CIRCULAR, CIR/MRD/DMS/ 34
/2013, dated November 6, 2013
To
All
Stock Exchanges.
1. Technological advancements and
various market events have necessitated reviewing the existing system audit
framework for Stock Brokers / Trading Members. Accordingly, system audit
guidelines have been revised which includes System Audit Process, Auditor
Selection Norms and Terms of Reference (TOR).
2. The stock exchanges should
ensure that system audit of stock brokers / trading members are conducted in
accordance with the prescribed guidelines enclosed in this circular.
3. Exchanges are advised to keep
track of findings of system audits of all brokers on quarterly basis and ensure
that all major audit findings, specifically in critical areas, are rectified /
complied in a time bound manner failing which follow up inspection of such
brokers may be taken up for necessary corrective steps / actions thereafter, if
any.
4. Stock Exchange should report all
major non-compliances / observations of system auditors, broker wise, on a
quarterly basis to SEBI.
5. For the current year, in case
the stock brokers have commenced their annual system audit, they may follow
existing annual system audit framework prescribed by exchanges. However, stock
brokers who are yet to commence annual system audit should carry out their
annual system audit as per the framework given in this circular.
6. Stock Exchanges are directed to:
a. take necessary steps and put in
place necessary systems for implementation of the above.
b. make necessary amendments to the
relevant bye-laws, rules and regulations for the implementation of the above
decision, wherever applicable.
c.
bring the
provisions of this circular to the notice of the stock brokers / trading
members of the stock exchange and also disseminate the same on their website.
7. This circular is being issued in
exercise of the powers conferred by Section 11(1) of Securities and Exchange
Board of India Act, 1992 to protect the interest of investors in securities and
to promote the development of, and to regulate, the securities market.
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