Client code modification: Sebi says bourses can waive fines

Capital market regulator Sebi today said stock exchanges can waive penalty on stock brokers in cases related to modification of client codes for non-institutional trades.
However, stock exchanges can waive the penalty on a stock broker only once in a quarter.
The move comes after the Securities and Exchange Board of India (Sebi) received representations from stock brokers and stock exchanges to review the penalty structure in cases of client code modifications.
Accordingly, in a circular, the market regulator said "stock exchanges may waive penalty for a client code modification where stock broker is able to produce evidence to the satisfaction of the stock exchange to establish that the modification was on account of a genuine error".

"Not more than one such waiver per quarter may be given to a stock broker for modification in a client code," the market regulator added.
Further, proprietary trades would not be allowed to be modified as client trade and vice versa.

"Stock exchanges shall submit a report to Sebi every quarter regarding all such client code modifications where penalties have been waived," Sebi said.
However, Sebi has directed the stock exchanges to undertake "stringent disciplinary actions against stock brokers who undertake frequent client code modifications".
Besides, it has asked the bourses to take necessary steps to put in place systems for implementation of the amended norms.