MCX Circular on - System Audit of Trading Member - ATF Members (Type III)
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Date of Issue: 17-10-2025
Issuer: MCX
System Audit of Trading Member - ATF Members (Type III)
Highlights of MCX Circular dated October-17-2025
This is with reference to SEBI Circular No. CIR/MRD/DMS/34/2013 dated November 6, 2013, SEBI/HO/MIRSD/TPD/CIR/2025/10 dated January 31, 2025, Exchange Circular No. MCX/TECH/066/2025 dated February 07, 2025, regarding “Framework for Monitoring and Supervision of System Audit of Stockbrokers (SBs) through Technology based Measures“ and “Annual System Audit of Stockbrokers / Trading members”. Further, as per the provisions outlined in SEBI Circular No. CIR/MRD/16/2013 dated May 21, 2013, stockbrokers who use Algorithmic Trading or offer Algorithmic Trading facilities to their clients are required to undergo a half-yearly system audit.
Member’s attention is also drawn to Exchange Circular Ref No. MCX/TECH/408/2025 dated August 14, 2025, regarding Empanelment of Auditors for conducting System Audit.
As mentioned in the circular, the Exchange shall accept the System Audit Report certified by empanelled system auditor only with effect from the half year ending September 30, 2025.
Trading members are required to conduct system audit for period ending September 30, 2025, and submit the report to the Exchange as per the timelines specified below. The list of System Auditor empanelled with MCX will be made available on the website at the following path : -
Technology & Services→CTCL→List of Empanelled System Auditor/Audit Firms/Companies
Further, guidelines for submission of reports on online portal and other related details shall be communicated through a separate circular.
Additionally, auditor will also be provided details of vendor/in-house developed products & application being used and registered with Exchange by trading member. The system auditor shall confirm whether the trading member has deployed the latest version in live environment and provide its version number being used for each product in auditor submission login. The system audit report can be submitted only after submission of version confirmation.
The online SAR portal will be available only to the applicable Members for audit report submission as per the schedule specified in the attached circular.
Trading members are advised to take note of the following key guidelines throughout the system audit lifecycle:
1. Ensure that only system auditors empanelled by the Exchange in accordance with the selection criteria communicated vide MCX Circular Ref No. MCX/TECH/514/2025 dated October 06, 2025, are selected/appointed for conducting audits.
2. Trading Members are required to submit complete details of audit plan after discussion/consultation with the appointed auditor on letter head of the member with digital signature on email id i.e. repo...@mcxindia.com . This should include details of auditor, list of systems and trading members office locations to be visited by auditor for system audit, and these details shall be utilized for capturing geo location of trading members office locations. (refer Annexure A for format of Audit Plan).
3. During the physical visit for system audit, auditors must log into the Exchange web portal to enable/capture geo-location. Additionally, System Auditor must submit/enter all visit-related details in Exchange provided web portal, including Date of visit, Entry and exit times, Name of the person(s) visited & interacted. Further, to ensure capturing Geo-location during physical visit by system auditor, the auditor shall log-on to the web portal of Exchange using trading members internet/network connectivity and system auditor shall not access Exchange web portal remotely during the physical visit to member’s office.
4. Trading Members are required to maintain comprehensive records of the audit team members who visit their premises for a minimum period of three years.
5. System Auditors shall preserve working papers, logs, screenshots, records of visits to the premises of the entity, POC and other evidence in support of the audit for a period not less than three years.
6. As part of System Audit guidelines, auditors shall submit the list of systems/processes etc. being audited along with details of samples reviewed in the format provided via Annexure B- Assessment Detail Report.
7. The Action Taken Report, if applicable, shall be validated by the same auditor who conducted the system audit.
8. QSBs are mandated to submit the system audit report after approval from their respective Governing Board and Standing Committee on Technology (SCOT) or equivalent Technology Committee (TC).
9. Other Trading Members are mandated to submi the system audit report on approval of Proprietor/Partner/Director or equivalent responsible official through SCOT or TC.
10. While selecting/appointing system auditors, Trading Members are advised to assess the number of members the auditor is currently servicing and the size of their audit team. This evaluation is essential to ascertain that the audit is comprehensive, and the auditors can dedicate adequate time and resources to ensure the integrity and effectiveness of the audit process is not compromised.
The detailed updated TOR of System Audit applicable for audit period ending September 30,2025 has been enclosed in Annexure C. All the areas included in the System Audit TOR shall be considered as Critical accordingly System auditors are advised to perform the system audit thoroughly.
The system audit report can be submitted only after submission of “Algo MIS Report”, “Version Confirmation Report”, “Assessment Details Report” and details of physical visit by system auditor. Submission of system audit report shall be considered complete only
after the trading member submits the report to the Exchange after providing management comments.
Further, the auditor shall provide compliance status for each TOR item as Compliant/NonCompliant/Not Applicable and in case of any TOR item which is not applicable, auditor is required to provide justification for the non-applicability of said TOR.
All Trading members (QSBs & Other Members) are requested to take note that, for each non-compliance reported by the auditor, trading members are required to submit corrective action taken report (ATR) and same shall be validated by the same auditor who conducted the system audit as per the above-mentioned timelines. Additionally, QSBs are mandated to submit the ATR (if applicable) after approval from their respective Governing Board and Standing Committee on Technology (SCOT) or equivalent Technology Committee (TC).
Similarly, other trading members are mandated to submit ATR (if applicable) on approval of Proprietor/Partner/Director or equivalent responsible official through SCOT or TC. On reviewing details of corrective action submitted by trading members, the auditor shall submit the status of compliance as Compliant or Non-Compliant on web portal.
Trading Members are required to submit Annexure A i.e. auditor details, visit details, audit plan & audit report on letter duly digitally sign on email id i.e. repo...@mcxindia.com.
Trading Members are requested to refer Exchange Circular MCX/INSP/525/2025 dated October 10, 2025, on actions for non-compliance observed in periodic submissions by trading members related to System Audit Report. The details of Penalties/disciplinary action(s)/charges have been provided in Annexure D.
All Trading Members are advised to take note of the above and comply.
Issuer: MCX
System Audit of Trading Member - ATF Members (Type III)
Highlights of MCX Circular dated October-17-2025
This is with reference to SEBI Circular No. CIR/MRD/DMS/34/2013 dated November 6, 2013, SEBI/HO/MIRSD/TPD/CIR/2025/10 dated January 31, 2025, Exchange Circular No. MCX/TECH/066/2025 dated February 07, 2025, regarding “Framework for Monitoring and Supervision of System Audit of Stockbrokers (SBs) through Technology based Measures“ and “Annual System Audit of Stockbrokers / Trading members”. Further, as per the provisions outlined in SEBI Circular No. CIR/MRD/16/2013 dated May 21, 2013, stockbrokers who use Algorithmic Trading or offer Algorithmic Trading facilities to their clients are required to undergo a half-yearly system audit.
Member’s attention is also drawn to Exchange Circular Ref No. MCX/TECH/408/2025 dated August 14, 2025, regarding Empanelment of Auditors for conducting System Audit.
As mentioned in the circular, the Exchange shall accept the System Audit Report certified by empanelled system auditor only with effect from the half year ending September 30, 2025.
Trading members are required to conduct system audit for period ending September 30, 2025, and submit the report to the Exchange as per the timelines specified below. The list of System Auditor empanelled with MCX will be made available on the website at the following path : -
Technology & Services→CTCL→List of Empanelled System Auditor/Audit Firms/Companies
Further, guidelines for submission of reports on online portal and other related details shall be communicated through a separate circular.
Additionally, auditor will also be provided details of vendor/in-house developed products & application being used and registered with Exchange by trading member. The system auditor shall confirm whether the trading member has deployed the latest version in live environment and provide its version number being used for each product in auditor submission login. The system audit report can be submitted only after submission of version confirmation.
The online SAR portal will be available only to the applicable Members for audit report submission as per the schedule specified in the attached circular.
Trading members are advised to take note of the following key guidelines throughout the system audit lifecycle:
1. Ensure that only system auditors empanelled by the Exchange in accordance with the selection criteria communicated vide MCX Circular Ref No. MCX/TECH/514/2025 dated October 06, 2025, are selected/appointed for conducting audits.
2. Trading Members are required to submit complete details of audit plan after discussion/consultation with the appointed auditor on letter head of the member with digital signature on email id i.e. repo...@mcxindia.com . This should include details of auditor, list of systems and trading members office locations to be visited by auditor for system audit, and these details shall be utilized for capturing geo location of trading members office locations. (refer Annexure A for format of Audit Plan).
3. During the physical visit for system audit, auditors must log into the Exchange web portal to enable/capture geo-location. Additionally, System Auditor must submit/enter all visit-related details in Exchange provided web portal, including Date of visit, Entry and exit times, Name of the person(s) visited & interacted. Further, to ensure capturing Geo-location during physical visit by system auditor, the auditor shall log-on to the web portal of Exchange using trading members internet/network connectivity and system auditor shall not access Exchange web portal remotely during the physical visit to member’s office.
4. Trading Members are required to maintain comprehensive records of the audit team members who visit their premises for a minimum period of three years.
5. System Auditors shall preserve working papers, logs, screenshots, records of visits to the premises of the entity, POC and other evidence in support of the audit for a period not less than three years.
6. As part of System Audit guidelines, auditors shall submit the list of systems/processes etc. being audited along with details of samples reviewed in the format provided via Annexure B- Assessment Detail Report.
7. The Action Taken Report, if applicable, shall be validated by the same auditor who conducted the system audit.
8. QSBs are mandated to submit the system audit report after approval from their respective Governing Board and Standing Committee on Technology (SCOT) or equivalent Technology Committee (TC).
9. Other Trading Members are mandated to submi the system audit report on approval of Proprietor/Partner/Director or equivalent responsible official through SCOT or TC.
10. While selecting/appointing system auditors, Trading Members are advised to assess the number of members the auditor is currently servicing and the size of their audit team. This evaluation is essential to ascertain that the audit is comprehensive, and the auditors can dedicate adequate time and resources to ensure the integrity and effectiveness of the audit process is not compromised.
The detailed updated TOR of System Audit applicable for audit period ending September 30,2025 has been enclosed in Annexure C. All the areas included in the System Audit TOR shall be considered as Critical accordingly System auditors are advised to perform the system audit thoroughly.
The system audit report can be submitted only after submission of “Algo MIS Report”, “Version Confirmation Report”, “Assessment Details Report” and details of physical visit by system auditor. Submission of system audit report shall be considered complete only
after the trading member submits the report to the Exchange after providing management comments.
Further, the auditor shall provide compliance status for each TOR item as Compliant/NonCompliant/Not Applicable and in case of any TOR item which is not applicable, auditor is required to provide justification for the non-applicability of said TOR.
All Trading members (QSBs & Other Members) are requested to take note that, for each non-compliance reported by the auditor, trading members are required to submit corrective action taken report (ATR) and same shall be validated by the same auditor who conducted the system audit as per the above-mentioned timelines. Additionally, QSBs are mandated to submit the ATR (if applicable) after approval from their respective Governing Board and Standing Committee on Technology (SCOT) or equivalent Technology Committee (TC).
Similarly, other trading members are mandated to submit ATR (if applicable) on approval of Proprietor/Partner/Director or equivalent responsible official through SCOT or TC. On reviewing details of corrective action submitted by trading members, the auditor shall submit the status of compliance as Compliant or Non-Compliant on web portal.
Trading Members are required to submit Annexure A i.e. auditor details, visit details, audit plan & audit report on letter duly digitally sign on email id i.e. repo...@mcxindia.com.
Trading Members are requested to refer Exchange Circular MCX/INSP/525/2025 dated October 10, 2025, on actions for non-compliance observed in periodic submissions by trading members related to System Audit Report. The details of Penalties/disciplinary action(s)/charges have been provided in Annexure D.
All Trading Members are advised to take note of the above and comply.
In ase of any clarification or assistance required in the implementation of this circular, you may contact : Kaushik Jethwa at kau...@secmark.in and 9870210171.
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