 "National Stock Exchange")
After Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) has put in place a graded penalty mechanism with fines starting from Rs 10,000 for brokers who fail to make timely submission of risk-based supervision (RBS) data, and prolonged non-compliance will result in disablement of trading terminals.
The exchange introduced a new risk-based model for supervision of market entities, following Securities and Exchange Board of India's (Sebi's) directions.
Trading members have been submitting RBS data since 2013-14. However, there have been instances of delayed submission or non-submission of data.
Accordingly, the exchanges, in consultation with Sebi, have formulated a standard penalty structure for delayed submission or non-submission of RBS data, which will be applicable from March 31, 2016, submission and onwards.
Earlier this week, BSE has put in place a graded penalty mechanism in this regard.
In a circular, the NSE said that brokers will have to submit RBS data for the fiscal ending March 31, by May 15, while for half year ending September 30, the last date will be November 15.
Submission of information within five days from required timeline will not attract any penalty. However, a fine of Rs 10,000 will be imposed in case brokers make the submission after five days but within 15 days.
The exchange will levy a fine of Rs 10,000, in addition to Rs 2,000 per day for submissions made after five days but within 15 days.
The trading member will not be allowed to register any new clients in exchange's unique client code database in case of non-submission of data even after 15 days. This will be implemented across the exchanges, even if data is submitted to one bourse.
"Registration of new clients will be allowed after data is submitted to all the exchanges," NSE said.
On non-submission of information after 45 days, in addition to the above criteria, it will attract disablement of trading terminals by all stock exchanges, irrespective of the bourse where the trading member has not submitted the data.
"Disablement of terminal and no new registration of clients will be allowed till the data is submitted to all the exchanges," it added.
Besides, highest risk-rating will be assigned to the parameters for which data is not submitted by the member.
Sebi has decided to adopt this new supervision model, based on level of risks posed by a market entity, to help it better regulate the marketplace and strengthen its surveillance system.
Under the model, various market entities are divided broadly into four groups – very low risk, low risk, medium risk and high risk – and the quantum of surveillance and number of inspections would increase as per the risk level.
The move helps the surveillance system take care of most of the smaller offences, so that the investigation resources are utilised more effectively to tackle serious violations in the market place.
The data collated from the members towards risk-based supervision would be shared with the capital market regulator.
