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POLICIES AND PROCEDURES

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CLOSING OF ACCOUNTS

The Client’s Accounts shall be closed upon a specific request from the client. The closure shall be effective only after a period of one month has elapsed from the date of application/intimation or the date of settlement of account whichever is later.

Settlement of account shall mean that there is no outstanding balance of shares or funds in the books of the client and AUTUS and the same is confirmed by the client. The date of confirmation shall be the effective date of settlement. As far as dormant accounts are concerned, we do not close such accounts but mark the same as “Inactive” till further action by the concerned client.

DORMANT POLICY

Dormant account policy: The policy for a Dormant account has been framed out under the specific guidelines of the Prevention of Money Laundering Act (PMLA) for the safety and security of the investors as well as the financial market.

1. INTRODUCTION

The Dormant Account Policy lays down the procedure to be followed when instruction for debit/credit or buy/sell is received from an account which is Dormant. This policy gives a full description like the time period and method considered for terming an account Dormant and also various steps required to be adhered to strictly for re-activating such Dormant accounts.

2. DEFINITION

An account shall be termed to be Dormant if it is inactive or remains non-operational by its holder at a stretch for a specified period of time. This specific period of time has been defined under the PMLA. Presently, this period is 6 (six) calendar months i.e. if an account is inactive for a minimum period of six calendar months, it will be classified as a dormant account.

3. TREATMENT OF A DORMANT ACCOUNT

All Dormant accounts will be treated in accordance with the policies prescribed under the PMLA. Accordingly, the dormant account will be frozen immediately and the client will not be permitted to undertake any further transaction in such a dormant account. The procedure for a listing of dormant account is run once every month, preferably on the last day of the month.

4. RE-ACTIVATION OF A DORMANT ACCOUNT

A Dormant account shall be re-activated only after undertaking the proper due-diligence process and fulfilling such conditions as may be deemed fit by the authorized person of the organization. As a practice, on receipt of an instruction from the client of a Dormant account, the authorized person has to appropriately verify the KYC of such clients as well as the authenticity of the instruction. The instruction is to be accepted only on the satisfaction of the above.

The above-stated policy may be modified at any time in accordance with the various rules, regulations, bye-laws, and guidelines that may be prescribed by SEBI, Exchange or any other competent authority or as per the internal policy of the organization from time to time. This policy for the dormant accounts is over and above the transaction monitoring in the dormant accounts as per the Anti-Money laundering policy of the organization.

SURVEILLANCE POLICY

Leading Stock Exchanges Bombay Stock Exchange Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”) have put in place a mechanism that will generate automated alerts for Stock Brokers & Trading Members whenever suspicious transactions are detected in their clients‟ accounts.

The alerts will be generated in case of unusual changes in the trading pattern of the clients, sudden trading in dormant accounts as also in suspected cases of circular trading, ‘pump-and-dump’, „front running‟ and ‘wash-sale’ activities, etc.

In view of the above, the Company endeavors to frame this policy for surveillance of these alerts and the manner of disposal of the same.

The said surveillance and disposal of the alerts shall be done on the following grounds:

  • Receipt of „Alerts‟ from Exchanges / generated at member‟send.
  • The time frame for disposition of alerts and if there is any delay in disposition, the reason for the same shall be documented.
  • Suspicious / Manipulative activity identification and reporting process.
  • Record Maintenance. In this regard, in order to facilitate effective surveillance mechanisms at the Broker level, the Exchanges have derived following transactional alerts that would be downloaded to the trading members. This will facilitate the Company to effectively monitor the trading activity of its client

CLIENT(S) INFORMATION

  • The Company is required to carry out the Due Diligence of its client(s) on a continuous basis.
  • The Company shall ensure that key KYC parameters are updated on a continuous basis as prescribed by SEBI and the latest information of the client is updated in the UCC database of the Exchange.
  • Based on KYC and updated information the Company shall establish groups/ association amongst clients to identify multiple accounts / common account/ group of clients.
  • The monitoring of the aforementioned alerts and disposal procedure shall be done within 45 days of the alert generation.

PMLA POLICY

Anti Money Laundering Measures

Background

The Prevention of Money Laundering Act, 2002 came into effect from 1st July 2005. Necessary Notifications / Rules under the said Act were published in the Gazette of India on 1 st July 2005 by the Department of Revenue, Ministry of Finance, and Government of India.

SEBI vide circular dated 18th January 2006 required Market intermediaries to lay down policy framework for anti-money laundering measures to be followed. AUTUS being a Stock Broker needs to adhere to the same. SEBI has also issued a Master circular dated 19th December 2008, which consolidates all the requirements/obligations issued with regard to AML/CFT until December 15, 2008

Objective

Money laundering has now become one of the major concerns of the international financial community. Money Laundering is not just an attempt to disguise money derived from illegal activities. Rather, money laundering is involvement in any transaction or series of transactions that seek to conceal or disguise the nature or source of proceeds derived from illegal activities, including drug trafficking, terrorism, organized crime, fraud, and many other crimes.

The objective is to have a system in place for preventing any money laundering financial transactions through us and also to identify, monitor, report any such transactions to appropriate authorities.

“Know Your Customer “(KYC) is the guiding principle behind the Anti-Money Laundering (AML) measures. It incorporates the “Know Your Customer” Standards & “Anti Money Laundering” Measures, hereinafter to be referred to as “KYC Standards” and “AML Measures “. The objective is to “have in place adequate policies, practices, and procedures that promote high ethical and professional standards and prevent the Company from being used, intentionally or unintentionally, by criminal elements “. KYC Standards and AML Measures would enable the Company to know/ understand its customers, the beneficial owners, the principals behind customers who are acting as agents and their financial dealings better which in turn will help the Company to manage its risks prudently

The management of the company is fully committed to establishing appropriate policies and procedures for ensuring effectiveness and compliance with respect to all relevant legal requirements.

The regulatory/statutory requirements

An officer of the company will be designated as “Principal Officer” who will ensure proper discharge of all legal requirements with respect to the same Mr. Ishan Bansal, Compliance Head is the Principal Officer responsible for

  • Compliance of the provisions of the PMLA and AML guidelines
  • Act as a central reference point and play an active role in the identification & assessment of potentially suspicious transactions
  • Ensure that AUTUS discharges its legal obligation to report suspicious transactions to concerned authorities.

The main aspect of this policy is the customer due diligence process which means:

  • Obtaining sufficient information about to the client in order to identify who is the actual beneficial owner of the securities or on whose behalf transaction is conducted
  • Verify the customer’s identity using reliable, independent source documents, data or information
  • Conduct on-going due diligence and scrutiny of the account/ client to ensure that the transaction conducted are consistent with the clients’ background/ financial status, its activities and risk profile.

The customer due diligence process includes three specific parameters:

  • Policy for acceptance of clients: Each client should be met in person Complete KYC to be done for all clients No account to be opened in a fictitious/benami name or on an anonymous basis
  • Clients Identification Procedure (Risk profiling) All clients to be classified as per the risk into 3 categories Low, Medium and High Risk
  • Suspicious Transaction identification and reporting Any unusual activity compared to past transactions Sudden activity in Dormant accounts Sudden High volume /high-value transactions
  • Central Depository Securities Limited (CDSL) communique no. CDSL/OPS/DP/POLCY/2017/176 dated April 05, 2017 and CDSL/OPS/DP/POLCY/2017/354 dated July 18, 2017, advises that the Beneficial Owners should submit/update their Aadhar Card copy with the Depository Participant. Please ensure that you update your Aadhar Number with AUTUS as per the mentioned notices.

The principal officer shall report the nature, amount, date and all related details of any and all suspicious transactions recorded.

Client identification

Before opening any Trading account with us, the following measures shall be taken:

  • In person verification of the client
  • Identify beneficial ownership and control, i.e., determine the persons who beneficially own / control the account.
  • Collect information about client’s background, occupation and also check the name of the introducer.
  • Collect and verify all original documents from the client.
  • Collect a certified copy of valid documents showing details of his permanent address, current address, PAN, nature of his occupation, financial status and also a recent photograph.
  • For clients trading in F&O segment, documentary proof of his financial details will be collected.
  • In the case of Corporate client, collect copies of certificate of incorporation, Memorandum of association and other documents as required by SEBI
  • In the case of Corporate clients, collect adequate information of the persons authorized to deal on behalf of the company.
  • The client shall be interviewed personally regarding the purpose of opening the account i.e., whether short term trading or long term investment.
  • Prior experience in the stock market
  • Introducer details

KYC updation process

All corporate clients must submit an annual report every year. In the case of individual clients, Client Master details shall be sent to all clients, who will confirm either that the details are updated or shall be advised to submit details if required. He shall also specify his present occupation and financial income details per annum in the same declaration.

The information should be adequate enough to satisfy the competent authorities (regulatory/ enforcement authorities) in the future that due diligence was observed by us in compliance with the Guidelines.

Failure by a prospective client to provide satisfactory evidence of identity should be noted and reported to the principal officer.

Further, we should also maintain continuous familiarity and follow-up with the client where inconsistencies in the information provided are noted.

The account will not be opened where we are unable to apply the above KYC policies, e.g., non-co-operation of the client in providing full information, etc

Client categorization

Each client will be marked into 3 categories, High Risk, Medium Risk and Low Risk from the point of view of the anti-money laundering laws. The categorization will be made based on the following parameters/ factors of risk perception:

  • High Networth Clients
  • Collect information about client’s background, occupation and also check the name of the introducer.
  • Trusts/ NGOs / Charities receiving donations
  • Companies having close family shareholdings (The above are considered of High Risk as per SEBI guidelines) The other parameters are nature of the business activity, trading turnover, manner of making the payment, etc. Provision will be made in the back office software for noting the categorization of each client. The high-risk client will require regular KYC update.

The clients will be placed under low, medium and high-risk categories based on their turnover per day. Corporates / HNIs having respectable social and financial standing, Clients who make the payment on time and take delivery of shares can be considered as Low.

Suspended Persons

SEBI and other authorities suspend or debar persons/entities from participating in the securities market in several instances. We as a Broker are required to ensure that such persons do not trade through us.

We shall lay down systems for identifying transactions which is not in consonance with the financial status declared/ shown by the client. Also, unusual activities compared to past transactions, sudden activity in dormant accounts, activity inconsistent from declared business activity, should be traced. This shall require appropriate changes in our back-office software.

Systems shall be put in place for identifying transactions likely to be market manipulation, and which appears to be insider trading and also any transaction which seems to have no bonafide intention. Regular communications by means of mailers, SMS, Email are sent to clients at various intervals requesting them to update their latest financial and KYC details available with us.

Role of Compliance Team & Internal Audit: The compliance team will play an important role in ensuring compliance of the above policies and procedures. The account opening team will exercise adequate due diligence as stated above. There will be periodic checking by the Principal Officer and the same report will be properly filed

Here is a system of concurrent audit, which will also include ensuring compliance of the

  • Due diligence in KYC norms.
  • Generation of exception reports
  • Trading in dormant client codes
  • Level of awareness of staffs

The clients will be placed under low, medium and high-risk categories based on their turnover per day. Corporates / HNIs having respectable social and financial standing, Clients who make the payment on time and take delivery of shares can be considered as Low.

Illiquid Securities

The Exchanges specifies a list of Illiquid Securities where higher due diligence is to be exercised by the Brokers. The trade pattern in such scrips by our clients is monitored. In case of high volume in any scrip compared to Exchange volume, the client is asked to submit clarification.

Employee Training

We have a policy for an ongoing employee training program so that the total staff of our company completely aware of the provisions of AML and CFT procedures and amendments thereof. These training programs are totally focused for frontline staff, back-office staff, compliance staff, risk management staff and staff dealing with new customers as it is very crucial that all those concerned fully understand the rationale behind these guidelines, obligations, and requirements, implement them consistently and are sensitive to the risks of their systems being misused by unscrupulous elements, if there is any lapse on the part of any staffs of the company.

A register of attendance or participation in such an Education/ training program is maintained for the employees, kept secured with the Compliance Department.

As resolved AUTUS shall take adequate measures as per its internal policy to prevent money laundering and shall also put in place a framework for PMLA policy. The policies and procedures as mentioned above shall not be final as it may adopt additional measures to safeguard its interest with respect to activities associated with PMLA.

POLICY FOR CLIENT CODE MODIFICATION

  • Objective: To frame the guidelines for modification to client codes post-trade execution and reporting of such Client Code Modifications.
  • Brief about Client Code Modification: Client Code Modification means modification/change of the client codes after the execution of trades. Stock Exchanges provide a facility to modify any client code after the trade has been executed to rectify any error or wrong data entry done by the dealers at the time of punching orders. However, such Client Code modification is subject to certain guidelines as to the time limit within which the client code modification is to be carried out, terminal/system on which such modifications can be done, etc.

    • The facility is mainly to provide a system for modification of client codes in case of genuine errors in a punching / placing the orders. It is to be used as an exception and not a routine. To prevent misuse of the facility Stock Exchanges levy penalty/fine for all non-institutional client code modifications.

  • Scope of the Policy: This policy covers all the Client Code Modifications carried out / to be carried out in any of the client accounts controlled by HO, subject to the guidelines issued by the SEBI / Stock Exchanges from time to time, in any segment of any exchange for which AUTUS is a member broker.
  • Error Trades: “Error Trades” means the trades which will be modified / to be modified/allowed, to be modified subject to guidelines of the SEBI / Stock Exchanges and this policy.For the purpose of this Policy, only the following types of trades shall be modified/allowed to be modified:

In case of NSE (NOTE: no consistent pattern in such modifications):

Client code/name and modified client code/name are similar to each other but such modifications are not repetitive.

INACTIVE ACCOUNT POLICY

Scope: To define procedures to ensure that no unauthorized trades are done in any INACTIVE client account.

Background & Definition: Client Account would be treated as INACTIVE if there is no transaction (trade) in the account for 12 Calendar months from the last trade.

Whenever there is a request for a trade-in INACTIVE account, the client must specifically provide in writing either through his registered Email ID or through a Letter requesting to reactivate the INACTIVE account. The back office executive should also confirm from the Client of any changes in details provided by him in the interim – which should be supported by adequate duly attested documents and the same to be updated in the back office and UCC before the Client is allowed to trade.

Once the account is identified as INACTIVE, any Funds/Securities lying in our account will be returned to the client.

BUYBACK/TAKEOVER

You will not be eligible to participate in buyback/takeovers if you have sold shares on or before the record date.