BSE to penalise brokers for delay in supervisory data filing

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 leading to 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 delay or non-submission of data.
Accordingly, the exchange, in consultation with Sebi, laid down the timetable for such submission and also penalty provisions.
In a circular, the exchange said brokers will have to submit RBS data for the half year ended September 30, 2016 by November 30 this year. Earlier this week, NSE had also asked brokers to submit the data by next month-end.

BSE -- formerly called the Bombay Stock Exchange -- asked the members to make the submission electronically too.

The exchange said a fine of Rs 10,000 will be imposed in case brokers make the submission within five days of the due date. There will be an additional Rs 2,000 per day for submissions made after 5 days of the cut-off but within 15 days.
The trading member will not be allowed to register any new clients in bourse UCC (Unique Client Code) database in the case of non-submission of data even after 15 days. This will be implemented across exchanges even if data are submitted to one bourse. Registration of new clients will be allowed after data are submitted to all bourses.

In addition, "highest risk-rating will be assigned to the parameters for which data are not submitted by the trading member", BSE 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 are submitted to all the exchanges," the exchange noted.
The Securities and Exchange Board of India (Sebi) has decided to adopt this new supervision model based on the 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, low, medium 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 marketplace. The data collated from the members towards risk-based supervision will be shared with Sebi.