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Internal Policies

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Client Code modification policy of Vachana

The following client code modifications would be considered as genuine modifications, provided there is no consistent pattern in such modifications:

  • Where original client code/name and modified client code/name are similar to each other but such modifications are not repetitive.
  • Where original client code and modified client code belong to a family. (Family for this purpose means spouse, dependent parents, dependent children and HUF)

The Board and Management of VIPL have approved under mention policy in this regard and instruct all the office bearers to follow it strictly.

  • There will be no client code mapping in trading terminals in order to control punching errors.
  • In case of any errors, Vachana has separate error account in the name of “Vachana Investments Pvt Ltd”.
  • Vachana office will maintain Client Code Modification register for recording the errors.
  • We ensure to review periodically list of inactive clients for marking in CTCL Surveillance System.
  • Dealers are advised to hear patiently the client code /scrip name and reconfirm the same to their best possible efforts before placing order into the system.
  • Dealers Department head/ compliance officer are advice to analyses the mistake and to take/implement corrective measures to their best possible efforts to minimize.
  • Compliance officer is advice to update the report to the Board /management of VIPL on the implementation of the said policy periodically.

PMLA policy of Vachana

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In order to prevent company from being used, intentionally or unintentionally, by criminal elements for money laundering activities, Vachana shall maintain a record of all the transactions; the nature and value of which has been prescribed below.

  • All cash transactions of the value of more than Rs 10 lakh or its equivalent in foreign currency.
  • All series of cash transactions integrally connected to each other which have been valued below Rs 10 lakh or its equivalent in foreign currency where such series of transactions take place within one calendar month.
  • All suspicious transactions whether or not made in cash and including, credits or debits into from any non-monetary account such as demat account, security account maintained by the VIPL.

Policy for acceptance of client

Obtaining sufficient information about client in order to identify persons who beneficially own or control the securities account by verifying the client’s identity using reliable, independent source documents, data or information.
Understand the ownership and control structure of the client.
Conduct on going 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 VIPL’s knowledge of the client, its business and risk profile, taking into account, where necessary, the client’s source of funds;
Registered intermediaries shall periodically update all documents, data or information of all clients and beneficial owners collected under the CDD process.

Acceptance of clients by VIPL

  • No account is opened in a fictitious / benami name or on an anonymous basis.
  • Ensure that an account is not opened where the VIPL is unable to apply appropriate CDD measures / KYC policies. This shall applicable in cases where it is not possible to ascertain the identity of the client, or the information provided to the VIPL is suspected to be non genuine, or there is perceived non co-operation of the client in providing full and complete information. The market VIPL shall not continue to do business with such a person and file a suspicious activity report. It shall also evaluate whether there is suspicious trading in determining whether to freeze or close the account. The VIPL shall be cautious to ensure that it does not return securities of money that may be from suspicious trades. However, the VIPL shall consult the relevant authorities in determining what action it shall take when it suspects suspicious trading.
  • Factors of risk perception (in terms of monitoring suspicious transactions) of the client are clearly defined having regard to clients’ location (registered office address, correspondence addresses and other addresses if applicable), nature of business activity, trading turnover etc. and manner of making payment for transactions undertaken. The parameters shall enable classification of clients into low, medium and high risk. Clients of special category (as given below) may, if necessary, be classified even higher. Such clients require higher degree of due diligence and regular update of Know Your Client (KYC) profile.
  • The circumstances under which the client is permitted to act on behalf of another person / entity shall be clearly laid down. It shall be specified in what manner the account shall be operated, transaction limits for the operation, additional authority required for transactions exceeding a specified quantity/value and other appropriate details. Further the rights and responsibilities of both the persons i.e. the agent- client registered with the VIPL, as well as the person on whose behalf the agent is acting shall be clearly laid down. Adequate verification of a person’s authority to act on behalf of the client shall also be carried out.
  • Necessary checks and balance to be put into place before opening an account so as to ensure that the identity of the client does not match with any person having known criminal background or is not banned in any other manner, whether in terms of criminal or civil proceedings by any enforcement agency worldwide.
  • Documentation requirements and other information shall be collected in respect of different classes of clients depending on the perceived risk and having regard to the requirements of Rule 9 of the PML Rules, Directives and Circulars issued by SEBI from time to time.

The CDD process shall necessarily be revisited when there are suspicions of money laundering or financing of terrorism (ML/FT).

Risk-based Approach: Based on the risk based approach, VIPL shall apply each of the client due diligence measures on a risk sensitive basis. The basic principle enshrined in this approach is that the VIPL shall adopt an enhanced client due diligence process for higher risk categories of clients. Conversely, a simplified client due diligence process may be adopted for lower risk categories of clients. In line with the risk-based approach, the type and amount of identification information and documents that VIPL shall obtain necessarily depend on the risk category of a particular client. Further, low risk provisions shall not apply when there are suspicions of ML/FT or when other factors give rise to a belief that the customer does not in fact pose a low risk.

The special category clients like Non resident clients, High net-worth clients, Trust, Charities, Non-Governmental Organizations (NGOs) and organizations receiving donations, Companies having close family shareholdings or beneficial ownership, Politically Exposed Persons (PEP) are individuals who are or have been entrusted with prominent public functions in a foreign country, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc.,

Companies offering foreign exchange offerings, Clients in high risk countries where existence / effectiveness of money laundering controls 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, While dealing with clients in high risk countries where the existence/effectiveness of money laundering control is suspect, intermediaries apart from being guided by the Financial Action Task Force (FATF) statements that identify countries that do not or insufficiently apply the FATF Recommendations, published by the FATF on its website (www.fatf- gafi.org), shall also independently access and consider other publicly available information.

The KYC policy shall clearly spell out the client identification procedure to be carried out at different stages i.e. while establishing the VIPL- Client relationship, while carrying out transactions for the client or when the VIPL has doubts regarding the veracity or the adequacy of previously obtained client identification data.

VIPL shall be in compliance with appropriate risk management systems to determine whether the client or potential client or the beneficial owner of such client is a politically exposed person. These procedures shall include seeking relevant information from the client, referring to publicly available information or accessing the commercial electronic databases of PEPS.

The VIPL relationship managers will have to seek senior management approval for establishing business relationships with PEPs. Where a client has been accepted and the client or beneficial owner is subsequently found to be, or subsequently becomes a PEP, and also take reasonable measures to verify the sources of funds as well as the wealth of clients and beneficial owners identified as PEP by each original document prior to acceptance of a copy. Failing to which, shall be noted and reported to the higher authority within the VIPL

Record Keeping

Vachana shall retain all the following records

  • the beneficial owner of the account;
  • the volume of the funds flowing through the account; and
  • for selected transactions, the origin of the funds, the form in which the funds were offered or withdrawn.

The information shall be maintained in respect of

  • The nature of the transactions;
  • The amount of the transaction and the currency in which it is denominated;
  • the date on which the transaction was conducted; and
  • the parties to the transaction.

Vachana will Monitoring and report suspicious transactions under the following circumstances.

  • Clients whose identity verification seems difficult or clients that appear not to cooperate
  • Clients based in high risk jurisdictions;
  • Substantial increases in business without apparent cause
  • Clients transferring large sums of money to or from overseas locations with instructions for payment in cash
  • Attempted transfer of investment proceeds to apparently unrelated third parties;
  • Unusual transactions by CSCs and businesses undertaken by offshore banks/financial services, businesses reported to be in the nature of export- import of small items.

All such trasactions shall be reported to concerned official by VIPL following the procedures prescribed by SEBI and FIU-IND.

The Principal Officer of VIPL will be responsible for timely submission of CTR and STR to FIU-IND by Utmost confidentiality maintained in filing of CTR and STR to FIU-IND. And such reports may be transmitted by speed/registered post/fax at the notified address. And also, VIPL shall put restrictions on operations in the accounts where an STR has been made. VIPL and Its directors, officers and employees (permanent and temporary) shall be prohibited from disclosing (“tipping off”) the fact that a STR or related information is being reported or provided to the FIU-IND. This prohibition on tipping off extends not only to the filing of the STR and/or related information but even before, during and after the submission of an STR. Thus, it shall be ensured that there is no tipping off to the client at any level.

Pre funded policy of Vachana

With respect to the mode of receipt and payment of funds through pre-funded instruments such as Pay Order, Demand Draft, Banker’s cheque, etc from the clients, it has been decided that, If the aggregate value of pre-funded instruments is 50,000/- or more, per day per client, VIPL may accept the instruments only if the same are accompanied by the name of the bank account holder and number of the bank account debited for the purpose, duly certified by the issuing bank. The mode of certification may include the following:

  • 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.
  • Maintain an audit trail of the funds received through electronic fund transfers to ensure that the funds are received from their clients only.
  • The Board/Management of VIPL has decided that, (a) the provisions of this Circular to be brought to the notice of constituents and also disseminate the same on their websites. (b) make amendments to the relevant bye-laws, rules and regulations for the implementation of the above, as deemed necessary; (C) communicate to SEBI, the status of the implementation of the provisions of this Circular by June 30, 2011; and (D) develop the monitoring mechanism through internal audit and inspections.

RMS policy of Vachana

Vachana as a value broker, has three distinct products namely Vachana Discount Delight, Vachana Service Delight and Vachana Investment Delight.

  1. Vachana Discount Delight
    • For NSE Cash, exposure up to 12 times on “A” category/frontline stocks and 100% margin is required on other than “A” Category stocks of NSE under the product MIS and the positions will be squared off at 3:15 automatically. If the client wants to carry forward the position, then it is allowed only under CNC product for the next day with 100% margin. Hence the client is asked to carry forward positions with available funds only.
    • For NSE FnO: An exposure up to 2 times is allowed by considering SPAN+Exposure margin under MIS and for Carry Forward positions 100% margin is required under NRML products. For Option trades 100% margin is required on Premium as per the Exchange.
  2. Vachana Service Delight
    • For NSE Cash, exposure up to 15 times on “A” category/frontline stocks and 100% margin is required on other than “A” Category stocks of NSE under the product MIS and the positions will be squared off at 3:15 automatically. If the client wants to carry forward the position, then it is allowed only under CNC product for the next day with an exposure margin up to 5 times on selected scripts and half of the positions will be cut before 11 am on T+1 basis and complete positions has to be squared off by 3 pm on T+2 basis.
    • For NSE FnO: An exposure up to 3 times is allowed by considering SPAN+Exposure margin under MIS and for Carry Forward positions 100% margin is required under NRML products. For Option trades 100% margin is required on Premium as per the Exchange.
    • Collateral margin will be considered for F&O segment under MIS with considerable haircut on selected scrips.
  3. Vachana Investment Delight
    • This service category is applicable only for Investors, hence the Product MIS will be disabled. Clients can buy scrips only under CNC product. Hence, they require 100% margin in their account.

Collateral Margin

  • Collateral benefit can be used only for F&O margin and not any other segment.
  • Collateral margin can be availed only based on Shares held in Vachana demat account but we do not consider any shares which are not in Vachana beneficiary demat.
  • The margin would be provided considering NSE VaR margin, which may change to type of share and volatility.
  • If client who wish not to keep their shares as collateral may send us email request to transfer the shares from Vachana Benificiary demat to respective client demat account.
  • The collateral margin would be calculated on value of holding and prescribed haircut on the selected srips. Hair cut may vary from stock to stock. For details on shares and haircut, client can go through our Products & Pricing page.
  • The whole process would cost you Rs 60/- per line item regardless of the size of your transfer/scrip.
  • In case of any benefits as corporate actions, the benefits would be transferred to client.

Note:

  • Clients having positions with insufficient funds will be cut at any point of time and it is with the discretion of Vachana RMS team. Rs 20 as Call and Trade will be charged on all square of positions due to insufficient balance.
  • Call & Trade charge of Rs. 20 is applicable for all executed orders for VDD clients.
  • Option premium received from writing options will not be considered as Cash/Capital.
  • All CO and MIS positions will automatically be squared off at the end of the each trading day.
  • Penalties levied by the exchange for short margin will be payable by the client.
  • All clients under Debit are required to settle the debit balance within 5 working days failing which interest at the rate of 24% p.a. shall be charged on such debit balance until such debit balance is settled.
  • CO and Bracket orders are allowed only for HNI and premium active clients who wish to benefit from highest leverage for Intraday.

Surveillance Policy of Vachana

The main objective of surveillance is to stop suspicious and manipulated trading activity by individual or group of individuals on the exchange platform. The Compliance office of Vachana will monitor such activity on regular basis.

The monitoring of such activity depends on Exchange alerts as follows.

Sr. No. Transactional Alerts Segment
1 Significantly increase in client activity Cash
2 Sudden trading activity in dormant account Cash
3 Clients/Group of Client(s), deal in common scrips Cash
4 Client(s)/Group of Client(s) is concentrated in a few illiquid scrips Cash
5 Client(s)/Group of Client(s) dealing in scrip in minimum lot size Cash
6 Client / Group of Client(s) Concentration in a scrip Cash
7 Circular Trading Cash
8 Pump and Dump Cash
9 Wash Sales Cash & Derivatives
10 Reversal of Trades Cash & Derivatives
11 Front Running Cash
12 Concentrated position in the Open Interest/High Turnover concentration Derivatives
13 Order book spoofing i.e. large orders away from market Cash

On receiving the said alerts from the exchange we shall analyze each and every alerts with the information available with us. In order to analyze/verify such alert we shall examine trading activity of the Client(s) / Group of Client(s) or scrips identified based on above alerts.

a) We may seek written explanation/undertaking from such identified Client(s) / Group of client(s) for entering in to such transactions.

b) We also ask for documentary evidences such as Bank statement /Demat transaction or holding statement within the period of such transactions or more than that. We may also ask for financial Details of the client such as income tax return , salary slip , Annual returns etc.

After analyzing the documentary evidences, such as the bank / demat statement or any other documents relevant to the said alert/transaction, we shall record its observations for such identified transactions or Client(s) / Group of Client(s). In case any adverse observations are recorded, We shall report all such instances to the Exchange.

In case adverse observations/alerts are recorded, we shall report such instances to the Exchanges within 45 days of alert generation. In case there is delay, we shall seek extension of the time period from the exchange after giving proper reason for delay.

After analysis of the transaction/alerts, documentary evidences and information available with us. We shall identify the suspicious / manipulative transactions of any of the client/group of clients, if any and shall report the same to the exchange within the prescribed time limit Further we may stop/banned client for doing further trading at our end.

We shall maintain and keep all such records and documentary evidences that have been analyzed/taken by us either In soft copy or In hard copy for the time period as prescribed by the regulatory authority. We shall produce such records as and when asked by exchanges or by the regulatory authority.

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