong and latest hashing algorithms. 17. MII should ensure that records of user access are uniquely identified and logged for audit and review purposes. Such logs should be maintained and stored in encrypted form for a time period not less than two (2) years. 18. MII should deploy additional controls and security measures to supe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion and prevention systems, to protect its IT infrastructure from security exposures originating from internal and external sources. 29. Anti-virus software should be installed on servers and other computer systems. Updation of Anti-virus definition files and automatic anti-virus scanning should be done on a regular basis. Security of Data 30. Data-in motion and Data-at-rest should be in encrypted form by using strong encryption methods such as Advanced Encryption Standard (AES), RSA, SHA-2, etc. 31. MII should implement measures to prevent unauthorised access or copying or transmission of data / information held in contractual or fiduciary capacity. It should be ensured that confidentiality of information is not compromised during the process of exchanging and transferring information with external parties. 32. The information security policy should also cover use of devices such as mobile phone, faxes, photocopiers, scanners, etc. that can be used for capturing and transmission of data. 33. MII should allow only authorized data storage devices through appropriate validation processes. Hardening of Hardware and Software 34. Only a hardened and vetted hardw....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stems and processes to facilitate continuous monitoring of security events and timely detection of unauthorised or malicious activities, unauthorised changes, unauthorised access and unauthorised copying or transmission of data / information held in contractual or fiduciary capacity, by internal and external parties. The security logs of systems, applications and network devices should also be monitored for anomalies. 44. Further, to ensure high resilience, high availability and timely detection of attacks on systems and networks, MII should implement suitable mechanism to monitor capacity utilization of its critical systems and networks. 45. Suitable alerts should be generated in the event of detection of unauthorized or abnormal system activities, transmission errors or unusual online transactions. Response and Recovery 46. Alerts generated from monitoring and detection systems should be suitably investigated, including impact and forensic analysis of such alerts, in order to determine activities that are to be performed to prevent expansion of such incident of cyber attack or breach, mitigate its effect and eradicate the incident. 47. The response and recovery pla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....terialised shares, issued by the company and its reconciliation thereof, the Depositories are advised to create and maintain a database of distinctive numbers (DN) of equity shares of listed companies with details of DN in respect of all physical shares and overall DN range for dematerialised shares. 3. The DN database shall make available, information in respect of issued capital, such as DN Range, number of equity shares issued, name of stock exchange where the shares are listed, date of in-principle listing / final trading approval / dealing permission, shares held in physical or demat form, date of allotment, shares dematerialized under temporary (frozen) ISIN (International Securities Identification Number) or Permanent (active) ISIN etc., at one place. 4. Based on consultations with the Depositories and Stock Exchanges, the following guidelines are given for the operationalisation of the DN database - 4.1. Instructions to the Depositories 4.1.1. The depositories shall create and maintain a database to capture DN in respect of all physical equity shares and overall DN range for dematerialised equity shares issued by listed companies. 4.1.2. The depos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....issions. ii. In respect of further issue of shares by listed companies, consequent to update of DN information by Issuers/RTAs, the stock exchange shall validate the DN information updated by the Issuer/RTA and update the date of 'in-principle' listing approval, date of final trading approval / dealing permission and trading start date [as per point nos. (v), (vi) and (vii) of 5.1.3], immediately upon granting of such permissions. iii. In respect of companies coming out with initial public offer or new listings on stock exchanges, the stock exchange shall update the DN database with the total number of equity shares for which final trading approval / dealing permission has been granted. iv. In respect of companies whose capital is changed/altered for any reason other than further issuance of shares such as buy-back of shares, forfeiture of shares, capital reduction, etc., the stock exchange shall confirm such change/alteration in the capital as updated by the Issuer/RTA in the DN database. 4.2.3. In case the DN data on listed shares as per the records of Issuers/RTAs does not match with records of the Stock Exchanges, the Stock Exchanges shall co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d for the clients of Depository Participants (DPs) ^Email on Separate mobile number/ email id for the clients of Depository Participants (DPs) dated January 16, 2015. i. It has been observed that DPs do not have the procedure to check that separate mobile number/ email id is uploaded for each client. ii. In view of the same Depositories are advised to instruct their participants to ensure that separate mobile number/E-mail address is uploaded for each client. However, under exceptional circumstances, the participants may, at the specific written request of a client, upload the same mobile number/E-mail address for more than one client provided such clients belong to one family. 'Family' for this purpose would mean self, spouse, dependent children and dependent parents. SCHEDULE CIRCULARS 1. Circular No. SMDRP/Policy/Cir-28/99 dated August 23, 1999. 2. Circular No. SMDRP/Policy/Cir-05/2001 dated February 1, 2001. 3. Circular No. D&CC/FITTC/Cir-09/2002 dated July 4, 2002. 4. Circular No. D&CC/FITTC/Cir-10/2002 dated September 25, 2002. 5. Circular No. D&CC/FITTC/Cir-13/2002 dated November 1, 2002. 6. Circular No. D&CC/FITTC/CIR - 12/2002 dated October 30....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Circular No. CIR/MRD/DMS/12/2012 dated April 13, 2012 44. Circular No. CIR/MRD/ DMS/17/2012 dated June 22, 2012 45. Circular No. CIR/MRD/ICC/16/2012 dated June 15, 2012. 46. Circular No. CIR/MRD/DP/21/2012 dated August 02, 2012. 47. Circular No. CIR/MIRSD/09/2012 dated August 13, 2012. 48. Circular No. CIR/MRD/DP/22/2012 dated August 27, 2012. 49. Circular No. CIR SEBI/MIRSD /11/2012 dated September 05, 2012. 50. Circular No. CIR/MRD/DP/24/2012 dated September 11, 2012. 51. Circular No. CIR/MRD/DP/DA/25/2012 dated September 21, 2012. 52. Circular No. CIR/MRD/DP/27/2012 dated November 01, 2012. 53. Circular No. CIR/MRD/DP/32/2012 dated December 06, 2012. 54. Circular No. CIR SEBI/MIRSD/01/2013 dated January 04, 2013. 55. Circular No. CIR/MRD/DP/10/2013 dated March 21, 2013. 56. Circular No. CIR SEBI/MRD/DRMNP/26/2013 dated September 04, 2013. 57. Circular No. CIR SEBI/MIRSD /07/2013 dated September 12, 2013. 58. Circular No. CIR SEBI/MIRSD/09/2013 dated October 08, 2013. 59. Circular No. CIR/MIRSD/10/2013 dated October 28, 2013. 60. Circular No. CIR SEBI/MIRSD/ 12/2013 dated December 04, 2013. 61. Circular No. CIR SEBI/MRD/DOP/01....