The Securities Exchange Board of India (SEBI) on January 31, 2025, issued a Framework for Monitoring and Supervision of System Audit of Stock Brokers (SBs) through Technology-based Measures.
The following guidelines have been stated for the conduct of system audit of SBs: -
• Stock exchanges shall develop a web-based platform to monitor the system audit process, ensuring auditors physically visit stock brokers' premises and access the system via a secure OTP mechanism.
• SBs shall provide auditor details, audit plans, and relevant documents via the web portal before the audit begins.
• Stock exchanges shall empanel system auditors based on qualifications, experience, and conflict-of-interest checks, with a cooling-off period of two years after three consecutive audits.
• Critical audit areas shall be reassessed if deficiencies are found, and negligent auditors may be de-empaneled and reported to regulatory bodies.
• Auditors shall verify technical glitches, remedial actions, capacity planning, software testing, compliance with logging mechanisms, and disaster recovery requirements.
• Stock exchanges shall validate audit reports, discuss findings with auditors for key brokers, and impose penalties for serious audit deficiencies or failure to close observations.
[Notification no. - SEBI/HO/MIRSD/TPD/CIR/2025/10]
