Policies and Procedures

GUIDELINES/CLARIFICATION ON MARGIN COLLECTION ANDREPORTING

1. What margins are required to be collected by Trading Members from clients in Capital & Derivative Segments?

A. Capital Market Segment

In capital segment, Trading Members (TM) are required to mandatorily collect VaR margins and Extreme loss Margin (ELM) from their clients on an upfront basis. Other margins such as Mark-to-market margin (MTM), delivery margin, special/additional Margin or such other margins as may be prescribed from time to time, shall be collected within ‘T+2’ working days from their clients. It must be ensured that VaR margins and ELM are collected in advance of trade and other margins are collected/paid as soon as margin calls are made by the clearing corporations.

B. F&O segment

In the F&O segment, it is mandatory for Trading Members to collect SPAN margin & Extreme loss margin from respective clients on a upfront basis. It must be ensured that all upfront margins are collected in advance of trade. Delivery Margin and margin on consolidated crystallized obligation shall be collected from clients by T+1 day.

C. Currency Derivativesegment

In case of Currency Derivatives segment also, it is mandatory for Trading Members to collect initial margin and extreme loss margins from their client on an upfront basis. It must be ensured that all upfront margins are collected in advance of trade. Margin on consolidated crystallized obligation shall be collected from clients by T+1 day. However, in case of currency future contracts, final settlement amount shall be collected by T+2 day.

D. Commodity Derivative Segment

Initial Margin and extreme loss margins shall be collected from client on an upfront basis. It must be ensured that all upfront margins are collected in advance of trade. Other margins such as Mark-to-market margin (MTM), delivery margin, special/additional Margin or such other margins as may be prescribed form time to time, shall be collected within ‘T+2’ working days from their clients.

2. In what form should a Trading Member collect the margins from its clients?

Trading Members shall collect the margins from its respective client, in any of the following forms, provided they are free & unencumbered, after taking into account their risk management policy and liquidity aspects:

• Consolidated funds balance across all segments and Exchanges (including Commodities) ¹.
• Bank guarantee received towards margin, issued by any approved bank and discharged in favor of the Member.
• Fixed deposit receipts (FDRs) received towards margin issued by any approved bank and lien marked in favor of the Member.
• Securities (including mutual fund, Government securities and Treasury bills) in dematerialized form actively traded on the National Exchanges, not declared as illiquid securities by any of such Exchanges, with appropriate haircut. (List of illiquid securities are declared on a regular basis by the Exchanges)².
• Any other such collaterals, as may be specified by clearing corporation from time to time.

¹Free and Unencumbered funds where funds are available in the bank account of client and specifically blocked by member on T day and actually moved to client bank account maintained by the member by T/T+1 day.

²With effect from August 01, 2020**, TM shall, inter alia, accept collateral from clients in the form of securities, only by way of ‘margin pledge’, created in the Depository system (in accordance with the SEBI circular SEBI/HO/MIRSD/DOP/CIR/P/2020/28 dated February 25, 2020).

**Note: Till August 31, 2020, trading members may consider collaterals of clients in the form of securities in the existing manner as well. However there cannot be any new transfer w.e.f. August 01, 2020 in the TM’s collateral/client collateral account for margin purpose.

3. Whether securities available in Trading member’s account can be considered for margin collection and reporting?

Member shall accept collateral from clients in the form of securities, only by way of ‘margin pledge’, created in the Depository system.

In view of the same, following clarifications are given for margin collection and reporting purpose after August 31, 2020:

• Securities which are sold in cash market and available in TM’s account i.e. POOL/EPI³ will not be considered as margin collected for any other trade/position.
• Securities received in pay out and available in CUSA account will not be considered for margin collection.

³Clearing corporation guidelines (NCL/CMPT/42900 dated December 12, 2019) with respect to reduction in margin requirement due to EPI, will remain applicable.

4. Is upfront margin collection required to be done in respect of clients who have done early pay-in of securitiestoTrading member/s?

No. Trading Member shall not be required to collect upfront margins, in respect of positions for which early pay-in of securities/funds is made by the clients to the trading member on the date of execution of the transaction.

5. What balances can be considered for collection and reporting of Margin executed under Margin trading facility?

For transactions undertaken under Margin Trading facility (MTF), upfront margin collected in the form of funds & securities for such MTF transactions and recorded in the MTF books can be considered.

6. Can excess margin/collateral available in MTF ledgers be considered towards Margins of non MTF transactions?

Excess margin/collateral available in MTF ledgers cannot be considered towards Margins of non-MTF transactions.

7. Can securities other than those in the approved list of securities be considered while reporting margin collection to theExchange?

Liquid securities, in dematerialized form, actively traded on the National Exchanges, which are specifically not declared as illiquid securities by any Exchanges, can be considered by the member while reporting margins to the Exchange.

7. Can securities other than those in the approved list of securities be considered while reporting margin collection to theExchange?

Liquid securities, in dematerialized form, actively traded on the National Exchanges, which are specifically not declared as illiquid securities by any Exchanges, can be considered by the member while reporting margins to the Exchange.

8. What is the procedure for valuation of Securities?

For the purpose of client Margin collection and reporting, the member shall compute the value of such securities as per the closing rate on T-1 day as reduced by the appropriate haircut at a rate not less than the VAR margin rate of the security on that day i.e. T-1 day.

9. What methodology should be adopted while reporting margin received in the form of liquid mutual funds?

Dematerialized units of liquid mutual funds whose NAVs are available and which could be liquidated readily may be considered while reporting margins collected from constituents. The value of listed liquid mutual funds should be computed based on the NAV on T-1 day, reduced by a haircut equivalent to the VAR. In case of others (mutual funds not listed) the haircut should be equivalent to 10% of theNAV.

10. What methodology should be adopted while reporting margin received in the form of Government securities and Treasurybills?

• G-Sec/T-Bills available in electronic form and pledge marked in favour of the trading member may also be considered while reporting margin collection to the Exchange.
• The valuation of G-Sec/T-Bill shall be based on closing price of G Sec/T-Bills on NDS on T-1 day reduced by a haircut of 10%.

11. What precautions are to be kept in mind in case of cheques received from Clients towards margin/margin on consolidated crystallized obligation /MTM losses?

• Towards collection/reporting of upfront margins : Cheques received / recorded in the books of Member on or before T day and deposited by Member by T+1 day (excluding bank holiday, if any), can be considered, provided the same is cleared within T+5 working days.
• Towards collection/reporting of margin on consolidated crystallized obligation (in Derivatives Segment) : Cheques received / recorded in the books of Member on or before T+1 day and deposited by member by T+2 day (excluding bank holiday, if any), can be considered, provided the same is cleared within T+5 working days.
• Towards collection/reporting of MTM losses (in Cash and Commodity Segment) : Cheques received / recorded in the books of Member on or before T+2 day and deposited by member by T+3 day (excluding bank holiday, if any), can be considered, provided the same is cleared within T+5 working days.
• Only cheques which are cleared should be considered and cheques dishonored or not cleared up to T+5 working days should not be reported as margin/ margin on consolidated crystallized obligation/ MTM collected.
• If subsequent to the margin/margin on consolidated crystallized obligation/ MTM reporting by the Member, the cheque deposited by the Member is dishonored or not cleared within T+5 working days, then revised margin file shall be uploaded after factoring into the effect of such dishonored or non-cleared cheques ,with incremental batch number within the above mentioned five days.

12. Whether balances/securities of related entities of the client can be considered for collection and reporting margin?

Margin available with related entities of the client cannot be considered as margin of the respective client.

13. What does short reporting of upfront margins/ MTM/ margin on consolidated crystallized obligation mean?

In case a Trading Member fails to collect requisite margin from the respective client on an upfront basis, margin on consolidated crystallized obligation by T+1(in case of F&O and CD segments) and MTM losses by T+2 (in case of cash and commodity segments) and reports to the clearing corporation that margin/ margin on consolidated crystallized obligation/MTM losses collected from client is less than the actual amount of margins/ margin on consolidated crystallized obligation/MTM losses required to be collected, it is termed as short reporting of margin collection and shall attract applicable penalty as mandated by clearing corporation from time to time.

13. What does short reporting of upfront margins/ MTM/ margin on consolidated crystallized obligation mean?

In case a Trading Member fails to collect requisite margin from the respective client on an upfront basis, margin on consolidated crystallized obligation by T+1(in case of F&O and CD segments) and MTM losses by T+2 (in case of cash and commodity segments) and reports to the clearing corporation that margin/ margin on consolidated crystallized obligation/MTM losses collected from client is less than the actual amount of margins/ margin on consolidated crystallized obligation/MTM losses required to be collected, it is termed as short reporting of margin collection and shall attract applicable penalty as mandated by clearing corporation from time to time.

14. What does false reporting of margin/margin on consolidated crystallized obligation/ MTM (Non Compliance) mean?

Where the margins including upfront margins/ margin on consolidated crystallized obligation/MTM Losses have not been collected/short collected by the Member in any of the applicable modes prescribed above, however the same has been reported by the member as collected, it would be construed as false reporting to the clearing corporation.

15. In case of short reporting of margin/margin on consolidated crystallized obligation/MTM, Can member pass on the penalty to the clients?

In case of failure (cheque not cleared or margin* requirement not met by the client) on part of the client resulting which penalty is levied by the Clearing Corporation on the member for short reporting of client upfront margins/ margin on consolidated crystallized obligation/MTM losses, member may pass on the actual penalty to the client, provided he has evidences to demonstrate the failure on part of the client .Wherever penalty for short reporting of upfront margin/ margin on consolidated crystallized obligation/ MTM losses is being passed on to the client relevant supporting documents for the same should be provided to the client.

^*Member cannot pass on the penalty w.r.t. short collection of upfront margin to client.

16. Are Members required to provide the Margin related information to clients?

Members should send margin related information to their clients. An indicative format of daily margin statement stipulating the minimum information to be provided to clients is enclosed as Annexure B.

Such margin related information (Daily margin statement) should be issued by Members to clients on a daily basis at the end of the trade day (T-Day) itself or by such timelines as may be specified from time to time.

Additionally, every member shall maintain proper records of collaterals of clients.

Members should have adequate systems and procedures in place to ensure that client collateral is not used for any purposes other than meeting the respective client’s margin requirements / pay-ins. Members should also maintain records to ensure proper audit trail of use of client collateral.

17. How will upfront margin collection and reporting be undertaken in case of NRI clients under the portfolio investment scheme (PIS)?

In case of NRI clients undertaking buy transactions under PIS, funds received from the NRI’s PIS bank account before the respective pay in, will be considered as collection of upfront margin.

In case of NRI clients undertaking sell transactions under PIS, securities received before the respective pay-in, shall be considered as collection of upfront margin.

18. How will margin be collected in case of intra-day transactions (buy & sell) in same scrip?

As per SEBI circular CIR/HO/MIRSD/DOP/CIR/P/2019/139 dated November 19, 2019, upfront margins viz. VaR margins and ELM are required to be collected in advance of trade. In case of any intra-day transactions in the same scrip on the same day, Margins shall be collected as per the below illustration:

19. Can member open segment wise ‘Client Securities Margin Pledge Account’?

Yes, member can open segment wise margin pledge account (one account per depository) or member can open single margin pledge account (per depository).

20.Whether margin pledge collaterals are required to be mentioned in daily margin statement?

Yes, margin pledge collaterals have to be mentioned in the daily margin statement. Please refer revised daily margin statement format attached as annexure B.

21.Can member accept security deposit from Authorised Person (AP) in the form of demat securities?

Yes, member can accept such securities in the form of pledge in it’s ‘Client Securities Margin Pledge Account’.

22. Can TM debit Margin pledge, unpledge and invocation charges to the client?

Member may pass on the actual charges for margin pledge/unpledged/invocation to respective client as per the agreed terms in writing and the same shall form part of tariff sheet.

23. As per SEBI circular, Pledge instructions shall have details of client UCC, TM/CM and Default Segment. So whether free securities pledged in one segment can be used for margin in other segment?

Yes, free securities of one segment can be considered for another segment for the purpose of margin collection and reporting.

24. As per the circular TMs shall be required to close all existing demat accounts tagged as ‘Client Margin/ Collateral’ by August 31, 2020.

- What is to be done in case the Member is unable to transfer the securities to the client by August 31, 2020 due to any legitimate reasons?

All securities lying in the existing Client Margin/Collateral Accounts shall be either returned to the clients upon fulfillment of obligation or disposed-off after giving notice of 5 days to the client, on or before August 31, 2020.

In case any security lying in such demat account cannot be sold or transferred, for any reason including litigation or court orders or other enforcement orders, such accounts can be frozen/suspended for credits except on account of any corporate actions.

• In CDSL such account can be marked for closure allowing only debits and prohibiting fresh credits except on account of corporate actions. Said account by default will be closed during the EOD of the day when balance becomes NIL.
• In case of NSDL, the standing instructions for credit in such account can be disabled which will restrict credits (except on account of corporate action) in such accounts

In case, Member is unable to transfer the securities to client’s BO account due to any legitimate reasons, Member may proceed to liquidate the securities lying in such demat accounts, and transfer the funds to the bank account of the client. In case Member is unable to transfer the funds due to client’s bank account becoming dormant & client is not contactable, Member shall set aside such funds (either in separate account or in the form of fixed deposit) till the client is contactable and correct bank account details are obtained. Member shall keep adequate trail to sufficiently prove that the clients were untraceable and sufficient follow ups have been made.

25. What are changes to be required in existing POA?

Member needs to delete the existing clause of POA w.r.t. transfer of securities for margin purpose and add relevant extract in POA related to execution of margin pledge. Member shall create an addendum to the existing POA for this purpose and inform the client accordingly in line with SEBI circular CIR/MRD/DMS/28/2010 dated August 31, 2010.

26.Whether members are required to open a separate demat account for funded stock under the margin trading facility?

Yes. Members are required to open a separate demat account for MTF funded stock which should be tagged as ‘Client Securities under Margin Funding Account’.

Further, all existing demat account of MTF funded stock, which are not tagged as specified above, will have to be closed.

27.Whether members can keep funded stock under the margin trading facility in ‘Client Securities under Margin Funding Account’?

No, funded stocks held by the member under the margin trading facility shall be held only by way of pledge in Client Securities under Margin Funding Account.

Please note that pledging of funded stocks under margin trading facility cannot be accepted in ‘Client Securities Margin Pledge Account’. Further, such funded stock cannot be re-pledge to CM/CC.

28.Whether pledge collaterals are required to be reported in weekly reporting of holding statement?

No.

29.Whether pledge collaterals are required to be recorded in Register of Securities (ROS)?

No. However member needs to maintain all records of pledge/Re pledge stocks (including client wise records) in the back-office records.

Note:

• In case Pledge/Re-pledge securities are invoked by member, (as specified in the SEBI circular SEBI/HO/MIRSD/DOP/CIR/P/2020 /28 dated February 25, 2020), such transactions are required to be recorded in ROS appropriately.
• In case securities are lying in member’s account (i.e POOL/EPI/CUSA/OWN), such securities also need to be recorded in ROS appropriately.
• Invoked securities and securities lying in EPI/CUSA/POOl/OWN to be reported in weekly Holding submission.

30. Can member change the type of existing demat Account to ‘Client Securities Margin Pledge Account’ / ‘Client Securities under Margin Funding Account’ instead of opening a separate account?

No, Member will not be permitted to change the type of the existing demat accounts to “Client Securities Margin pledge Account”/ ‘Client Securities under Margin Funding Account’.

CLIENT CODE MODIFICATION/ERROR CODE POLICY

Version: 01/2022
Review Date: 26/07/2022

Objective of the Policy: The main objective of the policy is to deal with the modification of the UCC/Client Code after the execution of the Trades and reporting of such modifications to the Exchanges.

Brief about the policy: Client code modification means any modification / change of the UCC/Client code after the execution of the Trades. Stock Exchanges has given a facility to modify any client codes after the trades has been executed. Such modifications are subject to certain guidelines as to the time limit within in which the modification is to be carried out.

Different Terms used in the policy

1) Genuine Errors – Errors due to communication/punching mistakes or typing errors and the modifications are possible only within the relatives (Relatives as defined under Companies Act, 1956).

Criteria for Genuine Trades

• Actual UCC/client Code wrongly punched similar UCC/Client Code.
• Mis Communication from the client/representative side.
• Wrong entry of the UCC/Client code among the family members of the client.

2) Error Account Trades – Trade modifications in client codes to that “ERROR-*****”, and not shifted to any other client codes.

Procedure for UCC/Client code modification

1) Any trades generated due to any error shall be modified into the Account called “ERROR-*****” and the position transferred will be liquidated/closed out subsequently.

2) Such incident shall be reported to the Compliance Officer/RMS in charge at the Head Office.

3) The compliance officer/RMS in charge shall review the same error and give the necessary approvals after verifying SEBI/Exchange directives issued from time to time.

4) A sperate register has been maintained to record such instances/trades shifting.

5) RMS In charge will be verify the mistakes and make the necessary changes in the Exchange portal.

6) The UCC/Client code modifications shall be done only in the exceptional circumstances.

7) RMS In charge will do the uploading process in the Exchange portal after taking the proper action.

Procedure for UCC/Client code modification

1) UCC/Client code modifications shall be reported to Compliance officer/other key personnel.

2) A separate register should be maintained in the HO level and records full details of modifications.

3) The company will review the Error account transactions recorded in the register on a regular basis.

4) In case of any violation resulting in penalty, the same will be recovered from the Authorized Person and or from the client.

Policy Review

The policy will be reviewed periodically, as per the changes.

Reference Circulars

NSE/INVG/2011/18484, NSE/SURV/27878, NSE/INVG/31729, NSE/INVG/35398, NSE/INVG/41356, NSE/INVG/41459, NSE/INVG/42106

DIVIDEND ENTRY/POSTING DETAILS (If the shares are lying in the Broker’s Beneficiary Account).

Version: 01/2022
Review Date: 26/07/2022

Dividends declared by the company are directly credited to your (client’s) bank account linked with the demat Account, if ECS facility is active in the account, or a cheque is issued as per the policy of the company. The Dividend payment date is generally 30-40 days after the record date.

If the client’s shares are lying in the Broker’s POOL/CUSA account on the record date, the Broker will receive the relevant corporate Action benefit and transfer the same benefit to the client’s Trading Account by passing the following entries in the Ledger Account.

1. If the shares of clients are lying in Broker’s POOL / CUSA Account on the date of Dividend.
2. Therefor Brokers receive Dividends on behalf of their clients whose shares are currently in the POOL / CUSA Account.
3. TDS Amount deducted by the Companies declaring dividend will also start appearing in the 26AS statement of the Brokers.
4. Dividend amount and the accompanying TDS may pertain to more than one client / multiple clients of the Broker.
5. Brokers keep ready details of clients TDS in such a format starting that there are no issues at the time of filing returns.
6. Clients also get their TDS credit in the clients own 26AS.
7. The Corporate Action entry will be updated in the BO and the client’s Ledger after deducting the TDS.
8. Accounting Entries to be passed by the Broker

EMPLOYEES HIRING AND TRAINING POLICY

Version: 01/2022
Review Date: 26/07/2022

HIRING OF EMPLOYEES

WealthyIn Broking Private Limited (WBPL) has adequate screening procedures in place to ensure high standards while hiring the Employees. Having regard to the risk of money laundering and terrorist financing and the size of the business, we ensure that all the employees taking up such key positions are suitable and competent to perform their duties. The company HR is instructed to cross check all the references and should take adequate measures to establish the authenticity and genuineness of the persons before onboarding.

EMPLOYEES TRAINING

WBPL shall provide Anti-Money laundering training to all its new employees at the time of joining the organization. We have an ongoing employee training program conducted by our Principal Officer and Senior Management, participation of all the Key employees in the seminars conducted by various regulatory bodies from time to time, so the staff are adequately trained in PMLA and CFT procedures. Training requirements shall have specific focuses for frontline staff, back office staff, compliance staff, risk management staff and staff dealing with clients.

Policy Review

The policy will be reviewed periodically, as per the changes.

POLICY REGARDING TREATMENT OF INACTIVE/DORMANT ACCOUNT

Version: 01/2022
Review Date: 26/07/2022

OBJECTIVE: The objective of the policy is to appropriately deal with the Inactive/Dormant clients, where the clients have not traded more than twelve 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, Stock Exchanges and Internal Risk Management policies.

Reference Circulars: SEBI Circular dated on 03rd December 2009 and NSE Circular No. INSP/13606, INSP/14048, INSP/43488, INSP/46506, INSP/49743.

Policy: It is prudent to keep a track of dormant and Inactive clients, which could be the breeding ground for any unauthorized transactions. Hence, a closer look is warranted for handling dormant accounts and also to lay down a procedure for reactivating them.

Procedure to handle Inactive/Dormant clients: WEALTHY In may carry out periodic review of the client accounts and may suspend these accounts from trading under any of the following circumstances.

• Where the Client is inactive for the twelve consecutive months.
• Where the account in under investigation by any regulatory body.
• As per the direction/instruction received from Exchanges, SEBI or any other regulatory body.
• On written request received from the client and the same can be activated on the written request of the client only.
• Where the client is reported or known to have expired.
• Where the client has not cleared his/her dues after the repeated reminders.

All the accounts marked as “Inactive/Dormant” shall be set to a zero limit in the exposures. If the client wants to make the account active after 12 consecutive months or there after needs to provide the required documents towards supporting the financial status or the client needs to submit the request letter to reactivate the account. In case there is any changes in the information such as Address, Mobile Number, Email Id, Bank/Demat Account number, financial disclosure provided in KYC at the time of registration as client, the same must be submitted along with the request. After proper verification of the updated/revised details and incorporated in the client master/Exchange records and then only the activation will be carried out.

Return of Client’s Assets: On a client being declared Inactive/Dormant, the client’s funds and securities shall be settled. Settlement of client account needs to be done as per the periodicity (Monthly/Quarterly) opted by the client. Proof of sending the statements of settlement of funds and securities has to be maintained. Settlement of client account needs to be done at least once in a calendar quarter.

Policy review: 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 Internal and Risk management policy.

Internal settlement / Close Out Policy

Version: 01/2022
Review Date: 26/07/2022

Stock broker shall not be obliged to deliver any securities or pay any money to the client unless and until the same has been received by the stock broker from the exchange, the Clearing Corporation/Clearing House or other company or entity liable to make the payment and the client has fulfilled his/her/its obligations first. As per the Exchange settlement norms the Payin obligation for securities are netted at member level and only the net obligation is delivered to the Exchange.

In case any client of Wealthy Broking Private Limited defaults in fulfilling securities pay in obligation against sell transaction in a particular settlement where any other Wealthy Broking Private Limited client is having a buy position then Wealthy will consider those short shares as Internal shortage shares.

Wealthy will settle all the internal shortage of shares internally only. This will be cash settled with the Internal Auction Price discovered as per below calculations

a) If on the settlement day, any client short delivered any security/ies against its obligation towards counter party then such securities shall be closed out at the auction price, however if the auction price is not available then at the highest rate at which the script traded on the settlement date.

Once the obligation is closed as per the process mentioned above, no obligation to deliver / receive security/ies shall remain for either parties. Clients shall not have any claim against the Broker for executing close out due to such shortage/s. Currently no penalty shall be levied on such close out transaction/s.

Margin Collection and Reporting Policy

Objective of the policy: To set a procedure and guidelines for collection of Margin from both, Clients as well as from Trading members, and reporting it to relevant Exchanges.

1. All margins for trades done in any Exchange, Will be collected upfront.
2. Margin will be accepted in the form of Funds through NEFT, Electronic Fund Transfer.
3. No Margin will be accepted through third party cheque and in case of Demand Draft / Pay Order, a declaration signed by client, must be accompanied.
4. In case of securities – The Client can create the Margin Pledge facility for Cash component and Non-Cash component securities. 50%:50% rule is applicable for Non cash component and a haircut as per exchange VAR will be applied.
5. At the end of the day or before the cut off time, Shortage of margin collected, will be calculated and reported to relevant Exchange.
6. In case of short margin (in case of MTM and Additional Margin), Follow up for collection will be done, and if margin is not received from client then position will be squared off.

Exchange FAQ details need to upload along with the policy

PMLA POLICY

WEALTHY IN BROKING PRIVATE LIMITED STOCK BROKER WITH NSE & BSE

DP WITH CDSL

WEALTHY In Broking Private Limited (WBPL) had designed this policy of PMLA and effective AML program to prohibit and actively prevent the money laundering or the funding of terrorist or criminal activities or flow of illegal money or hiding money to avoid taxes.

1) Background: The PMLA came into effect from 01st July 2005. SEBI has issued guidelines on Know Your Customer (KYC) Standards and AML (Anti-Money Laundering) standards vide a circular dated on 18th January 2006.

The guidelines issued with the circular are in the context of the recommendations made by the Financial Action Task Force (FATF) on Anti money laundering standards. Compliance with these standards by all Capital Market intermediaries registered with SEBI has become imperative. SEBI vide its circular No. ISD/CIR/RR/AML/2/06 dated March 20, 2006, has further issued guidelines with respect to maintenance and preservation of records of transactions, information to be maintained, reporting to Financial Intelligence Unit (FIU) – India.

2) What is Money Laundering: Money Laundering involves disguising financial assets so that they can be used without detection of the illegal activity that produced them. Through Money laundering, the laundered transforms the monetary proceeds derived from criminal activity in to funds with an apparently legal source.

As per Section (3) of the PMLA Act, 2002 enacted in the January 2003 and came to force on 01^st July, 2005 defines Money Laundering as under:

Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of Money laundering.

3) Prevention of Money Laundering Act: The prevention of Money Laundering Act, 2002 (PMLA) has been brought into force with effect from 01st July, 2005. As per the PMLA, every Banking Company, Financial institution and Intermediaries (which includes a Depository participants, Stock Broker, Sub Broker, Banker to an issue, Trustee to a trust deed, Registrar to an issue, Merchant Banker, Underwriters, Portfolio Manager, and any other intermediary associated with securities market) shall have to maintain a record of all the transactions, the nature and the value of which has been prescribed in the rules notified under the PMLA. For the purpose of PMLA, transactions include:

1. All cash transactions of the value of more than Rs. 10 Lakhs or its equivalent in foreign currency.
2. All series of Cash transactions integrally connected to each other which have been valued below Rs. 10 lakhs or equivalent in foreign currency where such series of transactions have taken place within a month and the monthly aggregate exceeds an amount of Rs. 10 lakhs rupees or its equivalent in foreign currency.
3. All suspicious transactions whether or not made in cash and including, interalia, credits or debits into from any non-monetary account such as demat account, security account maintained by the registered intermediary.

“Suspicious Transactions” 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.

Financial Intelligence Unit (FIU)-India: The Government of India set up Financial Intelligence Unit – India (FIU – IND) on November 18, 2004 as the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions. FIU – IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and related crimes. FIU – IND is an independent body to report directly to the Economic Intelligence Council (EIC) headed by the finance minister.

4) Policy of Wealthy Broking Limited: Wealthy In Broking Limited, has resolved that it would, as an internal policy, take adequate measures to prevent Money Laundering and shall put in place a framework to report cash and suspicious transactions to FIU as per guidelines of PMLA Rules, 2002.

Implementation on this policy

Appointment of Principal Officer

The company has designated the Principal Officer who shall be responsible for implementation and compliance of this policy shall include the following:

1. Compliance of the provisions of the PMLA and AML Guidelines act as a central reference point and play an active role in identification & assessment of potentially Suspicious Transactions; and
2. Ensure that Wealthy In Broking Pvt. Ltd. discharges its legal obligation to report Suspicious Transactions to the concerned authorities.
3. The employees are trained to address issues regarding the application of the PMLA.
4. The staff selection and training process complies with the PMLA policy.

Appointment of Designated Director

“Designated Director” means a person designated by the Board of Directors to ensure over all compliance with the obligations imposed under The Prevention of Money Laundering Act, 2002 and the Rules framed there under, as amended from time to time, and include the Managing Director or a Whole‐time Director duly authorized by the Board of Directors. The Company shall appoint a Designated Director and communicate the details of the Designated Director, such as, name, designation and address to the Office of the Director, FIU‐IND and update the same whenever there is any change.

Obligation to Establish Policies and Procedures

Global measures taken to combat drug trafficking, terrorism and other organized and serious crimes have all emphasized the need for financial institutions, including securities market intermediaries, to establish internal procedures that effectively serve to prevent and impede money laundering and terrorist financing. The PMLA is in line with these measures and mandates that all intermediaries ensure the fulfillment of the aforementioned obligations.

To be in compliance with these obligations, the senior management shall be fully committed to establishing appropriate policies and procedures for the prevention of PMLA and TF and ensuring their effectiveness and compliance with all relevant legal and regulatory requirements. We will ensure:

• issue a statement of policies and procedures, on a group basis where applicable, for dealing with PMLA and TF reflecting the current statutory and regulatory requirements.
• ensure that the content of these Directives are understood by all staff members.
• Regular yearly review the policies and procedures on the prevention of PMLA and TF to ensure their effectiveness. Further, in order to ensure the effectiveness of policies and procedures, the person doing such a review shall be different from the one who has framed such policies and procedures.
• adopt client acceptance policies and procedures which are sensitive to the risk of ML and TF
• undertake client due diligence (“CDD”) measures to an extent that is sensitive to the risk of ML and TF depending on the type of client, business relationship or transaction.
• have in system a place for identifying, monitoring and reporting suspected PMLA or TF transactions to the law enforcement authorities; and
• develop staff members’ awareness and vigilance to guard against PMLA and TF

Policies and Procedures to Money Laundering and Terrorist Financing

• Communication of group policies relating to prevention of ML and TF to all management and relevant staff that handle account information, securities transactions, money and client records etc. whether in branches, departments or subsidiaries.
• Client acceptance policy and client due diligence measures, including requirements for proper identification.
• Maintenance of records.
• Compliance with relevant statutory and regulatory requirements.
• Co-operation with the relevant law enforcement authorities, including the timely disclosure of information; and
• Role of internal audit or compliance function to ensure compliance with the policies, procedures, and controls relating to the prevention of ML and TF, including the testing of the system for detecting suspected money laundering transactions, evaluating and checking the adequacy of exception reports generated on large and/or irregular transactions, the quality of reporting of suspicious transactions and the level of awareness of front-line staff, of their responsibilities in this regard. The internal audit function shall be independent, adequately resourced and commensurate with the size of the business and operations, organization structure, number of clients and other such factors.

5). Implementation of this Policy

Client Due Diligence (CDD): The main aspect of this policy is the Customer Due Diligence process, which means:

1. Ensure that KYC norms are strictly followed, and all the information provided in the KYC form are obtained and filled up.
2. Obtain sufficient information in order to identify persons who beneficially own or control 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 should 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.
3. To verify the customer’s identity using reliable, independent source document, data or information.
4. To identify beneficial ownership and control, i.e. determine which individual(s) Ultimately own(s) or control(s) the client and/or the person on whose behalf a transaction is being conducted;
5. 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 customer, its business and risk profile, taking into account, where necessary, the customer’s source of funds.

5.1) Client Identification Policy:

Clients other than individuals or trusts: Where the client is a person other than an individual or trust, viz., company, partnership or unincorporated association/body of individuals, the intermediary shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the following information:

a) 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:

1. more than 25% of shares or capital or profits of the juridical person, where the juridical person is a company;
2. more than 15% of the capital or profits of the juridical person, where the juridical person is a partnership; or
3. 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.

b) In cases where there exists doubt under clause above 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 would include exercised through voting rights, agreement, arrangements or in any other manner.

c) Where no natural person is identified under any of clauses above, the identity of the relevant natural person who holds the position of senior managing official.

For client which is a trust: Where the client is a trust, the Company 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.

Exemption in case of listed companies: Where the client or the owner of the controlling interest is a company listed on a stock exchange or is a majorityowned subsidiary of such a company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.

Applicability for foreign investors: Dealing with foreign investors’ may be guided by the clarifications issued vide SEBI circulars CIR/MIRSD/11/2012 dated September 5, 2012 and CIR/ MIRSD/ 07/ 2013 dated September 12, 2013, for the purpose of identification of beneficial ownership of the client.

d) To verify the identity of the beneficial owner of the client and/or the person on whose behalf a transaction is being conducted, corroborating the information provided in relation to (c). d. To verify the identity of the beneficial owner of the client and/or the person on whose behalf a transaction is being conducted, corroborating the information provided in relation to (c); and

e) To understand the ownership and control structure of the client.

f) To 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

g) To periodically update all documents, data or information of all clients and beneficial owners collected under the CDD process.

5.2) Client Acceptance Policy

Client acceptance policies and procedures aim to identify the types of clients that are likely to pose a higher than average risk of ML or TF. To apply client due diligence on a risk sensitive basis depends on the type of client business relationship or transaction. The following safeguards shall be followed by the company while accepting the clients.

• No account is opened in a fictitious/ benami name or on an anonymous basis
• Risk Perception: Based on clients location, nature of business activity, trading turnover, manner of making payment for transactions undertaken, clients should be classified into low, medium and high risk category. Though as per guidelines issued by SEBI and practiced by the company this system of making payments to and for receiving payments from, clients is through banking channels only and in the manner specified, the following points are to be ensured.
• No payment in cash is either accepted or made to the client.
• Include this in “Do’s and ‘Don’ts’ issued in writing to the clients as part of client registration.
• Discourage payment by clients by DD. In exceptional cases DD’s may be accepted if the same is accompanied by documentary evidence such as bank statement and cheque.
• Ensure that the internal control policy in this regard are strictly followed − Ensure that no account is opened where the intermediary is unable to apply appropriate clients due diligence measures / KYC policies. Such cases are where:
  • It is not possible to ascertain the identity of the client
  • Information provided is suspected to be non genuine.
  • It appears that client does not co-operate by providing full and complete information.
• Ensure that identity of the client does not match with any person having known criminal background or is not banned in any other manner. An adequate system to prevent the entry of any suspended / debarred PAN No. into our system.
• The following are considered as Clients Special Category (CSC) and in respect of all them utmost care should be taken to clearly identify the client before the account is opened. The category of clients referred to herein are:
  • a) Non-resident clients
  • b) High net worth clients,
  • c) Trust, Charities, NGOs and organizations receiving donations
  • d) Companies having close family shareholdings or beneficial ownership
  • e) Politically exposed persons (PEP) of foreign origin
  • f) Current / Former Head of State, Current or Former Senior High-profile politicians and connected persons)
  • g) Companies offering foreign exchange offerings
  • h) Clients in high risk countries (where existence/effectiveness of money laundering control 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 any of the following – Havens/ sponsors of international terrorism, offshore financial centres, tax haven, countries where fraud is highly prevalent.
  • i) Non face to face clients
  • j)Clients with dubious reputation as per public information available etc.
• As far as possible reference and confidential report about the genuineness of the client should be obtained from the client’s bankers in respect of all cases other than (e),(g),(h),(i) and (j)
• In respect of those listed as (e), (g), (h), (i) and (j) avoid dealing with them and do not open any account for them.
• As far as possible and except where it is unambiguously made known that the voluntary donations and other receipts of the Trust/Charitable Organizations/NGO are from genuine sources and not from unidentified or fictitious person, no account of trust/ charitable organization/NGO should be opened.

6)Reliance on third party for carrying out Client Due Diligence (CDD).

1. We may rely on a third party for the purpose of (a) identification and verification of the identity of a client and (b) determination of whether the client is acting on behalf of a beneficial owner, identification of the beneficial owner and verification of the identity of the beneficial owner.
2. Such reliance shall be subject to the conditions that are specified in Rule 9 (2) of the PML Rules and shall be in accordance with the regulations and circulars/ guidelines issued by SEBI from time to time.

a) Risk Based Client Categorization:

Each client will be marked into three categories, High Risk, Medium Risk and Low Risk from the point of view of the anti money laundering laws. The categorization will be made based on the following parameters/factors of risk perception.

1. High Net-worth clients
2. Trusts/ NGOs / Charities receiving donations
3. Companies having close family shareholdings

(The above are considered of High Risk as per SEBI guidelines)

• The other parameters are nature of business activity, trading turnover, manner of making payment etc. Provision will be made in the back office software for noting this categorization. The high risk client will require regular KYC update.
• The clients will be placed under low, medium and high risk category based on their Turnover and ledger history. Corporates / HNIs having respectable social and financial standing.
• Clients who make the payment on time and take delivery of shares can be considered as Low risk clients. Intra-day clients or speculative clients whose turnover is not in line with the Financials declared as considered as Medium risk clients. Client doing large activity in Dormant Account, trading on a regular basis in illiquid scrips in large volume and quantity, those who have defaulted in the past and have suspicious background are to be considered as High Risk Category.

b) Monitoring of Transactions:

• Regular monitoring of transactions is required for ensuring effectiveness of the Anti Money Laundering procedures.
• Special attention required to all complex, unusually large transactions which appear to have no economic purpose.
• Internal threshold limits are set to specify for each class of client’s accounts and pay special attention to the transaction, which exceeds these limits.
• All records of transaction is preserved and maintained in terms of the PMLA 2002 and that transaction of suspicious nature or any other transaction notified under section 12 of the Act is reported to the appropriate authority.
• All suspicious transactions to be regularly reported to the higher Authorities /HOD. Further the compliance department should randomly examine selected transaction undertaken by clients to comment on their nature i.e. whether they are in the suspicious transactions or not.

c) Suspicious Transactions:

• Suspicious transactions involve funds which are derived from illegal activities or are transactions that are intended/ conducted in order to hide or disguise funds or assets derived from illegal activities (including, without limitation, the ownership, nature, source, location, or control of such funds or assets) as part of a plan to violate or evade any law or regulation or to avoid any transaction reporting requirement under the law;
• The transaction has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the financial institution knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.
• Criteria giving rise to suspicion:
• It is difficult to define exactly what constitutes suspicious transactions and as such given below is a list of circumstances where transactions may be considered to be suspicious in nature. This list is only inclusive and not exhaustive. Whether a particular transaction is actually suspicious or not will depend on the background, details of the transactions and other facts and circumstances.
  • Complex /unusually large transactions/ patterns which appear to have no economic purpose.
  • Client having suspicious background or links with known criminals.
  • Clients whose identity verification seems difficult. E.g.
    1. False identification documents
    2. Identification documents which could not be verified within reasonable time
    3. Non face to face Client
    4. Doubt over the real beneficiary of the account
    5. Accounts opened with names very close to other established business entities.
  • Client appears not to co-operate.
  • Use of different accounts by Client alternatively
  • Sudden activity in dormant accounts
  • Multiple accounts
    1. Large number of account having a common account holder, authorized signatory with no rationale
    2. Unexplained transfers between multiple accounts with no rationale
  • Asset management services for clients where the sources of funds is not clear or not in keeping with the clients’ apparent standing/business activity
  • Substantial increase in business without apparent cause (Unusual activity compared to past transactions)
  • Activity materially inconsistent with what would be expected from declared business
  • Inconsistency with clients apparent financial standing
  • In any account circular trading
  • Unusual transactions by Clients of Special Category (CSCs) and business undertaken by shell corporations, offshore banks/financial services, businesses reported to be in the nature of export-import of small items
  • A transaction which gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime.
  • A transaction which appears to be a case of insider trading
  • Transactions that reflect likely market manipulations
  • Suspicious off market transactions
  • Value of transaction just under the reporting threshold amount in an apparent attempt to avoid reporting
  • Inconsistency in the payment pattern by the client
  • Trading activity in account of high risk clients based on their profile, business pattern and industry segment
  • Accounts based as ‘passed through’. Where no transfer of ownership of securities or trading is occurred in the account and the account is being used only for funds transfers / layering purposes.
  • Large deals at prices away from the market
  • Suspicious off market transactions
  • Purchases made in one client’s account and later on transferred to a third party through off market transactions through DP Accounts;
  • Multiple transactions of value just below the threshold limit specified in PMLA so as to avoid possible reporting;

d) Reporting of Suspicious Transactions:

In terms of the PMLA rules, brokers and sub-brokers are required to report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit-India (FIU-IND) 6th Floor, Hotel Samarat, Chanakyapuri, New Delhi - 110021 as per the schedule given below:

The Principal Officer will be responsible for timely submission of CTR, STR and NTR to FIU-IND. Utmost confidentiality shall be maintained in filing of CTR, STR and NTR to FIU-IND. No nil reporting needs to be made to FIU-IND in case there are no cash/ suspicious/ non – profit organization transactions to be reported.

Irrespective of the amount of transaction and/or the threshold limit envisaged for predicate offences specified in the PMLA, 2002, an STR shall be filed, if there is reasonable grounds to believe that the transactions involves proceeds of crime.

e) Maintenance of Records:

Following are the Document Retention Terms should be observed:

1. All necessary records on transactions, both domestic and international, should be maintained at least for the minimum period of FIVE YEARS (5) from the date of cessation of the transaction.
2. Records on customer identification (e.g. copies or records of official identification documents like passports, identity cards, driving licenses or similar documents), account files and business correspondence should also be kept for the FIVE YEARS (5) from the date of cessation of the transaction.
3. Records shall be maintained in hard and soft copies.
4. In situations where the records relate to on-going investigation or transactions, which have been the subject of a suspicious transaction reporting, they should be retained until it is confirmed that the case has been closed.

7). Employees Hiring, Employees Training and Monitoring:

1) Hiring of Employees

1. The Department Heads shall be involved in hiring of new employees, shall adequately carry out the screening procedure in place to ensure high standards in hiring new employees.
2. Bona fides of employees are checked to ensure that the employees do not have any link with terrorist or other anti-social organizations.
3. Reference of candidate:- Candidate having reference would be called for the interview. In case of employee having applied through newspaper would be called for the interview after scrutinizing his/her bio-data.
4. Background of the candidate:- Background of the employee should be clean & under no circumstances candidate who has left earlier employer due to dispute should be selected.
5. Third party verification of candidate:- If necessary third party verification should be done by making phone call.
6. Experience: - Candidate should have to appear for the skilled test depending on the exposure. vii. Candidate should be aware for PMLA 2002 guidelines. Proper training should be given if he/she is not aware.

2) Training on prevention of Money Laundering:

The Company shall provide anti-money laundering training to all its new employees at the time of joining the organization and updates would be provided on periodic basis. We have an ongoing employee training program conducted by our Principal Officer and Senior Management, participation of all the Key employees in the Seminars conducted by various Regulatory bodies from time to time, so that members of the staff are adequately trained in PMLA and CFT procedures.

All the circulars issued by various Regulatory bodies including that of PMLA, are circulated to all the staff members and the same are also being discussed in length, in the Training program. Training program shall have special emphasis on front line staff, Back office staff, Compliance Staff, RMS Staff and Staff dealing with clients.

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 noncompliance with the PMLA Act.

3) Monitoring Employee Conduct and Accounts:

We will subject employee Accounts to the same AML procedures as customer accounts, under the supervision on 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.

8) Investor Education:

As the implementation of AML/CFT measures being sensitive subject and requires us to demand and collect certain information from investors which may be of personal in nature or has hitherto never been called for, which information include documents evidencing source of funds/income tax returns/bank records etc. and can sometimes lead to raising of questions by the client with regard to the motive and purpose of collecting such information. There is, therefore, a need for us to sensitize the clients about these requirements, as the ones emanating from AML and CFT framework. We shall circulate the PMLA Circulars and other specific literature/pamphlets etc. so as to educate the client of the objectives of the AML/CFT program. The same shall also be emphasized on, in the Investor Awareness Programs conducted by us at frequent intervals of time. The importance of the same is also made known to them at the time of opening the Account.

Review of the PMLA Policy & Procedures: The policy shall be reviewed from time to time as and when required by the Management and also implement the change after any change in the Anti Money Laundering Act 2002 or change in any other act, bye-laws, rules, regulations of SEBI or in any statutory and regulatory government department related to or affect to this.

This policy has been considered and adopted by the Board of Directors of the Company as per their meeting held on dd/mm/yyyy.

POLICY ON PRE-FUNDED INSTRUMENTS/ELECTRONIC FUND TRANSFER

Version: 01/2022
Review Date: 26/07/2022

Reference Circular No’s: - NSE/INSP/2011/118 dated on 09th June 2011/ SEBI CIR/MIRSD/03/2011

With reference to the above circular number, dated on 09th June 2011 on the drafted policy on pre-Funded instruments/Electronic Fund Transfer which has been approved by the Board of Directors.

Objective of the policy: The objective of the policy is to prevent acceptance of third-party funds and to prescribe process to deal with instruments issued by third party when received. As per the above circular, stockbroker can accept Demand Draft, Pay order, Banker’s cheque from their clients. However, the stockbroker must maintain an audit trail while receiving/collecting funds from the clients through any of the instruments mentioned above. Non maintenance of audit trial may result into breach of regulations issued under PMLA and SEBI guidelines.

Policy: As a part of our Internal control policy, we are strictly not accepting any prefunded instruments towards the receipt of funds from the clients. Any exceptional circumstances of receiving funds from the clients through prefunded instruments, we are strictly following/checking the following conditions as per the circular.

1. If the instrument is identified as pay order/DD/Banker’s cheque, then a suitable reason/clarification required from the client.
2. If the aggregate value of the instrument is less than 50,000 may be accepted from the client along with a declaration from the client.
3. If the aggregate value of pre-funded instruments is more than Rs.50,000 per day from the client, such instruments may be accepted only if the following documents duly certified by the issuing Bank.
   • Certificate from the issuing bank on its letterhead or on a plain paper with the seal of the issuing bank.
   • Certified copy of the requisition slip (portion which is retained by the bank) to issue the instrument.
   • Certified copy of the passbook/bank statement for the account debited to issue the instrument.
   • Authentication of the bank account-number debited and name of the account holder by the issuing bank on the reverse of the instrument.
4. If the client submits pre-paid funded instruments at different times during the day, details and certificates from Bank as stated above may be collected along with the instrument with which the aggregate value of pre-paid instruments submitted exceeds Rs. 50,000 for that date.
5. We will maintain an audit trial of the funds received through electronic fund transfers to ensure that the funds received from the respective clients only.

Review of the policy: The policy may be reviewed by the Board of Directors/Compliance Officer as and when there are any changes introduced by any statutory authority.

Policy on Circulation of Unauthenticated News

Version: 01/2022
Review Date: 26/07/2022

Introduction:

Securities and Exchange Board of India (SEBI) vide it’s circular ISD/1/2011 dated 23rd March, 2011 has ordered restriction on transmitting “unauthenticated news” by Broking houses and other SEBI registered intermediaries through various modes of communications like blogs, Chat forums, messenger sites etc. Intermediaries, which includes Wealthyin Broking Private Limited (Wealthy) to put in place proper internal controls and ensure that proper checks are in place to govern the conduct of their employees to prevent speculative news and rumours.

Objective of the policy:

To check origination or dissemination of unauthenticated market related news or rumours and to demonstrate to the regulator measures adopted for implementation on the policy.

Definitions:

1. Unauthenticated market related news or rumours: Unauthenticated market related news or rumours means “any information or news or talk or opinion widely disseminated with no discernible source or a statement or report without known authority for its truth”.
2. Employee/s “Employees” means Employees of Wealthy/temporary staff/group company staffs/consultants working in office premises.

Implementation of the policy:

Employees of the Company especially those who have access to market information viz. Sales Team, Dealers, Research Analyst, Equity/ Portfolio Advisors etc. shall not encourage or circulate rumours or unverified information obtained from client, industry, any trade or any other source without verification. Employees shall circulate only that information which is received from reliable sources only. If the source of the information is not verifiable, then such information may be used only after its use is approved by the Compliance Officer of the Company.

Illustrative list of Reliable Sources includes Information posted on websites of Government/Regulatory authorities, Print media and their websites, Business News Channels and such information which are communicated by the Corporates by way of press release.

Reporting:

Employees of the company are obliged to promptly furnish any market related news/information received by them from an unverified source/communication channel to the Compliance Officer of the company and shall forward the same has been approved by the Compliance Officer.

Internet Usage:

The Company has restricted the access of private e‐mails, chat forums/messengers, blogs, social networking websites etc. in office, unless otherwise permitted to specific individuals by the management. Such individuals irrevocably undertake that access to such sites will not be misused to the extent of facilitating unauthenticated news in any manner. The use of the official e‐mail id for posting unauthenticated news in mail groups, forums, blogs etc. will attract disciplinary action.

Penalty:

Any employee of the Company who fails to observe the provisions of this policy shall be deemed to have violated the various provisions contained in SEBI Act/Rules/Regulations etc. and shall be liable for penal action.

Policy Review:

The policy will be reviewed periodically, as per the changes.

Annexure – A

RISK DISCLOSURE DOCUMENT FOR CAPITAL MARKET AND DERIVATIVES SEGMENTS

This document contains important information on trading in Equities/Derivatives Segments of the stock Exchanges. All prospective constituents should read this document before trading in Equities/Derivatives Segments of the Exchanges. The Stock Exchanges does not expressly or impliedly, guarantee nor make any representation concerning the completeness, the adequacy or accuracy of this disclosure documents nor has the Stock Exchanges endorsed or passed any merits of participating in the market/trading. This brief statement does not disclose all of the risks and other significant aspects of trading. You should, therefore, study derivatives trading carefully before becoming involved in it. In the light of the risks involved, you should undertake transactions only if you understand the nature of the contractual relationship into which you are entering and the extent of your exposure to risk.

You must know and appreciate that trading in Equity shares, derivative contracts or other instruments traded on the Stock Exchange(s), which have varying element of risk, is generally not an appropriate avenue for someone of limited resources/limited investment and/or trading experience and low risk tolerance. You should, therefore, carefully consider whether such trading is suitable for you in the light of your financial condition. In case, you trade on the Stock Exchanges and suffer adverse consequences or loss, you shall be solely responsible for the same and the Stock Exchanges shall not be responsible, in any manner whatsoever, for the same and it will not be open for you to take the plea that no adequate disclosure regarding the risks involved was made or that you were not explained the full risk involved by the concerned stock broker. The constituent shall be solely responsible for the consequences and no contract can be rescinded on that account.

You must acknowledge and accept that there can be no guarantee of profits or no exception from losses while executing orders for purchase and/or sale of a derivatives contract being traded on the Stock Exchanges.

It must be clearly understood by you that your dealings on the Stock Exchanges through a stock broker shall be subject to your fulfilling certain formalities set out by the stock broker, which may, inter alia, include your filing the know your client form, rights and obligations, do’s and don’ts, etc. and are subject to Rules, Byelaws and Business Rules of the Stock Exchanges, its Clearing Corporation, guidelines prescribed by SEBI from time to time and Circulars as may be issued by the Stock Exchanges or its Clearing Corporation and in force from time to time.

The Stock Exchanges does not provide or purport to provide any advice and shall not be liable to any person who enters into any business relationship with any stock broker of the Stock Exchanges and/orthird party based on any information contained in this document. Any information contained in this document must not be construed as business advice/investment advice. No consideration to trade should be made without thoroughly understanding and reviewing the risks involved in such trading. If you are unsure, you must seek professional advice on the same.

In considering whether to trade, or authorise someone to trade for you, you should be aware of or must get acquainted with the following:

Basic Risks:

Risk of Higher Volatility: Volatility refers to the dynamic changes in price that a security/derivative contract undergoes when trading activity continues on the Stock Exchanges. Generally, higher the volatility of a security/derivatives contract, greater is its price swings. There may be normally greater volatility in thinly traded securities/derivatives contracts than in actively traded securities/derivatives contracts. As a result of volatility, your order may only be partially executed or not executed at all, or the price at which your order got executed may be substantially different from the last traded price or change substantially thereafter, resulting in real losses.

Risk of Lower Liquidity:

a. Liquidity refers to the ability of market participants to buy and/or sell securities/derivatives contracts expeditiously at a competitive price and with minimal price difference. Generally, it is assumed that more the number of orders available in a market, greater is the liquidity. Liquidity is important because with greater liquidity, it is easier for investors to buy and/ or sell securities/derivatives contracts swiftly and with minimal price difference and as a result, investors are more likely to pay or receive a competitive price for securities/derivatives contracts purchased or sold. There may be a risk of lower liquidity in some securities/derivatives contracts as compared to active securities/derivatives contracts. As a result, your order may only be partially executed, or may be executed with relatively greater price difference or may not be executed at all.

b. Buying/Selling securities/derivatives contracts as part of a day trading strategy may also result into losses, because in such a situation, securities/derivatives contracts may have to be sold/purchased at low/high prices, compared to the expected price levels, so as not to have any position or obligation to deliver/receive a security/derivatives contract.

Risk of Wider Spreads:

a. Spread refers to the difference in best buy price and best sell price. It represents the differential between the price of buying a security/derivatives contract and immediately selling it or vice versa. Lower liquidity and higher volatility may result in wider than normal spreads for less liquid or illiquid securities/derivatives contracts. This in turn will hamper better price formation.

Risk-reducing orders:

a. Most of the Stock Exchanges have a facility for investors to place “limit orders”, “stop loss orders” etc. Placing of such orders (e.g. “stop loss” orders or “limit” orders) which are intended to limit losses to certain amounts may not be effective many a time because rapid movement in market conditions may make it impossible to execute such orders.

b. A “market” order will be executed promptly, subject to availability of orders on opposite side, without regard to price and that while the customer may receive a prompt execution of a “market” order, the execution may be at available prices of outstanding orders, which satisfy the order quantity, on price time priority. It may be understood that these prices may be significantly different from the last traded price or the best price in that security/derivatives contract.

c. A “limit” order will be executed only at the “limit” price specified for the order or a better price. However, while the client received price protection, there is a possibility that the order may not be executed at all.

d. A stop loss order is generally placed “away “from the current price of a stock/derivatives contract, and such order gets activated if and when the contract reaches, or trades through, the stop price. Sell stop orders are entered ordinarily below the current price, and buy stop orders are entered ordinarily above the current price. When the securities/derivatives contract reaches the predetermined price, or trades through such price, the stop loss order converts to a market/limit order and is executed at the limit or better. There is no assurance therefore that the limit order will be executable since a security/derivative contract might penetrate the predetermined price, in which case, the risk of such order not getting executed arises, just as with a regular limit order.

Risk of News Announcements:

a. Traders/Manufacturers make news announcements that may impact the price of the stock and/or derivatives contracts. These announcements may occur during trading and when combined with lower liquidity and higher volatility may suddenly cause an unexpected positive or negative movement in the price of the security/derivatives contract.

Risk of rumors:

a. Rumors about the price of a stock/security at times float in the market through word of mouth, newspaper, websites or news agencies, etc. The investors should be wary of and should desist from acting on rumors

System risk:

a. High volume trading will frequently occur at the market opening and before market close. Such high volumes may also occur at any point in the day. These may cause delays in order execution or confirmation.

b. During periods of volatility, on account of market participants continuously modifying their order quantity or prices or placing fresh orders, there may be delays in execution of order and its confirmation.

c. Under certain market conditions, it may be difficult or impossible to liquidate a position in the market at a reasonable price or at all, when there are no outstanding orders either on the buy side or the sell side, or if trading is halted in a security / derivatives contract due to any action on account of unusual trading activity or security/derivatives contract hitting circuit filters or for any other reason.

System/Network congestion:

a. Trading on the Stock Exchanges is in electronic mode, based on satellite/leased line communications, combination of technologies and computer systems to place and route orders. Thus, there exists a possibility of communication failure or system problems or slow or delayed response from system or trading halt, or any such other problem/glitch whereby not being able to establish access to the trading system/network, which may be beyond the control of and may result in delay in processing or not processing buy or sell orders either in part or in full. You are cautioned to note that although these problems may be temporary in nature, but when you have outstanding open positions or unexecuted orders, these represent a risk because of your obligations to settle all executed transactions.

2. As far as Derivatives segments are concerned, please note and get yourself acquainted with the following additional features:

(i) Effect of “Leverage” or “Gearing”:

a. In the derivatives market, the amount of margin is small relative to the value of the derivatives contract so the transactions are ‘leveraged’ or ‘geared’. Derivatives trading, which is conducted with a relatively small amount of margin, provides the possibility of great profit or loss in comparison with the principal investment amount. But transactions in derivatives carry a high degree of risk. You should therefore completely understand the following statements before actually trading in derivatives contracts and also trade with caution while taking into account one’s circumstances, financial resources, etc.

b. Trading in Futures Derivatives involves daily settlement of all positions. Every day the open positions are marked to market based on the closing price. If the closing price has moved against you, you will be required to deposit the amount of loss (notional) resulting from such movement. This margin will have to be paid within a stipulated time frame, generally before commencement of trading on the next day.

c. If you fail to deposit the additional margin by the deadline or if an outstanding debt occurs in your account, the stock broker may liquidate a part of or the whole position or substitute securities. In this case, you will be liable for any losses incurred due to such close-outs.

d. Under certain market conditions, an investor may find it difficult or impossible to execute the transactions. For example, this situation can occur due to factors such as illiquidity i.e. when there are insufficient bids or offers or suspension of trading due to price limit or circuit breakers etc.

e. Steps, such as, changes in the margin rate, increase in the cash margin rate etc. may be adopted in order to maintain market stability. These new measures may be applied to the existing open interests. In such conditions, you will be required to put up additional margins or reduce your positions.

f. You must ask your broker to provide the full details of the derivatives contracts you plan to trade i.e. the contract specifications and the associated obligations.

(ii) Currency specific risks:

a. The profit or loss in transactions in foreign currency-denominated contracts, whether they are traded in your own or another jurisdiction, will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

b. Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example when a currency is deregulated or fixed trading bands are widened.

c. Currency prices are highly volatile. Price movements for currencies are influenced by, among other things: changing supply-demand relationships; trade, fiscal, monetary, Exchange control programs and policies of governments; foreign political and economic events and policies; changes in national and international interest rates and inflation; currency devaluation; and sentiment of the market place. None of these factors can be controlled by any individual advisor and no assurance can be given that an advisor’s advice will result in profitable trades for a participating customer or that a customer will not incur losses from such events.

(iii) Risk of Option holders:

a. An option holder runs the risk of losing the entire amount paid for the option in a relatively short period of time. This risk reflects the nature of an option as a wasting asset which becomes worthless when it expires. An option holder who neither sells his option in the secondary market nor exercises it prior to its expiration will necessarily lose his entire investment in the option. If the price of the underlying does not change in the anticipated direction before the option expires, to an extent sufficient to cover the cost of the option, the investor may lose all or a significant part of his investment in the option.

b. The Stock Exchanges may impose exercise restrictions and have absolute authority to restrict the exercise of options at certain times in specified circumstances.

(iv) Risks of Option Writers:

a. If the price movement of the underlying is not in the anticipated direction, the option writer runs the risks of losing substantial amount.

b. The risk of being an option writer may be reduced by the purchase of other options on the same underlying interest and thereby assuming a spread position or by acquiring other types of hedging positions in the options markets or other markets. However, even where the writer has assumed a spread or other hedging position, the risks may still be significant. A spread position is not necessarily less risky than a simple ‘long’ or ‘short’ position.

c. Transactions that involve buying and writing multiple options in combination, or buying or writing options in combination with buying or selling short the underlying interests, present additional risks to investors. Combination transactions, such as option spreads, are more complex than buying or writing a single option. And it should be further noted that, as in any area of investing, a complexity not well understood is, in itself, a risk factor. While this is not to suggest that combination strategies should not be considered, it is advisable, as is the case with all investments in options, to consult with someone who is experienced and knowledgeable with respect to the risks and potential rewards of combination transactions under various market circumstances.

3. Trading through wireless technology or any other technology:

Any additional provisions defining the features, risks, responsibilities, obligations and liabilities associated with securities trading through wireless technology or any other technology should be brought to the notice of the client by the stock broker.

4. General:

a. The term ‘constituent’ shall mean and include a client, a customer or an investor, who deals with a stock broker for the purpose of acquiring and/or selling of securities/derivatives contracts through the mechanism provided by the Stock Exchanges.

b. The term ‘stock broker’ shall mean and include a stock broker, a broker or a stock broker, who has been admitted as such by the Exchanges and who holds a registration certificate from SEBI

Annexure – B

RIGHTS AND OBLIGATIONS OF STOCK BROKERS, SUB-BROKERS AND CLIENTS AS PRESCRIBED BY SEBI AND STOCK EXCHANGES

1. The client shall invest/trade in those securities/contracts/other instruments admitted to dealings on the Exchanges as defined in the Rules, Byelaws and Regulations of Exchanges/Securities and Exchange Board of India (SEBI) and circulars/notices issued there under from time to time.
2. The stock broker, sub-broker and the client shall be bound by all the Rules, Byelaws and Regulations of the Exchange and circulars/notices issued there under and Rules and Regulations of SEBI and relevant notifications of Government authorities as may be in force from time to time.
3. The client shall satisfy itself of the capacity of the stock broker to deal in securities and/or deal in derivatives contracts and wishes to execute its orders through the stock broker and the client shall from time to time continue to satisfy itself of such capability of the stock broker before executing orders through the stock broker.
4. The stock broker shall continuously satisfy itself about the genuineness and financial soundness of the client and investment objectives relevant to the services to be provided.
5. The stock broker shall take steps to make the client aware of the precise nature of the Stock broker’s liability for business to be conducted, including any limitations, the liability and the capacity in which the stock broker acts.
6. The sub-broker shall provide necessary assistance and co-operate with the stock broker in all its dealings with the client(s).

CLIENT INFORMATION

7. The client shall furnish all such details in full as are required by the stock broker in "Account Opening Form ”with supporting details, made mandatory by stock Exchanges/SEBI from time to time.
8. The client shall familiarize himself with all the mandatory provisions in the Account Opening documents. Any additional clauses or documents specified by the stock broker shall be non-mandatory, as per terms & conditions accepted by the client.
9. The client shall immediately notify the stock broker in writing if there is any change in the information in the ‘account opening form’ as provided at the time of account opening and thereafter; including the information on winding up petition/insolvency petition or any litigation which may have material bearing on his capacity. The client shall provide/update the financial information to the stock broker on a periodic basis.
10. The stock broker and sub-broker shall maintain all the details of the client as mentioned in the account opening form or any other information pertaining to the client, confidentially and that they shall not disclose the same to any person/authority except as required under any law/regulatory requirements. Provided however that the stock broker may so disclose information about his client to any person or authority with the express permission of the client.

MARGINS

11. The client shall pay applicable initial margins, withholding margins, special margins or such other margins as are considered necessary by the stock broker or the Exchange or as may be directed by SEBI from time to time as applicable to the segment(s) in which the client trades. The stock broker is permitted in its sole and absolute discretion to collect additional margins (even though not required by the Exchange, Clearing House/Clearing Corporation or SEBI) and the client shall be obliged to pay such margins within the stipulated time.
12. The client understands that payment of margins by the client does not necessarily imply complete satisfaction of all dues. In spite of consistently having paid margins, the client may, on the settlement of its trade, be obliged to pay (or entitled to receive) such further sums as the contract may dictate/require.

TRANSACTIONSAND SETTLEMENTS

13. The client shall give any order for buy or sell of a security/derivatives contract in writing or in such form or manner, as may be mutually agreed between the client and the stock broker. The stock broker shall ensure to place orders and execute the trades of the client, only in the Unique client Code assigned to that client.
14. The stock broker shall inform the client and keep him apprised about trading/settlement cycles, delivery/payment schedules, any changes therein from time to time, and it shall be the responsibility in turn of the client to comply with such schedules/procedures of the relevant stock Exchange where the trade is executed.
15. The stock broker shall ensure that the money/securities deposited by the client shall be kept in a separate account, distinct from his/its own account or account of any other client and shall not be used by the stock broker for himself/itself or for any other client or for any purpose other than the purposes mentioned in Rules, Regulations, circulars, notices, guidelines of SEBI and/or Rules, Regulations, Byelaws, circulars and notices of Exchange.
16. Where the Exchange(s) cancels trade(s) suo moto all such trades including the trade/s done on behalf of the client shall ipso facto stand cancelled, stock broker shall be entitled to cancel the respective contract(s) with client(s).
17. The transactions executed on the Exchange are subject to Rules, Byelaws and Regulations and circulars/notices issued thereunder of the Exchanges where the trade is executed and all parties to such trade shall have submitted to the jurisdiction of such court as may be specified by the Byelaws and Regulations of the Exchanges where the trade is executed for the purpose of giving effect to the provisions of the Rules, Byelaws and Regulations of the Exchanges and the circulars/notices issued thereunder.

BROKERAGE

18. The client shall pay to the stock broker brokerage and statutory levies as are prevailing from time to time and as they apply to the client’s account, transactions and to the services that stock broker renders to the client. The stock broker shall not charge brokerage more than the maximum brokerage permissible as per the rules, regulations and bye-laws of the relevant stock Exchanges and/or rules and regulations of SEBI.

LIQUIDATIONAND CLOSE OUTOF POSITION

19. Without prejudice to the stock broker's other rights (including the right to refer a matter to arbitration), the client understands that the stock broker shall be entitled to liquidate/close out all or any of the client's positions for non-payment of margins or other amounts, outstanding debts, etc. and adjust the proceeds of such liquidation/close out, if any, against the client's liabilities/obligations. Any and all losses and financial charges on account of such liquidation/closing-out shall be charged to and borne by the client.
20. In the event of death or insolvency of the client or his/its otherwise becoming incapable of receiving and paying for or delivering or transferring securities which the client has ordered to be bought or sold, stock broker may close out the transaction of the client and claim losses, if any, against the estate of the client. The client or his nominees, successors, heirs and assignee shall be entitled to any surplus which may result there from. The client shall note that transfer of funds/securities in favor of a Nominee shall be valid discharge by the stock broker against the legal heir.
21. The stock broker shall bring to the notice of the relevant Exchange the information about default in payment/delivery and related aspects by a client. In case where defaulting client is a corporate entity/partnership/proprietary firm or any other artificial legal entity, then the name(s) of Director(s)/Promoter(s)/Partner(s)/Proprietor as the case may be, shall also be communicated by the stock broker to the relevant Exchange(s).

DISPUTE RESOLUTION

22. The stock broker shall provide the client with the relevant contact details of the concerned Exchanges and SEBI.
23. The stock broker shall co-operate in redressing grievances of the client in respect of all transactions routed through it and in removing objections for bad delivery of shares, rectification of bad delivery, etc.
24. The client and the stock broker shall refer any claims and/or disputes with respect to deposits, margin money, etc., to arbitration as per the Rules, By-Laws and regulations of the Exchanges where the trade is executed and circulars/notices issued thereunder as may be in force from time to time.
25. The stock broker shall ensure faster settlement of any arbitration proceedings arising out of the transactions entered into between him vis-à-vis the client and he shall be liable to implement the arbitration awards made in such proceedings.
26. The client/stock-broker understands that the instructions issued by an authorized representative for dispute resolution, if any, of the client/stock-broker shall be binding on the client/stock-broker in accordance with the letter authorizing the said representative to deal on behalf of the said client/stock-broker.

TERMINATION OF RELATIONSHIP

27. This relationship between the stock broker and the client shall be terminated; if the stock broker for any reason ceases to be a member of the stock Exchange including cessation of membership by reason of the stock broker's default, death, resignation or expulsion or if the certificate is cancelled by the Board.
28. The stock broker, sub-broker and the client shall be entitled to terminate the relationship between them without giving any reasons to the other party, after giving notice in writing of not less than one month to the other parties. Notwithstanding any such termination, all rights, liabilities and obligations of the parties arising out of or in respect of transactions entered into prior to the termination of this relationship shall continue to subsist and vest in/be binding on the respective parties or his/its respective heirs, executors, administrators, legal representatives or successors, as the case may be.
29. In the event of demise/insolvency of the sub-broker or the cancellation of his/its registration with the Board or/withdrawal of recognition of the sub-broker by the stock Exchange and/or termination of the agreement with the sub broker by the stock broker, for any reason whatsoever, the client shall be informed of such termination and the client shall be deemed to be the direct client of the stock broker and all clauses in the ‘Rights and Obligations’ document(s) governing the stock broker, sub-broker and client shall continue to be in force as it is, unless the client intimates to the stock broker his/its intention to terminate their relationship by giving a notice in writing of not less than one month.

ADDITIONAL RIGHTS AND OBLIGATIONS

30. The stock broker shall ensure due protection to the client regarding client’s rights to dividends, rights or bonus shares, etc. in respect of transactions routed through it and it shall not do anything which is likely to harm the interest of the client with whom and for whom they may have had transactions in securities.
31. The stock broker and client shall reconcile and settle their accounts from time to time as per the Rules, Regulations, By-Laws, Circulars, Notices and Guidelines issued by SEBI and the relevant Exchanges where the trade is executed.
32. The stock broker shall issue a contract note to his constituents for trades executed in such format as may be prescribed by the Exchange from time to time containing records of all transactions including details of order number, trade number, trade time, trade price, trade quantity, details of the derivatives contract, client code, brokerage, all charges levied etc. and with all other relevant details as required therein to be filled in and issued in such manner and within such time as prescribed by the Exchange. The stock broker shall send contract notes to the investors within one working day of the execution of the trades in hard copy and/or in electronic form using digital signature.
33. The stock broker shall make pay out of funds or delivery of securities, as the case may be, to the client within one working day of receipt of the payout from the relevant Exchange where the trade is executed unless otherwise specified by the client and subject to such terms and conditions as may be prescribed by the relevant Exchange from time to time where the trade is executed.
34. The stock broker shall send a complete `Statement of Accounts’ for both funds and securities in respect of each of its clients in such periodicity and format within such time, as may be prescribed by the relevant Exchange, from time to time, where the trade is executed. The statement shall also state that the client shall report errors, if any, in the Statement within such time as may be prescribed by the relevant Exchange from time to time where the trade was executed, from the receipt thereof to the Stock broker.
35. The stock broker shall send daily margin statements to the clients. Daily Margin statement should include, inter-alia, details of collateral deposited, collateral utilized and collateral status (available balance/due from client) with break up in terms of cash, Fixed Deposit Receipts (FDRs), Bank Guarantee and securities.
36. The client shall ensure that it has the required legal capacity to, and is authorized to, enter into the relationship with stock broker and is capable of performing his obligations and undertakings hereunder. All actions required to be taken to ensure compliance of all the transactions, which the client may enter into shall be completed by the client prior to such transaction being entered into.

ELECTRONIC CONTRACTNOTES (ECN)

37. In case, client opts to receive the contract note in electronic form, he shall provide an appropriate e-mail id to the stock broker. The client shall communicate to the stock broker any change in the email-id through a physical letter. If the client has opted for internet trading, the request for change of email id may be made through the secured access by way of client specific user id and password.
38. The stock broker shall ensure that all ECNs sent through the e-mail shall be digitally signed, encrypted, non-tamperable and in compliance with the provisions of the IT Act, 2000. In case, ECN is sent through e-mail as an attachment, the attached file shall also be secured with the digital signature, encrypted and non-tamperable.
39. The client shall note that non-receipt of bounced mail notification by the stock broker shall amount to delivery of the contract note at the e-mail ID of the client.
40. The stock broker shall retain ECN and acknowledgement of the e-mail in a soft and non-tamperable form in the manner prescribed by the Exchange in compliance with the provisions of the IT Act, 2000 and as per the extant rules/regulations/circulars/guidelines issued by SEBI/Stock Exchanges from time to time. The proof of delivery i.e., log report generated by the system at the time of sending the contract notes shall be maintained by the stock broker for the specified period under the extant regulations of SEBI/stock Exchanges. The log report shall provide the details of the contract notes that are not delivered to the client/e-mails rejected or bounced back. The stock broker shall take all possible steps to ensure receipt of notification of bounced mails by him at all times within the stipulated time period under the extant regulations of SEBI/stock Exchanges.
41. The stock broker shall continue to send contract notes in the physical mode to such clients who do not opt to receive the contract notes in the electronic form. Wherever the ECNs have not been delivered to the client or has been rejected (bouncing of mails) by the e-mail ID of the client, the stock broker shall send a physical contract note to the client within the stipulated time under the extant regulations of SEBI/stock Exchanges and maintain the proof of delivery of such physical contract notes.
42. In addition to the e-mail communication of the ECNs to the client, the stock broker shall simultaneously publish the ECN on his designated web-site, if any, in a secured way and enable relevant access to the clients and for this purpose, shall allot a unique user name and password to the client, with an option to the client to save the contract note electronically and/or take a print out of the same.

LAWAND JURISDICTION

43. In addition to the specific rights set out in this document, the stock broker, sub-broker and the client shall be entitled to exercise any other rights which the stock broker or the client may have under the Rules, Bye-laws and Regulations of the Exchanges in which the client chooses to trade and circulars/notices issued thereunder or Rules and Regulations of SEBI.
44. The provisions of this document shall always be subject to Government notifications, any rules, regulations, guidelines and circulars/notices issued by SEBI and Rules, Regulations and Bye laws of the relevant stock Exchanges, where the trade is executed, that may be in force from time to time.
45. The stock broker and the client shall abide by any award passed by the Arbitrator(s) under the Arbitration and Conciliation Act, 1996. However, there is also a provision of appeal within the stock Exchanges, if either party is not satisfied with the arbitration award.
46. Words and expressions which are used in this document but which are not defined herein shall, unless the context otherwise requires, have the same meaning as assigned thereto in the Rules, Byelaws and Regulations and circulars/notices issued thereunder of the Exchanges/SEBI.
47. All additional voluntary clauses/document added by the stock broker should not be in contravention with rules/regulations/ notices/circulars of Exchanges/SEBI. Any changes in such voluntary clauses/document(s) need to be preceded by a notice of 15 days. Any changes in the rights and obligations which are specified by Exchanges/SEBI shall also be brought to the notice the clients.
48. If the rights and obligations of the parties hereto are altered by virtue of change in Rules and regulations of SEBI or By-Laws, Rules and Regulations of the relevant stock Exchanges where the trade is executed, such changes shall be deemed to have been incorporated herein in modification of the rights and obligations of the parties mentioned in this document.

Annexure -C

POLICIES AND PROCEDURES

WealthyIn Broking Private Limited is a member of the National Stock Exchange and Bombay Stock Exchange in the Equity and Equity Derivative segment having its registered office at
__________________________________________________________

For the purpose of these policies and procedures, whatever the context so mentions “Client”, “You” or “Your”, it shall mean any natural or legal person who has agreed to open an account or initiate the process of opening account with Welathy by providing their information while registering on the platform as a user. Wealthy allows any person to surf the website without registering on the website. The term “We”, “Us”, “Our” and Team Wealthy shall mean M/s Wealthyin Broking Private Limited.

PROCEDURE OF PAYIN AND PAYOUT OF FUNDS:

Collection of Payin: Registered clients can transfer payin/margin in to the Trading Account only from such bank accounts are registered with Wealthy. Any transfer from a non-registered bank account will not be considered as payin/margin and the client does not get any Trading limit against this transfer.

• The client can transfer payin/margin from the instant payment gateway facility available on the trading platform/ Back office login or through funds page.

  Such transfers will be charged at _________ + GST per Transfer.

• The client can transfer the funds using NEFT/RTGS and there will be no cost.

Process of Payout: All the payout requests will have to be compulsorily placed on the Backoffice login provided to the clients. All payout requests will be processed electronically and the credit shall come to the client’s primary Bank account within 24 hours of having processed the payout request.

Withdrawal requests for Equity segment will be processed at 8.30 PM on working days. If the client places a withdrawal request before 8.00 PM, the money will be credited to your Bank account within 24 hours. If the client places payout requests after 8.00 PM, the same will be processed on the next working day.

The payout will not be processed on Saturday/Sunday and all the other clearing Holidays. Funds transferred cannot be withdrawn on the same day.

Collection of Margins:

Margins, by whatever name called and defined by the Exchanges viz. Initial Margin, Exposure Margin, Pre-expiry Margin, Tender period or Delivery period margin, Additional margin and special cash margin or any other margin specified by the Exchanges / Regulator from time to time. Wealthyin reserves the discretion to call for a higher percentage of margins from the client, than stipulated by Exchanges / Regulator, depending on the risk assessment or surveillance parameters or market volatility.

All margins are collected in Funds and Collaterals. Funds are collected through online mode. Collaterals can be in the form of pledged securities and any other form decided by Wealthy from time to time. The threshold limit of collaterals, the ratio of funds and collaterals and their haircuts are solely at discretion of Wealthy subject to the guidelines issued by Exchange / other regulatory authorities.

Limit / Exposure setting:

Limit / Exposure varies from time to time and it is depending upon the net cash and collateral available in a client’s trading account.

NSE/BSE Equity: Need to get more clarity, Intraday – No: of times, CNC – No: of times

NSE/BSE Futures & Options: For trades in Derivative segment, upfront margin is based on SPAN + Exposure margin, additional margin and any other margin as followed by the Exchanges.

Applicable Brokerage Rate:

1. For Cash Segment: The maximum brokerage chargeable in relation to trades effected in the securities admitted to dealings on the Capital market segment of the Exchange shall be 2.50% of the turnover exclusive of statutory levies.It is hereby further clarified that where the sale/purchase value of a share is Rs.10/- or less, a maximum brokerage of 25 paisa per share may be charged.
2. For Options trades: Brokerage for option contracts would not exceed Rs.100/- per lot single side or such other rates as provided by the Exchanges from time to time.

Square off Timings of Intraday Products (MIS/BO/CO)

^*Intraday square off timings can change based on the discretion of our Risk management Team. Call & trade charges of Rs. ___ will be applicable for all the Auto square off trades and for all the positions squared off from RMS end.

In case of any open positions (Intraday) is not squared off on the same day and converted in to Delivery / Carry forward positions because of any reason whatsoever, the clients agree to provide securities/funds to fulfil the pay-in obligation failing which the client will have to face auctions or internal close outs; in addition to this the client will have to pay penalties and other charges levied by Exchange in actual and losses; if any. RMS Team shall square off any such position, without the requirement of a margin call, if the sufficient margin is not available in the client account.

1. A Call & Trade charge of Rs.--- is applicable for positions squared of due to margin shortfall/insufficient funds.
2. If payment/Securities towards the Pay-in obligation/margin shortfall in Margin/Market-To-Market losses/ Debit in the client ledger are not received instantaneously, the sufficient positions/securities may be liquidated by the Member at it’s sole discretion, without any reference or prior notice to the client.
3. Benefit of the margin payment will be given only after the realization of the instrument.
4. The Broker has the right but not the obligation, to cancel all the pending orders and to sell/close/liquidate all open positions/securities/shares at the predefined square off time or when mark-to-market reaches or crosses stipulated margin percentage, whichever is earlier.
5. Option premium received from writing/selling options will not be considered as Cash/Capital.
6. Collateral margin will not be considered for Equity Delivery positions.
7. Basket orders will not be allowed on ASM/Penny stocks.
8. AMO (After Market Orders) will be cancelled if the price entered is more than 10% away from the LTP.
9. Penalty levied by the Exchanges for short margin will be payable by the client.
10. Payments will only be accepted from client’s registered Bank account.
11. Because of illiquidity of stock options, market orders are not allowed, only limit orders are allowed.
12. In case of your ledger is in debit balance and/or if you have insufficient funds to manage / carry forward your trading positions, you will be charged an interest of 0.05% per day as delayed payment charges.

The right to sell client’s securities or close client’s positions, without giving notice to the client, on account of non-payment of client’s dues (This shall be limited to the extent of settlement/margin obligation)

Conditions under which a client may not be allowed to take further position or the broker may close the existing position of a client.

We have margin based RMS system. Client may take exposure upto the amount of margin available with us. Client may not be allowed to take position/the existing position of the client is also liable to square off/close out without giving notice due to following reasons:

1. In case of non-availability/shortage of margin as per our RMS policy of the company.
2. Due to shortage of margin/not making of payment for their pay-in obligation/outstanding debts.
3. For non-payment or erosion of margins or other amounts, outstanding debts, etc. and adjust the proceeds of such liquidation/close out, if any, against the client’s liabilities/obligations.
4. Any order which is executed without the required Margin in the Client’s account or the broker’s exposure is more than 75 % and above with exchange, hence no fresh trade will be taken.
5. The client hereby authorizes the Stock Broker to square up all his outstanding positions at the discretion of the Stock Broker, which are not marked for delivery 15 minutes before the closing time of the normal market or if the client’s margin is evaporated by 80% in any of exchanges, the Stock Broker reserves the right to square off positions.
6. Under certain market conditions, it may be difficult or impossible to liquidate a position in the market at a reasonable price or at all, when there are no outstanding orders either on the buy side or the sell side, or if trading is halted in a security due to any action on account of unusual trading activity or stock hitting circuit filters or for any other reason as prescribed or instructed by SEBI.
7. The stock broker is entitled to disable/freeze the account or trading facility/any other service if, in the opinion of the stock broker, the client has committed a crime, fraud or has acted in contradiction of this agreement or evade/violate any laws, rules, regulations, directions of a lawful authority whether Indian or foreign or if the stock broker so apprehends.

Any profit/loss arising out of these transactions shall be at the risk of and borne by the client

Accepting Collateral as Margin:

• This facility is available only for those clients who have opened the demat account with Wealthy.
• Only POA clients are eligible to avail this facility. Currently non PoA clients are not eligible to use this facility.
• For all pledge request placed before 5.00 PM, the collateral margin will be available to trade on T+1 / next working day. If the request is placed after the cut off time the same will be processed only on the next working day.
• Margin/Limit will be provided after the applicable haircut.
• Client can use this Collateral margin (after haircut) for taking Intraday or Carry forward positions in Equity futures, and for writing Options of equities and Indices.
• Client will not be able to use this margin to buy options or take Delivery positions in Equity cash segment.
• Exchanges stipulate that for overnight F&O positions, 50% of the required margin needs to be in the form of Cash and the remaining 50% can be in terms of Collateral margin.
• If the client doesn’t have enough cash, client account will be in debit balance and there will be a delayed payment charge of 0.50% per day applicable. Example: If the client takes a position and that requires a margin of Rs. 1.00 lakh, the minimum cash requirement is Rs. 50,000 (irrespective of how much collateral available in the client account) .
• Liquid funds are considered as cash equivalents by the Exchange, so the above mentioned 50% is not applicable in this case.
• All the pledged stocks are marked as pledge in the client’s demat account until they are unpledged and clients will get benefits of all the corporate actions like dividend, splits, bonus etc.
• The process of pledging will cost Rs. 30 plus GST per scrip irrespective of the quantity, and there are no separate charges for unpledged the securities.
• Wealthy reserves the right to make necessary changes in the policy.

Imposition of Penalty / Delay payment charges:

Clients will be liable to pay late pay in/delayed payment charges for not making payment of their payin/margin obligation on time as per the exchange requirement/schedule as the rate of 2% per month. Similarly, the stock broker will also be liable to pay delayed payment charges to the client for not making payment of their obligation on time, as per the exchange requirement/schedule at the rate of 2% p.m., except in the cases covered by the “Running Account Authorization” give by the client to the stock broker.

The Client agrees that the stock broker may impose fines / penalties for any orders / trades / deals / actions of the client which are contrary to this agreement / rules / regulations / bye laws of the exchange or any other law for the time being in force, at such rates and in such form as it my deem fit. Further where the stock broker has to pay any fine or bear any punishment from any authority in connection with / as a consequence of /in relation to any of the orders / trades / deals actions of the client, the same shall borne by the client.

Shortage in obligations arising out of Internal netting of Trades:

Stock broker shall not be obliged to deliver any securities or pay any money to the client unless and until the same has been received by the stock broker from the exchange, the Clearing Corporation/Clearing House or other company or entity liable to make the payment and the client has fulfilled his/her/its obligations first. As per the Exchange settlement norms the Payin obligation for securities are netted at member level and only the net obligation is delivered to the Exchange.

In case any client of Wealthy Broking Private Limited defaults in fulfilling securities pay in obligation against sell transaction in a particular settlement where any other Wealthy Broking Private Limited client is having a buy position then Wealthy will consider those short shares as Internal shortage shares.

Wealthy will settle all the internal shortage of shares internally only. This will be cash settled with the Internal Auction Price discovered as per below calculations:

• If on the settlement day, any client short delivered any security/ies against its obligation towards counter party then such securities shall be closed out at the auction price, however if the auction price is not available then at the highest rate at which the script traded on the settlement date.

Once the obligation is closed as per the process mentioned above, no obligation to deliver / receive security/ies shall remain for either parties. Clients shall not have any claim against the Broker for executing close out due to such shortage/s. Currently no penalty shall be levied on such close out transaction/s.

Sending contract notes & Margin statement:

Wealthy will issue Contract Notes & Margin Statement to its clients within 24 hours of the Trade execution. These reports are also available on their respective Back Office login.

Temporarily suspending or closing a client’s account at the client’s request:

• Client may instruct the member to close out the account or suspend the trading through client’s account for the period as specified in the request in written and duly signed by him.
• The stock broker can withhold the payouts of client and suspend his trading account due to his surveillance action or judicial or / and regulatory order/action requiring client suspension.

Deregistering a client:

Notwithstanding anything to the contrary stated in the agreement, the stock broker shall be entitled to terminate the agreement with immediate effect in any of the following circumstances:

1. If there is any commencement of a legal process against the client under any law in force;
2. On the death/lunacy or other disability of the Client;
3. If the client being a partnership firm, has any steps taken by the Client and/or its partners for dissolution of the partnership;
4. If the client suffers any adverse material change in his/her/its financial position or defaults in any other agreement with the Stock broker;
5. If there is reasonable apprehension that the Client is unable to pay its debts or the Client ‘has admitted its inability to pay its debts, as they become payable;
6. If the Client is in breach of any term, condition or covenant of this Agreement;
7. If the Client has made any material misrepresentation of facts, including (without limitation) in relation to the Security;
8. If a receiver, administrator or liquidator has been appointed or allowed to be appointed of all or any part of the undertaking of the client;
9. If the Client have taken or suffered to be taken any action for its reorganization, liquidation or dissolution;
10. If the Client has voluntarily or compulsorily become the subject of proceedings under any bankruptcy or insolvency law or being a company, goes into liquidation or has a receiver appointed in respect of its assets or refers itself to the Board for Industrial and Financial Reconstruction or under any other law providing protection as a relief undertaking;
11. If any covenant or warranty of the Client is incorrect or untrue in any material respect;

However, before deregistering, client will be liable first to settle his account in full. In case, of any shortfall or any dues or payment remaining after adjusting the margin account, the client will be liable to make payment of the same. And in case of surplus arising out after netting of account, client shall be entitled to receipt thereof.

Inactive Client Account:

WEALTHY In may carry out periodic review of the client accounts and may suspend these accounts from trading under any of the following circumstances.

• Where the Client is inactive for the twelve consecutive months.
• Where the account in under investigation by any regulatory body.
• As per the direction/instruction received from Exchanges, SEBI or any other regulatory body.
• On written request received from the client and the same can be activated on the written request of the client only.
• Where the client is reported or known to have expired.
• Where the client has not cleared his/her dues after the repeated reminders.

Investor Grievances:

The Compliance officer shall be the designated officer for handling the investor Grievances and customer complaints. The resolution on the complaint shall be done at the earliest and the status of the same shall be recorded in the register.

Email Id:

Annexure -D

GUIDANCE NOTE - DO'S AND DON'TS FOR TRADING ON THE EXCHANGE(S) FOR INVESTORS

BEFORE YOU BEGIN TO TRADE

• Ensure that you deal with and through only SEBI registered intermediaries. You may check their SEBI registration certificate number from the list available on the Stock Exchanges www.Exchange.com and SEBI website www.sebi.gov.in.
• Ensure that you fill the KYC form completely and strike off the blank fields in the KYC form.
• Ensure that you have read all the mandatory documents viz. Rights and Obligations, Risk Disclosure Document, Policy and Procedure document of the stock broker.
• Ensure to read, understand and then sign the voluntary clauses, if any, agreed between you and the stock broker. Note that the clauses as agreed between you and the stock broker cannot be changed without your consent.
• Get a clear idea about all brokerage, commissions, fees and other charges levied by the broker on you for trading and the relevant provisions/guidelines specified by SEBI/Stock Exchanges.
• Obtain a copy of all the documents executed by you from the stock broker free of charge.
• In case you wish to execute Power of Attorney (POA) in favour of the Stock broker, authorizing it to operate your bank and demat account, please refer to the guidelines issued by SEBI/Exchanges in this regard.

TRANSACTIONS AND SETTLEMENTS

• The stock broker may issue electronic contract notes (ECN) if specifically authorized by you in writing. You should provide your email id to the stock broker for the same. Don’t opt for ECN if you are not familiar with computers.
• If at all you have opted for online mode of transactions, on the website, please do not share your internet trading account’s password with anyone.
• Do not make any payment in cash to the stock broker or his authorized officials, attorneys, agents and such other intermediary appointed by the Stock Broker or representing to be so appointed by Stock Broker.
• Make the payments by account payee cheque in favour of the stock broker. Don’t issue cheques in the name of sub broker or other intermediary representing to be so appointed by Stock Broker. Ensure that you have a documentary proof of your payment/deposit of securities with the stock broker, stating date, scrip, quantity, towards which bank/demat account such money or securities deposited and from which bank/demat account.
• Note that facility of Trade Verification is available on stock Exchanges’ websites, where details of trade as mentioned in the contract note may be verified. Where trade details on the website do not tally with the details mentioned in the contract note, immediately get in touch with the Investors Grievance Cell of the relevant Stock Exchange.
• In case you have given specific authorization for maintaining running account, payout of funds or delivery of securities (as the case may be), may not be made to you within one working day from the receipt of payout from the Exchange. Thus, the stock broker shall maintain running account for you subject to the following conditions:
  • Such authorization from you shall be dated, signed by you only and contains the clause that you may revoke the same at any time.
  • The actual settlement of funds and securities shall be done by the stock broker, at least once in a calendar quarter or month, depending on your preference. While settling the account, the stock broker shall send to you a ‘statement of accounts’ containing an extract from the client ledger for funds and an extract from the register of securities displaying all the receipts/deliveries of funds and securities. The statement shall also explain the retention of funds and securities and the details of the pledged shares, if any.
  • On the date of settlement, the stock broker may retain the requisite securities/funds towards outstanding obligations and may also retain the funds expected to be required to meet derivatives margin obligations for next 5 trading days, calculated in the manner specified by the Exchanges. In respect of cash market transactions, the stock broker may retain entire pay-in obligation of funds and securities due from clients as on date of settlement and for next day’s business, he may retain funds/securities/margin to the extent of value of transactions executed on the day of such settlement in the cash market.
  • You need to bring any dispute arising from the statement of account or settlement so made to the notice of the stock broker in writing preferably within 7 (seven) working days from the date of receipt of funds/securities or statement, as the case may be. In case of dispute, refer the matter in writing to the Investors Grievance Cell of the relevant Stock Exchanges without delay.
• In case you have not opted for maintaining running account and pay-out of funds/securities is not received on the next working day of the receipt of payout from the Exchanges, please refer the matter to the stock broker. In case there is dispute, ensure that you lodge a complaint in writing immediately with the Investors Grievance Cell of the relevant Stock Exchange.
• Please register your mobile number and email id with the stock broker, to receive trade confirmation alerts/details of the transactions through SMS or email, by the end of the trading day, from the stock Exchanges.

IN CASE OF TERMINATION OF TRADING MEMBERSHIP

• In case, a stock broker surrenders his membership, is expelled from membership or declared a defaulter; Stock Exchanges gives a public notice inviting claims relating to only the "transactions executed on the trading system" of Stock Exchange, from the investors. Ensure that you lodge a claim with the relevant Stock Exchanges within the stipulated period and with the supporting documents.
• Familiarize yourself with the protection accorded to the money and/or securities you may deposit with your stock broker, particularly in the event of a default or the stock broker’s insolvency or bankruptcy and the extent to which you may recover such money and/or securities may be governed by the By-Laws and regulations of the relevant Stock Exchange where the trade was executed and the scheme of the Investors’ Protection Fund in force from time to time.

DISPUTES/COMPLAINTS

• Please note that the details of the arbitration proceedings, penal action against the brokers and investor complaints against the stock brokers are displayed on the website of the relevant Stock Exchange.
• In case your issue/problem/grievance is not being sorted out by concerned stock broker/sub-broker then you may take up the matter with the concerned Stock Exchange. If you are not satisfied with the resolution of your complaint then you can escalate the matter to SEBI.
• Note that all the stock broker/sub-brokers has/have been mandated by SEBI to designate an e-mail ID of the grievance redressal division/compliance officer exclusively for the purpose of registering complaints.

RISK MANAGEMENT POLICY