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It is the policy of the company
to prohibit and actively prevent money laundering and any activity that
facilitates money laundering or the funding of terrorists or criminal
activities.Money laundering is generally defined as engaging in acts designed
to conceal or disguise the true origins of criminally derived proceeds so that
the unlawful proceeds appear to have been derived from legitimate origins or
constitute legitimate assets.
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| Following measures are being undertaken to implement the PMLA provisions as
envisaged under the Anti Money Laundering Act, 2002: |
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The company has designated Mr. Surendra Chaudhry as the Principal Officer for
its Anti-Money Laundering Programme.His duties will 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) |
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When establishing a relationship, maintaining a relationship or providing
services, especially when dealing with a client infrequently, all reasonable
steps must be taken to determine, to verify where necessary, and to remain
apprised of the identity, financial position and business objectives of the
client.
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Based on the risk, and to the extent reasonable and practicable, we ensure that
we know the true identity of our clients by using risk-based procedures to
verify and document the accuracy of the information we get about our clients.
In verifying client identity, we will analyze any logical inconsistencies in
the information we obtain. While accepting new clients, due diligence is
maintained with regard to :
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Compliance with the guidelines issued by SEBI/ RBI |
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Clearly establishing the identity of the client, verifying their address, phone numbers and other details |
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Checking all original documents for the supporting documents provided the client in order to open the account |
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PAN number provided by the client by comparing with original PAN card as well
as by checking details on the Income Tax website |
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Conforming to other KYC standards |
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Client identification is carried out before the account opening form is
processed and trading account is opened |
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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 |
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In addition to ensure that we review and update the KYC details in context to
the PMLA requirements for the existing clients |
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As a standard policy we do not deal in cash for any transactions – whether for
purchase or for selling. |
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We accept cheques only from the designated bank accounts. |
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We accept and deliver shares only to the designated DP accounts. |
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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. |
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Our monitoring of specific transactions for detecting any suspicious
transactions (as possible money laundering or terrorist financing) include: |
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Any transaction of retail clients of value exceeding Rs 10 lakhs if it is an
irregular transaction. Transaction is irregular
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if the size of order is not commensurate with client income level disclosed or
if its more then his/ her usual order size.
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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.
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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.
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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.
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The client engages in any transaction which does not make economic sense or is
complex or unusually large
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The information provided by the client that identifies a legitimate source for
funds is false, misleading, or substantially incorrect.
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Upon request, the client refuses to identify or fails to indicate any
legitimate source for his or her funds and other assets.
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The client has a questionable background or is the subject of news reports
indicating possible criminal, civil, or regulatory violations.
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The client exhibits a lack of concern regarding risks, commissions, or other
transaction costs.
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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.
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The client has difficulty describing the nature of his or her business or lacks
general knowledge of his or her industry.
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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.
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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.
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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.
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The client's account has inflows of funds or other assets well beyond the known
income or resources of the client.
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Maintenance of records – In order to provide audit trails to authorities all
suspicious transactions will be recorded with the following information : |
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The parties to the transaction (Beneficial owner of account and identity of
person making transaction) |
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The nature of the transaction |
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The amount of the transaction |
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The date on which the transaction was conducted |
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Origin of funds |
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Destination of funds and securities |
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Form of instruction and authority |
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| All records will be maintained for at least 5 years. |
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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. |
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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. |
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In addition random checks are done by management. |
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The AML programme is reviewed after every six months to ensure that it is
compliant with the requirements of the PMLA and the implementing regulations
under it. |
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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:
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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. |
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No employee is allowed to open their own/ immediate family members’ trading
account with Aadhar Securities. |
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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. |
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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. |
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To prevent the misuse of confidential information, access to the server room
(wherein staff routinely have access to confidential information) will be
restricted. |
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In case it is observed by Compliance Officer that there has been a violation of
the policies laid down above, SEBI shall be informed. |
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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.
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These measures include
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| - 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 |
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Trading Exposure |
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Trading exposure will be granted based on the effective deposit of the client
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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: |
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Un-transferred stock lying in the beneficiary account of company |
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Stock given by the client specifically for margin i.e. lying in the margin
account of the company |
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No Illiquid Stocks will be considered for effective deposit. |
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The prevailing policy for granting of exposure based on margin applicable on
each stock will apply. |
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The trading exposure allowed for intra-day trading will be two times of the
margin on outstanding positions of the effective deposit |
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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. |
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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. |
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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. |
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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. |
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The total deposit will be computed on-line considering the financial obligation
and value of stocks after haircut. |
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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. |
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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%. |
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We have an online risk management software (Protector) to monitor the online
Mark-to-Market and margin to mitigate risks in F&O trades. |
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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 |
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Low risk client includes clients who : |
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Provide references |
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No delegation of authority for operation of account |
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Always provide securities and funds in time |
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Places order within reasonable period of time |
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Turnover in line with financials |
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Deal only on Delivery Basis |
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Deal only on Delivery Basis |
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| 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 |
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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 | |
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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. |
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| 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. |
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Continuity planning / Alternate plan in case of disasters etc. |
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Backups of the systems are taken on a regular basis to ensure that in case of
any disaster our work can continue uninterrupted. |
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Daily backup is transferred to an offsite location every evening and stored in
a fireproof safe. |
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The back-up data is checked on a periodic basis to eliminate any possible data
error. |
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Alternate server is available on standby in case of emergency. |
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Continuous efforts are made to automate all the processes to enhance the
performance and effectiveness of our employees and systems |
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We have a lease line through the exchange to act as a standby |
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Standby VSAT is also available for emergencies |
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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.
a) ASPL shall have the absolute discretion to accept, refuse or partially accept
any buy or sell order for execution from a client in respect of penny stocks/
illiquid stocks as referred by the Stock Exchanges/ SEBI / stocks which as per
the perception of ASPL are extremely volatile or subject to Market
manipulation.
b) In addition Z category scrips specified by BSE may not be allowed for
trading.
c) ASPL shall have the prerogative to place such restrictions, notwithstanding
the fact that the client has adequate credit balance or margin available in his
account and/or the client had previously purchased or sold such securities /
contracts through ASPL itself.
2.Setting up client’s Exposure limits:
a) Purchase Limit: ASPL may provide a exposure limit for intraday and delivery
based purchases by a client which would be a multiple (varying between one to
four times) of the clear ledger balance in the account of the client plus value
of paid up collaterals computed after appropriate haircut. The value of the
“multiple” and the “haircut” shall be decided by ASPL based on Market
Volatility and quality of collaterals.
b) Sell Limit: ASPL may provide a sell limit to the client equivalent to the
value of securities held as collateral by ASPL on behalf of the client in its
Beneficiary and Margin Pool account after making appropriate adjustments for
the unsettled delivery positions of the client.
c) Exposure for F&O: ASPL may provide exposure for F&O based on
availability of both SPAN margin and Exposure Margin in the form of cash and
approved securities (with appropriate hair cut).
d) Client-wise differential Limits: ASPL shall have the prerogative to allow
differential purchase limits and sell limits varying from client to client,
depending on the Client Risk Category (based on credit worthiness, integrity
and past conduct of each client) as decided by ASPL from time to time.
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:
i)Account Opening charges
ii)Penalties levied by Exchange
iii)Statutory charges payable to Exchange/SEBI/Govt. Authorities etc. (including
Stamp Duty, Transaction charges, STT, Service Tax)
iv)SEBI/Exchange/Clearing Member Turnover charges
v)Other out of pocket and service related charges
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:
Where the client has not able to meet his pay-in obligation in cash by the
schedule date of pay-in irrespective of the value of collaterals available with
ASPL.
Clear proceeds of the cheque deposited by the client to meet the pay-in
obligations have not yet been received by ASPL.
Client is trading in “illiquid” scrips and volumes in his account exceed
internal cut off limit fixed by ASPL.
ASPL exposure at “house level” in a specific scrip / contract exceeds the
internal limits fixed by ASPL.
c.F&O:
Where the client has not met Market to Market loss in cash
Where the “open” positions in a contract exceed or are close to market wide
cut-off limits
Where the client’s position is close to client-wise permissible “open”
positions
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:
i) The client account is in debit
ii) The clients margin utilization is more than the threshold as decided by ASPL
from time to time
iii) The client has not fulfilled his settlement obligation ( Security /Funds ) on
time
iv) The clients MTM / Booked Losses exceeds the threshold decided by ASPL from time
to time
v) Also in case the client account is getting closed which requires that all the
open positions be squared off before the closure of the account
vi) Also, pursuant to any legal, regulatory, statutory or government order/
instruction, the above sale or close out can be done by ASPL
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:
a) Where the client is inactive for more than 3 months
b) Where the client has not cleared the naked or uncovered debits which are more
than 7 days’ old.
c) Where the account is under investigation by any regulatory body
d) Based on the recommendations made by the Compliance Officer/ Accounts Manager
due to excessive speculations, un-cleared balances.
e) Physical contract notes are received back undelivered due to reasons like “no
such person”, “addressee” left, refusal to accept mails, POD’s signed by the
third persons, signature mismatch on POD’s or other reasons which may create
suspicion, after” close” out of the open positions.
f) DCN failed (Bounced email) on more than 3 instances until client submits and
registers new email id.
g) Non delivery of the Statement of Account sent on periodic basis.
Non updation of communications details viz., email id, Mobile no, Land line
details or it is found to be belonging to a third person.
h) Client lodges a compliant either directly with ASPL or through Exchange
relating alleged unauthorized Trades being executed in the account.
i) On notices received from statutory, Government or Local authorities and Income
Tax, Service Tax,a Judicial or a Quasi Judicial authority, etc
j) Where a client is reported to or known to have expired.
ASPL may also suspend the account based on the written request received from
the client. For this suspension, the client will need to send a letter/request
form to ASPL duly signed alongwith a copy of proof of identity/PAN card. The
request so received will be acted upon after due verification within 7 working
days.
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.
a) ASPL may de-register the client account based on action taken by SEBI/NSE/BSE
or being part of list of debarred entities published by SEBI.
b) ASPL may also initiate action for deregistering a client on basis of
information found in sites of CIBIL (or any other agency that may be authorised
to disseminate information relating to defaulters) or client having suspicious
back ground, link with suspicious organization, etc..
c) ASPL shall have right to close out the existing position, sell the collaterals
to recover its dues, if any, before de-registering the client.
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