Client code modification: Sebi allows commexes to waive fine

To streamline norms with securities market, Sebi has allowed commodity derivatives exchanges to waive penalty on brokers related to client code modification in cases of genuine errors in non-institutional trades.
However, exchanges can waive the penalty on a broker only once in a quarter.
The Securities and Exchange Board of India (Sebi), which started regulating commodity markets from September last year, had come out with similar provision for the stock exchanges in October 2014.
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.

In a circular, Sebi emphasised that this client code modification facility is expected to be used more as an exception rather than a routine.
It will come into force from April 29.

Every trading member is required to enter the Client Code at the time of order entry.
Further, Sebi said proprietary trades would not be allowed to be modified as client trade and vice versa.
The commodity exchanges will have to submit a report to Sebi every quarter regarding all such client code modifications where penalties have been waived.
However, Sebi has directed the exchanges to undertake stringent disciplinary actions against stock brokers who undertake frequent client code modifications.