BSE Notice on - System Audit of Stockbrokers / Trading members for the half year ended September 30, 2025

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Date of Issue: 17-10-2025  
           
Issuer: BSE

System Audit of Stockbrokers / Trading members for the half year ended September 30, 2025

Highlights of BSE 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 notice no. 20250201-21 dated February 01, 2025, and notice no. 20131107-6 dated November 07, 2013 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 Notice No. 20250813-60 dated August 13, 2025, and Exchange Notice No. 20250902-57 dated September 02, 2025, regarding Empanelment of Auditors for conducting System Audit. As mentioned in these notices, 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 ended September 30, 2025, and submit the report to the Exchange as per the timelines specified below from the Exchange Empaneled System Auditor.  The list of System Auditor empanelled with BSE is available on the website at the following link.

Link: https://www.bseindia.com/register/SystemViewAuditorRegistrations.aspx 

rading 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 are selected for conducting audits, in accordance with the selection criteria communicated via Exchange notice no. 20250813-60 dated August 13, 2025.
   
   
2. Trading Members are required to submit complete details of audit plan after discussion/consultation with the appointed auditor and audit plan via the BEFS web portal. 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 office locations 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 web portal of Exchange using trading members internet/network connectivity the auditor shall log-on to the web portal of the 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 submit 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.

Further, System Auditors will be provided with Algo MIS Link under Auditor MIS Tab which will be a screen-based submission where a list of all the Registered Algo IDs of trading members shall be provided for ease of reference. In case any Algo ID is not complying with 38 checks of Section 4, auditor shall provide the details of non-compliant ToR point(s) along with their observations. 

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. 

Additionally,  system auditor shall also be provided details of vendor/in-house developed products & application being used and registered with Exchange by trading member, through a separate link <Version Compliance Confirmation> for which 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 last two columns through screen-based submission

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/Non-Compliant/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 abovementioned 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. 

Please be informed that a separate notice shall be issued shortly regarding availability of BEFS for submission of System Audit Report for half year ended September 30, 2025.

Trading Members are requested to refer Annexure 1 of Exchange notice no. 20251010-20 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.

In case of any clarification or assistance required in the implementation of this circular, you may contact : Kaushik Jethwa at kau...@secmark.in and 9870210171.