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   POLICY FOR SURVEILLANCE OF ALERTS

   Date of making: 02nd April, 2013

   Date of approval: 05th April, 2013

   To be implemented immediately from the date of approval.

The below mentioned policy made as per NSE Circular No. NSE/INVG/22908 dated March 7, 2013 for Surveillance has been approved by the Board of Directors in their meeting held on 05th April, 2013. All the employees are required to follow the same and take due care for its proper implementation.

This policy is made to facilitate effective surveillance mechanisms in our organization. The Exchange will provide alerts to us based on the transactions traded on the Exchange. We have to analyze these alerts and seek client information and documentary evidence and submit the same to the exchange within the prescribed time limit.
 
  1. Following are the transactional Alerts to be covered in surveillance:-
No. Transactional Alerts Segment
1 Significantly increase in client activity Cash
2 Sudden trading activity in dormant account Cash
3 Clients/Group of Client(s), deal in common scripts Cash
4 Client(s)/Group of Client(s) is concentrated in a few illiquid scripts Cash
5 Client(s)/Group of Client(s) dealing in scrip in minimum lot size Cash
6 Client / Group of Client(s) Concentration in a scrip Cash
7 Circular Trading Cash
8 Pump and Dump Cash
9 Wash Sales Cash & Derivatives
10 Reversal of Trades Cash & Derivatives
11 Front Running Cash
12 Concentrated position in the Open Interest / High
Turnover concentration Derivatives		 Derivatives
13 Order book spoofing i.e. large orders away from market Cash
 
The above transactional alerts can be modified to add any other type of alerts as and when required.

The following activities are also required to be carried out by the RMS / compliance department or the back office based on UCC parameters:
Client(s) Information:
To carry out the Due Diligence of its client(s) on a continuous basis. Further, to ensure that key KYC parameters are updated on a periodic basis as prescribed by SEBI and latest information of the client is updated in UCC database of the Exchange. Based on this information, to establish groups / association amongst clients to identify multiple accounts / common account / group of clients.
Analysis
To analyze the trading activity of the Client(s) / Group of Client(s) or scripts identified based on above alerts,:
  1. Seek explanation from such identified Client(s) / Group of Client(s) for entering into such transactions.
  2. Seek documentary evidence such as bank statement / demat transaction statement or any other documents to satisfy itself. In case of funds, Bank statements of the Client(s) / Group of Client(s) from which funds pay-in have been met, to be sought. In case of securities, demat account statements of the Client(s) / Group of Client(s) from which securities pay-in has been met, to be sought. The period for such statements may be at least +/- 2. 15 days from the date of transactions to verify whether the funds / securities for the settlement of such trades actually belongs to the client for whom the trades were transacted.
  3. After analyzing the documentary evidences, including the bank / demat statement, the Trading Member shall record its observations for such identified transactions or Client(s) / Group of Client(s). In case adverse observations are recorded, the Trading Member shall report all such instances to the Exchange within 45 days of the alert generation. The Trading Member may seek extension of the time period from the Exchange, wherever required.
Following is the procedure to be adopted in case of any alert being received either from the exchange or generated at our end:
  1. To review the alerts based on
    1. Type of alert downloaded by the Exchange
    2. Financial details of the client
    3. Past Trading pattern of the clients/ client group
    4. Bank / Demat transaction details (The period for such statements may be at least +/- 15
      days from the date of transactions)
    5. Other connected clients in TM’s UCC (common email/ mobile number/ address, other linkages, etc.)
    6. Other publicly available information.
    If any concern is seen post inquiry/ receipt of explanation from client, we have to forward the alerts to the Exchange with his comments and any documents deemed relevant.
  2. Within 45 days of the alert generation. The extension of the time period can be sought from the Exchange, wherever required.
  3. A Register for recording the alerts has to be maintained which shall record the following Time frame for disposition of alerts , the findings , and if there is any delay in disposition, reason for the same etc.

    A quarterly MIS shall be put up to the Board of Directors on the number of alerts pending at the beginning of the quarter, generated during the quarter, disposed off during the quarter and pending at the end of the quarter. Reasons for pendency shall be discussed and appropriate action taken. Also, the Board of Directors shall be apprised of any exception noticed during the disposition of alerts.

    The surveillance process shall be conducted under overall supervision of the Compliance Officer/ Designated Director.

    Internal auditor shall review the surveillance policy, its implementation, effectiveness and review the alerts generated during the period of audit. Internal auditor shall record the observations with respect to the same in their report.
Designed by: Wings Technology
 
SEBI Regn No.
IN-DP-CDSL-547-2010 - CDSL
INB 231279333 - CASH MARKET SEGMENT
INF 231279333 - F &O SEGMENT
IN513965          - CMID
INE261279333 - MCX-SX
INE231279333 - NSE-CD
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