Internal Audit for stock brokers/clearing members
In continuation with the Circular No.F.1/5/SE/ 83 dated May 31, 1984
of Government of India, Ministry of Finance, Department of Economics
Affairs, Stock Exchange Division, you are advised to direct your
stock brokers/clearing members to carry outcomplete internal audit
on a half yearly basis by independent qualified CharteredAccountant s.
The scope of such audit shall cover, interalia, the existence, scope
and efficiency of the internal control system, compliance with the
provisions of the SEBI Act, 1992, Securities Contracts (Regulation)
Act 1956, SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992,
circulars issued by SEBI, agreements, KYC requirements, Bye Laws of
the Exchanges, data security and insurance in respect of the
operations of stock brokers/clearing members. The first such audit
period should be from October1, 2008 to March 31, 2009.
The exchanges shall ensure compliance of the above mandatory
requirements by all the stock brokers/clearing members.
The Stock Exchanges are advised to:
1. make necessary amendments to the relevant bye-laws, rules and
regulations for the implementation of the above decision immediately,
2. bring the provisions of this circular to the notice of the member
brokers /clearing members of the Exchange and also to disseminate
the same on the website, and
3. communicate to SEBI, the status of the implementation of the
provisions of this circular in the Monthly Development Report.
This circular is being issued in exercise of the powers conferred by
Section 11 (1) of Securities and Exchange Board of India Act, 1992
to protect the interest of investors in securities and to promote
the development of, and to regulate, the securities market.
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