INTERNAL CONTROL & RISK MANAGEMENT POLICY
In September 2005 Pune Stock Exchange Securities Limited hereinafter for the sake of brevity shall be referred to as “PSESL” shifted to the system of tripartite agreement as per SEBIs directives. After 2005, the role of sub-brokers of subsidiary company has been reduced to an intermediary to merely punch the orders for the clients and to act as a facilitator / mediator between the client and PSESL. The sub-brokers are not maintaining any back office nor are they given the powers to issue contract notes.
Further, from April 2015, post de-recognition of Pune Stock Exchange as regional stock exchange PSE Securities Ltd no longer function as subsidiary of regional stock Exchange & is now a ‘Corporate Broking Entity”.
A. Change in KYC Details: :
- In Case of any change in the information, provided by the sub broker/ client in the Registration form, the sub broker/ Client agrees to immediately communicate the same in writing, along with relevant proofs to PSESL. The sub broker/ Client agrees that it shall not hold PSESL responsible for any non-communication of such changes.
B. Exposures/ Margin::
Trading Margin for Client:
- According to their holding in Beneficiary as well as Holding in our DP (POA / Non POA) and in transit stock of settlement after hair cut which is considered as ‘Stock limit’ (Non cash Limit).
- According to their net ledger balance for all segments (for all exchanges) which is considered as ‘Limit’ (Cash Limit).
Exposure will be given on the basis of above defined margin structure on daily basis.
C. Third Party Payments::
- The Sub-broker/client agrees and accepts that PSESL will refuse payments from any bank account that is not mentioned in the KYC. The Sub-broker/client undertakes it will not hold PSESL responsible for any loss or damage arising out of such refusals of third party payments.
D. Third Party Deliveries::
- The Sub-broker/client agrees and accepts that PSESL will refuse deliveries from any demat account that are not mentioned in the KYC, even though the same might belong to the client. The client undertakes it will not hold PSESL responsible for any loss or damages arising out of such refusals of third party deliveries.
E. Delayed Payment Charges::
- The Sub-broker/client agrees that in case he/she/it does not make the payments on time or if there is an outstanding balance in the client’s account. PSESL has the discretion to levy a Delayed Payment Charge and debit the same in the client’s ledger. The client understands and agrees to the same. It is the sole discretion of PSESL to charge a amount as Delayed Payment Charges. The Sub-broker/client agrees and undertakes not to question the same.
F. Cheque Bouncing Charges::
- The Sub-broker/client undertakes to ensure that all the cheques issued by them to PSESL are honored by the bankers. In case of any cheque bouncing, the charges for the same, as levied by the bank on PSESL, will be debited to the Sub-broker/client ledger. Also, the cost of legal proceeding against the client, initiated towards cheque bouncing, will also be debited to the Sub-broker/client ledger. The Sub-broker/client agrees and understands the same.
- It is the responsibilities of Sub-broker/client to ensure that the securities are transferred to the concerned demat account PSESL, for effecting delivery to the exchange against the sale position of the Sub-broker/client. Such transfers will be within the time specified by SEBI/exchange/. In case the Sub-broker/client fails to transfer the shares on time to PSESL, the Sub-broker/client undertakes that They shall not hold PSESL responsible for any loss/damages arising out of such delayed transfers.
- The client agrees and undertakes that it is responsibility to endure that the Delivery Instruction Slip (DIS) is filled properly, fully and correctly. The Sub-broker/client undertakes that they will not hold PSESL responsible for any loss/damages arising out of such rejection of DIS due to the DIS not being in order.
- As a part of its internal policy, PSESL will not execute any sale transactions for which delivery will be given by the Sub-broker/client in physical form (Non demat form). The Sub-broker/client agrees to the same and undertakes that it will not hold PSESL responsible for any loss/damages arising out of the same.
- As a part of its internal policy PSESL can refuse purchase of any stocks which will result in physical delivery.
H. Internal Auctions::
- Due to internal shortages, PSESL might not be in a position to deliver the securities purchased by the Sub-broker/client. In such circumstances close out credits, for the undelivered shares will be given to the Sub-broker/client as per the internal formula prescribed by PSESL from time to time. The Sub-broker/client understands and agrees to the same. The Sub-broker/client undertakes that it will not hold PSESL responsible for any loss/damages arising out of the same.
- Similarly, if the Sub-broker/client fails to deliver securities against their sale transactions, then appropriate amount will be debited from the Sub-broker/client’s ledger as close out debits as per the auction close out formula decided by PSESL from time to time. The Sub-broker/client understands and agrees to the same. The client undertakes that he will not hold PSESL responsible for any loss/damages arising out of the same.
- The client agrees that it is their responsibility to get in regular touch with our Sub-broker to know about the PSESL internal auction formula.
I. Corporate Benefits::
- PSESL will make its best efforts to intimate the Sub-broker/client, who avail the running account facility and/or clients whose shares are lying with PSESL due to debit balance in their ledger as, about the corporate benefits/ announcements declared in the respective stocks. However, the client agrees that it is the responsibility of the PSESL/Sub-broker/clients also to keep track of such corporate announcements. The Sub-broker/client understands and agrees to the same. However the Sub-broker/client will not hold PSESL responsible for any loss/damage arising out of such non communication from either side on such announcement.
- In case any Sub-broker/client wishes to avail corporate benefit like right, bonus etc. and the client’s securities are lying with PSESL due to debit balance in their ledger A/c, the Sub-broker/client should intimate PSESL in writing about their consent to avail the corporate benefit, in such a case PSESL will apply to the corporate benefits on behalf of the Sub-broker/clients and will debit the cost to the Sub-broker/ client’s account. However the Sub-broker/client will not hold PSESL responsible for any loss/damages arising out of such communication.
- In case the Sub-broker/client is availing the facility of running account and wants the securities transferred to his demat account, prior to record date, to avail any corporate benefits, the Sub-broker/ client has to make a written request for the same at least 48 hours prior to the record date. In such a case, PSESL will transfer the securities only if there is no outstanding debit balance in the client’s accounts and only if the securities are fully paid for. In case there is outstanding debit balance in the client’s account. PSESL will retain the securities. The client understands and agrees to the same. However the client will not hold PSESL responsible for any loss/damages arising out of such non communication.
J. Arbitration / Legal Expenses::
- In case of any arbitration / legal proceedings initiated by PSESL for the client and the final arbitration award /court decision is in PSESL favour, then the cost incurred by PSESL towards arbitration / legal case, will be debited to the client’s ledger by PSESL. The client understands and agrees to the same.
- The client understands and agrees that it is the prerogative of sub broker to open any new trading account for any client. Sub-broker can refuse opening of any new account for any client. The client agrees and understands that it cannot insist, on a matter of right PSESL to open the trading account just because they have filled up the registration kit.
- The Sub-broker/client understands and agrees that the trades executed by them might result in profit or in loss. The Sub-broker/client agrees and undertakes that they will not deny the trades, if the same resulted in loss and shall not hold PSESL responsible to such losses arising out of the Sub-broker/client’s trading decisions.
- The client understands and agrees that due to volatility in the market or due to liquidity of the stock, it may happen that the actual rate of trade might differ from the rate at which the Sub-broker/client has placed the order. The Sub-broker/client undertakes not to hold PSESL responsible for any loss or damages arising out of the same.
- The Sub-broker/ client acknowledge and accept that PSESL has the sole discretion not to accept any order for reasons like margin shortfall, ledger debit balance, etc. accordingly, PSESL/sub broker has the right to reject or cancel any order, if already placed. The Sub-broker/client understands and agrees on the same and will not hold PSESL responsible for any consequential loss or damages, including notional/opportunity loss.
- PSESL may refuse execution of orders in ‘penny stock’ or stock which lot size may be more than 1 or which is in physical form as a part of their due diligence and risk management policy. The Sub-broker/client agrees to the same and undertakes it will not question the same.
- The sub broker/client undertakes not to execute transactions either singly or in tandem with other sub broker/clients, which in PSESLs knowledge may be viewed as manipulative trades viz. artificially raising, depressing and maintaining the price, creation of artificial volume etc. or which could be termed as manipulative or fraudulent trades by SEBI/Exchanges. In case the sub broker/client is found to be indulging in such activities, PSESL reserves the right to inform the exchange/SEBI/other regulatory authority of the same. sub broker/Client understands and agrees to the same.
- The sub broker/ client understands and agrees that any trades in any illiquid scrip/contract would be solely at sub broker/ client’s risk in terms of traded prices and lack of liquidity of stock. The sub broker/client agrees and undertakes that they will not hold PSESL responsible for any loss of damages if any, incurred due to trading in such illiquid scrip/contract. The sub broker/client also agrees that they will not deny such trades if the same has resulted in a loss.
- Any errors in the contract note should be brought to the notice of PSESL within 48 hours of receipt of the same. If no discrepancy or error is pointed out by the sub broker/client, in writing, within 48 hours of receipt of the contract, it will be presumed that the sub broker/client accepts the trades as mentioned in the contract notes and the sub broker/ client shall not hold PSESL responsible for any damages, loss or claims, at a later date.
- The existing sub broker/ client agree not to open any new account in his/her/its name with same PAN NO to any other sub broker of PSESL.
- The sub broker/client agrees to complete any further documentation that may be required to fulfill PSESL’s mandatory due-diligence and/or obligation to any regulatory authorities.
- 27. The sub broker/client understands and agrees that, if any authority under law seeks information about the sub broker/client, PSESL will provide the same to them, without any prior consent from the concerned sub broker/clients. However, PSESL will take all steps to ensure that the sub broker/ client’s are informed. The sub broker/client further agrees to provide any additional information as required under law/regulatory authorities.
- The sub broker/client agrees to complete any further documentation to fulfill the settlement obligations. Also PSESL does not fulfill its settlement obligation to the sub broker/ client.
- PSESL may charge KYC charges from its new clients. The same will be debited to the client’s ledger on creation of Unique Client Code. The client understands and agrees to the same.
- PSESL shall make all reasonable efforts to intimate the client about any corporate announcements, open positions, securities holding position, ledger balance, securities receivable/deliverable, margin requirements, squaring off process, new/change in exposure policy, risk management policy etc. from time to time, through its sub broker. The client agrees and undertakes his responsibility also to remain in touch with the concerned sub broker of PSESL, where the client normally deals to keep a regular check on his account, margin requirements, open positions, delivery status, securities holding, ledger balance etc.
- No interest will be paid to the clients who maintain running account with PSESL, on the credit balance available in the sub broker/ client’s account. The sub broker/client understands and agrees to the same.
- The sub broker/ client confirms that there is no bar on him imposed by any regulatory and/or statutory authorities to deal in securities directly or indirectly. The sub broker/ client agree to inform PSESL in writing of any regulatory action taken by any regulatory authority on the sub broker/ client. In case the sub broker/ client fails to inform the same and PSESL on its own comes to know of such action taken by any regulatory authority, PSESL reserves the right to refuse dealing for such sub broker/ clients. Also PSESL will at its sole discretion close all their A/c,s and liquidate additional capital to the extent of debit balances. The sub broker/ client agrees to the same and undertakes not to hold PSESL responsible for any loss/damages arising out of such action of PSESL.
- The sub broker/ client undertakes to read all the circulars sent by PSESL, on the FTP Website provided by the PSESL. The sub broker/ client undertake not to hold PSESL responsible for any loss/damages in case the sub broker/ client fails to read those circular.
L. Contract note dispatch::
- The sub broker/ client understand and agree that PSESL will sent Electronic Contract Notes by email provided by the client. In case the sub broker/ client desires to receive the contract note in any other manner apart from being sent in Digital contract, he may inform PSESL in writing, in the format prescribed in the Registration form. sub broker/ Client agrees and understands that non-receipt of bounced mail notification by the PSESL shall amount to delivery of the contract note in the physical form.
For PSE Securities Limited
CEO & Director