To All Clearing Members (Clearing for other Stockbroker and/or Custodial Participants Code)
This is further to ICCL circular no. 20230921-16 dated September 21, 2023 wherein it was informed that all Clearing Members undertaking clearing activities, 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 Ltd. (ICCL).
The eligibility criteria for auditors who can carry internal audit of clearing members was also prescribed in the above circular.
We further refer to BSE circular no. 20240304-60 dated March 4, 2024 which prescribes the framework for empanelment of auditors for conducting internal audit of trading members. It is hereby clarified that Audit firms which are empanelled by BSE in terms of the above circular (as updated from time to time) are eligible to conduct internal audit of clearing members for half year ended March 31, 2024. Further, as advised by SEBI and to enhance the ease of doing compliance and reduce operational difficulties faced by Members/Audit Firms, it has been decided that the auditors empanelled with any of the Exchange(s), shall be eligible to conduct internal audit of the Clearing Members of any of the Clearing Corporations.
Clearing members undertaking clearing activities for atleast one trade during the period from October 1, 2023 to March 31, 2024 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 Ltd. The process for submission of IAR for the half year ended March 31, 2024 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 once again reiterated that the following penalties/disciplinary actions for late/non-submission of the Internal Audit Report shall be applicable: -
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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 March 31, 2024 within the due date
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1. For the 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 circular no. 20210817-28 dated August 17, 2021 or 20231229-11 dated December 29, 2023 as deemed fit.
For and on behalf of
Indian Clearing Corporation Limited
Anita Bhatia
General Manager
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