This is further 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 Stock Brokers / Trading members wherein half yearly system audit has been prescribed for stock brokers who use Algorithmic Trading or provide their clients with the facility of Algorithmic Trading as per SEBI Circular CIR/MRD/16/2013 dated May 21, 2013.
The Trading Members are required to note the following:
I. Trading members who have used Algorithmic Trading facility(Type III brokers) to trade for the period ended September 2018, are required to submit the system audit report for the half year ended September 2018 (format of ToR III is attached).
Further the formats for Executive Summary Report, Corrective Action Report and Follow on Report are also attached as Annexure I, Annexure II and Annexure III respectively.
Timeline for submission of system audit reports for the half year ended September 30, 2018 is given below:
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Sr No.
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Particulars
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Due Date for submission to the Exchange
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1.
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Preliminary Audit report
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November 30, 2018
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2.
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Executive Summary Report
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3.
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Corrective Action Report
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February 28, 2019
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4.
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Follow on Report
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May 31, 2019
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Exchange will identify the Type III members based on available data / information and display the same to members in the BEFS. In case of any discrepancy, members are requested to immediately contact the officials of the Broker Supervision department (contact details given below).
II. AUDITOR SELECTION NORMS:
The System Audit should be carried out by auditor as per the norms prescribed below:
i. The Auditor shall have minimum 3 years of experience in IT audit of securities market participants e.g. stock exchanges, clearing corporations, depositories, stock brokers, depository participants etc. The audit experience should cover all the major areas mentioned under Terms of Reference (ToR) of the system audit specified by SEBI / stock exchange.
ii. It is recommended that resources employed shall have relevant industry recognized certifications e.g. D.I.S.A. (ICAI) Qualification , CISA (Certified Information System Auditor) from ISACA, CISM (Certified Information Securities Manager) from ISACA, CISSP (Certified Information Systems Security Professional) from International Information Systems Security Certification Consortium, commonly known as (ISC).
iii. The Auditor should have experience of IT audit/governance frameworks and processes conforming to industry leading practices like CobiT.
iv. The Auditor shall not have any conflict of interest in conducting fair, objective and independent audit of the Stock Broker. Further, the directors / partners of Auditor firm shall not be related to any stock broker including its directors or promoters either directly or indirectly.
v. The Auditor shall not have any cases pending against its previous audited companies/firms, which fall under SEBI’s jurisdiction, which point to its incompetence and/or unsuitability to perform the audit task.
vi. A declaration stating that the auditor is in compliance with the requirements prescribed by SEBI vide its circular no. CIR/MRD/DMS/34/2013 dated November 6, 2013 and clarifications / guidelines issued by SEBI / BSE must be included in all the audit reports.
vii.The Auditor may perform a maximum of 3 successive audits of the stock broker .Follow-on audits conducted by the auditor shall not be considered in the successive audits. In this regard, it is clarified that the count of such audits will commence from audits conducted for period ended March 31, 2014.
III. ELECTRONIC SUBMISSION THROUGH BEFS:
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. Further details on submission of System Audit Report through BEFS for the half year ended September 30, 2018 will be intimated to the members shortly.
Please note thatin case of non/late submission of System audit report for the half year ended September 30, 2018 beyond November 30, 2018, disciplinary action/charges are as follows:
1. Charges of Rs 100/- per day will be levied for the month of December 2018.
2. Further, from January 1, 2019 Exchange will withdraw trading facility for non-submission of System audit report.
In case of any further clarification the Trading Members may contact the following officials.
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Sr. No.
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Name of Official
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Tel No.
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1.
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Ms. Jyoti Thukral
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022-22728214
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2.
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Ms. Priya Pillai
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022-22728598
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For and on behalf of BSE Ltd.
Hitasha Gurbani Jyoti Thukral
Asst. General Manager Sr. Manager
Broker Supervision Broker Supervision
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