Annexure - 1

INDEX

MANDATORY DOCUMENTS AS PRESCRIBED BY SEBI & EXCHANGES

S. No. Name of the Document Brief Significance of the Document Page No
1 Index Index & Instructions/ check list for filling KYC form
Annexure - 1
Tariff sheet Document detailing the rate/amount of brokerage and other 1-2
charges levied on the client for trading on the stock
exchange(s) (to be added by the stock broker).
2 Part-1 A. KYC form 3-4
Account Opening Form
Part 1 -Annexure -2 (J)
Part -2 B. Document captures the additional information about the 5-8
Trading Account Related constituent relevant to trading account and an
Details - Annexure -3 instruction/check list. & FATCA declaration
3 Investor Charter – Stock Publishing Investor Charter and disclosure of Investor 9-12
Brokers Complaints by Stock Brokers

4 Rights and Obligations Document stating the Rights & Obligations of stock 13-18
Annexure -4 broker/trading member, sub-broker and client for trading on
exchanges (including additional rights & obligations in case of
internet/wireless technology based trading).
5 Risk Disclosure Document Document detailing risks associated with dealing in the 19-22
(RDD) Annexure -5 securities market.
6 Guidance note Document detailing do’s and don’ts for trading on exchange, 23-24
Annexure -6 for the education of the investors.
7 Policies and Procedures Document describing significant policies and procedures of the 25-26
stock broker (to be added by the stock broker).
8 Brief write up on PML Note / FAQ on Anti-Money Laundering (AML) and 27-30
Countering the Financing of Terrorism (CFT)
SUPPLEMENTARY DOCUMENTS - FATCA DECLARTION & ULTIMATE BENEFICIAL OWNERSHIP
(UBO) FORM FOR NON-INDIVIDUALS
FATCA FATCA Declaration & UBO declaration 8

Format for Confirmation of Receipt of Executed Documents & check list

Confirmation of Receipt of Executed Documents to be provided on Letter Head and check list of 31-35
supporting documents require.
Name of stock broker/trading member/clearing AXIS CAPITAL LIMITED (ACL)
member:
SEBI Registration No. and date: BSE(Cash)/ NSE(Cash) /NSE (F&O) & MSEIL(Cash) : SEBI
REG. No. INZ000189931 - DT. August 02, 2018.
Registered Office Address: Axis House,8th Floor, Wadia International Centre,Pandurang
Budhkar Marg, Worli,Mumbai-400025,India.
Ph: 91-22-43252525 Fax: 91-22-43254599 Website:
www.axiscapital.co.in
Correspondence Office Address: Axis House, 1st floor, C-2 Wadia Interernational centre, P.B.
Marg, Worli, Mumbai – 400025,India.
Ph.: 91-22-43252525 Fax: 91-22-43254599
Website: www.axiscapital.co.in
Compliance Officer Name: Mr. Kayomarz Patel, Ph.: 91-22-43255545
E-mail ID: [email protected]
Joint Co-CEO Names: Mr. Salil Pitale & Mr. Chirag Negandhi, Ph.: 91-22- 43254571
E-mail ID : [email protected]
For any grievance/dispute please contact Axis Capital Limited at the above address or E-mail ID - [email protected]
/ [email protected] and Phone no. 91-22-43252525. In case not satisfied with the response, please contact the
concerned exchange(s) as follows: NSE Investor Grievance Cell / Arbitration at [email protected] ; Ph: 91-22-26598190,
BSE Investor Grievance Cell / Arbitration at [email protected] ; Ph: 91-22-22728097 and MSEIL Investor Grievance
Cell / Arbitration at [email protected]; [email protected]; Ph: 91-22-61129000 (Ext:9028)

1
 INSTRUCTIONS/ CHECK LIST FOR TRADING ACCOUNT OPENING
1. Additional documents in case of trading in derivatives segments - illustrative list:

Copy of ITR Acknowledgement Copy of Annual Accounts

In case of salary income - Salary Slip, Copy of Form 16 Net worth certificate
Copy of demat account holding statement. Bank account statement for last 6 months
Any other relevant documents substantiating ownership of Self declaration with relevant supporting documents.
assets.
*In respect of other clients, documents as per risk management policy of the stock broker need to be provided by the
client from time to time.

2. Copy of cancelled cheque leaf/ pass book/bank statement specifying name of the constituent, MICR Code or/and
IFSC Code of the bank should be submitted.
3. Demat master or recent holding statement issued by DP bearing name of the client.
4. For individuals:
a. Stock broker has an option of doing ‘in-person’ verification through web camera at the branch office of the
stock broker/sub-broker’s office.
b. In case of non-resident clients, employees at the stock broker’s local office, overseas can do in-person’
verification. Further, considering the infeasibility of carrying out ‘In-person’ verification of the non-
resident clients by the stock broker’s staff, attestation of KYC documents by Notary Public, Court,
Magistrate, Judge, Local Banker, Indian Embassy / Consulate General in the country where the client
resides may be permitted.
5. For non-individuals:
a. Form need to be initialized by all the authorized signatories.
b. Copy of Board Resolution or declaration (on the letterhead) naming the persons authorized to deal in
securities on behalf of company/firm/others and their specimen signatures.
________________________________________________________________________________________

Proprietary-Trading disclosure:
This has reference to circular no. SEBI / MRD / SE / CIR.- 42 / 2003 dated November 19. 2003, As mandated by SEBI
and/ or the Exchanges(S), the stock broker hereby makes disclosure to the client that the stock broker may, from time-
to-time, make investments in securities with a view to deploy its own surplus funds on its own proprietary account
without any specific intimation to the client in this regard.
TARIFF SHEET/ BROKERAGE STRUCTURE

The rates for items 2 – 6 may change as and when changes in the same are made by the respective statutory authority.
Input the mutually agreed brokerage rate.

1. Brokerage To be negotiated
2. Goods & Service Tax (GST) 18 % on (Brokerage value + Exchange transaction
charges + SEBI Fees)
3. Securities Transaction Tax (STT) 0.10% of market value of transaction
4. Exchange Transaction Chrges Max 0.00345% of market value of transaction
5. Stamp Duty Duty (depends on the 0.015 % of market value of transaction only on Buy
rate of respective states) trades
6. SEBI turnover fees 0.0001% of market value of transaction

Client’s GST NO. :

Client’s C-KYC NO. (KYC identifier no.) :

Signature & company stamp

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 Annexure – 2 (J)
PART I - KNOW YOUR CLIENT (KYC) APPLICATION FORM (For Non-Individuals)
AXIS CAPITAL LIMITED (ACL)
Axis House Level 5, C-2 Wadia International Centre, P.B.Marg,Worli, Mumbai-400025
Photograph of
Authorised person

Please affix the

recent passport size
photograph and sign
across it
Please fill this form in ENGLISH and in BLOCK LETTERS

A. IDENTITY DETAILS

1 Name of the Applicant

2 Date of incorporation Place of incorporation

3 Date of commencement of business

4 a) PAN b) Registration No. (e.g. CIN)

5 Status (please tick any one):

Private Limited Co. Bank Partnership FDI

Public Ltd. Co. Government Body FI FPI- CATEGORY- I

Body Corporate Non Government Organization HUF FPI- CATEGORY- II

Trust Defense Establishment AOP LLP

Charities Society NGO’s BOI

Others (please specify)

B. ADDRESS DETAILS

1 Correspondence Address City/town/village PIN Code

State Country

2 Specify the proof of address submitted for correspondence address

Tel. (Off.) Tel. (Res.)

3 Contact Details Fax No. Mobile No.

Email ID

Registered Address (if

4 different from above or City/town/village PIN Code
mention N.A):
State Country

5 Specify the proof of address submitted for registered address

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C. OTHER DETAILS
Details of Promoters/ Partners/ Karta / Trustees and whole time directors:
Aadhar No. of
Residential /
Sr. DIN of whole Promoters/
Name PAN Registered Photograph
No. time directors Partners/
Address
Karta

Make a separate sheet if required

DECLARATION
I/We hereby declare that the details furnished above are true and correct to the best of my/our knowledge and belief and I/we
undertake to inform you of any changes therein, immediately. In case any of the above information is found to be false or
untrue or misleading or misrepresenting, I am/we are aware that I/we may be held liable for it.
Date

Name & Signature of the Authorised Signatory(ies) & company stamp

================================================================ =
FOR OFFICE USE ONLY
(Originals verified & Self-Attested document copies received

Name & Signature of the Authorised

Signatory

Seal/Stamp of the
Date D D M M Y Y Y Y
intermediary

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 RT-2 / Annexure – 3
TRADING ACCOUNT RELATED Details
(Do not leave blank spaces please mention N.A. OR Nil if applicable.)
A. OTHER DETAILS For Non- Individuals
Gross Annual Income Details (please specify): Income Range per annum as on date ( / / )
1
Below ` 1 lac ` 10- 25 lac
` 1- 5 lac ` 25 lac- 1 crore
` 5- 10 lac More than ` 1 crore

2 Networth Amount (`) __________________________ (Rs) In Word______________________________________

D D M M Y Y Y Y
As on (date) (Networth should not be older than 1 year)

3 Please tick, if applicable:

Politically Exposed Person (PEP), Related to a Politically Exposed Person (PEP), Not applicable

4 Any other information

B. BANK ACCOUNT(S) DETAILS

1. Name of Bank →
Branch address → Type of Account :
→ CURRENT

Bank A/c. No. → MICR Number ↓ IFSC code ↓

(Please provide cancelled cheque leaf for MICR & IFSC code)

C. DEPOSITORY ACCOUNT(S) DETAILS

1. Depository Participant Name ↓ Depository Type Beneficiary name ↓
(NSDL/CDSL) ↓
✓ ✓ ✓

DP ID → ✓ Beneficiary ID ✓
(BO ID) →
(Please provide copy of client master issued by DP/ Holding Statement. Shares bought by you will be transferred to
your DP a/c. stated by you at Sr. No.1)

D. TRADING PREFERENCES
*Please sign in the relevant boxes where you wish to trade. The segment not chosen should be struck off
by the client.
Exchange Cash Segment Derivatives Segment (F&O)

BSE Co. Stamp & Sign here Co. Stamp & Sign here

NSE Co. Stamp & Sign here Co. Stamp & Sign here

MSEI Co. Stamp & Sign here N.A.

# If, in future, the client wants to trade on any new segment/new exchange, separate authorization/letter should
Be taken from the client by the stockbroker.

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E. PAST REGULATORY ACTION, IF ANY
Details of any action/proceedings initiated/pending/ taken by SEBI/ Stock exchange/any NO
other authority against the applicant/constituent or its Partners/promoters/whole time
directors/authorized persons in charge of dealing in securities during the last 3 years:
(If applicable provide details separately)

F. DEALINGS THROUGH SUB-BROKERS AND OTHER STOCK BROKERS

▪ If client is dealing through the sub-broker, provide the following details:
Sub-broker’s Name:
SEBI Registration No.(s):
Registered office address:
Ph: Fax: Website:

▪ Whether dealing with any other stock broker/sub-broker (if case dealing with multiple stock brokers/
sub-brokers, provide details of all)
Name of stock broker: Name of sub broker if any :
Client Code: Exchange(s):
Details of disputes/dues pending from/to such stock broker/sub- broker:
G. ADDITIONAL DETAILS
▪ Whether you wish to receive physical contract note or ACL does not offer ECN facility to clients
Electronic Contract Note (ECN) (please specify): whose trades are not settled through
custodians.
▪ Specify your Email id’s:
1. For UCC with stock exchanges (note that stock 1.
exchange will send mails to this ID)
2. For back office operations (Broker will send 2.
communication to both the mail id.)
▪ 1. Mobile No.of contact person (note that stock exchange 1.
will send SMS to this mobile giving information of trade)
2. Mobile no. of authorised person (for all other 2.
communication)
▪ Whether you wish to avail of the facility of internet trading/ ACL does not offer this facility.
wireless technology (please specify):
▪ Number of years of Investment/Trading Experience:
▪ In case of non-individuals, name, designation, PAN, UID,
signature, residential address and Photographs of persons
authorized to deal in securities on behalf of
company/firm/others:
▪ Whether you wish to receive physical or electronic copy
of the following standard documents, which are part of
the account opening kit :
Physical : □
a) Rights & Obligations of stock broker, sub-broker and
client for trading on exchanges (including additional or
rights & obligations in case of internet/ wireless
technology based trading);
b) Uniform Risk Disclosure Documents (for all
Electronic:□ will be e-mailed to you
on your registered e-mail id.
segments/ exchanges); and
▪ c) Guidance Note detailing Do’s and Don’ts for trading on
stock exchanges.
• Any other information:
H. INTRODUCER DETAILS (optional) (to be completed by Axis Capital)
Name of the Introducer:
Status of the Introducer:
Sub-broker/Remisier/AuthorizedPerson/ Existing
Client/Others, please specify Signature of the Introducer
Address and phone no. of the Introducer:

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 I. NOMINATION DETAILS (for individuals only)
I/We wish to nominate I/We do not wish to nominate
Name of the Nominee: …………………………………………………………………………
Relationship with the Nominee: ……………………………………………………………………………………
PAN of Nominee: ……………………………………. Date of Birth of Nominee: …………………….
Address and phone no. of the Nominee: ……………………………………………………………………
If Nominee is a minor, details of guardian:
Na4me of guardian: …………………………………………………….…………..………………………
Address and phone no. of Guardian: ……………………………..………………………..……………..
Signature of guardian…………………………………………….……………………………………….

WITNESSES (ONLY APPLICABLE IN CASE THE ACCOUNT HOLDER HAS MADE NOMINATION)
1. NAME ---------------------------------------------------- 2. NAME -----------------------------------------------
SIGNATURE -------------------------------------------- SIGNATURE ------------------------------------------
ADDRESS ----------------------------------------------- ADDRESS ---------------------------------------------
-------------------------------------------------------------- ----------------------------------------------------------

DECLARATION
1. I/We hereby declare that the details furnished above are true and correct to the best of my/our knowledge and
belief and I/we undertake to inform you of any changes therein, immediately. In case any of the above
information is found to be false or untrue or misleading or misrepresenting, I am/we are aware that I/we may
be held liable for it.

2. I/We confirm having read/been explained and understood the contents of the document on policy and
procedures of the stock broker and the tariff sheet.

3. I/We further confirm having read and understood the contents of the ‘Rights and Obligations’ document(s)
and ‘Risk Disclosure Document’. I/We do hereby agree to be bound by such provisions as outlined in these
documents. I/We have also been informed that the standard set of documents has been displayed for
Information on stock broker’s designated website, if any.

Place -----------------------
Date: _____/______/______ (---------------------------------------------------)
Co. Stamp & Signature of authorized signatory of
client ______________________________________________________________________________________
FOR OFFICE USE ONLY
I / We undertake that we have made the client aware of ‘Policy and Procedures’, tariff sheet and all the non-
mandatory documents. I/We have also made the client aware of ‘Rights and Obligations’ document (s), RDD and
Guidance Note. I/We have given/sent him a copy of all the KYC documents. I/We undertake that any change in
the ‘Policy and Procedures’, tariff sheet and all the non-mandatory documents would be duly intimated to the
clients. I/We also undertake that any change in the ‘Rights and Obligations’ and RDD would be made available
on my/our website, if any, for the information of the clients.

Stock Broker’s Signature Seal/Stamp of the intermediary

For Axis Capital Limited

Director /Authorised Signatory Date: _____/______/______

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FATCA & CRS Declaration - For Non Individual Clients
FATCA - Declaration

Please tick the applicable tax resident declaration – (Any one)

1. Is “Entity” a tax resident of any country other than India Yes No
(If yes, please provide country/ies in which the entity is a resident for tax purposes and the associated Tax ID number below.)
Sr. Country Tax Identification Identification Type
No. Number* (TIN or Other*, please specify)
1.

2.

3.

* In case Tax Identification Number is not available, kindly provide its functional equivalent.
In case TIN or its functional equivalent is not available, please provide Company Identification number or Global
Entity Identification Number or GIIN, etc.

In case the Entity's Country of Incorporation / Tax residence is U.S. but Entity is not a Specified U.S. Person, mention
Entity's exemption code here;

UBO Declaration (Mandatory for all entities except, a Publicly Traded Company or a related entity of Publicly
Traded Company)

Category (Please tick applicable category):

Unlisted Company Partnership Firm Limited Liability Partnership Company

Unincorporated association / body of individuals Public Charitable Trust Religious Trust

Private Trust Others (please specify______________________________________________)

Please list below the details of controlling person(s), confirming ALL countries of tax residency / permanent residency /
citizenship and ALL Tax Identification Numbers for EACH controlling person(s). (Please attach additional sheets if
necessary)

Note: Attach valid documentary proof like Shareholding pattern duly self-attested by Authorized Signatory / Company
Secretary

Declaration:

I/We have understood the information requirements of Axis Capital Ltd. (read along with the FATCA & CRS Instructions)
and hereby confirm that the information provided by me / us on this Form is true, correct, and complete. I/We also confirm
that I/we have read and understood the FATCA & CRS Terms and Conditions below and hereby accept the same.

Name : ________________________________________________________ Place ______________________

Designation : ______________________________________________________ Date ______/ _______/ _______

Signature & company stamp Signature & company stamp Signature & company stamp

8
 Investor Charter – Stock Brokers
VISION

To follow highest standards of ethics and compliances while facilitating the trading by clients in securities in a fair and
transparent manner, so as to contribute in creation of wealth for investors.

MISSION

i) To provide high quality and dependable service through innovation, capacity enhancement and use of
technology.
ii) To establish and maintain a relationship of trust and ethics with the investors.
iii) To observe highest standard of compliances and transparency.
iv) To always keep ‘protection of investors’ interest’ as goal while providing service.

Services provided to Investors

• Execution of trades on behalf of investors.
• Issuance of Contract Notes.
• Issuance of intimations regarding margin due payments.
• Facilitate execution of early pay-in obligation instructions.
• Settlement of client’s funds.
• Intimation of securities held in Client Unpaid Securities Account (CUSA) Account.
• Issuance of retention statement of funds.
• Risk management systems to mitigate operational and market risk.
• Facilitate client profile changes in the system as instructed by the client.
• Information sharing with the client w.r.t. exchange circulars.
• Redressal of Investor’s grievances.

Rights of Investors
• Ask for and receive information from a firm about the work history and background of the person handling your
account, as well as information about the firm itself.
• Receive complete information about the risks, obligations, and costs of any investment before investing.
• Receive recommendations consistent with your financial needs and investment objectives.
• Receive a copy of all completed account forms and agreements.
• Receive account statements that are accurate and understandable.
• Understand the terms and conditions of transactions you undertake.
• Access your funds in a timely manner and receive information about any restrictions or limitations on access.
• Receive complete information about maintenance or service charges, transaction or redemption fees, and penalties.
• Discuss your grievances with compliance officer of the firm and receive prompt attention to and fair consideration
of your concerns.

Various activities of Stock Brokers with timelines

S.No. Activities Expected Timelines
1. KYC entered into KRA System and CKYCR 10 days of account opening
2. Client Onboarding Immediate, but not later than one week
3. Order execution Immediate on receipt of order, but not later than the same
day
4. Allocation of Unique Client Code Before trading
5. Copy of duly completed Client Registration 7 days from the date of upload of Unique Client Code to the
Documents to clients Exchange by the trading member
6. Issuance of contract notes 24 hours of execution of trades
7. Collection of upfront margin from client Before initiation of trade

9
 8. Issuance of intimations regarding other margin due At the end of the T day
payments
9. Settlement of client funds 30 days / 90 days for running account settlement (RAS) as
per the preference of client.
If consent not given for RAS – within 24 hours of pay-out

10. ‘Statement of Accounts’ for Funds, Securities and Weekly basis (Within four trading days of following week)
Commodities
11. Issuance of retention statement of 5 days from the date of settlement
funds/commodities
12. Issuance of Annual Global Statement 30 days from the end of the financial year

13. Investor grievances redressal 30 days from the receipt of the complaint

DOs and DON’Ts for Investors

DOs DON’Ts
1. Read all documents and conditions being agreed before signing 1. Do not deal with unregistered stock broker.
the account opening form.
2. Receive a copy of KYC, copy of account opening documents and 2. Do not forget to strike off blanks in your
Unique Client Code. account opening and KYC.
3. Read the product / operational framework / timelines related to 3. Do not submit an incomplete account opening
various Trading and Clearing & Settlement processes and KYC form.
4. Receive all information about brokerage, fees and other charges
levied. 4. Do not forget to inform any change in
5. Register your mobile number and email ID in your trading, demat information linked to trading account and obtain
and bank accounts to get regular alerts on your transactions. confirmation of updation in the system.
6. If executed, receive a copy of Power of Attorney. However, 5. Do not transfer funds, for the purposes of
Power of Attorney is not a mandatory requirement as per SEBI / trading to anyone other than a stock broker. No
Stock Exchanges. Before granting Power of Attorney, carefully payment should be made in name of employee
examine the scope and implications of powers being granted. of stock broker.
7. Receive contract notes for trades executed, showing transaction
price, brokerage, GST and STT etc. as applicable, separately, 6. Do not ignore any emails / SMSs received with
within 24 hours of execution of trades. regards to trades done, from the Stock Exchange
8. Receive funds and securities / commodities on time within 24 and raise a concern, if discrepancy is observed.
hours from pay-out. 7. Do not opt for digital contracts, if not familiar
9. Verify details of trades, contract notes and statement of account with computers.
and approach relevant authority for any discrepancies. Verify
trade details on the Exchange websites from the trade verification 8. Do not share trading password.
facility provided by the Exchanges. 9. Do not fall prey to fixed / guaranteed returns
10. Receive statement of accounts periodically. If opted for running schemes.
account settlement, account has to be settled by the stock broker
as per the option given by the client (30 or 90 days). 10. Do not fall prey to fraudsters sending emails and
11. In case of any grievances, approach stock broker or Stock SMSs luring to trade in stocks / securities
Exchange or SEBI for getting the same resolved within prescribed promising huge profits.
timelines 11. Do not follow herd mentality for investments.
Seek expert and professional advice for your
investments.

Grievance Redressal Mechanism

Level 1 – Approach the Stock Broker at the designated Investor Grievance e-mail ID of the stock broker. The Stock Broker
will strive to redress the grievance immediately, but not later than 30 days of the receipt of the grievance.
Level 2 – Approach the Stock Exchange using the grievance mechanism mentioned at the website of the respective exchange.
Complaints Resolution Process at Stock Exchange explained graphically:

10
Timelines for complaint resolution process at Stock Exchanges against stock brokers
S.No. Activities Timelines for activity
1. Receipt of Complaint Day of complaint (C Day).

2. Additional information sought from the C + 7 Working days.

investor, if any, and provisionally forwarded
to stock broker.
3. Registration of the complaint and C+8 Working Days i.e. T day.
forwarding to the stock broker.
4. Amicable Resolution. T+15 Working Days.

5. Refer to Grievance Redressal Committee T+16 Working Days.

(GRC), in case of no amicable resolution.
6. Complete resolution process T + 30 Working Days.
post GRC.
7. In case where the GRC Member requires T + 45 Working Days.
additional information, GRC order shall be
completed within.
8. Implementation of GRC Order. On receipt of GRC Order, if the order is in favour of the
investor, debit the funds of the stock broker. Order for debit
is issued immediately or as per the directions given in GRC
order.
9. In case the stock broker is aggrieved by the
GRC order, will provide intention to avail
arbitration Within 7 days from receipt of order
10 Investor is eligible for interim relief from Investor Protection
Fund (IPF).The interim relief will be 50% of the GRC order
amount or Rs.2 lakhs whichever is less. The same shall be
If intention from stock broker is received and provided after obtaining an Undertaking from the investor.
the GRC order amount is upto Rs.20 lakhs
11 Stock Broker shall file for arbitration Within 6 months from the date of GRC recommendation

12 The GRC order amount shall be released to the investor after

In case the stock broker does not file for adjusting the amount released as interim relief, if any.
arbitration within 6 months

11
Handling of Investor’s claims / complaints in case of default of a Trading Member / Clearing Member (TM/CM)

Default of TM/CM
Following steps are carried out by Stock Exchange for benefit of investor, in case stock broker defaults:
• Circular is issued to inform about declaration of Stock Broker as Defaulter.
• Information of defaulter stock broker is disseminated on Stock Exchange website.
• Public Notice is issued informing declaration of a stock broker as defaulter and inviting claims within specified period.
• Intimation to clients of defaulter stock brokers via emails and SMS for facilitating lodging of claims within the specified
period.

Following information is available on Stock Exchange website for information of investors:

• Norms for eligibility of claims for compensation from IPF.
• Claim form for lodging claim against defaulter stock broker.
• FAQ on processing of investors’ claims against Defaulter stock broker.
• Provision to check online status of client’s claim.

Level 3 – The complaint not redressed at Stock Broker / Stock Exchange level, may be lodged with SEBI on SCORES (a
web based centralized grievance redressal system of SEBI) @ https://scores.gov.in/scores/Welcome.html

12
 Annexure – 4
RIGHTS AND OBLIGATIONS OF STOCK BROKERS, SUB-BROKERS AND CLIENTS
as prescribed by SEBI and Stock Exchanges
1. The client shall invest/trade in those securities/contracts/other instruments admitted to dealings on the
Exchanges as defined in the Rules, Byelaws and Regulations of Exchanges/ Securities and Exchange
Board of India (SEBI) and circulars/notices issued there under from time to time.

2. The stock broker, sub-broker and the client shall be bound by all the Rules, Byelaws and Regulations of
the Exchange and circulars/notices issued there under and Rules and Regulations of SEBI and relevant
notifications of Government authorities as may be in force from time to time.

3. The client shall satisfy itself of the capacity of the stock broker to deal in securities and/or deal in
derivatives contracts and wishes to execute its orders through the stock broker and the client shall from
time to time continue to satisfy itself of such capability of the stock broker before executing orders
through the stock broker.

4. The stock broker shall continuously satisfy itself about the genuineness and financial soundness of the
client and investment objectives relevant to the services to be provided.

5. The stock broker shall take steps to make the client aware of the precise nature of the Stock broker’s
liability for business to be conducted, including any limitations, the liability and the capacity in which the
stock broker acts.

6. The sub-broker shall provide necessary assistance and co-operate with the stock broker in all its dealings
with the client(s).

CLIENT INFORMATION

7. The client shall furnish all such details in full as are required by the stock broker in "Account Opening
Form” with supporting details, made mandatory by stock exchanges/SEBI from time to time.

8. The client shall familiarize himself with all the mandatory provisions in the Account Opening documents.
Any additional clauses or documents specified by the stock broker shall be non-mandatory, as per terms &
conditions accepted by the client.

9. The client shall immediately notify the stock broker in writing if there is any change in the information in
the ‘account opening form’ as provided at the time of account opening and thereafter; including the
information on winding up petition/insolvency petition or any litigation which may have material bearing
on his capacity. The client shall provide/update the financial information to the stock broker on a periodic
basis.

10. The stock broker and sub-broker shall maintain all the details of the client as mentioned in the account
opening form or any other information pertaining to the client, confidentially and that they shall not
disclose the same to any person/authority except as required under any law/regulatory requirements.
Provided however that the stock broker may so disclose information about his client to any person or
authority with the express permission of the client.

MARGINS

11. The client shall pay applicable initial margins, withholding margins, special margins or such other
margins as are considered necessary by the stock broker or the Exchange or as may be directed by SEBI
from time to time as applicable to the segment(s) in which the client trades. The stock broker is permitted
in its sole and absolute discretion to collect additional margins (even though not required by the
Exchange, Clearing House/Clearing Corporation or SEBI) and the client shall be obliged to pay such
margins within the stipulated time.

13
 12. The client understands that payment of margins by the client does not necessarily imply complete
satisfaction of all dues. In spite of consistently having paid margins, the client may, on the settlement of its
trade, be obliged to pay (or entitled to receive) such further sums as the contract may dictate/require.

TRANSACTIONS AND SETTLEMENTS

13. The client shall give any order for buy or sell of a security/derivatives contract in writing or in such form
or manner, as may be mutually agreed between the client and the stock broker. The stock broker shall
ensure to place orders and execute the trades of the client, only in the Unique Client Code assigned to that
client.

14. The stock broker shall inform the client and keep him apprised about trading/settlement cycles,
delivery/payment schedules, any changes therein from time to time, and it shall be the responsibility in
turn of the client to comply with such schedules/procedures of the relevant stock exchange where the
trade is executed.

15. The stock broker shall ensure that the money/securities deposited by the client shall be kept in a separate
account, distinct from his/its own account or account of any other client and shall not be used by the stock
broker for himself/itself or for any other client or for any purpose other than the purposes mentioned in
Rules, Regulations, circulars, notices, guidelines of SEBI and/or Rules, Regulations, Bye-laws, circulars
and notices of Exchange.

16. Where the Exchange(s) cancels trade(s) suo moto all such trades including the trade/s done on behalf of
the client shall ipso facto stand cancelled, stock broker shall be entitled to cancel the respective
contract(s) with client(s).

17. The transactions executed on the Exchange are subject to Rules, Byelaws and Regulations and
circulars/notices issued thereunder of the Exchanges where the trade is executed and all parties to such
trade shall have submitted to the jurisdiction of such court as may be specified by the Byelaws and
Regulations of the Exchanges where the trade is executed for the purpose of giving effect to the
provisions of the Rules, Byelaws and Regulations of the Exchanges and the circulars/notices issued
thereunder.

BROKERAGE

18. The Client shall pay to the stock broker brokerage and statutory levies as are prevailing from time to time
and as they apply to the Client’s account, transactions and to the services that stock broker renders to the
Client. The stock broker shall not charge brokerage more than the maximum brokerage permissible as per
the rules, regulations and bye-laws of the relevant stock exchanges and/or rules and regulations of SEBI.

LIQUIDATION AND CLOSE OUT OF POSITION

19. Without prejudice to the stock broker's other rights (including the right to refer a matter to arbitration), the
client understands that the stock broker shall be entitled to liquidate/close out all or any of the client's
positions for non-payment of margins or other amounts, outstanding debts, etc. and adjust the proceeds of
such liquidation/close out, if any, against the client's liabilities/obligations. Any and all losses and
financial charges on account of such liquidation/closing-out shall be charged to and borne by the client.

20. In the event of death or insolvency of the client or his/its otherwise becoming incapable of receiving and
paying for or delivering or transferring securities which the client has ordered to be bought or sold, stock
broker may close out the transaction of the client and claim losses, if any, against the estate of the client.
The client or his nominees, successors, heirs and assignee shall be entitled to any surplus which may
result there from. The client shall note that transfer of funds/securities in favor of a Nominee shall be
valid discharge by the stock broker against the legal heir.

21. The stock broker shall bring to the notice of the relevant Exchange the information about default in
payment/delivery and related aspects by a client. In case where defaulting client is a corporate
entity/partnership/proprietary firm or any other artificial legal entity, then the name(s) of
Director(s)/Promoter(s)/Partner(s)/Proprietor as the case may be, shall also be communicated by the stock
broker to the relevant Exchange(s).

DISPUTE RESOLUTION
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 22. The stock broker shall provide the client with the relevant contact details of the concerned Exchanges and
SEBI.

23. The stock broker shall co-operate in redressing grievances of the client in respect of all transactions
routed through it and in removing objections for bad delivery of shares, rectification of bad delivery, etc.

24. The client and the stock broker shall refer any claims and/or disputes with respect to deposits, margin
money, etc., to arbitration as per the Rules, Byelaws and Regulations of the Exchanges where the trade is
executed and circulars/notices issued thereunder as may be in force from time to time.

25. The stock broker shall ensure faster settlement of any arbitration proceedings arising out of the
transactions entered into between him vis-à-vis the client and he shall be liable to implement the
arbitration awards made in such proceedings.

26. The client/stock-broker understands that the instructions issued by an authorized representative for
dispute resolution, if any, of the client/stock-broker shall be binding on the client/stock-broker in
accordance with the letter authorizing the said representative to deal on behalf of the said client/stock-
broker.

TERMINATION OF RELATIONSHIP

27. This relationship between the stock broker and the client shall be terminated; if the stock broker for any
reason ceases to be a member of the stock exchange including cessation of membership by reason of the
stock broker's default, death, resignation or expulsion or if the certificate is cancelled by the Board.

28. The stock broker, sub-broker and the client shall be entitled to terminate the relationship between them
without giving any reasons to the other party, after giving notice in writing of not less than one month to
the other parties. Notwithstanding any such termination, all rights, liabilities and obligations of the parties
arising out of or in respect of transactions entered into prior to the termination of this relationship shall
continue to subsist and vest in/be binding on the respective parties or his/its respective heirs, executors,
administrators, legal representatives or successors, as the case may be.

29. In the event of demise/insolvency of the sub-broker or the cancellation of his/its registration with the
Board or/withdrawal of recognition of the sub-broker by the stock exchange and/or termination of the
agreement with the sub broker by the stock broker, for any reason whatsoever, the client shall be
informed of such termination and the client shall be deemed to be the direct client of the stock broker and
all clauses in the ‘Rights and Obligations’ document(s) governing the stock broker, sub-broker and client
shall continue to be in force as it is, unless the client intimates to the stock broker his/its intention to
terminate their relationship by giving a notice in writing of not less than one month.

ADDITIONAL RIGHTS AND OBLIGATIONS

30. The stock broker shall ensure due protection to the client regarding client’s rights to dividends, rights or
bonus shares, etc. in respect of transactions routed through it and it shall not do anything which is likely
to harm the interest of the client with whom and for whom they may have had transactions in securities.

31. The stock broker and client shall reconcile and settle their accounts from time to time as per the Rules,
Regulations, Bye Laws, Circulars, Notices and Guidelines issued by SEBI and the relevant Exchanges
where the trade is executed.
32. The stock broker shall issue a contract note to his constituents for trades executed in such format as may
be prescribed by the Exchange from time to time containing records of all transactions including details of
order number, trade number, trade time, trade price, trade quantity, details of the derivatives contract,
client code, brokerage, all charges levied etc. and with all other relevant details as required therein to be
filled in and issued in such manner and within such time as prescribed by the Exchange. The stock broker
shall send contract notes to the investors within one working day of the execution of the trades in hard
copy and/or in electronic form using digital signature.

15
 33. The stock broker shall make pay out of funds or delivery of securities, as the case may be, to the Client
within one working day of receipt of the payout from the relevant Exchange where the trade is executed
unless otherwise specified by the client and subject to such terms and conditions as may be prescribed by
the relevant Exchange from time to time where the trade is executed.

34. The stock broker shall send a complete `Statement of Accounts’ for both funds and securities in respect of
each of its clients in such periodicity and format within such time, as may be prescribed by the relevant
Exchange, from time to time, where the trade is executed. The Statement shall also state that the client
shall report errors, if any, in the Statement within such time as may be prescribed by the relevant
Exchange from time to time where the trade was executed, from the receipt thereof to the Stock broker.

35. The stock broker shall send daily margin statements to the clients. Daily Margin statement should include,
inter-alia, details of collateral deposited, collateral utilized and collateral status (available balance/due
from client) with break up in terms of cash, Fixed Deposit Receipts (FDRs), Bank Guarantee and
securities.

36. The Client shall ensure that it has the required legal capacity to, and is authorized to, enter into the
relationship with stock broker and is capable of performing his obligations and undertakings hereunder.
All actions required to be taken to ensure compliance of all the transactions, which the Client may enter
into shall be completed by the Client prior to such transaction being entered into.

ELECTRONIC CONTRACT NOTES (ECN)

37. In case, client opts to receive the contract note in electronic form, he shall provide an appropriate e-mail
id to the stock broker. The client shall communicate to the stock broker any change in the email-id
through a physical letter. If the client has opted for internet trading, the request for change of email id
may be made through the secured access by way of client specific user id and password.

38. The stock broker shall ensure that all ECNs sent through the e-mail shall be digitally signed, encrypted,
non-tamper able and in compliance with the provisions of the IT Act, 2000. In case, ECN is sent through
e-mail as an attachment, the attached file shall also be secured with the digital signature, encrypted and
non-tamperable.

39. The client shall note that non-receipt of bounced mail notification by the stock broker shall amount to
delivery of the contract note at the e-mail ID of the client.

40. The stock broker shall retain ECN and acknowledgement of the e-mail in a soft and non-tamperable form
in the manner prescribed by the exchange in compliance with the provisions of the IT Act, 2000 and as
per the extant rules/regulations/circulars/guidelines issued by SEBI/Stock Exchanges from time to time.
The proof of delivery i.e., log report generated by the system at the time of sending the contract notes
shall be maintained by the stock broker for the specified period under the extant regulations of SEBI/stock
exchanges. The log report shall provide the details of the contract notes that are not delivered to the
client/e-mails rejected or bounced back. The stock broker shall take all possible steps to ensure receipt of
notification of bounced mails by him at all times within the stipulated time period under the extant
regulations of SEBI/stock exchanges.

41. The stock broker shall continue to send contract notes in the physical mode to such clients who do not opt
to receive the contract notes in the electronic form. Wherever the ECNs have not been delivered to the
client or has been rejected (bouncing of mails) by the e-mail ID of the client, the stock broker shall send a
physical contract note to the client within the stipulated time under the extant regulations of SEBI/stock
exchanges and maintain the proof of delivery of such physical contract notes.

42. In addition to the e-mail communication of the ECNs to the client, the stock broker shall simultaneously
publish the ECN on his designated web-site, if any, in a secured way and enable relevant access to the
clients and for this purpose, shall allot a unique user name and password to the client, with an option to the
client to save the contract note electronically and/or take a print out of the same.

16
LAW AND JURISDICTION
43. In addition to the specific rights set out in this document, the stock broker, sub-broker and the client shall
be entitled to exercise any other rights which the stock broker or the client may have under the Rules,
Bye-laws and Regulations of the Exchanges in which the client chooses to trade and circulars/notices
issued thereunder or Rules and Regulations of SEBI.
44. The provisions of this document shall always be subject to Government notifications, any rules,
regulations, guidelines and circulars/notices issued by SEBI and Rules, Regulations and Bye laws of the
relevant stock exchanges, where the trade is executed, that may be in force from time to time.
45. The stock broker and the client shall abide by any award passed by the Arbitrator(s) under the Arbitration
and Conciliation Act, 1996. However, there is also a provision of appeal within the stock exchanges, if
either party is not satisfied with the arbitration award.
46. Words and expressions which are used in this document but which are not defined herein shall, unless the
context otherwise requires, have the same meaning as assigned thereto in the Rules, Byelaws and
Regulations and circulars/notices issued thereunder of the Exchanges/SEBI.
47. All additional voluntary clauses/document added by the stock broker should not be in contravention with
rules/regulations/notices/circulars of Exchanges/SEBI. Any changes in such voluntary
clauses/document(s) need to be preceded by a notice of 15 days. Any changes in the rights and
obligations which are specified by Exchanges/SEBI shall also be brought to the notice of the clients.
48. If the rights and obligations of the parties hereto are altered by virtue of change in Rules and regulations
of SEBI or Bye-laws, Rules and Regulations of the relevant stock Exchanges where the trade is executed,
such changes shall be deemed to have been incorporated herein in modification of the rights and
obligations of the parties mentioned in this document.

INTERNET & WIRELESS TECHNOLOGY BASED TRADING FACILITY PROVIDED BY STOCK

BROKERS TO CLIENT
(All the clauses mentioned in the ‘Rights and Obligations’ document(s) shall be applicable. Additionally, the
clauses mentioned herein shall also be applicable.)

1. Stock broker is eligible for providing Internet based trading (IBT) and securities trading through the use
of wireless technology that shall include the use of devices such as mobile phone, laptop with data card,
etc. which use Internet Protocol (IP). The stock broker shall comply with all requirements applicable to
internet based trading/securities trading using wireless technology as may be specified by SEBI & the
Exchanges from time to time.
2. The client is desirous of investing/trading in securities and for this purpose, the client is desirous of using
either the internet based trading facility or the facility for securities trading through use of wireless
technology. The Stock broker shall provide the Stock broker’s IBT Service to the Client, and the Client
shall avail of the Stock broker’s IBT Service, on and subject to SEBI/Exchanges Provisions and the
terms and conditions specified on the Stock broker’s IBT Web Site provided that they are in line with the
norms prescribed by Exchanges/SEBI.
3. The stock broker shall bring to the notice of client the features, risks, responsibilities, obligations and
liabilities associated with securities trading through wireless technology/internet/smart order routing or
any other technology should be brought to the notice of the client by the stock broker.
4. The stock broker shall make the client aware that the Stock Broker’s IBT system itself generates the
initial password and its password policy as stipulated in line with norms prescribed by Exchanges/SEBI.
5. The Client shall be responsible for keeping the Username and Password confidential and secure and shall
be solely responsible for all orders entered and transactions done by any person whosoever through the
Stock broker’s IBT System using the Client’s Username and/or Password whether or not such person
was authorized to do so. Also the client is aware that authentication technologies and strict security
measures are required for the internet trading/securities trading through wireless technology through
order routed system and undertakes to ensure that the password of the client and/or his authorized
representative are not revealed to any third party including employees and dealers of the stock broker

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6. The Client shall immediately notify the Stock broker in writing if he forgets his password, discovers
security flaw in Stock Broker’s IBT System, discovers/suspects discrepancies/ unauthorized access
through his username/password/account with full details of such unauthorized use, the date, the manner
and the transactions effected pursuant to such unauthorized use, etc.

7. The Client is fully aware of and understands the risks associated with availing of a service for routing
orders over the internet/securities trading through wireless technology and Client shall be fully liable and
responsible for any and all acts done in the Client’s Username/password in any manner whatsoever.

8. The stock broker shall send the order/trade confirmation through email to the client at his request. The
client is aware that the order/ trade confirmation is also provided on the web portal. In case client is
trading using wireless technology, the stock broker shall send the order/trade confirmation on the device
of the client.

9. The client is aware that trading over the internet involves many uncertain factors and complex hardware,
software, systems, communication lines, peripherals, etc. are susceptible to interruptions and
dislocations. The Stock broker and the Exchange do not make any representation or warranty that the
Stock broker’s IBT Service will be available to the Client at all times without any interruption.

10. The Client shall not have any claim against the Exchange or the Stock broker on account of any
suspension, interruption, non-availability or malfunctioning of the Stock broker’s IBT System or Service
or the Exchange’s service or systems or non-execution of his orders due to any link/system failure at the
Client/Stock brokers/Exchange end for any reason beyond the control of the stock broker/Exchanges.

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 Annexure – 5

RISK DISCLOSURE DOCUMENT FOR CAPITAL MARKET AND DERIVATIVES SEGMENTS

This document contains important information on trading in Equities/Derivatives Segments of the stock
exchanges. All prospective constituents should read this document before trading in Equities/Derivatives Segments
of the Exchanges.
Stock exchanges/SEBI does neither singly or jointly and expressly nor impliedly guarantee nor make any
representation concerning the completeness, the adequacy or accuracy of this disclosure document nor have Stock
exchanges /SEBI endorsed or passed any merits of participating in the trading segments. This brief statement does
not disclose all the risks and other significant aspects of trading.
In the light of the risks involved, you should undertake transactions only if you understand the nature of the
relationship into which you are entering and the extent of your exposure to risk.
You must know and appreciate that trading in Equity shares, derivatives contracts or other instruments traded on
the Stock Exchange, which have varying element of risk, is generally not an appropriate avenue for someone of
limited resources/limited investment and/or trading experience and low risk tolerance. You should therefore
carefully consider whether such trading is suitable for you in the light of your financial condition. In case you trade
on Stock exchanges and suffer adverse consequences or loss, you shall be solely responsible for the same and
Stock exchanges/its Clearing Corporation and/or SEBI shall not be responsible, in any manner whatsoever, for the
same and it will not be open for you to take a plea that no adequate disclosure regarding the risks involved was
made or that you were not explained the full risk involved by the concerned stock broker. The constituent shall be
solely responsible for the consequences and no contract can be rescinded on that account. You must acknowledge
and accept that there can be no guarantee of profits or no exception from losses while executing orders for
purchase and/or sale of a derivative contract being traded on Stock exchanges.
It must be clearly understood by you that your dealings on Stock exchanges through a stock broker shall be subject
to your fulfilling certain formalities set out by the stock broker, which may inter alia include your filling the know
your client form, reading the rights and obligations, do’s and don’ts, etc., and are subject to the Rules, Byelaws and
Regulations of relevant Stock exchanges, its Clearing Corporation, guidelines prescribed by SEBI and in force
from time to time and Circulars as may be issued by Stock exchanges or its Clearing Corporation and in force from
time to time.
Stock exchanges does not provide or purport to provide any advice and shall not be liable to any person who enters
into any business relationship with any stock broker of Stock exchanges and/or any third party based on any
information contained in this document. Any information contained in this document must not be construed as
business advice. No consideration to trade should be made without thoroughly understanding and reviewing the
risks involved in such trading. If you are unsure, you must seek professional advice on the same.
In considering whether to trade or authorize someone to trade for you, you should be aware of or must get
acquainted with the following:-
1. BASIC RISKS:
1.1 Risk of Higher Volatility:
Volatility refers to the dynamic changes in price that a security/derivatives contract undergoes when trading
activity continues on the Stock Exchanges. Generally, higher the volatility of a security/derivatives contract,
greater is its price swings. There may be normally greater volatility in thinly traded securities / derivatives
contracts than in active securities /derivatives contracts. As a result of volatility, your order may only be partially
executed or not executed at all, or the price at which your order got executed may be substantially different from
the last traded price or change substantially thereafter, resulting in notional or real losses.
1.2 Risk of Lower Liquidity:
Liquidity refers to the ability of market participants to buy and/or sell securities / derivatives contracts
expeditiously at a competitive price and with minimal price difference. Generally, it is assumed that more the
numbers of orders available in a market, greater is the liquidity. Liquidity is important because with greater
liquidity, it is easier for investors to buy and/or sell securities / derivatives contracts swiftly and with minimal price
difference, and as a result, investors are more likely to pay or receive a competitive price for securities / derivatives
contracts purchased or sold. There may be a risk of lower liquidity in some securities / derivatives contracts as
compared to active securities / derivatives contracts. As a result, your order may only be partially executed, or may
be executed with relatively greater price difference or may not be executed at all.

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1.2.1 Buying or selling securities / derivatives contracts as part of a day trading strategy may also result into losses,
because in such a situation, securities / derivatives contracts may have to be sold / purchased at low / high prices,
compared to the expected price levels, so as not to have any open position or obligation to deliver or receive a
security / derivatives contract.

1.3 Risk of Wider Spreads:

Spread refers to the difference in best buy price and best sell price. It represents the differential between the price
of buying a security / derivatives contract and immediately selling it or vice versa. Lower liquidity and higher
volatility may result in wider than normal spreads for less liquid or illiquid securities / derivatives contracts. This
in turn will hamper better price formation.

1.4 Risk-reducing orders:

The placing of orders (e.g., "stop loss” orders, or "limit" orders) which are intended to limit losses to certain
amounts may not be effective many a time because rapid movement in market conditions may make it impossible
to execute such orders.

1.4.1 A "market" order will be executed promptly, subject to availability of orders on opposite side, without regard
to price and that, while the customer may receive a prompt execution of a "market" order, the execution may be at
available prices of outstanding orders, which satisfy the order quantity, on price time priority. It may be
understood that these prices may be significantly different from the last traded price or the best price in that
security / derivatives contract.

1.4.2 A "limit" order will be executed only at the "limit" price specified for the order or a better price. However,
while the customer receives price protection, there is a possibility that the order may not be executed at all.

1.4.3 A stop loss order is generally placed "away" from the current price of a stock / derivatives contract, and such
order gets activated if and when the security / derivatives contract reaches, or trades through, the stop price. Sell
stop orders are entered ordinarily below the current price, and buy stop orders are entered ordinarily above the
current price. When the security / derivatives contract reaches the pre -determined price, or trades through such
price, the stop loss order converts to a market/limit order and is executed at the limit or better. There is no
assurance therefore that the limit order will be executable since a security / derivatives contract might penetrate the
pre-determined price, in which case, the risk of such order not getting executed arises, just as with a regular limit
order.

1.5 Risk of News Announcements:

News announcements that may impact the price of stock / derivatives contract may occur during trading, and when
combined with lower liquidity and higher volatility, may suddenly cause an unexpected positive or negative
movement in the price of the security / contract.

1.6 Risk of Rumors:

Rumors about companies / currencies at times float in the market through word of mouth, newspapers, websites or
news agencies, etc. The investors should be wary of and should desist from acting on rumors.

1.7 System Risk:

High volume trading will frequently occur at the market opening and before market close. Such high volumes may
also occur at any point in the day. These may cause delays in order execution or confirmation.

1.7.1 During periods of volatility, on account of market participants continuously modifying their order quantity or
prices or placing fresh orders, there may be delays in order execution and its confirmations.

1.7.2 Under certain market conditions, it may be difficult or impossible to liquidate a position in the market at a
reasonable price or at all, when there are no outstanding orders either on the buy side or the sell side, or if trading
is halted in a security / derivatives contract due to any action on account of unusual trading activity or security /
derivatives contract hitting circuit filters or for any other reason.

1.8 System/Network Congestion:

Trading on exchanges is in electronic mode, based on satellite/leased line based communications, combination of
technologies and computer systems to place and route orders. Thus, there exists a possibility of communication
failure or system problems or slow or delayed response from system or trading halt, or any such other
20
problem/glitch whereby not being able to establish access to the trading system/network, which may be beyond
control and may result in delay in processing or not processing buy or sell orders either in part or in full. You are
cautioned to note that although these problems may be temporary in nature, but when you have outstanding open
positions or unexecuted orders, these represent a risk because of your obligations to settle all executed
transactions.

2. As far as Derivatives segments are concerned, please note and get yourself acquainted with the following
additional features:-
2.1 Effect of "Leverage" or "Gearing":
In the derivatives market, the amount of margin is small relative to the value of the derivatives contract so the
transactions are 'leveraged' or 'geared'. Derivatives trading, which is conducted with a relatively small amount of
margin, provides the possibility of great profit or loss in comparison with the margin amount. But transactions in
derivatives carry a high degree of risk.
You should therefore completely understand the following statements before actually trading in derivatives and
also trade with caution while taking into account one's circumstances, financial resources, etc. If the prices move
against you, you may lose a part of or whole margin amount in a relatively short period of time. Moreover, the loss
may exceed the original margin amount.
A. Futures trading involve daily settlement of all positions. Every day the open positions are marked to market
based on the closing level of the index / derivatives contract. If the contract has moved against you, you will be
required to deposit the amount of loss (notional) resulting from such movement. This amount will have to be paid
within a stipulated time frame, generally before commencement of trading on next day.
B. If you fail to deposit the additional amount by the deadline or if an outstanding debt occurs in your account, the
stock broker may liquidate a part of or the whole position or substitute securities. In this case, you will be liable for
any losses incurred due to such close-outs.
C. Under certain market conditions, an investor may find it difficult or impossible to execute transactions. For
example, this situation can occur due to factors such as illiquidity i.e. when there are insufficient bids or offers or
suspension of trading due to price limit or circuit breakers etc.
D. In order to maintain market stability, the following steps may be adopted: changes in the margin rate, increases
in the cash margin rate or others. These new measures may also be applied to the existing open interests. In such
conditions, you will be required to put up additional margins or reduce your positions.
E. You must ask your broker to provide the full details of derivatives contracts you plan to trade i.e. the contract
specifications and the associated obligations.
2.2 Currency specific risks:
1. The profit or loss in transactions in foreign currency-denominated contracts, whether they are traded in your
own or another jurisdiction, will be affected by fluctuations in currency rates where there is a need to convert from
the currency denomination of the contract to another currency.
2. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur,
for example when a currency is deregulated or fixed trading bands are widened.
3. Currency prices are highly volatile. Price movements for currencies are influenced by, among other things:
changing supply-demand relationships; trade, fiscal, monetary, exchange control programs and policies of
governments; foreign political and economic events and policies; changes in national and international interest
rates and inflation; currency devaluation; and sentiment of the market place. None of these factors can be
controlled by any individual advisor and no assurance can be given that an advisor's advice will result in profitable
trades for a participating customer or that a customer will not incur losses from such events.
2.3 Risk of Option holders:
1. An option holder runs the risk of losing the entire amount paid for the option in a relatively short period of time.
This risk reflects the nature of an option as a wasting asset which becomes worthless when it expires. An option
holder who neither sells his option in the secondary market nor exercises it prior to its expiration will necessarily
lose his entire investment in the option. If the price of the underlying does not change in the anticipated direction
before the option expires, to an extent sufficient to cover the cost of the option, the investor may lose all or a
significant part of his investment in the option.

21
2. The Exchanges may impose exercise restrictions and have absolute authority to restrict the exercise of options at
certain times in specified circumstances.

2.4 Risks of Option Writers:

1. If the price movement of the underlying is not in the anticipated direction, the option writer runs the risks of
losing substantial amount.
2. The risk of being an option writer may be reduced by the purchase of other options on the same underlying
interest and thereby assuming a spread position or by acquiring other types of hedging positions in the options
markets or other markets. However, even where the writer has assumed a spread or other hedging position, the
risks may still be significant. A spread position is not necessarily less risky than a simple 'long' or 'short' position.
3. Transactions that involve buying and writing multiple options in combination, or buying or writing options in
combination with buying or selling short the underlying interests, present additional risks to investors. Combination
transactions, such as option spreads, are more complex than buying or writing a single option. And it should be
further noted that, as in any area of investing, a complexity not well understood is, in itself, a risk factor. While this
is not to suggest that combination strategies should not be considered, it is advisable, as is the case with all
investments in options, to consult with someone who is experienced and knowledgeable with respect to the risks
and potential rewards of combination transactions under various market circumstances.

3. TRADING THROUGH WIRELESS TECHNOLOGY/ SMART ORDER ROUTING OR ANY OTHER

TECHNOLOGY:

Any additional provisions defining the features, risks, responsibilities, obligations and liabilities associated with
securities trading through wireless technology/ smart order routing or any other technology should be brought to
the notice of the client by the stock broker.

4. GENERAL

4.1 The term ‘constituent’ shall mean and include a client, a customer or an investor, who deals with a stock broker
for the purpose of acquiring and/or selling of securities / derivatives contracts through the mechanism provided by
the Exchanges.

4.2 The term ‘stock broker’ shall mean and include a stock broker, a broker or a stock broker, who has been
admitted as such by the Exchanges and who holds a registration certificate from SEBI.

22
 Annexure-6

GUIDANCE NOTE - DO’s AND DON’Ts FOR TRADING ON THE EXCHANGE(S) FOR INVESTORS

BEFORE YOU BEGIN TO TRADE

1. Ensure that you deal with and through only SEBI registered intermediaries. You may check their SEBI
registration certificate number from the list available on the Stock exchanges www.bseindia.com,
www.nseindia.com ; www.msei.in and SEBI website www.sebi.gov.in.
2. Ensure that you fill the KYC form completely and strike off the blank fields in the KYC form.
3. Ensure that you have read all the mandatory documents viz. Rights and Obligations, Risk Disclosure
Document, Policy and Procedure document of the stock broker.
4. Ensure to read, understand and then sign the voluntary clauses, if any, agreed between you and the stock
broker. Note that the clauses as agreed between you and the stock broker cannot be changed without your
consent.
5. Get a clear idea about all brokerage, commissions, fees and other charges levied by the broker on you for
trading and the relevant provisions/ guidelines specified by SEBI/Stock exchanges.
6. Obtain a copy of all the documents executed by you from the stock broker free of charge.
7. In case you wish to execute Power of Attorney (POA) in favour of the Stock broker, authorizing it to operate
your bank and demat account, please refer to the guidelines issued by SEBI/Exchanges in this regard.

TRANSACTIONS AND SETTLEMENTS

8. The stock broker may issue electronic contract notes (ECN) if specifically authorized by you in writing. You
should provide your email id to the stock broker for the same. Don’t opt for ECN if you are not familiar with
computers.
9. Don’t share your internet trading account’s password with anyone.
10. Don’t make any payment in cash to the stock broker.
11. Make the payments by account payee cheque in favour of the stock broker. Don’t issue cheques in the name of
sub-broker. Ensure that you have a documentary proof of your payment/deposit of securities with the stock
broker, stating date, scrip, quantity, towards which bank/ demat account such money or securities deposited
and from which bank/ demat account.
12. Note that facility of Trade Verification is available on stock exchanges’ websites, where details of trade as
mentioned in the contract note may be verified. Where trade details on the website do not tally with the details
mentioned in the contract note, immediately get in touch with the Investors Grievance Cell of the relevant
Stock exchange.
13. In case you have given specific authorization, payout of funds or delivery of securities as the case may be,
may not be made to you within one working day from the receipt of payout from the Exchange. Thus the
stock broker may maintain a running account for you subject to the following conditions:
a) Such authorization from you shall be dated, signed by you only and contains the clause that you may
revoke the same at any time.
b) The actual settlement of funds and securities shall be done by the stock broker, at least once in a calendar
quarter or month, depending on your preference. While settling the account, the stock broker shall send to
you a ‘statement of accounts’ containing an extract from the client ledger for funds and an extract from the
register of securities displaying all the receipts/deliveries of funds and securities. The statement shall also
explain the retention of funds and securities and the details of the pledged shares, if any.
c) On the date of settlement, the stock broker may retain the requisite securities/funds towards outstanding
obligations and may also retain the funds expected to be required to meet derivatives margin obligations
for next 5 trading days, calculated in the manner specified by the exchanges. In respect of cash market
transactions, the stock broker may retain entire pay-in obligation of funds and securities due from clients
as on date of settlement and for next day’s business, he may retain funds/securities/margin to the extent of
value of transactions executed on the day of such settlement in the cash market.

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 d) You need to bring any dispute arising from the statement of account or settlement so made to the notice of
the stock broker in writing preferably within 7 (seven) working days from the date of receipt of
funds/securities or statement, as the case may be. In case of dispute, refer the matter in writing to the
Investors Grievance Cell of the relevant Stock exchanges without delay.
14. In case you have not opted for maintaining running account and pay-out of funds/securities is not received on
the next working day of the receipt of payout from the exchanges, please refer the matter to the stock broker.
In case there is dispute, ensure that you lodge a complaint in writing immediately with the Investors Grievance
Cell of the relevant Stock exchange.
15. Please register your mobile number and email id with the stock broker, to receive trade confirmation alerts/
details of the transactions through SMS or email, by the end of the trading day, from the stock exchanges.

IN CASE OF TERMINATION OF TRADING MEMBERSHIP

16. In case, a stock broker surrenders his membership, is expelled from membership or declared a defaulter; Stock
exchanges gives a public notice inviting claims relating to only the "transactions executed on the trading
system" of Stock exchange, from the investors. Ensure that you lodge a claim with the relevant Stock
exchanges within the stipulated period and with the supporting documents.
17. Familiarize yourself with the protection accorded to the money and/or securities you may deposit with your
stock broker, particularly in the event of a default or the stock broker’s insolvency or bankruptcy and the
extent to which you may recover such money and/or securities may be governed by the Bye-laws and
Regulations of the relevant Stock exchange where the trade was executed and the scheme of the Investors’
Protection Fund in force from time to time.

DISPUTES/ COMPLAINTS

18. Please note that the details of the arbitration proceedings, penal action against the brokers and investor
complaints against the stock brokers are displayed on the website of the relevant Stock exchange.
19. In case your issue/problem/grievance is not being sorted out by concerned stock broker/sub-broker then you
may take up the matter with the concerned Stock exchange. If you are not satisfied with the resolution of your
complaint then you can escalate the matter to SEBI.
20. Note that all the stock broker/sub-brokers have been mandated by SEBI to designate an e-mail ID of the
grievance redressal division/compliance officer exclusively for the purpose of registering complaints.

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 Policies and Procedures (Mandatory) of Axis Capital Pvt.Ltd. (ACL)

a. Refusal of orders for “Penny Stocks”

Although, the term “Penny Stock” is not defined by BSE / NSE / MSEI, SEBI, a “Penny Stock” generally
refers to a stock whose characteristics include but are not limited to:
• Small market capitalization;
• Trading at a price less than its face value;
• Have unsound fundamentals and or which may/may not be liquid (A list of illiquid securities is jointly
released by NSE, BSE and NSEI, from time to time.)

ACL recognizes that it is the client’s privilege to choose shares in which he / she would like to trade.
However, ACL likes to pay special attention to dealing in “Penny Stocks”. To this end:
• ACL may refuse to execute any client’s orders in “Penny Stocks” without assigning any reason for the
same.
• Any large order for purchase or sale of a “Penny Stock” should be referred to Head – Dealing before such
orders can be put in the market for execution.
• Clients must ensure that trading in “Penny Stock” does not result in creation of artificial volume or false
or misleading appearance of trading. Further, clients should ensure that trading in “Penny Stock” does not
operate as a device to inflate or depress or cause fluctuations in the price of such stock.
• Clients are expected not to place orders in “Penny Stocks” at prices which are substantially different from
the prevailing market prices. Any such order is liable to be rejected at the sole discretion of ACL.
• In case of sale of “Penny Stocks”, clients should ensure the delivery of shares to ACL before the pay-in
date.

b. Setting up client’s exposure limit

• Exposure limit for each client is determined by the Risk Management Department based on client’s net
worth information, client’s financial capacity, prevailing market conditions and margin deposited by
client in the form of funds / securities with ACL. These limits may be set exchange-wise, segment-wise,
and scrip-wise.
• The limits are determined by Risk Management Department based on the above criteria and the payment
history of the client in consultation with Sales / Sales traders.
• ACL retains the discretion to set and modify, from time to time, any client’s exposure limit decided as
above.
• Whenever any client has taken or wants to take exposure in any security, ACL may call for appropriate
margins in the form of early pay-in of shares or funds before or after execution of trades in the Cash
segment. In case of any margin shortfall, the clients will be told to reduce the position immediately or
they will be requested to deposit extra margin to meet the shortfall. Otherwise, ACL may refuse to trade
on behalf of such client at its own discretion.

c. Applicable brokerage rate

• Brokerage Rate is mutually decided between the ACL and each client based on client’s net worth,
expected trading volume, etc. The maximum brokerage chargeable will not exceed the rates prescribed by
SEBI and the exchanges.
• The applicable brokerage rate will be mentioned in the Client registration form and any change in the
brokerage rate in future will be communicated to the client in writing

d. Imposition of penalty / delayed payment charges by either party, specifying the rate and the period
• Penalty and other charges levied by Exchanges pertaining to trading of the client shall be recovered from
the respective client.
• If there is delay on the part of the client in satisfying his / her margin obligation or settlement obligation
then ACL shall levy delayed payment charges at the rate of 12% p.a. on such shortfall for the period of
delay on such client. ACL shall recover such delayed payment charges from the client by debiting the
client’s account.
• No interest or charges will be paid by ACL to any client in respect of retention of funds or securities
towards meeting future settlement obligations and in respect of running account authorizations.

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e. Right to sell clients’ securities or close clients’ positions, without giving notice to the client, on account of non-
payment of client’s dues
• ACL has the right to close out / liquidate or square off any open position of the client (limited to the
extent of settlement / margin obligation), without giving any prior notice, all or any of the client’s
positions as well as securities / collaterals placed as margins for non-payment of margin or other amounts
due from such client in respect of settlement or any other dues lawful that are recoverable from the client
by ACL. The proceeds of the same shall be adjusted against the client’s liabilities / obligations. Any loss
or financial charges on account of such close-out / liquidation shall be debited to the client’s account.

f. Shortages in obligations arising out of internal netting of trades

• To determine the net obligation of a broker / trading-cum-clearing member (for securities and funds) in a
settlement, clearing house does the netting of trades at the broker level. It is possible that a broker’s net
obligation towards clearing house may be nil but because of default by one or more clients in satisfying
their obligations towards the broker, the broker internally might have shortages in fulfilling its obligation
towards the other client(s). In such a situation, ACL shall endeavor to collect the securities from the
selling client and deliver it to the purchasing client within 48 hours of the settlement date. In case the
selling client is unable to deliver the securities within 48 hours, then ACL shall attempt to purchase the
securities from the market and deliver it to the purchasing client. If ACL is unable to obtain the securities
from the market, then the transaction will be closed out as per the auction rate prescribed by the Exchange
for that scrip and the closing amount will be credited to the purchasing client and same will be debited to
the selling client.

• In case of shortage in meeting the settlement obligation, either party shall endeavor to make good such
shortage through securities / value of shortage as per the Rules, Regulations and Bye-laws of the
respective stock exchange(s).

g. Conditions under which a client may not be allowed to take further position or the broker may close the
existing position of the client
ACL shall have absolute discretion and authority to limit client’s volume of business or to close any existing
position of a client without giving any prior notice to the client under following conditions:
• Extreme volatility in the market or in particular scrip or in the F&O segment.
• There is shortfall in the margin deposited by client with ACL.
• There is insider trading restrictions on the client.
• There are any unforeseen adverse market conditions or any natural calamity affecting the operation of the
market.
• There are any restrictions imposed by Exchange or Regulator on the volume of trading outstanding
positions of contracts.
• The client is undertaking any illegal trading practice or the client is suspected to be indulging in money
laundering activities.
• ACL has reached its limit in that scrip.
• The client has breached the client-wise limit.
• The client has taken or intends to take new position in a security which is in the banned period.
• Due to abnormal rise or fall in the market, the markets are closed.

h. Temporarily suspending or closing a client’s account based on the client’s request:

• Any client desirous of temporarily suspending his or her trading account has to give such request in
writing to the management. After management’s approval, further dealing in such client’s account will be
blocked. Whenever trade has to be resumed in any suspended client account, a request in writing should
be made by the client to the management and the management may ask for updated financial information
and other details for reactivating such account. After receiving necessary documents, details, etc. and
approval from the management, the client account will be reactivated and transaction will be carried out.
• Similarly, any client desirous of closing his / her account permanently is required to inform in writing and
the decision in this regard will be taken by the management. After necessary approval from the
management, the client code will be deactivated. Only after scrutinizing the compliance requirements and
a “no pending queries” confirmation is taken, securities and funds accounts will be settled.

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i. Deregistering a Client
ACL may, at its absolute discretion, decide to deregister a particular client. The illustrative circumstances
under which ACL may deregister a client are given below:
• SEBI or any other regulatory body has passed an order against such client, prohibiting or suspending such
client from participating in the securities market.

• Such client has been indicted by a regulatory body or any government enforcement agency in case of
market manipulation or insider trading or any other case involving violation of any law, rule, regulation,
guideline or circular governing securities market.
• Such client is suspected of indulging in illegal or criminal activities including fraud or money laundering.
• Such client’s name appears in the UN list of prohibited entities or in the SEBI debarred list.
• Such client’s account has been lying dormant for a long time or the client is not traceable.
• Such client has been declared insolvent or any legal proceedings to declare him / her as insolvent have
been initiated.
• Such client has been irregular in fulfilling obligations towards margin or settlement dues.
• Such client has a tainted reputation and any business relationship with such clients is likely to tarnish the
reputation of ACL or may act as detriment to ACL’s prospects.

Incorporate Policy towards “inactive Client”

1. Period after which client account will be considered inactive.
2. Reactivation process.
3. Retun of Client funds & Securities

Note / FAQ on Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT)
[This note is prepared by Axis Capital Limited (ACL) to educate / sensitize its employees and clients and to
generally make them aware about AML and CFT as mandated by Clauses 15.2 and 15.3, respectively of the SEBI
Master Circular Reference No. CIR/ISD/AML/3/2010 dated December 31, 2010 as amended from time to time.]

What is Money Laundering?

The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the
act. Money laundering is the processing of these criminal proceeds to disguise their illegal origin. This process is
of critical importance, as it enables the criminal to enjoy these profits without jeopardizing their source. Illegal
arms sales, smuggling, and the activities of organized crime, including for example drug trafficking and
prostitution rings, can generate huge amounts of proceeds. Embezzlement, insider trading, bribery and computer
fraud schemes can also produce large profits and create the incentive to “legitimize” the ill-gotten gains through
money laundering.

When a criminal activity generates substantial profits, the individual or group involved must find a way to control
the funds without attracting attention to the underlying activity or the persons involved. Criminals do this by
disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract
attention. In response to mounting concern over money laundering, the Financial Action Task Force on money
laundering (FATF) was established by the G-7 Summit in Paris in 1989 to develop a co-ordinated international
response. One of the first tasks of the FATF was to develop Recommendations, 40 in all, which set out the
measures national governments should take to implement effective anti-money laundering programs.

Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA) defines offence of money
laundering as under:
“Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually
involved in any process or activity connected with the proceeds of crime and projecting it as untainted property
shall be guilty of offence of money laundering."
How much money is laundered per year?
By its very nature, money laundering is an illegal activity carried out by criminals which occurs outside of the
normal range of economic and financial statistics. Along with some other aspects of underground economic
activity, rough estimates have been put forward to give some sense of the scale of the problem.

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The International Monetary Fund, for example, has stated in 1996 that the aggregate size of money laundering in
the world could be somewhere between two and five percent of the world’s gross domestic product. Using 1996
statistics, these percentages would indicate that money laundering ranged between US Dollar (USD) 590 billion
and USD 1.5 trillion. The lower figure is roughly equivalent to the value of the total output of an economy the
size of Spain. However it must be said that overall it is absolutely impossible to produce a reliable estimate of the
amount of money laundered and therefore the FATF does not publish any figures in this regard.

How is money laundered?

In the initial - or placement - stage of money laundering, the launderer introduces his illegal profits into the
financial system. This might be done by breaking up large amounts of cash into less conspicuous smaller sums
that are then deposited directly into a bank account, or by purchasing a series of monetary instruments (cheques,
money orders, etc.) that are then collected and deposited into accounts at another location.

After the funds have entered the financial system, the second – or layering – stage takes place. In this phase, the
launderer engages in a series of conversions or movements of the funds to distance them from their source. The
funds might be channeled through the purchase and sales of investment instruments, or the launderer might
simply wire the funds through a series of accounts at various banks across the globe. This use of widely scattered
accounts for laundering is especially prevalent in those jurisdictions that do not co-operate in anti-money
laundering investigations. In some instances, the launderer might disguise the transfers as payments for goods or
services, thus giving them a legitimate appearance.

Having successfully processed his criminal profits through the first two phases the launderer then moves them to
the third stage – integration – in which the funds re-enter the legitimate economy. The launderer might choose to
invest the funds into avenues like securities, commodities, real estate, luxury assets, business ventures, etc.

Where does money laundering occur?

As money laundering is a consequence of almost all profit generating crime, it can occur practically anywhere in
the world. Generally, money launderers tend to seek out countries or sectors in which there is a low risk of
detection due to weak or ineffective anti-money laundering programs. Because the objective of money laundering
is to get the illegal funds back to the individual who generated them, launderers usually prefer to move funds
through stable financial systems.

Money laundering activity may also be concentrated geographically according to the stage the laundered funds
have reached. At the placement stage, for example, the funds are usually processed relatively close to the under-
lying activity; often, but not in every case, in the country where the funds originate.

With the layering phase, the launderer might choose an offshore financial centre, a large regional business centre,
or a world banking centre – any location that provides an adequate financial or business infrastructure. At this
stage, the laundered funds may also only transit bank accounts at various locations where this can be done without
leaving traces of their source or ultimate destination.

Finally, at the integration phase, launderers might choose to invest laundered funds in still other locations if they
were generated in unstable economies or locations offering limited investment opportunities.

How does money laundering affect business?

The integrity of the banking and financial services marketplace depends heavily on the perception that it functions
within a framework of high legal, professional and ethical standards. A reputation for integrity is the one of the
most valuable assets of a financial institution. If funds from criminal activity can be easily processed through a
particular institution – either because its employees or directors have been bribed or because the institution turns a
blind eye to the criminal nature of such funds – the institution could be drawn into active complicity with
criminals and become part of the criminal network itself. Evidence of such complicity will have a damaging effect
on the attitudes of other financial intermediaries and of regulatory authorities, as well as ordinary customers.

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As for the potential negative macroeconomic consequences of unchecked money laundering, one could cite
inexplicable changes in money-demand, prudential risks to banks’ soundness, contamination effects on legal and
financial transactions, and increased volatility of international capital flows and exchange rates due to
unanticipated cross-border asset transfers. Also, as it rewards corruption and crime, successful money laundering
damages the integrity of the entire society and undermines democracy and the rule of the law.
What influence does money laundering have on economic development?
Launderers are continuously looking for new routes for laundering their funds. Economies with growing or
developing financial centers, but inadequate controls are particularly vulnerable as established financial centre
countries implement comprehensive anti-money laundering regimes. Differences between national anti-money
laundering systems will be exploited by launderers, who tend to move their networks to countries and financial
systems with weak or ineffective countermeasures. Some might argue that developing economies cannot afford to
be too selective about the sources of capital they attract. But postponing action is dangerous. The more it is
deferred, the more entrenched organized crime can become.

As with the damaged integrity of an individual financial institution, there is a damping effect on foreign direct
investment when a country’s commercial and financial sectors are perceived to be subject to the control and
influence of organized crime. Fighting money laundering and terrorist financing is therefore a part of creating
a business friendly environment which is a precondition for lasting economic development.

What is the connection with society at large?

The possible social and political costs of money laundering, if left unchecked or dealt with ineffectively, are
serious. Organized crime can infiltrate financial institutions, acquire control of large sectors of the economy
through investment, or offer bribes to public officials and indeed governments. The economic and political
influence of criminal organizations can weaken the social fabric, collective ethical standards, and ultimately the
democratic institutions of society. In countries transitioning to democratic systems, this criminal influence can
undermine the transition. Most fundamentally, money laundering is inextricably linked to the underlying criminal
activity that generated it. Money-laundering enables criminal activity to continue.

How does fighting money laundering help fight crime?

Money laundering is a threat to the good functioning of a financial system; however, it can also be the Achilles
heel of criminal activity. In law enforcement investigations into organized criminal activity, it is often the
connections made through financial transaction records that allow hidden assets to be located and that establish
the identity of the criminals and the criminal organization responsible.

When criminal funds are derived from robbery, extortion, embezzlement or fraud, a money laundering
investigation is frequently the only way to locate the stolen funds and restore them to the victims. Most
importantly, however, targeting the money laundering aspect of criminal activity and depriving the criminal of his
ill-gotten gains means hitting him where he is vulnerable. Without a usable profit, the criminal activity will not
continue.

What should individual governments be doing about it?

A great deal can be done to fight money laundering, and, indeed, many governments have already established
comprehensive anti-money laundering regimes. These regimes aim to increase awareness of the phenomenon –
both within the government and the private business sector – and then to provide the necessary legal or regulatory
tools to the authorities charged with combating the problem. Some of these tools include making the act of money
laundering a crime; giving investigative agencies the authority to trace, seize and ultimately confiscate criminally
derived assets; and building the necessary framework for permitting the agencies involved to exchange
information among themselves and with counterparts in other countries.

It is critically important that governments include all relevant voices in developing a national anti-money
laundering program. They should, for example, bring law enforcement and financial regulatory authorities
together with the private sector to enable financial institutions to play a role in dealing with the problem. This
means, among other things, involving the relevant authorities in establishing financial transaction reporting
systems, customer identification, record keeping standards and a means for verifying compliance.

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Should governments with measures in place still be concerned?
Money launderers have shown themselves through time to be extremely imaginative in creating new schemes to
circumvent a particular government’s countermeasures. A national system must be flexible enough to be able to
detect and respond to new money laundering schemes. Anti-money laundering measures often force launderers to
move to parts of the economy with weak or ineffective measures to deal with the problem. Again, a national
system must be flexible enough to be able to extend countermeasures to new areas of its own economy. Finally,
national governments need to work with other jurisdictions to ensure that launderers are unable to continue to
operate merely by moving to another location in which money laundering is tolerated.

What about multilateral initiatives?

Large-scale money laundering schemes invariably contain cross-border elements. Since money laundering is an
international problem, international co-operation is a critical necessity in the fight against it. A number of
initiatives have been established for dealing with the problem at the international level. International
organizations, such as the United Nations or the Bank for International Settlements, took some initial steps at the
end of the 1980s to address the problem. Following the creation of the FATF in 1989, regional groupings, e.g. the
European Union, Council of Europe, Organization of American States, etc., established anti-money laundering
standards for their member-countries. The Caribbean, Asia, Europe and southern Africa have created regional
anti-money laundering task force-like organizations, and similar groupings are planned for western Africa and
Latin America in the coming years.

What is the current legal framework for prevention of money-laundering in India?

The Prevention of Money Laundering Act, 2002 (PMLA) as amended from time to time, forms the core of the
legal framework put in place by India to combat money laundering. PMLA and the Rules notified thereunder
came into force with effect from July 1, 2005. The Director, FIU-IND (Financial Intelligence Unit – India) and
the Director (Enforcement) have been conferred with exclusive and concurrent powers under the relevant sections
of the Act to implement the provisions of the Act. The PMLA and rules notified thereunder impose an obligation
on banking companies, financial institutions and various market intermediaries like stockbrokers, etc. to verify the
identity of their clients, maintain records and furnish information to the FIU-IND.

The PMLA defines what constitutes a money-laundering offence and provides for the freezing, seizure and
confiscation of the proceeds of crime.
In addition to the PMLA, stockbrokers are also required to follow the provisions of the Circulars issued by the
SEBI and / or the stock exchanges in this regard.

Who can I contact if I suspect a case of money laundering?

As per the SEBI guidelines, every market intermediary must appoint a designated “Principal Officer” who
oversees the Anti-Money Laundering program of the organization. If in case, you have queries or concerns or
would like to report a matter you can directly speak to him / her. Depending on the seriousness of the query,
concern or the matter reported, the Principal Officer may process the information which in turn, may or may not
be reported to the FIU – IND, i.e. the Financial Intelligence Unit – India, Ministry of Finance – Government of
India. The FIU-IND is the central, national agency responsible for receiving, processing, analyzing and
disseminating information relating to suspect financial transactions to enforcement agencies and foreign FIUs.
References:
1. www.fatf-gafi.org
2. www.fiuindia.gov.in
3. www.sebi.gov.in
Disclaimer:
The above information is current at the time of printing and compiled from publicly available sources believed to
be reliable as listed above. While all due care is taken as to the accuracy and completeness of the same, ACL is
not in a position to vouch for the same. The recipient of this Note may want to refer to any other publicly
available material on this subject for further information / understanding.

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FORMAT - Confirmation of Receipt of Executed Mandatory & Voluntary Client Registration
Documents

With reference to my/our registration as Client with you for NSE/BSE for Capital market/ Derivatives Segment,
I/WE hereby confirm that I/We have received copies of the Know Your Client Form (KYC), Rights &
Obligations, Risk Disclosure Documents (RDD), Power of Attorney (POA ) (if any), Policy & Procedure, Do’s
and Don’ts doc., Brief write up on PML Tariff sheet Documents & all other executed mandatory &
volutary client registration documents.

Name: _________________________________________________________________

Client Code No:_________________

Signature & Co’s Stamp: ______________________________________________________

For KYC following documents required for Non - Individual Client

For Corporate /Partnership/Trust/HUF

1. Completed KYC Part-1 & Part -2 (for new trading account opening ); please refer to the
document attached. (complete pages 2-8 & 31 rest of the document is for your reference and
records.)
2. PAN card copy of Company (attested by co. secy / Director/ Partner / Trustees/HUF)
3. Valid address proof of company if correspondence address & registered office address are
different than we required address proof for both (attested by co. Secy. / Director/ Partner /
Trustees/HUF)
4. PAN card copy of Karta of HUF
5. MOA & AOA (attested by co. Secy. / Director/ Trustees)
6. Partnership Deed (attested by Partner)
7. Trust deed in case of Trust (attested by Trustees)
8. Incorporation certificate (attested by co. secy. / Director)
9. Financials for last 2 years (attested by co. secy / Director/ Partner / Trustees)
10. Shares holding statement (attested by co. secy / Director/ Partner / Trustees)
11. UBO declaration required if any trustee is holding >15% in the Trust
12. UBO declaration required if any Partner is holding >15% in the Partnership firm
13. UBO declaration required if any is holding >25% in the Company
14. ID proof of UBO (Shareholders of the Company / Trustees’/partnership)
15. List of authorized signatories with their specimen signatures (attested by co. secy /
Director/ Partner / Trustees)
16. Authorised signatories’ Address & PAN copy (attested by co. Secy. / Director/ Partner /
Trustees)
17. BR for appointment of authorized signatories for securities trading a/c. opening
18. BR for Trading a/c. opening with Axis Capital Ltd.
19. Demat a/c. proof (attested by co. Secy. / Director/ Partner / Trustees/ HUF)
20. Bank a/c. proof i.e. cancelled cheque, a/c. statement, a/c. passbook (attested by co. Secy. /
Director/ Partner / Trustees/HUF)
21. Self-attested Address & PAN proof of Director/ Partner / Trustees/HUF
22. Deed of declaration of HUF with the list of coparceners with the relations & PAN no (in case of
HUF)

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For Client is already registered with any KRA then need following documents;
1. Completed KYC Part -2 only (for new trading account opening with us ; please refer to the
document attached. complete pages 2, 5-8 & 31 rest of the document is for your reference and
records.)
2. BR for appointment of authorized signatories for securities trading a/c. opening
3. BR for Trading a/c. opening with Axis Capital Ltd.
4. Demat a/c. proof (attested by co. Secy. / Director/ Partner / Trustees)
5. Bank a/c. proof i.e. cancelled cheque, a/c. statement, a/c. passbook (attested by co. Secy. /
Director/ Partner / Trustees)
6. Deed of declaration of HUF with the list of coparceners with the relations & PAN no (in case of
HUF) (if not uploaded on KRA’s website)

For Foreign Direct Investors (FDI) (if the client is registered under Automatic Route (FDI is allowed
under the automatic route without prior approval either of the Government or the Reserve Bank of India
in all activities/sectors as specified in the consolidated FDI Policy, issued by the Government of India
from time to time.) ) List- A
1. Completed KYC ( Part 1 - Part 1 - Annexure -2 (J) & Part 2 / Annexure 3 – Trading related
details; in case of the client is not registered with any KRA). Please complete pages 2-8 & 31
rest of the document is for your reference and records.)
2. PAN card copy of entity
3. Valid address proof of company if correspondence address & registered office address are
different than we required address proof for both (attested by Co. Sec. / Director/ Partner /
Trustees)
4. Constitution / MOA & AOA (attested by Co. Sec. / Director/ Partner / Trustees)
5. Investment agreement / offer documents/ regulatory fillings
6. List of senior mgt. / whole time directors/ trustees
7. Photo ID proof of senior mgt. Or declaration on letterhead with full name, address, nationality &
DOB
8. PAN card copy of Directors (exemption for Foreign National Directors)
9. Board Resolution for appointment of authorized signatories for securities trading A/c. opening
10. Board Resolution for Trading A/c. opening with Axis Capital Ltd.
11. Foreign Inward Remittance Certificate (FIRC) issued by the banker / Proof of acquisition of
shares
12. Permission letter from RBI or Ministry of Corporate affairs of India/ Govt. of India Or
declaration stating that this entity is coming under automatic route.
13. Incorporation certificate (Attested by Co. Sec. / Director/ Partner / Trustees )
14. Valid Tax Residential Certificate
15. Copy of Global Business License
16. Financials for last 2 years (Attested by Co. Sec. / Director/ Partner / Trustees)
17. Shares holding statement (Attested by Co. Sec. / Director/ Partner / Trustees)
18. List of Ultimate Beneficial Owner (UBO) with their holding percentile in the company & their
ID proof. (Attested by Bank with the stamp & Employee ID or Notraized copy )
19. List of authorized signatories with their specimen signatures (Attested by Co. Sec. / Director/
Partner / Trustees)
20. Authorised signatories & Director’s Address proof & ID proof / PAN card copy if applicable.
(Attested by Bank with the stamp & Employee ID or Notraized copy )
21. Demat A/c proof i.e. copy of DP A/c Master issued by depository participant / DP statement.
Validity should not be less than 3 months)
22. Bank A/c. proof of Local Bank and proof of your FDI A/c maintained with your local custodian
in India for the funds settlement of your trades i.e. copy of cancelled cheque / copy of Bank A/c.
pass book / Bank statement Validity should not be less than 3 months)

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For Client who are already registered with any KRA we need following documents;
If the documents are mentioned in the above ‘List- A’ are not uploaded or available on KRA’s website
are required for complete our KYC process.

1. Completed KYC - Part 2 Annexure -2 (K) Account Opening Form only; (please refer to the
document attached. Please complete pages 2,5-8 & 31 rest of the document is for your reference
and records.)
2. Demat a/c proof i.e. copy of DP a/c. master issued by depository participant / DP statement.
(Validity not less than 3 months)
3. Bank a/c. proofs of your local bank and proof of your FDI a/c maintained with your local
custodian in India for the funds settlement of your trades.

For Client who are already registered with any KRA we need following documents;
Completed KYC Part -2 (Annexure 3); please refer to the document attached. Please complete
pages 2,5-8 & 31 rest of the document is for your reference and records.
For Foreign Direct Investor (FDI) i.e.. under Government Route

(FDI in activities not covered under the automatic route requires prior approval of the Government
which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic
Affairs, Ministry of Finance. Application can be made in Form FC-IL)

INSTRUCTION/CHECK LIST FOR FILLING KYC FORM

A. IMPORTANT POINTS:

1. Self-attested copy of PAN card is mandatory for all clients, including

Promoters/Partners/Karta/Trustees and whole time directors and persons authorized to deal in
securities on behalf of company/firm/others.
2. Copies of all the documents submitted by the applicant should be self-attested and accompanied
byoriginals for verification. In case the original of any document is not produced for verification,
then the copies Should be properly attested by entities authorized for attesting the documents, as
per the below Mentioned list.
3. If any proof of identity or address is in a foreign language, then translation into English is
required.
4. Name & address of the applicant mentioned on the KYC form, should match with the
documentary Proof submitted.
5. If correspondence & permanent address are different, then proof for both have to be submitted.
6. Sole proprietor must make the application in his individual name & capacity.
7. For non-residents and foreign nationals, (allowed to trade subject to RBI and FEMA guidelines),
copy of passport/PIO Card/ OCI card and overseas address proof is mandatory.
8. For foreign entities, CIN is optional; and in the absence of DIN no. for the director, their passport
copy Should be given.
9. In case of Merchant Navy NRI’s, Mariner’s declaration or certified copy of CDC ( Continuous
Discharge Certificate) is to be submitted.
10. Politically Exposed Persons(PEP) are defined as individuals who are or have been entrusted with
prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior
politicians, senior Government/judicial/military officers, senior executives of state owned
corporations, important political party officials, etc.

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B. Proof of Identity (POI):-List of documents admissible as Proof of Identity:
1. Unique Identification Number (UID) (Aadhaar) / Passport / Voter ID card/ Driving license.
2. PAN card with photograph
3. Identity card/documents with applicant’s Photo, issued by any of the following :Central/State
Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertaking,
Scheduled Commercial Bank, Public Financial Institutions, Colleges affiliated to Universities,
Professional Bodies such as ICAI, ICWAI,ICSI, Bar Council etc., to their Members; and Credit
cards/ Debit cards issued by Banks.

C. Proof of Address (POA):-List of documents admissible as Proof of Address:

(*Documents having an expiry date should be valid on the date of submission.)
1. Passport /Voters Identity Card/Ration Card/Registered Lease or Sale Agreement of Residence/
Driving License/Flat Maintenance bill/ Insurance Copy.
2. Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill –Not more than 3
months Old.
3. Bank Account Statement /Passbook—Not more than 3 months old.
4. Self –declaration by High Court and Supreme Court judges, giving the new address in respect of
their own accounts.
5. Proof of address issued by any of the following : Bank Managers of Scheduled Commercial
Bank/Scheduled Co-Operative Bank/Multinational Foreign Bank/Gazetted Officer/Notary
public/Elected Representatives to the Legislative Assembly /Parliament/Documents issued by
any Govt. of Statutory Authority.
6. Identity card/document with address, issued by any of the following : Central/State Government
and its Departments, Statutory/Regulatory Authorities, Public Sector Undertaking , Scheduled
Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities and
Professional Bodies such as ICAI,ICWAI,ICSI,Bar Council etc. to their Members.
7. For FII/Sub account, Power of Attorney given by FII/sub-account to the Custodians (which are
duly Notarized and /or apostiled or consularised) that gives the registered address should be
taken.
8. The Proof of address in the name of the spouse may be accepted.

D. Exemptions/clarifications to PAN
(*Sufficient documentary evidence in support of such claims to be collected.)
1. In case of transactions undertaken on behalf of Central Government and /or Sate Government and
by officials appointed by Courts e.g. Official liquidator, Court receiver etc.
2. Investors residing in the state of Sikkim.
3. UN entities/multilateral agencies exempt from paying taxes/filling tax returns in India.
4. SIP of Mutual Funds up to ` 50,000/- p.a.
5. In case of institutional clients, namely, FIIs, MFs, VCFs, FVCIs, Scheduled Commercial Banks,
Multilateral and Bilateral Development Financial Institutions, State Industrial Development
Corporations, Insurance Companies registered with IRDA and Public Financial Institution as
defined under section 4A of the Companies Act,1956, Custodians shall verify the PAN card details
with the Original PAN card and provide duly certified copies of such verified PAN details to the
intermediary.

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E. List of people authorized to attest the documents:
1. Notary Public, Gazetted Officer, Manager of a Scheduled Commercial/ Co-Operative Bank or
Multinational Foreign Banks (Name, Designation & Seal Should be affixed on the copy).
2. In case of NRIs, authorized officials of overseas branches of Scheduled Commercial Bank
registered In India, Notary Public, Court Magistrate, Judge, Indian Embassy / Consulate General
in the country Where the client resides are permitted to attest the documents.

F. FATCA Terms & Conditions:

1. I/We hereby authorize ACL to share my/our FATCA details as may be required with the domestic
or overseas regulatory authorities / tax authorities.
2. I/We understand that if there are any changes in my/our FATCA details, the onus lies on me/us to
intimate the same to ACL within a time frame of 30 days after the change in my/our FATCA
details.
3. I/We hereby confirm that the information provided by me/us is correct, complete & not
misleading.

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