BSE to fine brokers for delays in risk-based supervision data

BSE today 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 data and prolonged non-compliance would result in disablement of trading terminals.
The leading stock exchange introduced a new risk-based model for supervision of market entities, following regulator Sebi's directions.
Trading members have been submitting risk-based supervision (RBS) data since 2013-14. However, there have been instances of delayed or non-submission of data.
Accordingly, the exchange, in consultation with Sebi formulated the timetable for submission of RBS data and also the penalty provisions for delayed or non-submission of such provision.

In a circular, the exchange said that brokers will have to submit risk-based supervision (RBS) data for the fiscal ending March 31, by May 15, while that for half year ending September 30, last date will be November 15.
Submission of information within 45 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 45 days but within 50 days.

The exchange will levy a fine of Rs 10,000, in addition Rs 2,000 per day for submissions made after 50 days but within 60 days.

The trading member will not be allowed to register any new clients in exchange UCC (Unique Client Code) database in case of non-submission of data even after 60 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," BSE said.
On non-submission of information after 90 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.
The Securities and Exchange Board of India (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.