Procedures

1 . Policies and Procedures for Implementation of PMLA (Prevention of Money Laundering)

BACKGROUND

Pursuant to the recommendations made by the Financial Action Task Force on Anti-Money laundering standards, SEBI had issued the Guidelines on Anti-Money Laundering Standards vide their Master Circular No. ISD/AML/CIR-1/2010 dated February 12, 2010, and vide Circular No. CIR/ISD/AML//2/2010 dated June 14, 2010. As per these SEBI guidelines, all intermediaries have been advised to ensure that proper policy frameworks are put in place as per the Guidelines on Anti-Money Laundering Standards notified by SEBI.

WHAT IS MONEY LAUNDERING?

Money Laundering can be defined as engaging in financial transactions that involve income derived from criminal activity, transactions designed to conceal the true original of criminality derived proceeds and appears to have been received through legitimate sources/origins. This is done in three phases, as mentioned below:

	Placement - This is where the criminal proceeds are first-injected into the system. It is also the stage where those who are educated, briefed and alert to the process of money laundering, have the best chance of detecting what is happening and are thus best able to thwart and disrupt the process at the outset. At this stage, very often larger amounts of money are divided and distributed into smaller amounts to avoid suspicion and then paid into a series of bank accounts, arose to purchase securities, or life policies or other assets, sometimes many kinds of assets, all to achieve the prime purpose of being able to inject the tainted money or value into the legitimate mainstream financial/business system.
	Layering - After the injection has taken place and the tainted money or value has entered and become mixed up in the main mass of money or value in the financial system, it is spun around different accounts, different names, different ownerships, plus different instruments and investments. All these movements are designed to disguise the origins of the money or value and thus confuse those who might be attempting to trace the money or value back to the root, criminal source.
	Integration - Placing the laundered proceeds back into the economy in such a way that they re-enter the financial system as apparently legitimate funds. Integration means the reinvestment of those funds in an apparently legitimate business so that no suspicion of its origin remains and to give the appearance of legitimizing the proceeds

PREVENTION OF MONEY LAUNDERING ACT, 2002

Prevention of Money Laundering Act, 2002 (“PMLA” or “the Act”) forms the core of the legal framework put in place by India to combat money laundering. PMLA and the Rules notified there under came into force with effect from July 1, 2005.

The PMLA and Rules notified there under impose an obligation on intermediaries (including Stock Brokers, Sub Brokers and Depository Participant) to verify identity of clients, maintain records and furnish information to the Financial Intelligence Unit (FIU)- INDIA

FINANCIAL INTELLIGENCE UNIT (FIU) – INDIA

The Government of India set up Financial Intelligence Unit-India (FIU-IND) on November 18, 2004 as an independent body to report directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.

FIU-IND has been established as the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions. FIU-IND is also responsible for coordinating and stretching efforts of national and international intelligence and enforcement agencies in pursuing the global efforts against money laundering and related crimes.

OBJECTIVES OF THE PMLA

	To prevent, combat and control money laundering.
	To protect the Company from being used for money laundering
	To confiscate and seize the property obtained from the laundered money.
	Undertake periodic Customer Due Diligence measures which are sensitive to money laundering and terrorist financing risks.
	To comply with applicable laws as well as norms adopted internationally with reference to money laundering.
	To deal with any other issue connected with money laundering in India.

POLICY OF AADHAR SECURITIES PVT. LTD.

Aadhar Securities Pvt Ltd. (hereinafter referred as ASPL) is committed to adhering to guidelines prescribed by Securities and Exchange Board of India (SEBI) in this regard. It is our policy to prohibit and actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorists or criminal activities.

Following measures are being undertaken to implement the PMLA provisions as envisaged under the Anti Money Laundering Act, 2002:

The company has designated Mr. Surendra Chaudhry as the Principal Officer for its Anti-Money Laundering Programme. His duties include monitoring the Company’s compliance with AML obligations and overseeing communication and training of employees. When warranted, the Principal Officer will ensure filing of necessary reports with the Financial Intelligence Unit (FIU-IND)

The key aspect to be taken into consideration is Customer Due Diligence process which covers:

Obtaining sufficient information about the client in order to identify who is the actual beneficiary of the securities or on whose behalf transaction is conducted.

Verifying the customer’s identity using reliable, independent source date / information/ documents

Conducting ongoing due diligence and scrutiny of the account / client to ensure that the transactions conducted are consistent with the client’s background, financial status as well as risk profile.

Furthermore, Customer Due Diligence covers the following

Policy for acceptance of clients

ii.

Client identification procedure

iii.

Suspicious Transactions Reporting

i) Policy For Accepting New Clients

a) We have some policies in place for us to be able to identify new clients to prevent opening of any fictitious/ other account which is not in line with the rules and regulations laid down by SEBI/ the Exchanges.

b) Ideally we would like to take on new clients only when they are referred to by existing clients. However since that is not always feasible the following points are to be taken into consideration (for both referrals as well as direct clients):

	Each client should be met in person: We accept those clients whom we are able to meet personally. The client should either visit the office/branch or concerned official may visit the client at his residence / office address to get the necessary documents filled in and signed
	We should obtain complete information from the client. It should be ensured that the initial forms taken by the client are filled in completely. All photocopies submitted by the client are to be checked against original documents without any exception. Ensure that the ‘Know Your Client’ guidelines are followed without any exception. All supporting documents as specified by Securities and Exchange Board of India (SEBI) and Exchanges are obtained and verified.
	We should not accept clients with identity matching persons known to have criminal background. To check whether the client’s identify matches with any person having known criminal background or is not banned in any other manner, whether in terms of criminal or civil proceedings by any enforcement/regulatory agency worldwide
	We should be careful while accepting Clients of Special category like NRIs, HNIs, Trust, Charities, NGOs, Politically Exposed Persons (PEP), persons of foreign origin, companies having closed share holding/ownership, companies dealing in foreign currency, shell companies, overseas entities, clients in high risk countries, non face to face clients, and clients with dubious background. Other persons under this category would be current/former Head of State, current/former senior high profile politician, or clients from high-risk countries (where existence / effectiveness of money laundering controls is suspect, where there is unusual banking secrecy, countries active in narcotics production, countries where corruption level (as per Transparency International Corruption Perception Index) is high. Extra care should be taken to scrutinize the records / documents pertaining to clients belonging to aforesaid category.
	We should ensure that no account is being opened in a fictitious / benami name or on an anonymous basis.
	No compromise is acceptable on submission of mandatory information/ documents. The client’s trading account is to be opened only on receipt of mandatory information along with authentic supporting documents as per the regulatory guidelines. In case the client is unable / not willing to provide information/documents, we have sufficient reason to reject the client or defer opening the account till everything is provided

ii) Client Identification Procedure

a) Documents which can are sufficient proof to establish identity and proof of address of clients are:

	PAN card is mandatory and is most reliable document as only one card is issued to an individual and we can independently check its genuineness through IT website.

	PAN Card itself can serve as proof of identity. However, in case PAN card carries an old photograph of the holder, which does not match current facial features of the client, we should take other identity proof in form of Voter’s Identity card, Passport, Ration Card or any Government/PSU/Bank issued photo identity card.

	For valid address proof we can rely on Voter’s Identity Card, Passport, Bank Statement, Ration card and latest Electricity/telephone bill in the name of the client.

b) All documents which need to be obtained as customer identification for new clients are indicated on the Client agreement form for the various categories. Same are also indicated hereunder

In case of individuals, copy of the following documents has to be obtained:

As PAN is mandatory, verify its genuineness with IT website and cross verify the PAN card copy with the original.
Other proofs for identity are Voter’s Identity card, Passport, Ration Card or any Government/PSU/Bank issued photo identity card or any other document prescribed by the regulatory authorities
Address proof in the form of Voter’s Identity Card, Passport, Bank Statement, Ration card and latest Electricity/telephone bill in the name of the client or any other document prescribed by the regulatory authorities
Proof of the Demat Account (Client Master alongwith cancelled Depository slip)
Proof of Bank account (Latest Bank statement alongwith cancelled cheque clearly indicating printed account no. & name of holder).

In case of proprietorship concern, copy of the following documents has to be obtained:

Same documents as for Individual.
A declaration on the letterhead of the concern as per Annexure provided in KYC
Address proof in the form of Voter’s Identity Card, Passport, Bank Statement, Ration card and latest Electricity/telephone bill in the name of the client or any other document prescribed by the regulatory authorities
To ensure that rubber stamp is affixed along with signature at all places.
Copy of PAN of the firm

In case of HUF, copy of the following documents have to be obtained :

Copy of HUF PAN
Bank & D.P. Proof
Address Proof of Karta
Photograph of Karta
Signature of Karta and all the major co-partners on the Declaration given in Annexure provided in KYC

In case of Partnership firm, following documents need to be obtained:

Certified true copy of the Partnership Deed.
Copy of PAN of Partnership firm.
Copy of PAN / Passport / Election ID or Driving License of the Managing Partner(s) / Authorised official
A passport size photograph of the partner(s) duly signed across the face.
Proof of the Demat Account (the demat account should be as required for partnership firms).
A declaration on the letterhead of the firm, as per Annexure 3 provided in KYC
Copy of the balance sheet for the last two financial years (Copies of annual balance sheet to be submitted every year)
Authority letter by all the partners in favour of Managing Partner(s) as per Annexure 4 provided in KYC
Rubber stamp to be affixed along with signature at appropriate places.
Proof of Bank Account (of partnership firm)

In case of Partnership firm, following documents need to be obtained:

Copy of PAN of the company.
Copy of MAPIN card (UIN), if applicable.
Copy of PAN & Passport / Election ID or Driving License of Directors / Authorised officials.
Certified true copy of Certificate of Incorporation and Memorandum and Articles of Association.
Annexure 5 and 6 on company's letterhead (format provided in KYC)
Duly signed passport size photograph of Directors/ Authorised official.
Copy of ITR & the balance sheet for the last two financial years (copies of the annual balance sheet to be submitted every year)
Proof of Bank Account of the company (latest Bank statement)
Proof of the Demat Account.
Net Worth Certificate.
Copy of Form 32 of latest Directors and Form 18 (address proof).
Latest Shareholding Pattern including list of all those holding more that 5% in the share capital of the company, duly certified by the company secretary/ whole time director/ MD (copy of updated shareholdings pattern to be submitted every year)
Signature to be present with Company’s Rubber Stamp
Verification / Attestation of signature of Directors by the bank

In case of NRI (Individual) extra care needs to be taken. In case the individual is not present when submitting the documents, the same need to be attested and stamped by the Indian Embassy in the country he is residing in. The following documents need to be obtained:

RBI Approval (duly attested by bank with current date)
Passport size photograph (duly signed).
Proof of Demat account
Detail of NRE/ NRO account opened with bank with bank statement (duly attested by bank)
Copy of complete Passport.
Proof of address in India and abroad.
Copy of PAN of NRI (Individual).
Power of Attorney letter to whom power is given for signature and trading on behalf of him/her (Certified True Copy).
Personal details of Authorised person to whom the Power of Attorney is given for signature and trading on behalf of client (i.e. Address Proof, PAN No., contact No. and photograph).

In case of a Trust, one certified copy of the following must be obtained:

Registration certificate
Trust Deed
PAN card
Authorization letter for the entity authorized to act on their behalf
Officially valid documents like PAN card, voters ID, passport, etc of person(s) authorized to transact on behalf of the Trust.

In case of unincorporated association or a body of individuals, one certified copy of the following must be obtained:

Resolution of the managing body of such association or body of individuals
PoA in favour of person authorized to transact
Officially valid documents like PAN card, voters ID, passport, etc of the person(s) authorized to transact
Any document required by to establish the legal existence of such an association or body of individuals.
Once the documents are obtained the client trading account is opened and due procedures followed for opening of account, uploading of UCC & UCI, risk profiling of the client as per the policies laid down in Risk Management System and continuous surveillance in terms of PMLA.

Risk Based approach

The goal of a risk management system is to measure and manage a firm's exposure to various risks identified as central to its business operations and to outline preventive measures to discourage offenses, as well as detect and correct gaps.

To cover the various risk categories, the company employs a system to measure and manage exposure, which is outlined below and managers/ supervisors are briefed to follow it. This system is set out to protect ourselves from client default and risk containment measures.

a) capital adequacy requirement,

b) monitoring of client performance and track record

c) margin requirements

d) trading limits/ exposures

e) online monitoring of client positions

f) restrictions, in cases of margin limits, are breached etc.

g) Classification of clients into different categories

h) Continuity planning

Classification of Clients

Clients are classified into different risk categories (Low, Medium or High Risk) based on various parameters like client’s location (registered office address, correspondence addresses and other address if any applicable) nature of business activity, trading turnover, manner of making payment for transactions undertaken, relationship, etc.

Broadly speaking the following are the guidelines for classification of categories

Low risk client includes clients who :

a) Provide references

b) No delegation of authority for operation of account

c) Always provide securities and funds in time

d) Places order within reasonable period of time

e) Turnover in line with financials

f) Deal only on Delivery Basis

Grouping Parameters Risk Category - Low

Low turnover with low financial income
Government Employees
Housewives
Retired Employees
Agriculture Sector

Medium risk client: Any client who cannot be comfortably placed in neither in Low risk nor in High Risk category.

Grouping Parameters Risk Category - Medium

Medium Turnover with corresponding financial income
Top 100 (HNI Clients)
Stock Broker Employees

High risk client includes all clients mentioned under Special category of clients and any client against whom any order is passed by regulatory authorities or any investigation is launched which is pending Any client against whom any regulatory order is passed for accessing market then such client will automatically be black listed and no further trading should be done for those accounts.

Grouping Parameters Risk Category - High

2 or more instances of bouncing of cheques
High Brokerage with low financial income
High Turnover with low financial income
Doing large volumes in illiquid scrips
Advocate Clients
Builder Clients
Politician Clients
City (area)
Any large activity in Dormant Account.

Further client once categorized as low risk client can be later categorized as high risk or vice versa depending on the nature of transactions and client behavior and client owner periodical report of his/her client. Based on the client category the trading limits are defined in the front end system.

Non resident clients
Trust, Charities, NGOs and organizations receiving donations
Companies having close family shareholdings or beneficial ownership
Politically exposed persons (PEP) of foreign origin
Current / Former Head of State, Current or Former Senior High profile politicians and connected persons (immediate family, Close advisors and companies in which such individuals have interest or significant influence)
Companies offering foreign exchange offerings
Clients in high risk countries (where existence / effectiveness of money laundering controls is suspect, where there is unusual banking secrecy, Countries active in narcotics production, Countries where corruption (as per Transparency International Corruption Perception Index) is highly prevalent, Countries against which government sanctions are applied, Countries reputed to be any of the following – Havens / sponsors of international terrorism, offshore financial centers, tax havens, countries where fraud is highly prevalent.
Non face to face clients (with less personal interaction).
Clients with dubious reputation as per public information available etc.

iii. Suspicious Transactions Reporting
While care is taken while opening new accounts, we also scrutinize and update the KYC’s of the existing clients by undertaking the following:
a) Keep updating the financial status of the client by obtaining the latest Income Tax Return, Networth Certificate, Annual Accounts etc.
b) Update the details of the client like address, contact number, demat details, bank details etc. and keep the Account Opening Team at HO informed of the same. In case, at any point of time, we are not able to contact the client either at the address or on the phone number, please stop dealing for the client and inform the Principal Officer.
c) Check whether the client’s identity matches with any person having known criminal background or is not banned in any other manner, whether in terms of criminal or civil proceedings by any local enforcement/regulatory agency. For scrutiny / back ground check of the clients / HNI, websites such as www.watchoutinvestors.com should be referred. Also, Prosecution Database / List of Vanishing Companies available on www.sebi.gov.in and RBI Defaulters Database available on www.cibil.com should be checked.
d) Scrutinize minutely the records / documents pertaining to clients of special category (like Non-resident clients, High Net worth Clients, Trusts, Charities, NGOs, Companies having close family shareholding, Politically exposed persons of foreign origin, Current/Former Head of State, Current/Former senior high profile politician, Companies offering foreign exchange offerings, etc.) or clients from high-risk countries (like Libya, Pakistan, Afghanistan, etc.) or clients belonging to countries where corruption/fraud is highly prevalent.
e) Review the above details on an going basis to ensure that the transactions being conducted are consistent with our knowledge of customers, its business and risk profile, taking into account, where necessary, the customer’s source of funds.
If a potential or existing client either refuses to provide the information described above when requested, or appears to have intentionally provided misleading information, our firm will not open a new account and, after considering the risks involved, consider closing any existing account. In either case, our Principal Officer will be notified so that we can determine whether we should report the situation to FIU
In addition to ensure that we review and update the KYC details in context to the PMLA requirements for the existing clients, we also:
a) As a standard policy we do not deal in cash for any transactions – whether for purchase or for selling.
b) We accept cheques only from the designated bank accounts.
c) We accept and deliver shares only to the designated DP accounts.
d) We will manually monitor a sufficient amount of account activity to permit identification of patterns of unusual size, volume, pattern or type of transactions, in the context of other account activity to determine if a transaction lacks financial sense or is suspicious because it is an unusual transaction or strategy for that client.

Our monitoring of specific transactions for detecting any suspicious transactions (as possible money laundering or terrorist financing) include:

1. Any transaction of retail clients of value exceeding Rs 10 lakhs if it is an irregular transaction. Transaction is irregular

i. if the size of order is not commensurate with client income level disclosed or if its more then his/ her usual order size.

ii. If the order is placed by dormant client i.e. order placed by client after a period of 1 year from his/ her last transaction.

The client exhibits unusual concern about the firm's compliance with government reporting requirements and the firm's AML policies (particularly concerning his or her identity, type of business and assets), or is reluctant or refuses to reveal any information concerning business activities, or furnishes unusual or suspicious identification or business documents.

3. The client wishes to engage in transactions that lack business sense or apparent investment strategy, or are inconsistent with the client's stated business or investment strategy.

4. The client engages in any transaction which does not make economic sense or is complex or unusually large

5. The information provided by the client that identifies a legitimate source for funds is false, misleading, or substantially incorrect.

6. Upon request, the client refuses to identify or fails to indicate any legitimate source for his or her funds and other assets.

7. The client has a questionable background or is the subject of news reports indicating possible criminal, civil, or regulatory violations.

8. The client exhibits a lack of concern regarding risks, commissions, or other transaction costs.

9. The client appears to be acting as an agent for an undisclosed principal, but declines or is reluctant, without legitimate commercial reasons, to provide information or is otherwise evasive regarding that person or entity.

10. The client has difficulty describing the nature of his or her business or lacks general knowledge of his or her industry.

11. The client attempts to make frequent or large deposits of currency, insists on dealing only in cash, or asks for exemptions from the firm's policies relating to the deposit of cash.

12. The client engages in transactions involving monetary instruments that appear to be structured to avoid the government reporting requirements, especially if the monetary instruments are in an amount just below reporting or recording thresholds.

13. The client makes a funds deposit for the purpose of purchasing a long-term investment followed shortly thereafter by a request to liquidate the position and transfer of the proceeds out of the account.

14. The client's account has inflows of funds or other assets well beyond the known income or resources of the client.

Maintenance of records – In order to provide audit trails to authorities all suspicious transactions will be recorded with the following information :

1. The parties to the transaction (Beneficial owner of account and identity of person making transaction)

2. The nature of the transaction

3. The amount of the transaction

4. The date on which the transaction was conducted

5. Origin of funds

6. Destination of funds and securities

7. Form of instruction and authority

All records will be maintained for at least 5 years.

Reporting to FIU – We will make a note of Suspicious Transaction that have not been explained to the satisfaction of the Principal Officer and thereafter report the same to the FIU-IND within the required deadlines. We will notify regarding all transactions that raise an identifiable suspicion of criminal, terrorist or corrupt activities.

We ensure continuous training of concerned employees (Compliance, Accounts, etc) in order to keep the systems updated as well as conform to the guidelines of the authorities as well as follow the company’s policies to adhere to these guidelines.

In addition random checks are done by management

The AML programme is reviewed regularly to ensure that it is compliant with the requirements of the PMLA and the implementing regulations under it.

2 .Policies and Procedures for Prevention of Insider Trading

It is the policy of the company to follow the guidelines set by Securities Exchange Board of India for framing a code of conduct for prevention of insider trading by our directors and employees. These guidelines include:

	Director/ employees shall maintain the confidentiality of all price sensitive information. Director/ employees must not pass on such information directly or indirectly by way of making a recommendation for the purchase or sale of securities.
	No employee is allowed to open their own/ immediate family members’ trading account with Aadhar Securities.
	Directors/ employees shall not use price sensitive information to buy or sell securities of any sort, whether for their own account/ relative’s account (with other brokerage companies) or a client's account.
	Limited access will be available to confidential information i.e. files containing confidential information shall be kept secure. Computer files will have adequate security of login and password, etc.
	To prevent the misuse of confidential information, access to the server room (wherein staff routinely have access to confidential information) will be restricted.
	In case it is observed by Compliance Officer that there has been a violation of the policies laid down above, SEBI shall be informed.

3 . Policy & Procedures for Risk Management

These measures include

- capital adequacy requirement,

- monitoring of client performance and track record

- margin requirements

- trading limits/ exposures

- online monitoring of client positions

- restrictions, in cases of margin limits, are breached etc.

- Classification of clients into different categories

- Continuity planning

Trading Exposure

	Trading exposure will be granted based on the effective deposit of the client
	The effective deposit will be computed considering financial position +/- value of stock lying with company (after applying appropriate haircut). The stock available in following categories will be eligible for being part of effective deposit:
	Un-transferred stock lying in the beneficiary account of company
	Stock given by the client specifically for margin i.e. lying in the margin account of the company
	No Illiquid Stocks will be considered for effective deposit.
	The prevailing policy for granting of exposure based on margin applicable on each stock will apply.
	The trading exposure allowed for intra-day trading will be two times of the margin on outstanding positions of the effective deposit
	Clients who want to carry over the positions over and above the available deposit are required to deposit the additional money before closure of the trading session. However in certain cases wherein there is a commitment from respective client / sub-broker that the shortfall in margin will be made good by the same evening, such clients will be allowed to carry over the excess positions. The excess positions allowed to carry over should not exceed two time of the margin of the effective deposit.
	In case of failure of client/ sub-broker to deposit the deficient amount of margin by the same evening, the positions of such clients will be squared off by the Risk department the next day with out any further notice. In addition such clients/ sub-brokers will not be allowed to take any exposure over and above the available effective deposit in future. Such course of action will be decided by the Risk Team with due consultation of management.
	Clients taking higher exposure for intra day trading are required to bring the exposure in the line of available effective deposit by 3.15PM everyday.
	Clients/ sub-brokers will be given warning for reduction/squaring off of exposure/positions in case 50% or above of the total deposit eroded on account of mark to market loss at any point of time during the trading hours. However it is also expected from the traders/ sub-brokers to keep a close on-line vigil on clients taking the high exposures.
	The total deposit will be computed on-line considering the financial obligation and value of stocks after haircut.
	Positions of such client will be squared off without any further notice by the Risk team in case mark to market loss reaches 80% or above of the total deposit. Stocks of such clients will also be sold up to the extent of shortfall in margin and recovery of Mark to Market loss.
	To avoid such action by the Risk Team the clients/sub-brokers are required to bring additional deposits immediately but before breaching the set limit of 80%.
	We have an online risk management software (Protector) to monitor the online Mark-to-Market and margin to mitigate risks in F&O trades.

Classification of Clients

Clients are classified into different risk categories (Low, Medium or High Risk) based on various parameters like client’s location (registered office address, correspondence addresses and other address if any applicable, , nature of business activity, trading turnover, manner of making payment for transactions undertaken, relationship, etc.)

Broadly speaking the following are the guidelines for classification of categories

Low risk client includes clients who :

	Provide references
	No delegation of authority for operation of account
	Always provide securities and funds in time
	Places order within reasonable period of time
	Turnover in line with financials
	Deal only on Delivery Basis
	Deal only on Delivery Basis

Grouping Parameters	Risk Category - Low
Low turnover with low financial income Low	Low
Government Employees Low	Low
Housewives	Low
Retired Employees	Low
Agriculture Sector	Low

Medium risk client: Any client who cannot be comfortably placed in neither in Low risk nor in High Risk category.

Grouping Parameters	Risk Category - Medium
Medium Turnover with corresponding financial income
Top 100 (HNI Clients)
Stock Broker Employees

High risk client includes all clients mentioned under Special category of clients and any client against whom any order is passed by regulatory authorities or any investigation is launched which is pending Any client against whom any regulatory order is passed for accessing market then such client will automatically be black listed and no further trading should be done for those accounts.

Grouping Parameters	Risk Category - High
2 or more instances of bouncing of cheques
High Brokerage with low financial income
High Turnover with low financial income
Doing large volumes in illiquid scrips
Advocate Clients
Builder Clients
Politician Clients
City (area)
Any large activity in Dormant Account.
Clients of special category (CSC) include the following :
Non resident clients
Trust, Charities, NGOs and organizations receiving donations
Companies having close family shareholdings or beneficial ownership
Politically exposed persons (PEP) of foreign origin
Current / Former Head of State, Current or Former Senior High profile politicians and connected persons (immediate family, Close advisors and companies in which such individuals have interest or significant influence)
Clients in high risk countries (where existence / effectiveness of money laundering controls is suspect, where there is unusual banking secrecy, Countries active in narcotics production, Countries where corruption (as per Transparency International Corruption Perception Index) is highly prevalent, Countries against which government sanctions are applied, Countries reputed to be any of the following – Havens / sponsors of international terrorism, offshore financial centers, tax havens, countries where fraud is highly prevalent.
Non face to face clients (with less personal interaction).
Clients with dubious reputation as per public information available etc.

Continuity planning / Alternate plan in case of disasters etc.

	Backups of the systems are taken on a regular basis to ensure that in case of any disaster our work can continue uninterrupted.
	Daily backup is transferred to an offsite location every evening and stored in a fireproof safe.
	The back-up data is checked on a periodic basis to eliminate any possible data error.
	Alternate server is available on standby in case of emergency.
	Continuous efforts are made to automate all the processes to enhance the performance and effectiveness of our employees and systems
	We have a lease line through the exchange to act as a standby
	Standby VSAT is also available for emergencies

4 . Mandatory Document dealing with Policies and Procedures forming integral part of Member Constituent Agreement

Pursuant to SEBI’s Circular MIRSD/SE/Cir-19/2009 dated December 3, 2009 herein below the Policies and Procedures forming integral part of the Member Constituent Agreement. Some of these have already been detailed in the agreements signed in the Client Registration document with Aadhar Securities Pvt. Ltd (hereinafter called ASPL). These have also been sent out by courier to you recently.
1.Refusal of order for Penny stocks:
Penny Stocks have a small market capitalization due to unsound fundamentals. A typical penny stock is highly illiquid and stock exchanges many a time, put them in special categories such as Trade to Trade (T2T), due to small volumes and chances of price manipulation, or Z category, due to the non-fulfilment of the terms of the listing agreement. All trades in T2T and Z-category shares are settled only on actual deliveries or gross basis without allowing any netting.

2.Setting up client’s Exposure limits:

Purchase Limit:

Sell Limit:

Exposure for F&O:

Client-wise differential Limits:

3.Applicable Brokerage Rates
a) Brokerage shall be applied as per the rates agreed upon with the client in the Registration Form at the time of registration of the client subsequently through a written agreement between the client and ASPL. The rate of Brokerage shall not exceed the maximum brokerage permissible under Exchange bye-laws.

b) The slab rates of brokerage fixed by ASPL are function of the quality and cost of services provided to the client and the volume and revenue expected from an account. It shall be reviewed by the ASPL from time to time and may be increased with prospective effect at a notice of 15 days sent to the E-mail address or postal address of the client registered with ASPL.
c) The brokerage shall however be exclusive of the following:

4.Imposition of Penalty / delayed payment charges by either party, specifying the rate and the period (This must not result in funding by the broker in contravention of the applicable laws)

a.Delayed payment charges / Charges on Exposure against collaterals:
Pursuant to Exchange Bye-laws, the Member broker is currently required to make pay-in of funds to the Exchange by T+2 morning and arrange delivery of securities to the Exchange latest by T+2 morning. Further Member broker is also required to maintain adequate upfront margins with the Exchange to avail exposure for trading. The Exchanges have also defined the ratios in which the cash and collaterals are to be deposited and maintained by the Member broker. In addition the Exchange requires the member broker to deposit some of the margins like MTM, in Cash only.
In order to manage its working capital, ASPL requires fullest cooperation of the clients in meeting their respective obligation towards payin and margins. ASPL is therefore authorized by the client to charge a delayed payment penalty, not exceeding 2% per month, on account of delays/failure by the client in meeting the pay-in obligations on the scheduled date and also where the clients take exposure in F&O segment by depositing collaterals in a ratio which is disproportionate to the Cash versus collaterals ratios prescribed by the Exchanges. While levying delayed payment charges or interest on the debit balance in the running account of a client, ASPL may not consider any credit balance in the other family or group account of the client.
b.Penalties levied by Exchanges:
Further Exchanges levy various penalties on the member brokers on auction resulting from short deliveries, non adherence to client-wise exposure limits, client-wise shortfall in F&O Margin and for other reasons which may be defined by the Exchange from time to time. ASPL is therefore authorized by the client to pass on any penalty imposed by the Exchange/SEBI and or any other regulatory authority to the client, which arises on account of the client.
c.Interest Free Deposits:
ASPL provides exposure against the upfront margin received in the form of cash / collateral from the client and the client also has the prerogative to demand withdrawal of cash and collaterals at his discretion, ASPL shall not pay any interest or other benefit to the client for maintaining cash balances or depositing collateral margins with ASPL.

5.The right to sell clients’ securities or close clients’ positions, without giving notice to the client, on account of non-payment of client’s dues.

ASPL shall have right to sell client’s securities, both unpaid securities as well as collaterals deposited towards margins, or close out client’s open positions, without giving notice to the client where there is a delay/ failure of the client to meet the pay-in obligations and / or there is a failure of the client to bring additional margins to cover the increase in risk in the dynamic market conditions. This shall be limited to the extent of settlement / margin obligation.
a.Unpaid Securities in Capital Market:
In case of unpaid obligation on T+3, ASPL may sell the unpaid/ partially paid securities. In addition ASPL may sell the collaterals deposited by the client towards margins and/ or paid securities purchased by the client in earlier settlements where the sale of proceeds of unpaid securities are inadequate to cover the pay-in obligations and/ where the unpaid securities appear to be comparatively illiquid and cannot be sold at reasonable rates to the extent required. ASPL may follow the LIFO method for liquidation of securities but it may not binding on it to follow this method in all cases.
b.The margin shortfall in F&O: Positions of the client may be closed out to the extent of margin shortfall on the T+1 basis. While computing margin shortfall, value of unapproved securities shall not be considered. As per the current Exchange requirements, the Member Broker is required to maintain a 50:50 ratio between cash and collaterals margin deposited with the Exchange. ASPL shall therefore have the prerogative to insist for at least 50% of margin in cash and may not consider the value of securities over and above the cash component for the purpose of calculating margins shortfall and close the F&O position where it finds the deviation. However, sales made in capital market segment are not considered while closing F&O positions on T+1 basis due to margin shortfall.
c.Intra-day Positions: ASPL shall have right to close out any intra-day positions taken by the client after a defined “Cut-off” time (Presently 20 minutes before close of market).
d.General:
While selling the securities/ closing the clients positions, ASPL may take into account the sales made by the client, positions closed by the client or collections received from the client till a cut-off time (presently 2.00pm). While selling the securities/ closing the clients positions, ASPL may not take into consideration Cheques/Bank drafts/Pay orders deposited by the client with ASPL until clear proceeds of such instruments are received by ASPL in its bank account. ASPL shall have the right to sell client’s securities or close out client’s open positions but it shall not be under any obligations to undertake this exercise compulsorily. ASPL shall therefore not be under any obligation to compensate/ or provide reasons of any delay or omission on its part to sell client’s securities or close open positions of the client.
6.Shortages in obligations arising out of internal netting of trades:
ASPL shall have the right to adopt a policy of its choice for internal auctions arising out of internal netting of trades and charge to defaulter seller and compensate the impacted purchaser as per the policy. The current procedure for internal auction is displayed on the website (to be put under FAQ on website), which may be amended from time to time with prospective effect after publishing the same on the corporate website.
7.Conditions under which a client may not be allowed to take further position or the broker may close the existing position of a client
a.All Markets:
Where client is not having adequate margins as per conditions defined in Risk Management policy (This can be referred on our website).
b.Capital Market:

c.F&O:

d.INTRA-DAY:
Clients will not be able to place intra-day orders after a cut-off time fixed by ASPL. (Presently 20 minutes prior to close of market)

e.Event Based:
Where based on happening of an event, ASPL has the risk perception that further trading in the securities/ contracts may not be interest of its clients and/or the market.
f.In the following circumstances ASPL shall have the right to sell client's securities or close client's positions, either in full or partly, without giving notice to the client, on account of non-payment of client's dues, to the extent of settlement/margin obligation:

8.Temporarily suspending or closing a client’s account at the client’s request ASPL may carry a periodic review of the client accounts and may suspend the accounts from Trading in the following circumstances:

9.Deregistering a client
Both ASPL and the client shall have the right to terminate the relationship be giving a WEEK’S notice in writing to the other party.