Member’s attention is drawn to SEBI circular no. CIR/MRD/DMS/34/2013 dated November 6, 2013; and Exchange notice no. 20131107-6 dated November 7, 2013, on the Annual System Audit of Stockbrokers / Trading members. and Exchange notice no. 20230331-66 dated March 31, 2023, on Revised and Standardized Terms of Reference for System Audit of Stockbroker / Trading member across Exchanges.
Accordingly, trading members are required to carry out “System Audit” of their trading facility for the period ended March 31, 2023, as per the applicability criteria given below in Table 1:
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Table 1: Applicability of Terms of Reference
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Sr. No.
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Particulars
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Broker
Type*
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Terms of Reference
(TOR)
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Presence of broker
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Periodicity of submission of report
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1
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IML / IBT / DMA / STWT / SOR users and who may also be Type I brokers.
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II
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TOR II
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Presence in not more than 10 locations and number of terminals are not more than 50.
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Once in two
years. **
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Presence in more than 10 locations or number of terminals are more than 50.
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Annual
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2
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Algo users and who may also be Type II brokers
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III
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TOR III
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Not Applicable
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Half yearly
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Type I Stockbrokers who are using trading software provided by the Exchange (BOLT/BOLT PLUS) and/or software provided by Exchange owned application Service Provider (ASP) shall not be covered in the system audit.
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* Type of stock broker as specified in SEBI circular CIR/MRD/DMS/34/2013 dated November 06, 2013
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**Annual, if depository participant or is involved in offering any other financial services.
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Timelines for submission of System Audit Report is given below in Table 2:
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Table 2: Report Submission Timelines
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Audit Period
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Due Date for Submission
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Preliminary Audit Report submission
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Corrective Action Report (If Applicable)
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Follow on Audit Report (If Applicable)
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Half Yearly (October 2022 - March 2023)
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June 30, 2023
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September 30, 2023
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December 31, 2023
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Yearly Submission (April 2022 - March 2023)
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June 30, 2023
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September 30, 2023
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December 31, 2023
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Once in 2 Years (April 2021 – March 2023)
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June 30, 2023
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September 30, 2023
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December 31, 2023
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Exchange has identified the broker type and periodicity of submission of the system audit report based on available data / information and is displayed in BEFS Portal. In case of any discrepancy, stockbrokers are requested to immediately communicate on email id bse.msc(at)bseindia.com
Members may note that the above-mentioned reports are required to be submitted only in electronic form through BEFS (BSE Electronic Filing System) – https://befs.bseindia.com.
Trading members are requested to take note that, for each non-compliance reported by auditor, trading members are required to submit corrective action taken report as per above mentioned timelines. Further, based on audit findings and related risks it should indicate if a follow-on audit is required to review the status of NCs (non-compliances). To ensure that the timely corrective actions are taken by the Trading members, follow-on audit, if any, shall be scheduled by the trading member as per above mentioned timelines.
Submission of System Audit Report with Management comments shall be considered complete only after Member submits the report to the Exchange and receives an acknowledgment email. Saved reports/reports submitted by auditor will not be considered as final submission. Further, auditor must provide compliance status for each TOR item i.e., Compliant/Non-Compliant and Not Applicable and in case of any TOR item which is not applicable, auditor is required to provide justification for the non-applicability of said TOR. All artefacts required by auditor need to be securely stored and on requirement produce at minimal interval.
Stock brokers are requested to refer to the following documents while submitting the system audit report.
· Auditor Selection Process – Annexure I
· Audit Process – Annexure II
· Auditor User Manual for System Audit Report (SAR) – Annexure III
· Member User Manual for System Audit Report (SAR) – Annexure IV
· Terms of Reference (TOR) -II
· Terms of Reference (TOR) -III
The following penalty/disciplinary actions would be initiated against the Member for late/non- submission of System Audit Report in Table 3 below.
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Table 3: Penalty/Disciplinary Actions
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Sr. No
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Particulars
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Action
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1
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Submission within 1 month from the end of due date of submission.
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Penalty of Rs. 200/- per day
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2
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Submission after 1 month but within 3 months from the end of the due date for submission.
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Penalty of Rs. 500/- per day
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3
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Non-Submission within 3 months from the end of due date for submission.
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Disablement of trading facility across segments after giving 2 weeks’ notice.
Disablement notice issued to the member shall be shared with all the Exchanges for information.
Member will be enabled only after submission of system audit report.
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4
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Any change or additions in the above would be communicated through a separate notice
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Members are requested to take note of the above and ensure compliance to avoid disincentives.
In case of any queries/clarifications, you may contact us on the below numbers in Table 4 below.
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Table 4: Contact Details
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Sr. No
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Purpose
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Contact Nos.
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Email ID
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1
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System Audit XBRL related issues
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1800233 0445
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bse.auditreport(at)bseindia.com
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2
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System Audit Process related
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22725841/5842/8888
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bse.msc(at)bseindia.com
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For and on behalf of BSE Ltd.
Devendra Kulkarni Shivkumar Pandey
Additional General Manager Chief Information Security Officer |