To
All Clearing Members (Clearing for other Stock-Broker and/or Custodial Participants Code)
This is to inform that all Clearing Members undertaking clearing activities, for at-least one trade during the period from April 01, 2023 till September 30, 2023, for other stock-brokers and/or for custodian participants code (their direct trading clients or otherwise) are required to carry out Internal Audit and submit the report to Indian Clearing Corporation Limited (ICCL). For interoperable segments Clearing Members who have selected ICCL as Designated Clearing Corporation are required to submit the report as per the aforesaid requirement.
The audit shall be conducted only by independent qualified Chartered Accountants or Company Secretaries or Cost and Management Accountants who are in practice and do not have any conflict of interest in or relation with the member other than the internal audit assignment.
Auditor meeting the following eligibility criteria is qualified to conduct the Internal Audit of the Clearing Members:
a) The firm or at least one of the partners should have a minimum of 3 years’ experience in carrying out audits.
b) The Auditor/ Audit firm is not debarred or restrained from issuing any certificate by ICAI, ICSI, ICMAI, RBI, SEBI or by other regulator/law enforcement agency.
c) Auditor and/or its employee or partner signing the Internal Audit Report shall have a valid NISM-Series-XIV: Internal Auditors for Stockbrokers Certification or NISM Series III-A: Securities Intermediaries Compliance Certification or ICAI Certificate Course on Financial Markets and Securities Laws or any other equivalent examination.
The process for submission of such reports including format of Internal Audit Certificate, Format of Internal Audit Report, Guidelines on sample selection etc. shall be communicated separately through a circular.
It is to be noted that the due date to submit the Internal Audit Report is within two months from the end of half year i.e., for the half year ended September 30, 2023, the due date is November 30, 2023. The penalties/disciplinary actions for late/non-submission of the Internal Audit Report shall be as below: -
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Details of Violation
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Penalty/disciplinary actions
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Failure to furnish Internal Audit report to Clearing Corporation for half year ending 30th September within the due date
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1. For 1st week after due date, Charges of Rs. 2,500/- per day
2. Charges of Rs. 5,000/- per day from second week after due date
3. In case of non-submission within three weeks from the due date of submission, New TM/CP registration for clearing to be prohibited and notice of 7 days for disablement of clearing facility till submission of data/report. The disablement notice issued to the member shall be shared with all the CCs for information.
4. In case of non-submission within four weeks from the due date of submission, member shall be disabled in all segments till submission of data/report.
Penalty for Repeat Violation
In case of a repeat instance by the Member, levy of applicable monetary penalty along with an escalation of 50%.
In case of non-submission within three weeks from the due date of submission, New TM/CP registration for clearing to be prohibited and notice of 7 days for disablement of clearing facility till submission of data/report.
The disablement notice issued to the member shall be shared with all the CCs for information. In case of non-submission within four weeks from the due date of submission, Member shall be disabled in all segments till submission of data/report.
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The penalties/disciplinary action for non-compliances reported in the Internal Audit Report shall be as prescribed by ICCL from time to time.
For and on behalf of the Indian Clearing Corporation Limited.
Anand Shaha
General Manager
Regulatory & Compliance |