POLICY & PROCEDURE

INACTIVE ACCOUNT POLICY OF YOHA SECURITIES LTD

The objective of the policy is to appropriately deal with the Inactive/dormant clients, where clients have not traded for more than 6 continuous months.The policy is also applicable for accounts which have been marked inactive on account of Rules, Bye laws, circulars and guidelines issued by Sebi, Exchanges and Internal RiskManagement Policies.

Background:

SEBI vide circular no. dated December 3, 2009 and National Stock Exchange vide circular no. NSE/INSP/13606 dated December 3, 2009 directed that a policy be framed by stock brokers to deal with the inactive/dormant accounts.

Policy: Procedure to handle Inactive/dormant accounts:

If there is no transaction (buy / sell) entered into by the account holder for more than 6 continuous months, the account will be marked as “INACTIVE/DORMANT".All the accounts marked as “INACTIVE/DORMANT” needs to be monitored carefully in order toavoid unauthorized transactions in the account. If the client wants to make the account “ACTIVE” after 6 continuous months or after providing the required documents supporting the financial status, the client needs to submit a request to reactivate his/her account. In case there is any change in the information such as; address, mobile number, email id, bank/demat account, financial disclosure provided in KYC at the time of registration as client, the same has to be submitted along with the request. After proper verification of the updated / revised details and approval from the compliance officer / Director, the account can be made “ACTIVE” and transaction can take place.

Process for reactivation of Inactive / dormant account which are inactive for 16 continuous months:

The Client can follow any of the below processes:
1. Call the Head office/branch officeidentifying himself (through validation questions)and request for activation of account for placing orders/ transacting in the account or
2. Client can give the duly signed request in writing at any of the branch/main offices of along with documents for Address Proof – such as Aadhar Card, Electricity Bill ,Passport Copy. Identity Proof such as Aadhar Card , Passport Copy, Pan Card and financial Information required for trading in derivative segment. The Client may also courier/ post the same for activationof account or
3. Client can also send an email from registered mail id for reactivation request.

Process for reactivation of Inactive / dormant account which are inactive on account of Risk Management Policies / Non Compliance as per Rules, Bye laws, Circulars and Guidelines issued by Sebi, Exchanges:

Client can give the duly signed request in writing at any of the branch/Head office along with the financial Information required for trading. The Client may also courier/ post the same for activation of account. On verification of the same the compliance officer / risk department in-charge/Director can authorize the activation of such Inactive accounts subject to Rules, Bye laws, circulars and guidelines issuedby Sebi, Exchanges and Internal Risk Management Policies.

Consequences of Inactive Account

On a client being declared inactive, the client’s funds and demat account shall be settled. Settlement of client account needs to be done as per the periodicity (monthly/quarterly) opted by the client and his/her assets (funds, securities or any other collateral) be returned to him/her and statement needs to be sent to client. Proof of sending the statements of settlement of accounts has to be maintained. Settlement of client account needs to be done at least once in a calendar quarter. In case of interim request received from the client for release of funds/securities, the funds and/or securities will be transferred to his account after due verification of the client as per the procedure mentioned above.If client has provided running account authorization the funds/securities shall be transferred toclient’s bank/demat account as a part of daily settlement.


Controls after activation of Inactive Accounts:

1. Trades in such Inactive accounts be confirmed with respective clients by a person from Head Office who has not punched / received such orders.
2. Alert generation & monitoring at Head Office in case of trade in any Inactive account which is made Active.

Approval Authority:

This policy shall be approved by the Board.http://localhost:3160/YOHA/static/policyandprocedureold.aspx

Review Policy:

This policy may be reviewed as and when there are any changes introduced by any statutory authority or as and when it is found necessary to change on account of business needs and Risk Management policy.The policy may be reviewed by the Managing Director/CEO and place the changes in policy before the Board at the meeting first held after such changes are introduced.

Policy communication:

A copy of this policy shall be made available to all the relevant staff/persons such as: compliance officer / department in-charge of registration of clients and Directors.

SECURITIES LTD POLICIES AND PROCEDURE FOR PREVENTION OF MONEY LAUNDERING (as per the requirements of the PMLA Act 2002)

    1. Firm Policy

    It is the policy of the firm to prohibit and actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorist 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 derived from legitimate origins or constitute legitimate assets.


    2. Principal Officer Designation and Duties

    The firm has designated Shri/Smt. B. Elaiya Bharati (Compliance officer) as the Principal Officer for its Anti-Money Laundering Program, with full responsibility for the firm’s AML program is qualified by experience, knowledge and training. The duties of the Principal Officer will include monitoring the firm’s compliance with AML obligations and overseeing communication and training for employees. The Principal Officer will also ensure that proper AML records are kept. When warranted, the Principal Officer will ensure filing of necessary reports with the Financial Intelligence Unit (FIU – IND). The firm has further designated Mr. C. Manoj (Whole-time Director) as Designated Director for its Anti-Money Laundering Program.


    The firm has provided the FIU with contact information for the Principal Officer and Designated Director, including name, title, mailing address, e-mail address, telephone number and facsimile number. The firm will promptly notify FIU of any change to this information.


    3. CUSTOMER ACCEPTANCE POLICY

    The Customer Acceptance Norms specified below shall be applicable to clients sourced directly by employees of Yoha Securities Ltd (YSL)and also with regard to clients sourced through Business AssociatesMarketing agents etc. if any of YSL.


    All persons sourcing clients on behalf of YSL shall be required to adhere to the requirements specified below that are aimed to identify the types of clients that are likely to pose a higher than the average risk of money laundering or terrorist financing:


      1. In-person verification:

      In person verification shall be mandatory for all clients. Accounts shall be opened only for those persons whose in-person verification has been done as per the SEBI/Stock Exchange/Depository or other regulations in this regard. The client should visit the Branch or the authorised official may visit the client at the residence/office to complete the in-per verification procedures. We shall not open accounts of Non-Face to Face Clients.


      2. KYC Procedures:

      Accept only clients in respect of whom complete KYC procedures has been completed. Client account shall not be opened in case the client fails to submit any required documents:


      1. Documents shall be accepted as per the checklists given from time to time
      2. Photocopies submitted by the clients shall be compulsorily verified with original
      3. All details in the form shall be filled in by the clients without fail
      4. Do not compromise on submission of mandatory information – Accounts should not be opened where the client refuses to provide information/documents.

      3. Benami Accounts:

      No account is opened in a fictitious / benami name or on an anonymous basis.


      4.Debarred Clients:

      Before clients open an account check whether the client’s name matches with names in any of the following lists:

      • - SEBI Debarred List
      • - UNSC
      • - PEP
      • -such other list that may be specified by the Regulators/Compliance Department from time to time - Do not open accounts with a known criminal background.

      5. Clients of Special Category:

      Due care shall be taken while accepting clients of Special Category Clients of Special Category include but shall not be limited to the following-

      1. ix. Trust, Charities, Non-Governmental Organizations (NGOs) and organizations receiving donations
      2. x. Companies having close family shareholdings or beneficial ownership
      3. xi. Politically Exposed Persons (PEP) (i.e. Individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc. and family members or close relatives of PEPs)
      4. xii. Companies offering foreign exchange offerings
      5. xiii. Clients in high risk countries (i.e - 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 Havens/ sponsors of international terrorism offshore financial centers, tax havens, countries where fraud is highly prevalent
      6. xiv. Non face to face clients – Do not open Account
      7. xv. Clients with dubious reputation as per public information available etc.

    Treatment of Accounts of Clients of Special Category

      1. NRI:: While opening NRI account utmost care should be exercised. While opening an NRI Repatriable or NRI Non Repatriabale inter alia, collect the following documents from the clients:

      NRI Repatriable/Non Repatriable
      1. PAN Card Copy
      2. Passport Copy
      3. Indian Address Proof
      4. Cancelled Cheque copy of NRE A/c
      5. 5. PIS Permission issued from RBI.
      6. NRI Address Proof
      7. Bank Statement Copy.
      8. Client Master Copy for demat account.

      2. High Networth Clients:

      High networth clients could be classified as such such at the account opening stage or during the course of the relationship, it is realized that the clients investments or the appetite for investment is high.

      3. Trust, Charity and NGOs:

      Both public as well private, registered as well un registered trust will have to be classified in the special category. Any Charitable or Non governmental organization or a no Profit Organization will be also classified herein.

      4. Close family shareholdings or Beneficial Ownership:

      In case of close family shareholdings the objective is to understand whether the beneficiaries of two or more accounts, which may also be opened at different times are same, then both need to be marked under this special category.

      5. Politically Exposed Persons:

      In case of PEPs, the account should be opened only after consent of the senior management (Head Retail and Principal Officer) and all the required documents are collected and client should be marked as PEP in records. Where a client has been accepted and the client or beneficial owner is subsequently found to be, or subsequently becomes a PEP, registered intermediaries shall obtain senior management approval to continue the business relationship. Verify the sources of funds of the PEP.

      6. Company offering foreign Exchanges:

      At the account opening stage if the individual or the entity is registered foreign exchange dealer, then the same may be categorized.

      7. Client in High Risk Country:

      Do open any account received from client who was residing in a high risk jurisdiction and may have investment proceeds which may have also originated from these counties. The list may be obtained from the Financial Action Task Force (FATF) statements that identify countries that do not or insufficiently apply the FATF Recommendations, published by the FATF on its website (www.fatf- gafi.org).

      8. Client with dubious Public Reputation:

      If a client’s reputation during the opening of the account or post opening the account is known to be not good, then the same is marked in this special category.


    4. CUSTOMER IDENTIFICATION POLICY

    The following Customer Identification Norms shall be adhered to in respect of all new clients to establish the identity of the client along with firm proof of address to prevent opening of account which is fictitious/benami/anonymous in nature. SEBI/the Stock Exchanges/the Depositories and other regulatory authorities under which YSL is governed from time to time specify various KYC norms/guidelines that have to be adhered to in order to be able to Identify Customers. Such Norms and guidelines should be followed scrupulously at the time of customer acceptance. Further given below are a list of Basic Requirements to be obtained from various types of clients at the time of account opening.

      1.Proof Of Identity

      Every client would be identified based on only photo identity as prescribed under applicable KYC norms. The PAN Card, which is compulsory, would also serve as a photo identity. Other Identity proofs which might be collected for verification are as under:

      1. xxiv. Passport
      2. xxv. Voter ID Card
      3. xxvi. Driving license
      4. xxvii. PAN card with photograph
      5. xxviii. Unique Identification Number (UID) (Aadhar Card)/ Relevant details made available through E-KYC Process of UIDAI
      6. xxix. VI. Identity card/document with applicant’s Photo, issued by a) Central/State Government and its Departments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) Scheduled Commercial Banks, e) Public Financial Institutions, f) Colleges affiliated to Universities (this can be treated as valid only till the time the applicant is a student), g) Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members, and h) Credit cards/Debit cards issued by Banks.

      2.Proof Of Address

      The address of the Client would be verified from one of the following:

      1. xxx. Ration card
      2. xxxi. Passport
      3. xxxii. Voter ID Card
      4. xxxiii. Driving license
      5. xxxiv. Bank passbook / Bank Statement
      6. xxxv. Unique Identification Number (UID) (Aadhar Card) /Relevant details made available through E-KYC Process of UIDAI
      7. xxxvi. VII. Verified copies of a) Electricity bills (not more than three months old), b) Residence Telephone bills (not more than three months old) and c) Leave and License agreement / Agreement for sale. VIII. Self-declaration by High Court & Supreme Court judges, giving the new address in respect of their own accounts.
      8. xxxvii. Identity card/document with address, issued by a) Central/State Government and its Departments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) Scheduled Commercial Banks, e) Public Financial Institutions, f) Colleges affiliated to Universities (this can be treated as valid only till the time the applicant is a student) and g) Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their Members.

      3.Identification of Beneficial Owner of Account (Other than Individual)

      The term "Beneficial Owner" has been defined as the natural person who ultimately owns or controls a client and/or the person on whose behalf the transaction is being conducted, and includes a person who exercises ultimate effective control over a juridical person. A juridical person has been defined as an Entity, as a firm, that is not a single natural person, as a human being, authorized by law with duties and rights, recognized as a legal authority having a distinct identity, a legal personality (Also known as artificial person, juridical entity, juristic person, or legal person). The Refulatory authorities have advised the procedure for determination of Beneficial Ownership as under:

      1. LL. Where the client is a person other than an individual or trust, the banking company and financial institution, as the case may be, shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the following information:
        1. The identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control through ownership or who ultimately has a controlling ownership interest. Explanation: Controlling ownership interest means ownership of/entitlement to more than 25% of shares or capital or profits of the juridical person, where the juridical person is a company; ownership of/entitlement to more than 15% of the capital or profits of the juridical person where the juridical person is a partnership; or, ownership of/entitlement to more than 15% of the property or capital or profits of the juridical person where the juridical person is an unincorporated association or body of individuals.
        2. In cases where there exists doubt under (i) as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity of the natural person exercising control over the juridical person through other means. Explanation: Control through other means can be exercised through voting rights, agreement, arrangements, etc.
        3. Where no natural person is identified under (i) or (ii) above, the identity of the relevant natural person who holds the position of senior managing official.
      2. MM. Where the client is a trust, the banking company and financial institution, as the case may be, shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the identity of the settler of the trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.
      3. NN. Where the client or the owner of the controlling interest is a company listed on a stock exchange, or is a majority-owned subsidiary of such a company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.
      Accordingly all employees of YSL are to take cognizance of the above details and collect POI/POA of all Beneficial Owners identified as above.

      4.Basic KYC Norms to be followed for verification / scrutiny

      1. oo. The photograph in the PAN card and in any other address proof which contains a photograph must match. This should be followed to ensure that no account is opened in anonymous or fictitious names.
      2. pp. As per SEBI, NSDL, NSE & BSE guidelines, all Address and Identification proofs, should be verified with the originals by any of the employee of YSL. Care should be taken that the employee, who is verifying the copies of the proofs, should be competent to do the same.
      3. qq. In-Person verification of Applicant (s) made compulsory as per Exchanges and NSDL norms should be done by an employee of YSL only or as specified by the Regulators from time to time. The person conducting verification should visit the address provided by the applicant (s) and complete in person verification.
      4. rr. Proof should be collected for both permanent address and correspondence address and the same should be verified with originals.
      5. ss. Notwithstanding the above, the Company prohibits doing business with any individual or entity whose identity cannot be determined or who refuses to provide information or who have provided information that contains significant inconsistencies which cannot be resolved after due investigation.
      6. tt. Verify whether any of the existing Client or new Applicant, falls within the UN sanction list and/ or is debarred by SEBI from dealing in securities. In this case, if any of the Existing Client falls in either of the categories, the said Client would be suspended from trading immediately & the matter would be reported to the concerned Regulatory Authority if required. In case of new applicant falling within the category, such account should not be opened. Clients name in the regulatory orders issued by the exchanges on a day to day basis should be barred from trading with immediate effective.
      7. uu. In case of Non Resident clients, remittance only from approval banking channels will be accepted. In case of FII’s, the investment must be from the current account maintained with the Reserve Bank of India.
      8. vv. Clients should not be activated to trade in derivative segment unless the clients submit a valid proof of financial information.
    The above constitutes our KYC norms and will be strictly followed so that the Company has no doubt about the Client identity. The account of any existing Client not able to satisfy his/her identity will be frozen till identity is established .These norms may be changed by Compliance Officer/Designated Director from time to time to adhere regulatory requirements and to have stringent anti money laundering measures.

    5.Risk Categorisation

    All clients should be categorized on the basis of the risk of money laundering or terrorist financing that they are likely to pose. The clients can be classified into the medium or high risk category depending on various items like Client wise Large Turnovers, particular Script exposure / trading , client’s income range , trading pattern, client is of special category. If any of the client would satisfy the above criteria, depending on the criteria satisfied the same would be classified into medium or high risk. Clients should broadly be classified in the following categories: Low Risk - Clients who pose low or nil risk. They are corporates/HNIs who have a respectable social and financial standing. Clients who fulfill obligations on time. Medium Risk- Intraday clients or speculative client High Risk - Clients who have defaulted in the past. Clients who have a suspicious background. Clients of Special Category


    6. Ongoing Customer Due Diligence

      1. Procedure

      • Any communication in respect of the Client shall be with the Client only
      • Trade Orders/Instructions shall be accepted from the Client only.
      • In case the client wishes to authorise a third party to give trade orders/instructions to the company in the cients account, a duly notarized Power of Attorney shall be provided by the Client and KYC documents like Proof of Identity, Proof of Address and Relationship with the client of such authorised person shall be obtained.
      • The Employees of the Company and the Clients shall adhere to the guidelines issued by the Company in this regard from time to time.
      • Obtaining sufficient information in order to identify persons who beneficially own or control the securities account. Whenever it is apparent that the securities acquired or maintained through an account are beneficially owned by a party other than the client, that party shall be identified using client identification and verification procedures. The beneficial owner is the natural person or persons who ultimately own, control or influence a client and/or persons on whose behalf a transaction is being conducted. It also incorporates those persons who exercise ultimate effective control over a legal person or arrangement.
      • Understand the ownership and control structure of the client;
      • 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 client, its business and risk profile, taking into account, where necessary, the client’s source of funds; and
      • The CDD process shall necessarily be revisited when there are suspicions of money laundering or financing of terrorism (ML/FT).

      2.Monitoring Accounts For Suspicious Activity

      The firm will monitor through the automated means of Back Office Software and alerts provided by exchanges for unusual size, volume, pattern or type of transactions. For non automated monitoring, the following kinds of activities are to be mentioned as Red Flags and reported to the Principal Officer:

      • The customer 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.
      • The customer wishes to engage in transactions that lack business sense or apparent investment strategy, or are inconsistent with the customer's stated business or investment strategy.
      • The information provided by the customer that identifies a legitimate source for funds is false, misleading, or substantially incorrect.
      • Upon request, the customer refuses to identify or fails to indicate any legitimate source for his or her funds and other assets.
      • The customer (or a person publicly associated with the customer) has a questionable background or is the subject of news reports indicating possible criminal, civil, or regulatory violations.
      • The customer exhibits a lack of concern regarding risks, commissions, or other transaction costs.
      • The customer 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.
      • The customer has difficulty describing the nature of his or her business or lacks general knowledge of his or her industry.
      • The customer 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.
      • The customer engages in transactions involving cash or cash equivalents or other monetary instruments that appear to be structured to avoid the Rs.10,00,000 government reporting requirements, especially if the cash or monetary instruments are in an amount just below reporting or recording thresholds.
      • For no apparent reason, the customer insists for multiple accounts under a single name or multiple names, with a large number of inter-account or third-party transfers.
      • The customer engages in excessive journal entries between unrelated accounts without any apparent business purpose.
      • The customer requests that a transaction be processed to avoid the firm's normal documentation requirements.
      • The customer, for no apparent reason or in conjunction with other red flags, engages in transactions involving certain types of securities, such as Z group and T group stocks, which although legitimate, have been used in connection with fraudulent schemes and money laundering activity. (Such transactions may warrant further due diligence to ensure the legitimacy of the customer's activity.)
      • The customer's account shows an unexplained high level of account activity
      • The customer maintains multiple accounts, or maintains accounts in the names of family members or corporate entities, for no apparent purpose.
      • The customer's account has inflows of funds or other assets well beyond the known income or resources of the customer.

      When a member of the firm detects any red flag he or she will escalate the same to the Principal Officer for further investigation Broad categories of reason for suspicion and examples of suspicious transactions for an intermediary are indicated as under: Identity of Client

      • - False identification documents
      • - Identification documents which could not be verified within reasonable time
      • - Non-face to face client
      • - Doubt over the real beneficiary of the account
      • - Accounts opened with names very close to other established business entities
      Suspicious Background
      • - Suspicious background or links with known criminals
      Multiple Accounts
      • - Large number of accounts having a common account holder, introducer or authorized signatory with no rationale
      • - Unexplained transfers between multiple accounts with no rationale
      Activity in Accounts
      • - Unusual activity compared to past transactions
      • - Use of different accounts by client alternatively
      • - Sudden activity in dormant accounts
      • - Activity inconsistent with what would be expected from declared business
      • - Account used for circular trading
      Nature of Transactions
      • - Unusual or unjustified complexity
      • - No economic rationale or bonafide purpose
      • - Source of funds are doubtful
      • - Appears to be case of insider trading
      • - Investment proceeds transferred to a third party
      • - Transactions reflect likely market manipulations
      • - Suspicious off market transactions
      Value of Transactions
      • - Value just under the reporting threshold amount in an apparent attempt to avoid reporting
      • - Large sums being transferred from overseas for making payments
      • - Inconsistent with the clients apparent financial standing
      • - Inconsistency in the payment pattern by client
      • - Block deal which is not at market price or prices appear to be artificially inflated/deflated

      3.Procedure to handle Inactive/dormant accounts:

      If there is no transaction (buy / sell) entered into by the account holder for more than 06 continuous months, the account will be marked as “INACTIVE/DORMANT".All the accounts marked as “INACTIVE/DORMANT” needs to be monitored carefully in order toavoid unauthorized transactions in the account. If the client wants to make the account “ACTIVE” after 06 continuous months or after providing the required documents supporting the financial status, the client needs to submit a request to reactivate his/her account. In case there is any change in the information such as; address, mobile number, email id, bank/demat account, financial disclosure provided in KYC at the time of registration as client, the same has to be submitted along with the request. After proper verification of the updated / revised details and approval from the compliance officer / Director, the account can be made “ACTIVE” and transaction can take place. . Process for reactivation of Inactive / dormant account which are inactive for 06 continuous months:

      The Client can follow any of the below processes:

      1. Call the Head office/branch officeidentifying himself (through validation questions)and request for activation of account for placing orders/ transacting in the account or
      2. Client can give the duly signed request in writing at any of the branch/main offices of along with documents for Address Proof – such as Aadhar Card, Electricity Bill ,Passport Copy. Identity Proof such as Aadhar Card , Passport Copy, Pan Card and financial Information required for trading in derivative segment. The Client may also courier/ post the same for activationof account or
      3. Client can also send an email from registered mail id for reactivation request.

      Process for reactivation of Inactive / dormant account which are inactive on account of Risk Management Policies / Non Compliance as per Rules, Bye laws, Circulars and Guidelines issued by Sebi, Exchanges:

      Client can give the duly signed request in writing at any of the branch/Head office along with the financial Information required for trading. The Client may also courier/ post the same for activation of account. On verification of the same the compliance officer / risk department in-charge/Director can authorize the activation of such Inactive accounts subject to Rules, Bye laws, circulars and guidelines issuedby Sebi, Exchanges and Internal Risk Management Policies. Consequences of Inactive Account OOn a client being declared inactive, the client’s funds and demat account shall be settled. Settlement of client account needs to be done as per the periodicity (monthly/quarterly) opted by the client and his/her assets (funds, securities or any other collateral) be returned to him/her and statement needs to be sent to client. Proof of sending the statements of settlement of accounts has to be maintained. Settlement of client account needs to be done at least once in a calendar quarter. In case of interim request received from the client for release of funds/securities, the funds and/or securities will be transferred to his account after due verification of the client as per the procedure mentioned above.If client has provided running account authorization the funds/securities shall be transferred toclient’s bank/demat account as a part of daily settlement. Controls after activation of Inactive Accounts:

      1. Trades in such Inactive accounts be confirmed with respective clients by a person from Head Office who has not punched / received such orders.
      2. Alert generation & monitoring at Head Office in case of trade in any Inactive account which is made Active.

    7. Maintenance of records

    The Principal Officer will be responsible for the maintenance for following records

    • all cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign currency;
    • all series of cash transactions integrally connected to each other which have been valued below rupees ten lakhs or its equivalent in foreign currency where such series of transactions have taken place within a month;
    • 1) all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place;
    • all suspicious transactions whether or not made in cash. Suspicious transaction means a transaction whether or not made in cash which, to a person acting in good faith -
      • gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime; or
      • appears to be made in circumstances of unusual or unjustified complexity; or
      • appears to have no economic rationale or bonafide purpose; or o gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism
    The records shall contain the following information:
    • the nature of the transactions;
    • the amount of the transaction and the currency in which it was denominated;
    • the date on which the transaction was conducted; and
    • the parties to the transaction."
    The records will be updated on daily basis, and in any case not later than 5 working days

    8. Reporting to FIU IND

    For Cash Transaction Reporting

    • All dealing in Cash that requiring reporting to the FIU IND will be done in the CTR format and in the matter and at intervals as prescribed by the FIU IND For Suspicious Transactions Reporting We will make a note of Suspicion Transaction that have not been explained to the satisfaction of the Principal Officer and thereafter report the same to the FIU IND and the required deadlines. This will typically be in cases where we know, suspect, or have reason to suspect:
    • the transaction involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity as part of a plan to violate or evade any the transaction reporting requirement,
    • the transaction is designed, whether through structuring or otherwise, to evade the any requirements of PMLA Act and Rules framed thereof
    • the transaction has no business or apparent lawful purpose or is not the sort in which the customer would normally be expected to engage, and we know, after examining the background, possible purpose of the transaction and other facts, of no reasonable explanation for the transaction, or
    • the transaction involves the use of the firm to facilitate criminal activity.

    We will not base our decision on whether to file a STR solely on whether the transaction falls above a set threshold. We will file a STR and notify law enforcement of all transactions that raise an identifiable suspicion of criminal, terrorist, or corrupt activities. All STRs will be reported quarterly to the Board of Directors, with a clear reminder of the need to maintain the confidentiality of the STRs We will not notify any person involved in the transaction that the transaction has been reported, except as permitted by the PMLA Act and Rules thereof.

    9. AML Record Keeping

    1. o. STR Maintenance and Confidentiality We will hold STRs and any supporting documentation confidential. We will not inform anyone outside of a law enforcement or regulatory agency or securities regulator about a STR. We will refuse any requests for STR information and immediately tell FIU IND of any such request we receive. We will segregate STR filings and copies of supporting documentation from other firm books and records to avoid disclosing STR filings. Our Principal Officer will handle all requests or other requests for STRs.
    2. p. Responsibility for AML Records and SAR Filing Principal Officer will be responsible to ensure that AML records are maintained properly and that STRs are filed as required
    3. q. Records Required As part of our AML program, our firm will create and maintain STRs and CTRs and relevant documentation on customer identity and verification. We will maintain STRs and their accompanying documentation for at least ten years.

    10.Recruitment and Training Programs For Employees

    We shall ensure adequate screening procedures at the time of hiring its staff. It shall also ensure that the employees dealing with PMLA requirements are suitable and competent to perform their duties. We will ensure that the new staff recruited by them is also given initial PMLA awareness training and all employees will have to provide details similar to the KYC for customers.


    We will develop ongoing employee training under the leadership of the Principal Officer. Our training will occur on at least an annual basis. It will be based on our firm’s size, its customer base, and its resources. Our training will include, at a minimum: how to identify red flags and signs of money laundering that arise during the course of the employees’ duties; what to do once the risk is identified; what employees' roles are in the firm's compliance efforts and how to perform them; the firm's record retention policy; and the disciplinary consequences (including civil and criminal penalties) for non-compliance with the PMLA Act. We will develop training in our firm, or contract for it. Delivery of the training may include educational pamphlets, videos, intranet systems, in-person lectures, and explanatory memos. We will review our operations to see if certain employees, such as those in compliance, margin, and corporate security, require specialized additional training. Our written procedures will be updated to reflect any such changes.


    11. Program to Test AML Program

    1. r. Staffing The testing of our AML program will be performed by the Statutory Auditors of the company
    2. s. Evaluation and Reporting After we have completed the testing, the Auditor staff will report its findings to the Board of Directors. We will address each of the resulting recommendations.

    12. Monitoring Employee Conduct and Accounts

    We will subject employee accounts to the same AML procedures as customer accounts, under the supervision of the Principal Officer. We will also review the AML performance of supervisors, as part of their annual performance review. The Principal Officer’s accounts will be reviewed by the Board of Directors.


    PS shall ensure adequate screening procedures at the time of hiring its staff. It shall also ensure that the employees dealing with PMLA requirements are suitable and competent to perform their duties. PS will conduct PMLA awareness program for its existing employees to ensure that they are aware of their obligations under the provisions of PMLA. PS will ensure that the new staff recruited by them is also given initial PMLA awareness training.


    13. Confidential Reporting of AML Non-Compliance

    Employees will report any violations of the firm’s AML compliance program to the Principal Officer, unless the violations implicate the Principal/Compliance Officer, in which case the employee shall report to the Chairman of the Board, Mr./Ms. Such reports will be confidential, and the employee will suffer no retaliation for making them.


    14. Board of Directors Approval

    We have approved this AML program as reasonably designed to achieve and monitor our firm’s ongoing compliance with the requirements of the PMLA and the implementing regulations under it.

Process Control Objectives Key Risks/ [Impact] Control
R.1 Customer
R.1.1 Customer identification policy to verify his or her identity using independent source Accounts opened in anonymous or fictitious names or persons with criminal background may open accounts. All requirements of KYC is completely filled up and all documents obtained including (i) copy of identity proof (ii) copy of address proof (iii) Copy of PAN card (iv)Introduction (v) Photograph has been obtained
R.1.2 Standard KYC program for new customers Inadequate KYC standards will enhance the exposure to legal and reputational risk Our KYC program comprised of standard procedure for (i) Customer identification (ii)Customer acceptance policy and (iii) High risk clients are not accepted.
R.1.3 Customer Acceptance policy to restrict undesirable persons from commencing business with the Broker. If the fictitious and criminal back ground customers are accepted the chances of fraud and repudiation of contract will increase. A client profile of the new customer is required to be prepared containing details furnished in the KYC. Based on the profile clients should be classified into high, medium and low risk client. E.g. Salaried persons, established business persons etc may be classified as low risk category
R.1.4 On going monitoring of Customers Existing customers falling into high risk category enhancing exposure to credit and default risk Based on the Client profiles and risk category threshold limits required to be fixed for clients. So that any irregular pattern of trading and unusually large transactions can be monitored. Internal monitoring system generates alerts for such transactions.
R.1.5 Trading must happen after all the required documents are collected. If all the relevant documents are not collected The risk of repudiation of contract will be high. It will also lead to regulatory non compliance. The documentation comprises of Checklist, UCC (Unique customer Code) & Approval Procedures
R.1.6 Unique client code(UCC) is allotted to every client and uploaded with the exchange with PAN It will lead to regulatory non compliance. The procedure comprises of assigning responsibility to persons to ensure allocation and updation of UCC before commencing trading
R.1.7 Periodical updation of the client data base Delay or non updation of the client data base will lead to risk of non compliance of exchange guidelines. Specific date will be fixed every month for review and updation of client data. Checklist/questionnaire also will be sent to all clients periodically to ensure updation of data.
Process Control Objectives Key Risks/ [Impact] Control
R.2 Operation
Order management & margin
R.2.1 Systems to ensure only authorized orders are executed. The responsibility is to be fixed for execution of order. Execution of orders without client authorization will cause the repudiation of contract and reputation risk. The system comprises of monitoring of exceptional reports and monitoring of dormant accounts.
R.2.2 Prevention of order execution without appropriate margin. Non compliance of exchange regulations. System is in place to generate alerts/prevent trading without adequate margin.
R.2.3 Receiving orders Identification of clients should be done while receiving the order. The risk of reputation of order and disputes will increase. Voice recording system or random call back verifications procedure can be implemented to ensure authenticity and confirmation of the orders.
R.2.4 No of cases of Cancellation of order should be analyzed. Particular client may default number of times which may lead to fraud. The system comprises of analysis of cancellation cases by a responsible person and reviewed.
R.2.5 Long outstanding debit should be monitored well. Undesirable increases in bad debts. The system comprises of review of report of long outstanding and immediate actions on the same.
Contract notes & Statement of accounts
R.2.6 Contract notes has to be dispatched within 24 hours from execution of the trade & proof of dispatch must be maintained Non compliance of exchange regulations and SEBI regulations System is there to monitor dispatch of contract notes for all transactions at the day end. Periodical cross checking of dispatch details of contract notes with the transactions entered into for the period is being done. Register is maintained for recording the delivery note numbers of contract notes send.
R.2.7 e Contract notes delivery shall be tracked Non delivery of contract notes will lead to non compliance of exchange regulation. System is in place to keep track of delivery of e contract notes sent.
R.2.8 e Contract notes shall be digitally signed Without the digital signature the document is not authorized. The same can be tampered. Asymmetric crypto system will be used. All e contract notes will be digitally signed. Consent of client will be taken for accepting electronic contract notes
R.2.9 Daily margin reports has to be sent to customers Log of bounced mail to be maintained. Non compliance of exchange guidelines. The reports are will be sent daily to the customer. A log of the same is will be maintained for ensuring all the contract notes has been sent. The bounced contract notes mail id will be checked and confirmed with the customer.
R.2.10 Quarterly Statements of accounts should be sent to the clients and log of the same should be maintained Non compliance of exchange guidelines. The statement will be sent quarterly to the customer. A log of the same will be maintained for ensuring that all the statement has been sent.
R.2.11 Periodic review of client details to be done. Change of address or other details may lead to non compliance for the broker. The management will ensure that all the change of client details has been updated in the masters. The details will be reviewed and updated by authorized person only
Banking and Demat account operations
R.2.12 Operation of bank accounts & beneficiary account for client funds & securities separately. There is a risk of utilization of client money for business purpose. The management maintains different accounts for the client and own funds.
R.2.13 The pay in and pay out of funds should be within stipulated time Pay in & pay out should be to the respective clients only. Non compliance of exchange guidelines. Loss of confidence of client as well as goodwill of the company The payment may get credited to wrong client account. The management has check on the pay in pay out and ensures all the payment has been made to respective client and within time limit allowed.
R.2.14 Client fund should not be used for other purposes There is a risk of utilization of client money for business purpose. The management has different accounts for the client and own.
R.2.15 The bank accounts should be periodically reconciled and should be reviewed and documented. Risk of embezzlement of funds BRS is being prepared regularly and reviewed.
Terminal operations and systems
R.2.16 Information Security, systems audit & due diligence Increase in system related risk.. The management conducts system audit in regular intervels.
R.2.17 Login ID management Risk of unauthorized access will increase The password will not be shared. And the respective person will use their own log in id. The password will be changed in regular intervals.
R.2.18 Terminals should be operated by persons holding NCFM certificate Licenses and validity of terminals. Non compliance of the exchange guidelines. Operation by unauthorized person will lead to fraud, misplacement of data and money. Operators have completed the certification course by respective exchanges. The terminal license is valid and renewed on time.
Management of branches / sub brokers and internal control
R.2.19 Survey for opening and closing branches The business may face problem of shut down and other social problems. The management will do a proper survey regarding the environment, business opportunity and communication facility etc before starting the branch.
R.2.20 Document and record keeping at branches There is a risk of data misplacement. System of maintenance of record keeping is strong enough so that no files can be lost. Files are being maintained based on location.
R.2.21 Approval and authorization of transactions at branch Unauthorized transaction will lead to fraud and misplacement of cash and assets. Persons should be identified and authority should be given to authorize the transactions. It should be reviewed by higher authority.
R.2.22 Periodical branch inspection Internal control of branches. Closure procedure for branches Lead to fraud, noncompliance of exchange guidelines, unauthorized trades. Improper closure of branch will lead to loss of assets and may cause legal disputes. The branch will be inspected in regular intervals. All the internal controls of the branch will be checked and controlled by head office. The branch will be closed in a proper way considering appropriate disposal of assets and data. All legal procedures will be properly followed up. And one month before closure, clients are sent intimation letters from H.O. Facility is given to them to operate from H.O or nearby branch.
Investor grievance handling
R.2.23 Recording & disposal of complaints Monitoring of pending grievance Unresolved complaints may lead to legal disputes. All the complaints will be resolved as early as possible. The management will fix a time limit for resolving the complaints. The same will be monitored and reviewed in a timely manner.
Analysis of grievances. Repetition of similar nature of grievances shows the failure of internal control. All grievances will be analyzed and internal controls will be put in place, if any loop hole found.
Maintenance of Books of Accounts
R.2.24 Maintenance of books as per statutory requirement Statutory non compliance The management will ensure all the books are maintained as per statutory requirements.
R.2.25 Reconciliation of various sets of books of accounts like branch books with head office Unreconciled books will lead to missing of transaction, chances of fraud. The management will reconcile the books periodically and the same will be reviewed by higher authority and documented.
Transfer of trades
R.2.26 Order modifications Unauthorized modification of order will lead to legal disputes. The orders will be modified with proper approval only.
Margin Trading
R.2.27 Approvals from exchange obtained for margin trading Non compliance with Exchange regulations Approval from exchange will be taken for margin trading.
R.2.28 Monitoring and ensuring sufficient margins to prevent margin trading Non compliance with Exchange regulations The management will monitor the margin daily.
Proprietary Trading
R.2.29 Maintenance of records to separately identify proprietary trading There is a risk of utilization of client money for own purpose. The management maintains separate accounts for the client and self. All the records are kept separately.
R.2.30 Statutory disclosures for proprietary trading Non compliance of exchange guidelines. It has been disclosed that the member is involved in proprietary trading.
R.2.31 Prior approval to be obtained for propriety trading from more than one location Non compliance of exchange guidelines. The member will obtain prior approval from the exchange if it involves in proprietary trading in more than one location.
Internet Trading
R.2.32 Approvals to be obtained from the exchange for providing internet trading facility to the clients Non compliance with Exchange regulations The management has obtained necessary approvals from the exchange.
Process Control Objectives Key Risks/ [Impact] Control
R.3 Compliance
Systems & Procedures pertaining to Prevention of Money Laundering
R.3.1 Collection of information from clients like KYC Inadequate KYC standards will enhance the exposure to legal and reputational risk Our KYC program comprised of standard procedure for (i) Customer identification (ii)Customer acceptance policy and (iii) on-going monitoring of higher risk accounts
R.3.2 Periodical updation of information from clients Delay or non updation of the client data base. Specific date will be fixed every quarter month for review and updation of client data. Checklist/questionnaire also will be sent to all clients periodically to ensure updation of data.
R.3.3 Such data to be maintained for a period of 10 years from the date of cessation of transaction between the client and intermediary Non compliance with Exchange regulations All data will be kept in a safe place and in a secured manner for 10 years.
R.3.4 Maintain and preserve information relating to specified transactions in Rule 3 of PMLA rules. Non compliance with PMLA rules. All information required as per rule 3 will be preserved.
R.3.5 Any suspicious transaction deducted should be immediately notified to the money laundering officer Non compliance with PMLA rules. Once suspicious transaction is detected it will be immediately notified to money laundering officer.
R.3.6 Periodical reports on compliance and review of alerts. Non review of reports may lead to money laundering. The reports will be reviewed and documented.
Process Control Objectives Key Risks/ [Impact] Control
R.4 Technology
R.4.1 The system is being modified regularly with addition of hardware and software. Unauthorized access to the system may lead to loss of data as well as assets. The system comprises of Perform periodic system reauthorization or whenever major changes are made to an IT system in its operational production environment.
R.4.2 The disposition of information, hardware and software. Activities may include moving, archiving, discarding, or destroying information and sanitizing the hardware and software. The data may get lost while disposition. Improper disposition may also lead to leakage of information too. The system will ensure that the hardware and software are properly disposed of, that the residual data is appropriately handled and the system migration is conducted in a secure and systematic manner.
R.4.3 Hacking, system intrusions, break ins, unauthorized system access, computer crime (cyber stalking ), information bribery, spoofing, Data may get stolen by the outsiders which will cause severe financial as well as reputation loss. Intrusion detection tools are implemented. (E.g. firewall and antivirus software are in place. )To collect information, risk assessment personnel can develop a questionnaire concerning the management and operational controls planned or used for the IT system. The questionnaire will be distributed to the technical and non technical management personnel who are designing the IT system .
R.4.4 Unauthorized users Company firewall should restrict inbound telnet and guest id. Using telnet to the server and browsing system files with the guest id.
R.4.5 Virus The data can get corrupted and information may get lost. Virus detection and eradication software are installed on servers and user work stations. The software should identify, detect and remove viruses to ensure system and data integrity.
Process Control Objectives Key Risks/ [Impact] Control
R.5 Natural Disaster
R.5.1 Fire, Earthquake, Tsunami, Flood, tornadoes, landslides, electrical storms. Loss of data and physical assets. Information on natural threats will be made available. The emergency numbers will be readily available for reference. Proper water sprinklers will be used. The same will be checked in the regular intervals. The back up data is being kept in a remote place so it can be saved from the threats. Insurance for all the information and assets is being done and renewed on due dates.
Process Control Objectives Key Risks/ [Impact] Control
R.6 Human resources
R.6.1 Employee identification policy to verify his or her identity using independent source A person with criminal back ground if selected risk of theft, fraud increases. All employees are taken after verification of backgrounds only
R.6.2 Employee selection process If ineligible employee being selected it may cause poor quality of work. All employees are being selected by proper interview process only.
R.6.3 Employee induction program. Improper introduction to work may lead lack of initiative towards work. Proper induction programs being conducted for all the newly joined employees
R.6.4 Employee training program. Inadequate training will cause poor quality of work. All the employees are given sufficient training and motivation.
R.6.5 Risk mitigation procedure relating to continuing employee:- disgruntled, malicious, negligent, dishonest employees. They can abuse computer, make frauds and theft, falsified inputs, use malicious code, sale of personal information. Human resource management is effective. The employees will be motivated regularly.
R.6.6 Risk mitigation procedure relating to terminated employees Dialing into the company’s network and accessing the company proprietary data. Terminated employees system identifiers will be removed from the system

Risk Management Policy – YOHA SECURITIES LTD

Preamble

Yoha Securities LTD (YSL) is regulated by the Securities and Exchange Board of India (SEBI) as a stock broker. Further, we are regulated by stock exchanges through their notices, circulars, rules, regulations, and bye laws. Risk is the potential harm that may arise from some present process or from some future event. It is often mapped to the probability of some event which is seen as undesirable.

Risk Management is process of measuring, or assessing risk and then developing strategies to manage the risk. Typically involves utilizing a variety of techniques, models and financial analyses.

YSL is exposed to variety of risks including market, credit, liquidity, operational and other risk that are material and require comprehensive controls and ongoing oversight. The risk management framework of YSL for its business is based upon the different client segments, applicable settlement mechanism and SEBI/Stock Exchange/Depository regulations.

We set out below the principles of our risk management framework:

  1. RISK MANAGER
  2. For smooth operational efficiency, a full time Risk Manager will be available with full control a tool that manages the surveillance system. Risk Manager is bound to perform some of the operations which are listed below :

    • There may be cases when client is not able to connect the online trading program, may be because of Internet failure, system breakdown etc. At these situations, it will be responsibility of RM to execute trade on telephonic conversation with respective client, if the client wants to do so .
    • If the total margin required at the commencement of the day falls short by more than 10% ( Expressed as a % of margin required i.e. IM + EM ), the risk manager will be authorized to square off open positions of his choice and client will be able to trade only to close positions already open. However Risk manager will take oral confirmation for such square off.
    • Our risk manager will be authorized to cut off client’s position at the end of the day if the positions are exceeding margin requirements by 3:10 PM. Risk manager will be free to select which position he should square off under due intimation to client.
    • Risk Manager is required to give margin utilized details, M2M details, account position details etc. at any time to the clients who requires the same.
    • Risk Manager will be available to monitor the operations and for solving queries arising during trading hours.
    • Risk Manager is liable to restrict the client if he is not following trading standards set.
    • Risk Manager shall take proper steps to prevent clients from trading in illiquid scrips.
    • Risk Manager shall be authorized to refuse acceptance of orders in penny stocks.
    • It shall be the duty of risk manager to report any significant event, which may have adverse impact on company’s business, to the Directors.
    • Risk Manager has to continuously monitor margin utilization of the company and report immediately to the senior officer or designated person if it crosses beyond 80%.
  3. REGISTERING A CLIENT
  4. While registering a client, due care is required to be taken regarding identity of clients. Due diligence process as enumerated in the Anti Money Laundering Policy with regard to registration of clients and continuing updation of client information shall be followed.

  5. CLIENT ADMINISTRATION
  6. Any changes, locking, unlocking, swapping in Client, Client Profile, and Segment shall be done by personnel under specific approval from Risk Head.

  7. EXPOSURE AND LIMIT SETTINGS
  8. Risk control parameters are inbuilt in the front end system on the basis of which the clients are prevented from taking further position and risk.

    Such parameters are;

    • Gross Exposure Limits
    • Turnover Limits
    • Mark to Market Limits
    • Buy and Sell Limits

    Above parameters are expressed as multiplier of deposits. Deposit Means: Available Ledger Balance and other collateral with appropriate haircuts.YSL does not accept any collateral other than stock held in Bene account .Client wise deposits and multiplier are required to be inserted in the front end system. On the above deposit, different limit multipliers are set based on the risk profile of the client. Collection of upfront margin in the cash segment is at the discretion of the Directors. The above monitoring is done on a daily basis and at the end of trading day, value of deposits and multiplier are set for the next trading day.

    Exposure shall be provided to clients on the basis of available deposit and client risk profile. Such Exposure Value shall be derived from Value at Risk (VAR) Margin and/or pre-defined margins by YSL.

    Further In cash segment collection of Margin in cash segment for non institutional clients’ is at the discretion of Director with input from Dealers as they are the best persons to judge the financial positions and trading activity of the clients.

    Limits are set with the following parameters within the RMS system by the Manager:

    - Cash Margin Avail - Adhoc Margin - Finance Limit - Del.Amt.Limit - Buy Security Qty. Limit - Sell Security Qty. Limit - Direct Collateral - M to M loss Limit - Exposure Limit - Turnover Limit - Sell Exp Limit - Buy Exp Limit - Notinal Cash - Buy Exp Opt Limit - Sell Exp Opt Limit - Buy Exp Fut Limit

    Further the limits are set up taking into account capital adequacy specifically :

    • Branch
    • Dealer
    • Client/Group
    • Client
  9. LIQUIDATION/SQUARE OFF:
  10. All outstanding intraday position shall be squared off daily at 3.10pm at Market rate. All pending intraday order in Cash Segment shall be cancelled prior to Intraday Square off execution.

    For Intra Day Trades, Warning shall be issued to clients when 60% of available margin is eroded. Further, In case Margin Eroded Exceeds 80%, client is informed to make RTGS of amount equal to margin eroded to carry forward his position, and if he fails to do, Trades shall be squared off by member.

  11. CLIENT DEFAULT & OUTSTANDING
  12. Contract slip/bills must be signed properly by the clients/authorized representatives. Proper authorization letter should be taken in case client sends somebody else for collection. Contract Notes are to be sent within 24 hours of execution of trades.

    In case of default, if client is not able to pay his/her/its dues immediately adopt following procedure:-

    • Try to take post dated cheque/s for amount due;
    • Get the ledger and contract notes signed by the client;
    • Obtain letter from the client covering the schedule of future payments;
    • Preserve
    • Signed contract notes / bills ;
    • Proof of sending of bills/contracts by courier etc.; and
    • Proof of delivery of bills/contracts by courier etc.
    • Arrangement for recording of telephone conversations with defaulting client should be made covering Amount/s, Due Date/s, Date of recording Exchange/s and major scrips.

    If hopes of recovery by follow up have faded, inform the Directors immediately but not later than 15 days in case of cheque bouncing and within 1 month in other cases. For small amounts i.e. below 10,000/- offer the client to settle the payment for lesser amount and close the business with him since it is not economical to initiate such cases. Major defaults older then 6 months may also be intimated to the Directors for civil recovery.

    When default has already occurred, do not pass JV for transferring funds. Obtain letters for all the inter exchange, inter segment, inter family/friend transfers and third party payments should be backed by proper authorizations signed by all the parties.

    Outstanding more than 30 days shall be closely monitored and recovery procedure shall be initiated for the same. Further, client shall not be provided Buy Limits and Only Sale Limits shall be made available if shares are lying with us. Back office shall take all reasonable steps to clear such debits.

  13. RISK COVERAGE
  14. YSL should have adequate insurance cover for different types of exposures, including but not limited to fidelity insurance, and replacement of equipment and other business and data processing devices. A BCP is to be maintained to ensure that business continues as normal in case of a disaster of any magnitude.

  15. GENERAL
  16. YSL has various policies and code of conduct in place to mitigate risk.

SURVEILLANCE POLICY OF YOHA SECURITIES LTD

Objective:

The objective of this policy is to have in place an effective market surveillance mechanism to ensure investor protection and to safeguard the integrity of the markets. The goal of surveillance is to spot adverse situations in the markets and to pursue appropriate preventive actions to avoid disruption to the markets. The fairness of the markets is closely linked to investor protection and, in particular, to the prevention of improper trading practices. This monitoring is required to analyse the trading pattern of the clients in order to observe whether any transaction (buying / selling) done intentionally, which will have an abnormal effect on the price and / or volumes of any share, which is against the fundamental objective of the Securities Market.

Background:

National Stock Exchange vide circular no. NSE/INVG/22908 dated March 7, 2013 & BSE Notice No.20130307-21, intimated that the Exchange would be making available following alerts based on the trading activity of the client for facilitating the effective surveillance mechanism and directed the stock brokers to frame a Surveillance policy for the same. The surveillance policy shall cover the maintenance and disposition of alerts received from exchanges/generated at our end.


Sr.No Transactional Alerts Segment
1 Significantly increase in client activity cash
2 Sudden trading activity in dormant account cash
3 Clients/Group of Client(s), deal in common scrips cash
4 Client(s)/Group of Client(s) is concentrated in a few illiquid scrips cash
5 Client(s)/Group of Client(s) dealing in scrip in minimum lot size cash
6 Client / Group of Client(s) Concentration in a scrip cash
7 Circular Trading cash
8 Pump and Dump cash
9 Wash Sales of Trades Cash & Derivatives
10 Reversal of Trades Cash & Derivatives
11 Front Running Cash
12 Concentrated position in the Open Interest / High Turnover concentration Derivatives
13 Order book spoofing i.e. large orders away from market Cash

Terms used in this Policy:

Alerts: Referred as transactional alerts arising due to sudden significant increase in client activity, sudden trading activity in inactive/dormant accounts, clients/groups of clients dealer in common scrips, illiquid scrips, minimum lot size/or single scrip, large orders away from the market, concentrated position in the open interest/high turnover concentration, circular trading, pump and dump, wash sales, reversal of trades, front running.

Policy: Transactional alerts

In accordance with the circular no.NSE/INVG/22908 dated March 7, 2013 issued by National Stock Exchange and BSE Notice No.20130307-21, in order to maintain the records of the transactional alerts received from exchanges or generated at our end, the following steps would be taken to review and dispose the alerts:

  1. Review the type of alert downloaded by exchange or generated at our end
  2. Financial details of the client
  3. Past trading pattern of the clients/client group
  4. Bank/demat transaction details
  5. Other connected clients having common email/mobile number/address or any other linkages etc.
  6. Other publicly available information

On receipt of the above information, analyse the alerts generated and in case of any adverse findings/comments, the same shall be communicated to the Exchange within 45 days from the alert generation. In case analysis is taking time due to complexity, an extension may be taken from the exchangeto review the alert(s).In order to have indepth analysis of the above transactional alerts, the following due diligence shallbe taken:

Client(s) Information:

Due Diligence of client(s) would be done on a continuous basis. Client information should be updated at least once a year through periodic review. Financial information also needs to be updatedfor all active clients and the following relevant documents pertaining to financial details to be obtained from clients:

  1. Copy of ITR Acknowledgement
  2. Copy of Annual Accounts
  3. Copy of Form 16 in case of salary income
  4. Net worth certificate
  5. Salary Slip
  6. Bank account statement for last 6 months
  7. Copy of demat account Holding statement.
  8. Any other relevant documents substantiating ownership of assets.
  9. Self declaration along with relevant supporting documents

Addition/ Modification of any parameter (correspondence address, contact details, email id, bank andbeneficiary accounts) relating to client should also be updated immediately in the UCI /UCC database of exchange and the same shall be updated in back office also.

Based on the above information/documents, identification of groups / association amongst clients to identify multiple accounts / common account / group of clients would be established.

Groups to be formed on the basis of details of family/ group/ associate provided by clients during their registration or at the time of periodic review and on the basis of any authorization submitted by the client for adjustment of their balances.

Analysis:

In order to analyze the trading activity of the Client(s) / Group of Client(s) or scrips identified basedon the alerts received from the Exchange, the following information shall be sought from clients:

    a. Seek explanation from such identified Client(s) / Group of Client(s) for entering into such transactions. Letter/ email to be sent to client asking the client to confirm that client has adhered to trading regulations and details may be sought pertaining to funds and securities and other trading pattern.
    b. Seek documentary evidence such as Bank Statement / Demat Transaction Statement or any other documents to support the statement provided by client.
    1. In case of funds, Bank statements of the Client(s) / Group of Client(s) from where funds pay-in have been met, to be sought. Sources of funds in the bank statements to be verified. In case of securities, Demat account statements of the Client(s) / Group of Client(s) from where securities pay-in has been met, to be sought.
    2. The period for such statements may be at least +/- 15 days from the date of transactions to verify whether the funds / securities for the settlement of such trades actually belongs to the client for whom the trades were transacted.
    c. After analyzing the documentary evidences, including the Bank / Demat statement, the observations shall be recorded for such identified transactions or Client(s) / Group of Client(s). In case of adverse observations, the same will be reported to the Exchange within 45 days of the alert generation. Extension of the time period from the Exchange will be sought, if required. In case the client does not cooperate or does not revert within reasonable period, Exchange is to be informed based on the information available with us.
Monitoring and Reporting :

The surveillance process shall be conducted under overall supervision of the Compliance Officer and based on facts and circumstances, he / she is required to take adequate precaution.

Designated directors / partners / proprietor / Compliance Officer would be responsible for all surveillance activities carried out and for the record maintenance and reporting of such activities.

A quarterly MIS shall be put up to the Board/Partners/Proprietor on the number of alerts pending at the beginning of the quarter, generated during the quarter, disposed off during the quarter and pending at the end of the quarter. Reasons for pendency shall be discussed and appropriate action would be taken. In case of any exception noticed during the disposition of alerts, the same shall be put up to the Board/Partners/Proprietor.

Internal auditor shall review this policy, its implementation, effectiveness and review the alerts generated during the period of audit. Internal auditor shall record the observations with respect to the same in their report.

Approval Authority:

This policy shall be approved by the Board of Directors

Review Policy:

This policy may be reviewed as and when there are any changes introduced by any statutory authority or as and when it is found necessary to change the policy due to business needs. The policy may be reviewed by the Managing Director/CEO and changes in policy placed before the Board at the meeting first held after such changes are introduced.

Policy communication:

A copy of the approved policy shall be made available to Compliance officer, Head of risk and Head of Operations.

Dormant Accounts
PMLA policy
Risk Management Framework
Risk Management Policy
Surveillance Policy
ATTENTION INVESTORS :
No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account.
KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
Prevent Unauthorised transactions in your account. Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day .......... Issued in the interest of investors
  SEBI Regn Nos : NSE CM-INB230853233 F&O-INF230853233 CM CLIENT ID : 10003814 CM BPID : IN564107 CM DPID : IN303315 CM DPNAME :YOHA SECURITIES LTD SEBI REGN NO BSE : INB01
Email : yohasec@yahoo.co.in  Contact Us: Old No:50/New No:16 Capital place,South Boag Road,T.Nagar Chennai-600017.  Phone No: 044-24334379/ 24353011/ 24353151/24355268.
Compliance Officer : Eliaya bharati Phone No.044-24353151 Email-Id:ebharati@yohasecurities.com  For any Grievances kindly Email us : investorcomplaints@yohasecurities.com
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