Policies and Procedures

Groww Invest Tech Private Limited (referred to as “Nextbillion”) is a member of NSE and BSE in Equity and Equity Derivatives segment having its registered office at No.11, 2nd floor, 80 FT Road, 4th Block, S.T Bed, Koramangala, Bengaluru – 560034, Karnataka, India. For the purpose of this document, wherever its mentioned “Client”, “You” or “Your” shall mean any natural or legal person who has agreed to open an account or initiate the process of opening the account with Nextbillion by providing their information while registering on the partform. Please read the following policy and procedures carefully as it pertains to your trading activity to all the segments with Nextbillion.

CNC (Cash And Carry): For Delivery (buy stocks and hold them overnight) in the Cash segment, you will have to place your orders under product type “CNC”.

• You need to have enough funds in your Account for the full value of the buyer to be made.
• You need to have enough shares in your Demat account for selling shares.
• Demat account Should be mapped to your trading account
• Short sell not allowed in this product

EQUITY DELIVERY

When you buy a stock and hold it overnight, it is called a delivery trade. At NBT, you need to use product type as CNC while placing a trade to take delivery of equity stock. The product type CNC will show up on your order window only if you have a Demat account mapped to your trading account since you would require a Demat to take delivery of the equity that you purchase.

At NBT we provide no leverage when you are executing delivery trades which mean that if you want to buy Rs 1lk of stock as CNC, you will need this Rs 1lk+charges in your trading account and similarly if you want to sell 100 shares with product type as CNC, you will need these shares in your Demat account mapped to your trading account.

The settlement cycle in India is T+2 day for Equity delivery. What this means is that credit from any sale credits from equity delivery trades happen on T+2 day. This credit is available for you to trade BTST, but there might be a short margin penalty applicable if you carry forward positions using this unrealized credit.

The net purchase or sale of scrip in a client account that is settled by way of delivery on T+2 (or as per settlement schedule). Delivery in respect of sale transactions in the cash segment must be settled by the client by tendering securities in Demat form before the pay-in deadline. By not doing so, the client faces the risk of entering the auction.

EQUITY INTRADAY

Risk Management Policy for Intra-day Trades

Intraday, also referred to as order type – MIS (Margin Intraday Square off) involves buying and selling stocks within the same trading day. In this type of orders, if the same is not squared off by the user or converted into other order types, the RMS system shall automatically square off the order post the cut off time which  is decided as per the RMS of the trading member. Thus, when a trader wants to strictly trade intraday he can do so by using the MIS product type. 

Difference between Delivery and Intrad-day trades

General Points:-

Rights of the Trading Member :

1. Intra-day trading will be allowed only in scrips which form underlying for the F&O contracts traded in NSE in order to ensure liquidity. Trading Member reserves sole right to amend/modify such list of securities available for intra-day trades based on its RMS policy.
2. Clients will be allowed to take positions only upon satisfying upfront payment of applicable upfront margin available in the clear investable amount.
3. No adjustments with any trading profits which are yet to be settled will be allowed while considering such upfront margin. However, in the case of intra-day losses, the same will be adjusted from the available amount.
4. RMS will constantly monitor real-time MTM loss. Once the client cross 80% of the available amount, such clients’ open positions will be subject to auto squaring off. The trading member will take adequate steps on the best effort basis to give a margin call to the client as soon as he reaches 60% of the available amount.
5. Any losses, if any, arising out of auto squaring off of positions by the RMS has to be borne by the client and Nextbillion Technology Pvt Ltd will not be responsible for the same.
6. Intraday square off timings can change based on the discretion of our risk management department
7. No fresh intra-day orders will be accepted post 3.20 PM and all existing orders will be cancelled by the system at 3.20 PM.
8. The system will automatically start squaring off open positions from 3:20 PM. So any open position can be squared off anytime after 3:20 PM till the market ends.
9. In the event of any intraday position could not be squared off by the RMS  on the same day due to many reasons including but not limited to network issues, system issues, technical glitch or any other risks associated with internet/wireless-based trading which may occur at the end of the Client, broker or the respective Exchange, it shall be treated as a Cash and Carry (“CNC”) and carried forward to the next trading day and applicable charges will be levied to the client. All such open buy positions will be squared off at the next trading date post opening of the market. Such buy positions will not be converted to delivery based trades even after the client pays the entire outstanding amount. In case of uncovered short sell positions, such shares will be marked for auction even though the client may hold such shares in the Demat account. The client will be responsible for all losses arising out of such squaring off and will keep Nextbillion TEchnology Pvt Ltd indemnified from compensating such losses.
10. The Trading Member will take adequate steps on the best effort basis to give a margin call to the client in case the client breaches the cut off level of MTM loss. However, in cases of market volatility and paucity of time, the trading member posses the right to square off the open positions without even giving prior intimation to the client. Client agrees and accepts that monitoring of positions/trades executed on an intra-day basis is his sole responsibility. The client also agrees that the trading member cannot be blamed for any losses incurred by him while executing intra-day trades.
11. RMS team can suspend the MIS facility on any script during trading hours also in case of any unfavourable situations like extreme volatility, no liquidity etc. However, for clients’ holding open positions will be given an exit option.
12. Right Entitlement - Kindly note that fresh purchase of Right Entitlement is blocked across all scrips. Only selling is allowed.

OFF MARKET TRANSFER PROCESS - Delivery Instruction Slip (DIS)

Clients can transfer shares to their Groww demat account from their other demat account i.e. outside Groww through off market transfer (credit). Similarly, Clients can transfer shares from their Groww demat account to their other demat account i.e. outside Groww through off market transfer (debit).

To make an off-market transfer, please submit the filled DIS slip along with the details of the transferee's and submit at the following address:

No.11, 80 FT Road, 1st & 2nd floor,4th Block S.T.Bed, Koramangala, Bangalore- 560034.

As per CDSL's circular dated December 22, 2023, to prevent incorrect transfers, all off-market transfers will be processed only if the sender (transferor) of the securities adds the receiver's (transferee’s) demat account as a beneficiary on CDSL. You can register the transferee through us or through Easiest. For any queries, you can kindly write to [email protected]

Kindly note that all off-market transactions in CDSL are subject to the One Time Password (OTP) Verification in CDSL if reason code is not amongst the exemption list for OTP verification.

Off-market transfer requests submitted before 3.30pm on trading days will be processed on the same day. However, any requests placed after 3.30 PM will be rejected. Also if the DIS is received by Groww after the execution date as specified in the DIS, the same will be rejected and Groww will not be responsible in any manner whatsoever.

The charges for processing the off-market transfer will be as per the Tariff sheet.

MARGINS

NBT does not engage in the business of Client Funding. Clients are required to have sufficient balance in their accounts to hold/carry forward positions.

• Positions that do not have sufficient funds can be cut at any time at the discretion of our RMS desk. There will be no margin calls or intimation from our RMS desk.
• Any open positions can be squared off at the discretion of our RMS desk If the funds available in your account are short of exchange specified margins. There will be no margin call before the position is squared off. During times of extreme volatility, the loss could be more than the funds available in your account before the position is squared off. All resulting charges or debts that might occur from such square offs will have to be borne by the client.
• Collateral margin will not be considered for equity delivery positions.
• AMO (After-Market Orders) will be allowed
• AMO will be canceled if the price entered is more than 3% away from the LTP in either direction.
• Fines levied by the exchange for a short margin will be payable by the client.
• Payments will only be accepted from the client’s registered bank account, cash and DD payments are not accepted.
• At the start of the delivery intention period, clients will not be informed before closing any open positions to avoid compulsory delivery notice.
• Instruments available for trading at NBT are subject to the discretion of the risk management team, and these may change from time to time
• In case your account is in debit balance and/or if you have insufficient funds to manage your trading positions, you will be charged an interest of 18% p.a as delayed payment charges.

Policy for penny stocks 

Stocks that appear in the list of illiquid securities issued by the Exchanges every Quarter are considered penny stocks. These stocks are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid-ask spreads, small capitalization, and limited following and disclosure. Depending on the market condition and RMS policy of the company, NBT reserves the right to refuse to allow trading and/or provide limits on penny stocks

Delivery Trades 

The net purchase or sale of scrip in a client account that is settled by way of delivery on T+2 (or as per settlement schedule). Delivery in respect of sale transactions in the cash segment must be settled by the client by tendering securities in Demat form before the pay-in deadline. By not doing so, the client faces the risk of entering the auction.

Internal closeout procedure

Internal Shortage means one client who purchased the shares will not get the shares delivered to his demat account due to the failure of another client to deliver the shares he sold with the same broker. Exchanges will settle only the net obligation with the broker and the broker needs to settle the above trades internally.

Sample Trade;

Internal Closeout Settlement

Above trade will be settled internally. The price for the internal trade settlement will be “T Day highest Price + 5%”. This additional 5% will be debited to the defaulter sell client and the buyer will get this benefit of it as he is not getting the delivery of the securities he purchased.

Calculation

Note: - If there are multiple clients who purchased the same share, the client with smaller quantity will get the priority in security settlement and the client who purchased higher quantity will get the short delivery and settled in auction/closeout.

Trading in newly listed shares and illiquid securities 

Newly listed securities, illiquid securities and Trade-to-Trade securities which have high VaR margin are subject to high market risks and rate fluctuations. Illiquid securities and Trade-to-Trade securities will have a daily price range (DPR) whereby the chances that these shares can reach the upper DPR or Lower DPR during a trading day are higher than other securities. Hence, the dealing in these securities will be subject to permission from the surveillance department and will be subject to the available credit balance.

Policy for GSM Securities (Graded Surveillance Measure Securities)

In GSM securities the Company would be Blocking of the scrip under GSM from grade I – grade VI. Exchanges has vide their respective circulars have provided for guidelines on GSM security. The client can refer to the same in the case of the explanation required. Newly listed shares usually do not have a DPR and hence, the chances for rate fluctuations are higher. The dealing in newly listed shares will be restricted to the available credit balance after considering the Mark-to-Market (Mark-toMarket) levels.

Mark-to-Market Square-Off 

At any given point in time, if the MTM level of the client breaches 80% of his available Cash margin, the risk team would square off the complete positions of the client with or without intimating the clients.

For the sake of better understanding, the square of the percentage of 70% or 80% is basically the threshold base limit and it should not be construed as exact 70% or 80% for square off. The position may get squared off at exact 70% or 80% or above the base threshold limit. Due to market extreme volatility, it may not be possible to monitor the square off limit from percentage (%) to percentage (%).

Also, in case the MTM square off is done, the residual fund if any will be blocked to trade till the client adds fresh funds to bring the overall MTM percentage sufficient below the threshold limit.

Further, the square-off will also be based on the extreme volatility in the market which may have a severe impact on the client and the company. The Company may or may not inform the client on the same in case of potential fluctuation. (SEBI guideline on closeout/square off)

All information mentioned here is subject to change at the discretion of our Risk management team.

User wise limits

We may levy certain limit (either mandated by a regulator or as per our internal policies) on trading on our platform. These are to ensure no fat finger error is multiplied and results in systemic risk for either the client or us. Below are the most common limits and caps we have on our platform. These limits may be revised based on the client request or from our end based on our internal review and the trading history of the client. We shall not assume any liability in respect of orders rejected by reason of their quantity or value exceeding the cap value.

1. Single order quantity limit:

• Equity: 80000
• F&O: Lower of 100 lots or exchange freeze qty or 200000

2. Single Order Value limit

• Equity: 40 lakhs
• F&O: lower of 7.5 Cr Crores INR or exchange freeze amount

3. Gross Turnover Limit:

• Equity: Min 5 crore (can be more based on trading volume)
• F&O: 500 Crores INR (strike + premium for options)

4. Exposure Limit – 50% of turnover limits

FUNDS

Payin Clients can transfer funds into the Trading Account only from such bank accounts which are registered with NBT. Any transfer from a non-registered bank account will not be considered and the client does not get any trading limit credit for such transfers.

The client can transfer funds from the instant payment gateway facility available on the trading platform. Such transfers will be charged at Rs 9/- per transfer. UPI transfer Allowed. You will get SMS confirmation once the amount is processed.

NBT as a policy neither accepts any funds for pay-in/margin in cash nor makes any payment or allows withdrawal of funds in cash. No claim will be entertained where the client states to have made any cash payment or deposited cash with any Employee of NBT.

THIRD-PARTY PAYMENTS

NBT shall have the prerogative to refuse payments received from any bank account where the client is not the first holder or which is not mentioned in the KYC or which the client has not got updated subsequently by submitting a written request along with adequate proof thereof as per proforma prescribed by NBT. NBT shall not be responsible for any loss or damage arising out of such refusal of acceptance of payments in the situations mentioned above.

However, due to an oversight, if any such third-party payment has been accepted by NBT and the credit for the same has been given in the client’s ledger, NBT shall have the right to immediately reverse such credit entries on noticing or becoming aware of the same. In such a case, NBT reserves the right to liquidate any of the open positions and/or any of the collaterals received/ held on behalf of the client. NBT, its Directors and employees shall not be responsible for any consequential damages or losses.

COLLATERAL MARGINS

Margin to its clients for the securities held by the client in their Demat account. The way it works is, the shares will have to be moved from your beneficiary account to NBT Margin client collateral account through an Off- Market transfer which you have to initiate and these stocks would be moved to the margin account. NBT would then provide you margins against these shares after considering NSE VaR margins and your limit would be enhanced on your trading platform. Whenever you wish do not receive these margins, you can just send us a request to withdraw the securities held in the NBT Margin account and we would, in turn, move them to your beneficiary account.

Please note that at all times you would continue to remain the owner of the securities that you have transferred and hence would be eligible for all corporate benefits, whatsoever. Such corporate benefits would be passed on to you. Every broker does this as a value-added service and not necessarily as a money-making process. We understand that not all clients can bring in cash to trade and since securities are assets, we could give margin against such assets for the client to trade.

• For all pledge requests placed before 4:00 PM, the collateral margin will be available to trade on T+1 day (next working day). All requests placed after 4:00 PM will be processed only on the next working day.
• Margins will be provided after the applicable haircut. A haircut of 10% would mean that if you pledged stocks worth Rs 1 lakh, Rs 90,000 (90% of 1 lakh) will be added as collateral margin to your trading account.
• You can see this margin under the heading Direct Collateral on our trading platforms (Web/mobile),
• All delayed payment (interest) charges accumulated will be debited once every month on the ledger. A link to see cumulative delayed payment (interest) charges calculation can be found on the holding page itself.
• All pledged stocks will be debited from your Demat account until they are unpledged again. The entire process of pledging and unpledging will cost Rs 100 plus GST per scrip irrespective of the quantity. So, if you pledge 100 shares of Script A and 200 shares of Script B, the total cost (pledging + unpledged) will be 20 + Rs. 12 per request (CDSL Charges), Pledge Invocation: Rs. 20. This charge will be debited from your ledger the day you place the pledge request.
• NBT reserves the right to liquidate any stock in case debit arises in the client’s account and subsequent non-payment of such debits.
• NBT reserves the right to make any changes in the policy with due intimation to the client.

DEBIT BALANCE

(Delayed payment charges): NBT follows the practice of posting the settlement obligation towards their transaction in the client ledger on the settlement date. All clients are advised to make the payment before the pay-in time on the settlement day, though there are instances wherein client may delay the payment beyond the settlement date. Although, it is obligatory for a broker to meet the settlement obligation in time, therefore, in order to ensure timely receipt of funds from clients towards their payment obligation, “charges for delayed payment” are levied in the client’s account. The sum towards “charges for delayed payment” is levied to discourage delayed payment from clients who do not deposit the required sum of money before the payin time on the payin day. “Charges for delayed payment” are levied on the respective ledger debit of the clients at a rate of 18 % per annum of the debit balance in the account. For the purpose of reckoning debit balance, the debit balance in the client ledger is consolidated across all segments of the respective exchange after giving effect to the release of margin.

IPO

If you are subscribing to an IPO, there is no need to issue a cheque. Please write the Bank account number and sign the IPO application form to authorize your bank to make payment in case of allotment. In case of non allotment the funds will remain in your bank account.

RISK POLICY

Introduction

Investment in securities is susceptible to market risks. While the risk of loss is inherent in the market, we at Groww, seek to minimize the risk of loss through a dynamic risk management policy which is an essential feature of our product offering. As our customer, it is important for you to be aware of our Risk Management Policy and how the Policy would operate to regulate your transactions. It is also important to note that the Risk Management Policy is not an insurance against losses; these are measures and precautions that are adopted to contain risks to the minimum. The Policy is subject to change according to our risk perceptions of the market and relevant regulations for the time being in force. 

CONTRACT NOTES AND MARGIN STATEMENT

NBT will issue contract notes & margin statements to its clients within 24 hours of the trade taking place. Along with the Contract Note, the client shall also be furnished with a copy of the daily margin status which is also available to be viewed on their respective Personal Ledger.

NBT will maintain the client’s securities in a designated account called the Client Beneficiary Account. The securities of NBT will be kept in a separate Demat account termed as NBT Beneficiary Account. The clients’ and NBT’s own securities will not be mixed with each other.

DEMAT ACCOUNT

NBT will open all DP Accounts. A client has the facility of linking his existing Demat Account to the Trading Account and taking delivery of stocks or opening a new Demat Account with NBT A client who wants to fully engage in trading in the Delivery Segment of NSE/BSE, will have to compulsorily open an account with NBT. Transfer of shares from a third-party Demat account into NBT’s pool account and subsequent selling of such stocks are not allowed.

CLOSING OF ACCOUNTS

The Client’s Accounts shall be closed upon a specific request from the client. The closure shall be effective only after a period of one month has elapsed from the date of application/intimation or the date of settlement of account whichever is later.

Settlement of account shall mean that there is no outstanding balance of shares or funds in the books of the client and NBT and the same is confirmed by the client. The date of confirmation shall be the effective date of settlement. As far as dormant accounts are concerned, we do not close such accounts but mark the same as “Inactive” till further action by the concerned client.

DORMANT POLICY

Dormant account policy: The policy for a Dormant account has been framed out under the specific guidelines of the Prevention of Money Laundering Act (PMLA) for the safety and security of the investors as well as the financial market. 

1. Introduction

The Dormant Account Policy lays down the procedure to be followed when instruction for debit/credit or buy/sell is received from an account which is Dormant. This policy gives a full description like the time period and method considered for terming an account Dormant and also various steps required to be adhered to strictly for re-activating such Dormant accounts.

2. Definition 

An account shall be termed to be Dormant if it is inactive or remains non-operational by its holder at a stretch for a specified period of time. This specific period of time has been defined under the PMLA. Presently, this period is 6 (six) calendar months i.e. if an account is inactive for a minimum period of six calendar months, it will be classified as a dormant account.

3. Treatment of a Dormant account 

All Dormant accounts will be treated in accordance with the policies prescribed under the PMLA. Accordingly, the dormant account will be frozen immediately and the client will not be permitted to undertake any further transaction in such a dormant account. The procedure for a listing of dormant account is run once every month, preferably on the last day of the month. 

4. Re-activation of a Dormant account 

A Dormant account shall be re-activated only after undertaking the proper due-diligence process and fulfilling such conditions as may be deemed fit by the authorized person of the organization. As a practice, on receipt of an instruction from the client of a Dormant account, the authorized person has to appropriately verify the KYC of such clients as well as the authenticity of the instruction. The instruction is to be accepted only on the satisfaction of the above. 

The above-stated policy may be modified at any time in accordance with the various rules, regulations, bye-laws, and guidelines that may be prescribed by SEBI, Exchange or any other competent authority or as per the internal policy of the organization from time to time. This policy for the dormant accounts is over and above the transaction monitoring in the dormant accounts as per the Anti-Money laundering policy of the organization.

SURVEILLANCE POLICY

Leading Stock Exchanges Bombay Stock Exchange Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”) have put in place a mechanism that will generate automated alerts for Stock Brokers & Trading Members whenever suspicious transactions are detected in their clients‟ accounts. 

The alerts will be generated in case of unusual changes in the trading pattern of the clients, sudden trading in dormant accounts as also in suspected cases of circular trading, ‘pump-and-dump’, „front running‟ and ‘wash-sale’ activities, etc.

In view of the above, the Company endeavors to frame this policy for surveillance of these alerts and the manner of disposal of the same. 

The said surveillance and disposal of the alerts shall be done on the following grounds:

1. Receipt of „Alerts‟ from Exchanges / generated at member‟send.
2. The time frame for disposition of alerts and if there is any delay in disposition, the reason for the same shall be documented. 
3. Suspicious / Manipulative activity identification and reporting process.
4. Record Maintenance. In this regard, in order to facilitate effective surveillance mechanisms at the Broker level, the Exchanges have derived following transactional alerts that would be downloaded to the trading members. This will facilitate the Company to effectively monitor the trading activity of its client

CLIENT(S) INFORMATION

• The Company is required to carry out the Due Diligence of its client(s) on a continuous basis. 
• The Company shall ensure that key KYC parameters are updated on a continuous basis as prescribed by SEBI and the latest information of the client is updated in the UCC database of the Exchange.
•  Based on KYC and updated information the Company shall establish groups/ association amongst clients to identify multiple accounts / common account/ group of clients. 
• The monitoring of the aforementioned alerts and disposal procedure shall be done within 45 days of the alert generation

ANALYSIS

In order to analyze the trading activity of the Client(s) / Group of Client(s) or scrips identified based on the above alerts, Company will:

1. Seek explanation from such identified Client(s) / Group of Client(s) for entering into such transactions.
2. Seek documentary evidence such as bank statement / Demat transaction statement or any other documents to satisfy itself:

• In case of funds, Bank statements of the Client(s) / Group of Client(s) from which funds pay-in have been met, to be sought. In the case of securities, Demat account statements of the Client(s)/Group of Client(s) from which securities pay-in has been met, be sought
• The period for such statements may be at least +/- 15 days from the date of transactions to verify whether the funds/securities for the settlement of such trades actually belongs to the client for whom the trades were transacted.
• After analyzing the documentary evidence, the Company will record its observations for such identified transactions or Client(s)/Group of Client(s).
• In case adverse observations are recorded, the Company will report all such instances to the Exchange within 45 days of the alert generation. The Company may seek an extension of the time period from the Exchange, wherever required.

MONITORING AND REPORTING

Receipt of Alerts from Exchanges / generated

• The time frame for disposition of alerts and if there is any delay in disposition, the reason for the same shall be documented.
• Suspicious / Manipulative activity identification and reporting process
• Record Maintenance
• A quarterly MIS shall be put up to the Board on the number of alerts pending at the beginning of the quarter, generated during the quarter, disposed off during the quarter and pending at the end of the quarter. Reasons for pendency shall be discussed and appropriate action will be taken. The Board shall be apprised of any exception noticed during the disposition of alerts.
• The surveillance process shall be conducted under the overall supervision of its Compliance Officer
• Compliance Officer will be responsible for all surveillance activities carried out by the Company and for the record maintenance and reporting of such activities.
• Based on facts and circumstances, the Company will exercise its independent judgment and will take adequate precautions.

PMLA POLICY 

Anti Money Laundering Measures

Background

The Prevention of Money Laundering Act, 2002 came into effect from 1st July 2005. Necessary Notifications / Rules under the said Act were published in the Gazette of India on 1 st July 2005 by the Department of Revenue, Ministry of Finance, and Government of India.

SEBI vide circular dated 18th January 2006 required Market intermediaries to lay down policy framework for anti-money laundering measures to be followed. NBT being a Stock Broker needs to adhere to the same. SEBI has also issued a Master circular dated 19th December 2008, which consolidates all the requirements/obligations issued with regard to AML/CFT until December 15, 2008

Objective

Money laundering has now become one of the major concerns of the international financial community. Money Laundering is not just an attempt to disguise money derived from illegal activities. Rather, money laundering is involvement in any transaction or series of transactions that seek to conceal or disguise the nature or source of proceeds derived from illegal activities, including drug trafficking, terrorism, organized crime, fraud, and many other crimes.

The objective is to have a system in place for preventing any money laundering financial transactions through us and also to identify, monitor, report any such transactions to appropriate authorities.

“Know Your Customer “(KYC) is the guiding principle behind the Anti-Money Laundering (AML) measures. It incorporates the “Know Your Customer” Standards & “Anti Money Laundering” Measures, hereinafter to be referred to as “KYC Standards” and “AML Measures “. The objective is to “have in place adequate policies, practices, and procedures that promote high ethical and professional standards and prevent the Company from being used, intentionally or unintentionally, by criminal elements “. KYC Standards and AML Measures would enable the Company to know/ understand its customers, the beneficial owners, the principals behind customers who are acting as agents and their financial dealings better which in turn will help the Company to manage its risks prudently

The management of the company is fully committed to establishing appropriate policies and procedures for ensuring effectiveness and compliance with respect to all relevant legal requirements.

The regulatory/statutory requirements

An officer of the company will be designated as “Principal Officer” who will ensure proper discharge of all legal requirements with respect to the same Mr. Ishan Bansal, Compliance Head is the Principal Officer responsible for

• Compliance of the provisions of the PMLA and AML guidelines
• Act as a central reference point and play an active role in the identification & assessment of potentially suspicious transactions
• Ensure that NBT discharges its legal obligation to report suspicious transactions to concerned authorities.

The main aspect of this policy is the customer due diligence process which means:

• Obtaining sufficient information about to the client in order to identify who is the actual beneficial owner of the securities or on whose behalf transaction is conducted
• Verify the customer’s identity using reliable, independent source documents, data or information
• Conduct on-going due diligence and scrutiny of the account/ client to ensure that the transaction conducted are consistent with the clients’ background/ financial status, its activities and risk profile.

The customer due diligence process includes three specific parameters:

• Policy for acceptance of clients: Each client should be met in person Complete KYC to be done for all clients No account to be opened in a fictitious/benami name or on an anonymous basis
• Clients Identification Procedure (Risk profiling) All clients to be classified as per the risk into 3 categories Low, Medium and High Risk
• Suspicious Transaction identification and reporting Any unusual activity compared to past transactions Sudden activity in Dormant accounts Sudden High volume /high-value transactions
• Central Depository Securities Limited (CDSL) communique no. CDSL/OPS/DP/POLCY/2017/176 dated April 05, 2017 and CDSL/OPS/DP/POLCY/2017/354 dated July 18, 2017, advises that the Beneficial Owners should submit/update their Aadhar Card copy with the Depository Participant. Please ensure that you update your Aadhar Number with NBT as per the mentioned notices.

The principal officer shall report the nature, amount, date and all related details of any and all suspicious transactions recorded.

1. Client identification

Before opening any Trading account with us, the following measures shall be taken:

• In person verification of the client
• Identify beneficial ownership and control, i.e., determine the persons who beneficially own / control the account.
• Collect information about client’s background, occupation and also check the name of the introducer.
• Collect and verify all original documents from the client.
• Collect a certified copy of valid documents showing details of his permanent address, current address, PAN, nature of his occupation, financial status and also a recent photograph.
• For clients trading in F&O segment, documentary proof of his financial details will be collected.
• In the case of Corporate client, collect copies of certificate of incorporation, Memorandum of association and other documents as required by SEBI
• In the case of Corporate clients, collect adequate information of the persons authorized to deal on behalf of the company.
• The client shall be interviewed personally regarding the purpose of opening the account i.e., whether short term trading or long term investment.
• Prior experience in the stock market
• Introducer details

2. KYC updation process

All corporate clients must submit an annual report every year. In the case of individual clients, Client Master details shall be sent to all clients, who will confirm either that the details are updated or shall be advised to submit details if required. He shall also specify his present occupation and financial income details per annum in the same declaration.

The information should be adequate enough to satisfy the competent authorities (regulatory/ enforcement authorities) in the future that due diligence was observed by us in compliance with the Guidelines.

Failure by a prospective client to provide satisfactory evidence of identity should be noted and reported to the principal officer.

Further, we should also maintain continuous familiarity and follow-up with the client where inconsistencies in the information provided are noted.

The account will not be opened where we are unable to apply the above KYC policies, e.g., non-co-operation of the client in providing full information, etc

3. Client categorization

Each client will be marked into 3 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:

• High Networth Clients
• Trusts/ NGOs / Charities receiving donations
• Companies having close family shareholdings (The above are considered of High Risk as per SEBI guidelines) The other parameters are nature of the business activity, trading turnover, manner of making the payment, etc. Provision will be made in the back office software for noting the categorization of each client. The high-risk client will require regular KYC update.

The clients will be placed under low, medium and high-risk categories based on their turnover per day. 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

4. Suspended Persons

SEBI and other authorities suspend or debar persons/entities from participating in the securities market in several instances. We as a Broker are required to ensure that such persons do not trade through us.

We shall lay down systems for identifying transactions which is not in consonance with the financial status declared/ shown by the client. Also, unusual activities compared to past transactions, sudden activity in dormant accounts, activity inconsistent from declared business activity, should be traced. This shall require appropriate changes in our back-office software.

Systems shall be put in place for identifying transactions likely to be market manipulation, and which appears to be insider trading and also any transaction which seems to have no bonafide intention. Regular communications by means of mailers, SMS, Email are sent to clients at various intervals requesting them to update their latest financial and KYC details available with us.

Role of Compliance Team & Internal Audit: The compliance team will play an important role in ensuring compliance of the above policies and procedures. The account opening team will exercise adequate due diligence as stated above. There will be periodic checking by the Principal Officer and the same report will be properly filed

Here is a system of concurrent audit, which will also include ensuring compliance of the

• Due diligence in KYC norms.
• Generation of exception reports
• Trading in dormant client codes
• Level of awareness of staffs

5. Illiquid Securities

The Exchanges specifies a list of Illiquid Securities where higher due diligence is to be exercised by the Brokers. The trade pattern in such scrips by our clients is monitored. In case of high volume in any scrip compared to Exchange volume, the client is asked to submit clarification.

6. Employee Training

We have a policy for an ongoing employee training program so that the total staff of our company completely aware of the provisions of AML and CFT procedures and amendments thereof. These training programs are totally focused for frontline staff, back-office staff, compliance staff, risk management staff and staff dealing with new customers as it is very crucial that all those concerned fully understand the rationale behind these guidelines, obligations, and requirements, implement them consistently and are sensitive to the risks of their systems being misused by unscrupulous elements, if there is any lapse on the part of any staffs of the company.

A register of attendance or participation in such an Education/ training program is maintained for the employees, kept secured with the Compliance Department.

As resolved NBT shall take adequate measures as per its internal policy to prevent money laundering and shall also put in place a framework for PMLA policy. The policies and procedures as mentioned above shall not be final as it may adopt additional measures to safeguard its interest with respect to activities associated with PMLA.

POLICY FOR CLIENT CODE MODIFICATION

1. Objective: To frame the guidelines for modification to client codes post-trade execution and reporting of such Client Code Modifications.

2.Brief about Client Code Modification: Client Code Modification means modification/change of the client codes after the execution of trades. Stock Exchanges provide a facility to modify any client code after the trade has been executed to rectify any error or wrong data entry done by the dealers at the time of punching orders. However, such Client Code modification is subject to certain guidelines as to the time limit within which the client code modification is to be carried out, terminal/system on which such modifications can be done, etc.

The facility is mainly to provide a system for modification of client codes in case of genuine errors in a punching / placing the orders. It is to be used as an exception and not a routine. To prevent misuse of the facility Stock Exchanges levy penalty/fine for all non-institutional client code modifications.

3. Scope of the Policy: This policy covers all the Client Code Modifications carried out / to be carried out in any of the client accounts controlled by HO, subject to the guidelines issued by the SEBI / Stock Exchanges from time to time, in any segment of any exchange for which NBT is a member broker.
4. Error Trades: “Error Trades” means the trades which will be modified / to be modified/allowed, to be modified subject to guidelines of the SEBI / Stock Exchanges and this policy.For the purpose of this Policy, only the following types of trades shall be modified/allowed to be modified:

In case of NSE (NOTE: no consistent pattern in such modifications):

Client code/name and modified client code/name are similar to each other but such modifications are not repetitive.

In Case of BSE:

• Punching error/typing error of client codes due to any genuine error or mistake in order entry, while punching the order.
• Trade entered for the wrong client due to any miscommunication from the client / authorized representative of the client.

5. General Conditions:

• The facility for Client Code Modification can be used only in the case of Error Trade.
• The Client Code Modification shall be carried out only on the designated system and/or as per the process as may be prescribed by SEBI / Stock Exchange.

6. A place for Client Code Modification: Any Client Code Modification shall subject to compliance of this policy, be carried out by RMS at HO of all the Error Trades happened in Capital Market Segment of NSE and BSE. 
7. Penalty: The penalty or fine, if any, levied on NBT for any wrong trade occurred due to any miscommunication from the client / authorized representative of the client shall be borne by the client.

ERROR ACCOUNT POLICY

1. The modification to the client code is to be done only in exceptional cases and not as a routine one.
2. The reason for modification has to be ascertained and analyzed and genuineness is to be established and also its impact on the clients should be studied before the modification. If a voice recording is in practice, the same is to be studied.
3. Normally as a principle, we are permitted to change client codes of non-institutional clients only for the following objective criteria;

Error due to communication and/or punching or typing such that the original client code/name and the modified client code/name are similar to each other.

Modification within relatives (Relative for this purpose would mean ‘Relative’ as defined under sec. 6 the Companies Act, 1956).

4. For easy identification of error account, we register a fresh client code in the UCC database of the Exchange for the account which is classified as an error account.
5. We will inform the Exchange, by the end of the day, the reasons for the modification of client codes of non-institutional trades based on the aforesaid objective criteria.
6. Therefore it is imperative that the issue should be reported to the senior level Manager/Director and only with his approval, the modification should be carried after being satisfied that it is genuine, the same is required to be done to protect the interests of the client.
7. Hence the facility to modify the client codes should be available only at the Corporate Manager level and should not be given to the branches/franchise/sub-brokers.

INACTIVE ACCOUNT POLICY

Scope: To define procedures to ensure that no unauthorized trades are done in any INACTIVE client account.

Background & Definition: Client Account would be treated as INACTIVE if there is no transaction (trade) in the account for 12 Calendar months from the last trade.

Whenever there is a request for a trade-in INACTIVE account, the client must specifically provide in writing either through his registered Email ID or through a Letter requesting to reactivate the INACTIVE account. The back office executive should also confirm from the Client of any changes in details provided by him in the interim – which should be supported by adequate duly attested documents and the same to be updated in the back office and UCC before the Client is allowed to trade.

Once the account is identified as INACTIVE, any Funds/Securities lying in our account will be returned to the client.

BUYBACK/TAKEOVER

You will not be eligible to participate in buyback/takeovers if you have sold shares on or before the record date.

PASSWORD POLICY

The Client is aware that NBT’s Online Trading System clients them self can set the initial password/auto-login with Gmail Account at the time of opening account for that NBT is aware of. The Client is aware that subsequent passwords are not known or available to NBT.

The Client shall be responsible for keeping the Username and Password confidential and secure and shall be solely responsible for all orders entered and transactions done by any person whosoever through NBT’s Online Trading System using the Client’s Username and/or Password whether such person was authorized to do so.

The Client shall immediately inform NBT of any unauthorized use of the Client’s Username or Password with full details of such unauthorized use including the date of such unauthorized use, the manner in which it was unauthorisedly used, the transactions effected pursuant to such unauthorized use, etc.

The Client acknowledges that he is fully aware of and understands the risks associated with availing of online trading services through internet including the risk of misuse and unauthorized use of his Username and/or Password by a third party and the risk of a person hacking into the Client’s account on NBT’s Online Trading System and unauthorisedly routing orders on behalf of the Client through the System. The Client agrees that he shall be fully liable and responsible for any and all unauthorized use and misuse of his Password and/or Username and also for any and all acts done by any person through NBT’s Online Trading System on the Client’s Username in any manner whatsoever.

Without prejudice to the provisions mentioned hereinabove, the Client shall immediately notify NBT in writing with full details if he discovers or suspects unauthorized access through his Username, Password or Account, he notices discrepancies that might be attributable to unauthorized access, he forgets his password or he discovers a security flaw in NBT’s Online Trading System.

Applicable password policy:

1. The length of the password should be of min 8 characters.
2. The password shall be case sensitive and should contain at least one each of the following characters with no space
   • Password is alphanumeric.
   • Must have at least one character.
   • Character could be Uppercase: A to Z or Lowercase: a to z
   • Must have at least one digit: 0 to 9
3. The new password must be different from the last password.
4. Password can’t contain a username or email id.
5. User account shall be locked for 30 mins after 3 invalid login attempts.
6. Users can log in to the Web/Mobile App with his registered email ID  provided while onboarding.
7. User can auto-login the Web/Mobile App with his Gmail Account.

INFORMATION SECURITY 

NEXTBILLION TECHNOLOGY PVT LTD systems are hosted at the Netmagic IDC 2 and Google Cloud Platform(GCP) Mumbai data centers in Mumbai.

At present we have a Production server and Backup server in place and both were synced together to get the data updated in the backup server on real-time. Also, the data is backed up through storage folder in a secure way, one copy of the backup on the same server itself, other copy in backup server & external media devices. Even we will take the backup of the SQL database on a daily basis and store it securely.

In the case of primary server failure then alternate communication will be carried from the secondary server and will continue the trading platform.

RECOVERY PROCEDURES

Network failure: Our systems are hosted at the Netmagic IDC 2 and Google Cloud Platform(GCP) Mumbai data centres in Mumbai with state of the art redundancy measures.

Every day we are taking a backup of database one copy in a database server itself and other copies are stored in backup server and external media device also for the need for restoration on need basis.

The Database is restored from these copies on failure.

If there is a problem with the database when we can restore the database from the backup node to the server immediately and even if that backup system has a problem we can restore the data from the external device.

System / hard disk failure: To avoid single points of failure we plan to run parallel servers which are running simultaneously thus adding redundancy, so that customer can be provided service with limited downtime delay.

INVESTOR GRIEVANCES

Compliance Officer shall be the designated officer for handling the Investors Grievances and Client Complaints. The email ID you can write to in case you have any grievance is [email protected].

The resolution of the Complaint shall be done at the earliest and the same shall be recorded in the register along with the date of resolution.