Description

Updated KYC compliance guidelines including trading restrictions for non-validated clients and centralized demise reporting mechanism.

Summary

BSE has issued updated guidelines following amendments to SEBI KYC Registration Agency (KRA) Regulations, 2011. The circular introduces strict trading restrictions for clients with non-validated KYC status and establishes a centralized mechanism for reporting investor demise through KRAs.

Key Points

  • Clients with KYC “On Hold” status from July 1-31, 2025 will be prohibited from trading effective August 25, 2025
  • Exchange will flag non-compliant PANs as “Not Permitted to Trade” from August 23, 2025
  • Centralized demise reporting mechanism through KRAs requires blocking debit transactions and closing UCCs
  • KRA-compliant clients will be permitted to trade on T+1 basis after validation
  • Open positions of non-compliant clients will naturally expire on contract expiry dates

Regulatory Changes

  • Implementation of centralized mechanism for reporting investor demise through KRAs
  • Enhanced validation requirements for both AADHAAR and Non-AADHAAR based OVD documents
  • Daily reporting system for demise PANs from KRAs to trading members
  • Mandatory blocking of debit transactions and UCC inactivation for deceased investors

Compliance Requirements

  • Trading members must ensure compliance with SEBI circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/0000000163 dated October 03, 2023
  • Block debit transactions and inactivate/close UCCs for PANs declared as demise by KRAs
  • Monitor daily PAN lists from KRAs for demise declarations
  • Ensure KYC validation compliance for all client accounts
  • Review non-validated client list provided in specified file path

Important Dates

  • August 23, 2025: Exchange begins flagging non-compliant PANs as “Not Permitted to Trade”
  • August 25, 2025: Trading restrictions become effective for non-validated KYC clients
  • July 1-31, 2025: Period for KYC uploads subject to validation requirements
  • T+1: Timeframe for permitting trade after KRA compliance restoration

Impact Assessment

High operational impact as trading members must implement systems to handle daily demise reporting and KYC validation checks. Clients with pending KYC validation face immediate trading restrictions, potentially affecting market liquidity. The centralized demise reporting mechanism enhances investor protection but requires significant compliance infrastructure updates. Trading members need to establish robust monitoring systems for daily KRA communications and ensure timely compliance actions.

Impact Justification

Trading restrictions effective August 25, 2025 for non-validated KYC clients will significantly impact market access