NSE Circular on: Enforcement actions against the Trading Members
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02-09-2022 |
NSE |
Trading |
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Highlights of NSE Circular dated
September 02, 2022 Enforcement actions against the Trading Members NSE has informed that, it has been decided to revise the existing process to streamline and expedite the post-Inspection actions. Therefore, with effect from September 8, 2022, no Preliminary Observation Sheet (POS) will be issued to the Trading Members and directly a LO/Show Cause Notice (as may be applicable) will be issued.
It has further stated that with effect from September 8, 2022, the Letter of Observation (LO) shall indicate the prescribed penalties as per Schedule I to this Circular. Trading Members must take note of the observations and ensure that the responses to the LO along with complete documentary evidence to substantiate their response, are submitted to the Enforcement Department within the timelines as specified in the LO.
NSE has therefore, emphasized that it is in the interest of the Trading Members to submit complete, accurate and correct information in response to Pre – Inspection Questionnaire/Exchange communications during the inspection process.
The Exchange also imposes penalties for the breach of the provisions of various circulars issued by the other Regulatory departments namely Surveillance and Membership Compliance as specified in Table 2 of this Circular for various non-compliance viz. delay or non-submission of various periodic submissions, non-adherence to membership/compliance requirements, non-compliances by the Market Maker in SME Segment and abnormal/non-genuine transaction observed by the Surveillance department of the Exchange.
Trading Members are requested to note that all the circulars as mentioned in the Table 1 and 2 of this Circular have been reviewed and consolidated into a common penalty structure and is enclosed to this circular as Schedule I. This circular is not applicable to any non-compliances/actions related to surveillance /investigation except to the extent covered in Table 2 of this Circular. Revisions in penalty as mentioned in Schedule I including penalties prescribed for repeat violations as mentioned shall be effective for all LOs issued with effect from September 8, 2022. Further, it may also be noted that where the discretion for levy of monetary penalty was available in the above circulars the same stands modified to the extent that all such discretion stands withdrawn. The Schedule I additionally covers penalties which are as under:
It is also to be noted that prescribed penalty as mentioned in the above said circulars stand revised as provided in Schedule I.
Upon receipt of Trading Members’ response to Exchange Communications, including the LO, the Exchange shall consider the same as final, and complete the enforcement actions by issuing an Action Letter.
Failure to submit a response to the LO within the prescribed timelines would be construed as "No additional information is available", and the Exchange shall proceed to complete the enforcement action based on the available documents.
It is brought to the notice of the Trading Members that any failure to adhere to the timelines unless extended by the Exchange as specified in the Exchange Communications, including the LO, shall be treated as non-cooperation, and appropriate disciplinary proceedings shall be initiated under Chapter IV of NSEIL Rules.
Attention in this regard is also drawn to Rule 17 under Chapter IV of NSEIL Rules which clearly stipulates that Reconsideration/Review of any order passed by the Exchange is only at the suo-moto discretion of the Committee.
The existing process of placing the matters before Member and Core Settlement Guarantee Fund Committee ("MCSGFC”) will continue to be followed for observations involving disciplinary action like the prohibition of onboarding of new clients, restriction on the onboarding of Authorized Persons or any action like disablement, suspension, expulsion, and declaration of default. In such cases, the Exchange shall issue a show cause notice and provide an opportunity of personal hearing before MCSGFC. However, the disablement of terminals shall continue to be applicable as per existing provisions/process for the following: · Violations mentioned in Annexure 1 & 4 of Schedule I. · Under SEBI SOP Circular SEBI/HO/MIRSD/DPIEA/CIR/P/2020/115 dated July 01, 2020 regarding Trading Member / Clearing Member leading to default.
This circular shall come into effect from September 8, 2022.
NSE Circular No. NSE/INSP/53530 dated September 02, 2022 is enclosed herewith for your ready reference.
In case of any clarification or assistance required in implementation of this circular you may contact Vandana Vania– van...@secmark.in / 9223303460 Kaushik Jethwa – kau...@secmark.in / 9870210171 |
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Contact: 9869265949, 9870210171, in...@secmark.in, kau...@secmark.in
