Penalty/Disciplinary action for delay in submission of Internal Audit Report and adverse observations in the Internal Audit Report

• Notice No: 20220601-52
• Notice Date: 01 Jun 2022
• Category: Compliance
• Segment: General

To All Members,

Please refer to Exchange notice nos. 20180214-31 dated February 14, 2018, prescribing penalty for failure to furnish Internal Audit report to Stock Exchanges within specified timelines (Annexure B - Sr. No.2) and Exchange notice no. 20210422-42 dated April 22, 2021 prescribing the penalty structure for adverse observations in the internal audit reports (Annexure V).

In this regard, please note that with an objective to improve regulatory compliances, Exchange has undertaken review of the aforementioned penalty structure and the revised penalty framework is given below: -

A.    Revision in penalty for delay in submission or non-submission of Internal Audit Report

Penalty/Disciplinary action for delays in submission

Penalty/disciplinary action in case of Repeat violation

For Active Trading Members (who are required to submit the internal audit report) Timeline for submission: 2 Months 1         For 1st week after due date, Charges of Rs. 2,500/- per day.                    2         Charges of Rs. 5000/- per day from second week after due date.                                        3         In case of non-submission within three weeks from the due date of submission, new client registration to be prohibited and notice of 7 days for disablement of trading facility till submission of data/report. The disablement notice issued to the member shall be shared with all the Exchanges for information.                               4         In case of non-submission within four weeks from the due date of submission, Member shall be disabled in all segments till submission of data/report

1         In case of a repeat instance by the Member, levy of applicable monetary penalty along with an escalation of 50%. 2         In case of non-submission within three weeks from the due date of submission, new client registration to be prohibited and notice of 7 days for disablement of trading facility till submission of data/report. 3         The disablement notice issued to the member shall be shared with all the Exchanges for information. In case of non-submission within four weeks from the due date of submission, Member shall be disabled in all segments till submission of data/report.

B.     Revision in penalty for adverse observations in the Internal Audit Report:

In order to bring parity between the action of adverse observations reported by Internal Auditor during the half yearly submission and observation during the course of inspection, the Penalty Framework as provided in Exchange notice no. 20180214-31 dated February 14, 2018, and other relevant circulars issued from time to time shall be applicable for such adverse observations in the Internal Audit Report.

The revised penalty structure as mentioned above for late submissions as well as for non-compliances observed in the internal audit reports shall be applicable w.e.f. July 1, 2022.

Trading Members are advised to take note and comply with the above guidelines.

For and on behalf of BSE Ltd.

Hitesh Desai	Kiran Sawant
Additional General Manager	Asst. General Manager
Brokers’ Supervision	Brokers’ Supervision