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The underlying document outlines various policies and procedures ISS Enterprise Limited [Erstwhile: ISE Securities & Services Limited]. has framed with respect to its dealings with clients.
Kindly note
that the below stated policies and procedures are subject to change from time to
time, depending upon our internal risk management framework, market and external
environment and clients can refer the ISS website for the updated documents.
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A) Policy for Penny Stock
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A stock that trades at a relatively low price and market capitalization. These types
of stocks are generally considered to be highly speculative and high risk because
of their lack of liquidity, large bid-ask spreads, small capitalization and limited
following and disclosure. Depending on the market condition and RMS policy of the
company, the company reserves the right to refuse to provide the limit in Penny
stocks and losses if any on account of such refusal shall be borne by client only.
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B) Setting up client's exposure limits
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The stock broker may from time to time impose and vary limits on the orders that
the client can place through the stock broker's trading system (including exposure
limits, turnover limits, limits as to the number, value and/or kind of securities
in respect of which orders can be placed etc.). The client is aware and agrees that
the stock broker may need to vary or reduce the limits or impose new limits urgently
on the basis of the stock broker's risk perception and other factors considered
relevant by the stock broker including but not limited to limits on account of exchange/SEBI
directions/limits (such as broker level/market level limits in security specific/volume
specific exposures etc.), and the stock broker may be unable to inform the client
of such variation, reduction or imposition in advance. The client agrees that the
stock broker shall not be responsible for such variation, reduction or imposition
or the client's inability to route any order through the stock broker's trading
system on account of any such variation, reduction or imposition of limits. The
client further agrees that the stock broker may at any time, at its sole discretion
and without prior notice, prohibit or restrict the client's ability to place orders
or trade in securities through the stock broker, or it may subject any order placed
by the client to a review before its entry into the trading systems and may refuse
to execute/allow execution of orders due to but not limited to the reason of lack
of margin/securities or the order being outside the limits set by stock broker/exchange/SEBI
and any other reasons which the stock broker may deem appropriate in the circumstances.
The client agrees that the losses, if any on account of such refusal or due to delay
caused by such review, shall be borne exclusively by the client alone.
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We have margin based RMS system. Total deposits of the clients are uploaded in the
system and client may we have margin based RMS system. Total deposits of the clients
are uploaded in the system and client may system of the stock exchange and/or margin
defined by RMS based on their risk perception. The payout of securities will be
released after considering all liabilities / obligations (including unsettled transactions).
Client may sell shares held by him in Demat account, for which PoA has been provided
to stock broker, without giving margin.
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C) Applicable brokerage rate
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Brokerage will be charged within the limits prescribed by SEBI/Exchange.
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D) Imposition of penalty / delayed payment charges
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Clients will be liable to pay late pay in/delayed payment charges for not making
payment of their payin/margin obligation on time as per the exchange requirement/schedule
at the rate of 1½% per month. Similarly the stock broker will also be liable to
pay delayed payment charges to the client for not making payment of their obligation
on time, as per the exchange requirement/schedule at the rate of 1½% p.m., except
in the cases covered by the "Running Account Authorisation" given by the client
to the stock broker.
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The client agrees that the stock broker may impose fines / penalties for any orders
/ trades / deals / actions of the client which are contrary to this agreement /
rules / regulations / bye laws of the exchange or any other law for the time being
in force, at such rates and in such form as it may deem fit. Further where the stock
broker has to pay any fine or bear any punishment from any authority in connection
with / as a consequence of / in relation to any of the orders / trades / deals /
actions of the client, the same shall be borne by the client.
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E) The right to sell client's securities or close clients' positions, without giving
notice to the client, on account of non-payment of client's dues
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Without prejudice to the stock brokers other right (Including the right to refer
the matter to arbitration), the stock broker shall be entitled to liquidate/close
out all or any of the clients position without giving notice to the client for non
payment of margins or other amounts including the pay in obligation, outstanding
debts etc and adjust the proceeds of such liquidation/close out, if any, against
the clients liabilities/obligations.
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The client shall ensure timely availability of funds/securities in form and manner
at designated time and in designated bank and depository account(s), for meeting
his/her/its pay in obligation of funds and securities. Any and all losses and financial
charges on account of such liquidations/ closing out shall be charged to & borne
by the client. In cases of securities lying in margin account/client beneficiary
account and having corporate actions like Bonus, Stock split, Right issue etc, for
margin or other purpose the benefit of shares due to or received under Bonus, Stock
split, Right issue etc will be given when the shares is actually received in the
stock broker designated Demat account.
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In case the payment of the margin / security is made by the client through a bank
instrument, the stock broker shall be at liberty to give the benefit / credit for
the same only on the realization of the funds from the said bank instrument etc,
at the absolute discretion of the stock Broker. Where the margin / security is made
available by way of securities or any other property, the stock broker is empowered
to decline its acceptance as margin / security &/or to accept it at such reduced
value as the stock broker may deem fit by applying haircuts or by valuing it by
marking it to market or by any other method as the stock broker may deem fit in
its absolute discretion.
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The stock broker has the right but not the obligation, to cancel all pending orders
and to sell/close/liquidate all open positions/securities/shares at the pre-defined
square off time or when Mark to Market (M-T-M) percentage reaches or crosses stipulated
margin percentage, whichever is earlier. The stock broker will have sole discretion
to decide referred stipulated margin percentage depending upon the market condition.
In the event of such square off, the client agrees to bear all the losses based
on actual executed prices, the client shall also be solely liable for all and any
penalties and charges levied by the exchange(s).
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F) Shortages in obligations arising out of internal netting of trades
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Stock broker shall not be obliged to deliver any securities or pay any money to
the client unless and until the same has been received by the stock broker from
the exchange, the clearing corporation / clearing house or other company or entity
liable to make the payment and the client has fulfilled his/her/its obligations
first. The policy and procedure for settlement of shortages in obligations arising
out of internal netting of trades is as under:
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a) The Short delivering client is debited by an amount equivalent to 20% above of
closing rate of day prior to Payin/Payout Day. The securities delivered short are
purchased from market on T+2 day and the purchase consideration (inclusive of all
statutory taxes & levies) is debited to the short delivering seller client along
with reversal entry of provisional amount debited earlier.
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b) If securities cannot be purchased from market due to any force major condition,
the short delivering seller is debited at the closing rate on T+2 day or Auction
day on Exchange plus 10% where the delivery is matched partially or fully at the
Exchange Clearing, the delivery and debits/credits shall be as per Exchange Debits
and Credits.
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c) In cases of securities having corporate actions all cases of short delivery of
cum transactions which cannot be auctioned on cum basis or where the cum basis auctioned
on cum basis or where the cum basis auction payout is after the book closure/record
date, would be compulsory closed out at higher of 10% above the official closing
price on the auction day or the highest traded price from first trading day of the
settlement till the auction day.
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G) Conditions under which a client may not be allowed to take further position or
the broker may close the existing position of a client
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We have margin based RMS system. Client may take exposure upto the amount of margin
available with us. Client may not be allowed to take position in case of non-availability/shortage
of margin as per our RMS policy of the company. The existing position of the client
is also liable to square off/close out without giving notice due to shortage of
margin/ non making of payment for their payin obligation/outstanding debts.
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Temporarily suspending or closing a client's account at the client's request
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On the request of the client in writing, the client account can be suspended temporarily
and same can be activated on the written request of the client only. During the
period client account is suspended, the market transaction in the client account
will be prohibited. However client shares/ledger balance settlement can take place.
On the request of the client in writing, the client account can be closed provided
the client account is settled. If the client wants to reopen the account in that
case client has to again complete the KYC requirement.
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i) Deregistering a client
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Notwithstanding anything to the contrary stated in the agreement, the stock broker
shall be entitled to terminate the agreement with immediate effect in any of the
following circumstances:
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- If the action of the client are prima facie illegal / improper or such as to manipulate
the price of any securities or disturb the normal/proper functioning of securities
or disturb the normal/proper functioning of the market, either alone or in conjunction
with others.
- If there is any commencement of a legal process against the client under any law
in force;
- On the death/lunacy or other disability of the Client;
- If the client being a partnership firm, has any steps taken by the Client and/or
its partners for dissolution of the partnership;
- If the Client suffers any adverse material change in his/her/its financial position
or defaults in any other agreement with the Stock broker;
- If there is reasonable apprehension that the Client is unable to pay its debts or
the Client has admitted its inability to pay its debts, as they become payable;
- If the Client is in breach of any term, condition or covenant of this Agreement;
- If the Client has made any material misrepresentation of facts, including (without
limitation) in relation to the Security;
- If a receiver, administrator or liquidator has been appointed or allowed to be appointed
of all or any part of the undertaking of the Client;
- If the Client have taken or suffered to be taken any action for its reorganization,
liquidation or dissolution;
- If the Client has voluntarily or compulsorily become the subject of proceedings
under any bankruptcy or insolvency law or being a company, goes into liquidation
or has a receiver appointed in respect of its assets or refers itself to the Board
for Industrial and Financial Reconstruction or under any other law providing protection
as a relief undertaking;
- If any covenant or warranty of the Client is incorrect or untrue in any material
respect;
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Inactive Client account: - Client account will be considered as inactive if the
client does not trade for period of 6 months. Calculation will be done at the beginning
of every month and those clients who have not traded even a single time will be
considered as inactive, the shares/ credit ledger balance if any will be transferred
to the client within one week of the identifying the client as inactive. The client
has to make written request for reactivation of their account.
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Trading in Exchange is in Electronic Mode, based on VSAT, leased line, ISDN, Modem
and VPN, combination of technologies and computer systems to place and route orders.
I/we understand that there exists a possibility of communication failure or system
problems or slow or delayed response from system or trading halt or any break down
in our back office/ front end system, or any such other problems/glitch whereby
not being able to establish access to the trading system/network, which may be beyond
your control and may result in delay in processing or not processing buy or sell
Orders either in part or in full. I/We shall be fully liable and responsible for
any such problem/fault.
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Client Acceptance of Policies and Procedures stated herein above:
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I/We have fully understood the same and do hereby sign the same and agree not to
call into question the validity, enforceability and applicability of any provision/clauses
this document any circumstances what so ever. These Policies and Procedures may
be amended / changed unilaterally by the broker, provided the change is informed
to me / us with through any one or more means or methods. I/we agree never to challenge
the same on any grounds including delayed receipt / non receipt or any other reasons
whatsoever. These Policies and Procedures shall always be read always be read along
with the agreement and shall be compulsorily referred to while deciding any dispute
/ difference or claim between me / us and stock broker before any court of law /
judicial / adjudicating authority including arbitrator / mediator etc.
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Policy Frame Work covering KYC Standards and AML Measures.
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In terms of the guidelines issued by the Securities Exchange Board of India (SEBI)
for both trading and demat accounts on Know Your Customer(KYC) standards and Anti
Money Laundering(AML) measures, intermediaries (both brokers and depository participants)
are required to put in place a comprehensive policy frame work covering KYC Standards
and AML Measures.
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This policy document is prepared in line with the SEBI guidelines and incorporate
ISS Enterprise Limited [Erstwhile: ISE Securities & Services Limited] approach to customer identification procedures,
customer profiling based on the risk perception and monitoring of transactions on
an ongoing basis. The objective of this policy document is to prevent incorporate
ISS Enterprise Limited [Erstwhile: ISE Securities & Services Limited] from being used, intentionally or unintentionally,
by criminal elements for money laundering activities and for identifying, monitoring
and reporting suspected money laundering or terrorist financing transactions to
the law enforcement authorities.
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2. Definition of Money Laundering
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Section 3 of the Prevention of Money Laundering {PML] Act 2002 has defined the “offence
of money laundering” as under:
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“Whosever directly or indirectly attempts to indulge or knowingly assists or knowingly
is party or is actually involved in any process or activity connected with the proceeds
of crime and projecting it as untainted property shall be guilty of offence of money
laundering”.
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Money launders may use the broking system for cleansing ‘money’ earned through criminal
activities with the objective of hiding/disguising its source. The process of money
laundering involves creating a web of financial / trading transactions so as to
hide the origin and true nature of these funds. Money launders also disguise the
true source of funds by investing the funds earned out of terrorist / criminal activities
through third party accounts
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3. Obligations under Prevention of Money Laundering [PML] act 2002
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Section 12 of PML Act 2002 places certain obligations on every banking company,
financial institution and intermediary which include (i) maintaining a record of
prescribed transactions(ii) Furnishing information of prescribed transactions to
the specified authority(iii) Verifying and maintaining records of the identity of
its clients(iv) Preserving records in respect of (i), (ii), (iii) above for a period
of 10 years from the date of cessation of transactions with the clients. These requirements
would come into effect after Govt. of India frames rules under the Act.
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4. Money Laundering – Risk Perception
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- To prevent criminal elements from using the ISS Enterprise Limited [Erstwhile: ISE Securities & Services Limited]
trading / demat system for money laundering activities.
- To enable ISS Enterprise Limited [Erstwhile: ISE Securities & Services Limited] to know / understand its customers
and their financial dealings better, which in turn would help Apollo Sindhoori to
manage risks prudently.
- To put in place appropriate controls for detection and reporting of suspicious activities
in accordance with applicable laws/laid down procedures.
- To comply with applicable laws and regulatory guidelines related to anti – money
laundering.
- To take necessary steps to ensure that the concerned staff are adequately trained
in KYC/AML procedures.
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This policy is applicable to all branches/offices of ISS Enterprise Limited [Erstwhile: ISE Securities & Services Limited] and is to be read in conjunction with related operational guidelines issued
from time to time.
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7. Key Elements of the Policy
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1. Policy for acceptance of clients
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ISS Enterprise Limited [Erstwhile: ISE Securities & Services Limited] has developed customer acceptance policies and
procedures that aim to identify the types of customers that are likely to pose a
higher than the average risk of money laundering or terrorist financing. By establishing
such policies and procedures, we will be in a better position to apply customer
due diligence on a risk sensitive basis depending on the type of customer business
relationship or transaction.
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Factors / Parameters of risk perception (in terms of monitoring suspicious transactions)
- Clients’ location (registered office address, correspondence addresses and other
addresses if applicable),
- Nature of business activity,
- Trading turnover etc .
- Manner of making payment for transactions undertaken.
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Further SEBI guidelines on AML Policy has classified the following clients of special
category for whom risk categories have to be assigned and who shall have to be monitored
on an ongoing basis:
- Non resident clients
- High networth clients,
- Trust, Charities, NGOs and organizations receiving donations
- 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
- Clients with dubious reputation as per public information available etc
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The above factors / parameters would enable classification of clients into low,
medium and high risk. Clients of special category (as given below ) may, if necessary,
be classified even higher. Such clients require higher degree of due diligence and
regular update of KYC profile.
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2. Procedure for identifying clients:
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Verify the customer’s identity using reliable, independent source documents, data
or information i.e. complete harmonization with FIU and SEBI guidelines on KYC
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Conduct ongoing due diligence and scrutiny, i.e. perform ongoing scrutiny of the
transactions and account throughout the course of the business relationship to ensure
that the transactions being conducted are consistent with the registered intermediary’s
knowledge of the customer, its business and risk profile, taking into account, where
necessary, the customer’s source of funds.
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Necessary checks and balance to be put into place before opening an account so as
to ensure that the identity of the client does not match 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 agency worldwide.
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Ensure that an account is not opened where the intermediary is unable to apply appropriate
clients due diligence measures / KYC policies. This may be applicable in cases where
it is not possible to ascertain the identity of the client, information provided
to the intermediary is suspected to be non genuine, perceived non cooperation of
the client in providing full and complete information.
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3. Transaction monitoring:
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Regular monitoring of transactions is vital for ensuring effectiveness of the Anti
Money Laundering procedures. The following activities / transactions to be monitored
on an ongoing basis to enable ISS Enterprise Limited [Erstwhile: ISE Securities & Services Limited] to submit periodical
CTRs / STRs
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Regular monitoring of transactions is vital for ensuring effectiveness of the Anti
Money Laundering procedures. The following activities / transactions to be monitored
on an ongoing basis to enable ISS Enterprise Limited [Erstwhile: ISE Securities & Services Limited] to submit periodical
CTRs / STRs
- Special attention should be paid to all complex, unusually large transactions /
patterns which appear to have no economic purpose. Internal threshold limits to
be specified for each class of client accounts and pay special attention to the
transaction which exceeds these limits.
- Randomly examine a selection of transaction undertaken by clients to comment on
their nature i.e. whether they are in the suspicious transactions or not.
- Clients whose identity verification seems difficult or clients appears not to cooperate
- Asset management services for clients where the source of the funds is not clear
or not in keeping with clients apparent standing /business activity;
- Clients in high-risk jurisdictions or clients introduced by banks or affiliates
or other clients based in high risk jurisdictions;
- Substantial increases in business without apparent cause;
- Transfer of investment proceeds to apparently unrelated third parties;
- Unusual transactions by CSCs and businesses undertaken by shell corporations, offshore
banks /financial services, businesses reported to be in the nature of export-import
of small items.
- Comparison of declared income with trading volumes
- Verification of amounts paid through third party cheques
- Verification of amounts paid through demand drafts
- Off – market transfers in dormant accounts
- Huge transactions in short period and then account becoming dormant or closed
- Transactions in illiquid scrips
- Matching of orders in illiquid scrips
- Multiple client code transactions
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Any suspicious transaction will be immediately notified by the Principal Officer
or any other designated officer. The notification will be done in the form of a
detailed report with specific reference to the clients, transactions and the nature
/reason of suspicion. However, it be ensured that there is continuity in dealing
with the client as normal until told otherwise and the client is not be told of
the report/suspicion. In exceptional circumstances, consent may not be given to
continue to operate the account, and transactions may be suspended, in one or more
jurisdictions concerned in the transaction, or other action taken.
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5. Maintenance of records:
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The intermediary should ensure a record of transaction is preserved and maintained
in terms of section 12 of the PMLA 2002 and that transaction of suspicious nature
or any other transaction notified under section 12 of the act is reported to the
appropriate law authority. Suspicious transactions should also be regularly reported
to the higher authorities / head of the department.
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8. KYC for the existing accounts
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While the KYC guidelines will apply to all new clients, the same should be applied
to the existing customers on the basis of materiality and risk. KYC details should
be obtained from all existing clients within the time frame specified by SEBI and
other regulatory authorities. However, transactions in existing accounts would be
continuously monitored for any unusual pattern in the operation of the accounts.
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Principal Officer appointed under AML guidelines, shall with the help of AML team
shall monitor all the transactions listed above and shall submit periodical CTRs
and STRs.
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An AML team shall be formed which will monitor the transactions listed above on
an ongoing basis, analyze transactions, identify transactions that are suspicious
in nature and report the same to the concerned authority through the Principal Officer.
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The policy will reviewed be at regular intervals or as and when considered necessary
by the Board.
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