The Bombay Stock Exchange (BSE) on May 19, 2023, issued a notification regarding the System Audit of Stockbrokers / Trading Members
This has a reference to SEBI circular no. CIR/MRD/DMS/34/2013 dated November 06, 2013, and Exchange notice no. 20131107-6 dated November 07, 2013, on the Annual System Audit of Stockbrokers / Trading members. and Exchange notice no. 20230331-66 dated March 31, 2023, on Revised and Standardized Terms of Reference for System Audit of Stockbroker / Trading member across Exchanges.
The following has been stated namely: -
• It states that the trading members are required to carry out a “System Audit” of their trading facility for the period ending March 31, 2023, as per the applicability criteria given in Table-1
• It states that the Timelines for submission of the System Audit Report shall be as per the requirement mentioned in Table-2
• It states that the members may note that the above-mentioned reports are required to be submitted only in electronic form through BEFS (BSE Electronic Filing System) – https://befs.bseindia.com.
•It is to be noted that for each non-compliance reported by the auditor, trading members must submit corrective action taken report as per the above-mentioned timelines.
• It Further states that based on audit findings and related risks it should indicate if a follow-on audit is required to review the status of NCs (non-compliances).
• To ensure that timely corrective actions are taken by the Trading members, a follow-on audit, if any, shall be scheduled by the trading member as per timelines mentioned in Table-2
• It states that the Submission of a System Audit Report with Management comments shall be considered complete only after the Member submits the report to the Exchange and receives an acknowledgment email, the Saved reports/reports submitted by the auditor will not be considered the final submission.
• The auditor must provide compliance status for each TOR item i.e., Compliant/Non-Compliant and Not Applicable and in case of any TOR item which is not applicable, the auditor is required to provide justification for the non-applicability of said TOR. All artifacts required by the auditor need to be securely stored and on requirement produced at minimal intervals.
• The stock brokers are requested to refer to the following documents while submitting the system audit report namely: -
(i) Auditor Selection Process – Annexure I
(ii) Audit Process – Annexure II
(iii) Auditor User Manual for System Audit Report (SAR) – Annexure III
(iv) Member User Manual for System Audit Report (SAR) – Annexure IV
(v) Terms of Reference (TOR) -II
(vi) Terms of Reference (TOR) –III
• It has mentioned the Penalty/Disciplinary Actions that would be initiated against the Member for late/non- submission of the System Audit Report in Table-3
• It is requested to take note of the above and ensure compliance to avoid disincentives.
[Notification No. 20230519-13]
