Description

BSE issues guidelines following SEBI KYC regulation amendments, implementing trading restrictions for non-validated clients effective August 25, 2025.

Summary

BSE has issued comprehensive guidelines following amendments to SEBI KYC Registration Agency Regulations, 2011. The circular implements strict trading restrictions for clients whose KYC validations are “On Hold” and establishes procedures for handling deceased investor accounts through centralized KRA reporting.

Key Points

  • Clients with non-validated KYC (“On Hold” status) from July 1-31, 2025 will be prohibited from trading effective August 25, 2025
  • Trading members must block debit transactions and inactivate accounts for PANs declared as deceased by KRAs
  • KRAs will provide daily updates of deceased PANs to trading members
  • Non-compliant PANs will be flagged as “Not Permitted to Trade” from August 23, 2025
  • Clients who become KRA compliant can resume trading on T+1 basis

Regulatory Changes

  • Implementation of centralized mechanism for reporting investor demise through KRAs
  • Enhanced KYC validation requirements affecting both Aadhaar and Non-Aadhaar based OVD
  • Streamlined process for daily communication of non-compliant PANs between KRAs and exchanges

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 in trading accounts for deceased investor PANs
  • Inactivate/close UCC in all stock exchanges for deceased investors
  • Monitor daily PAN updates from KRAs
  • Prevent trading for non-validated clients while allowing natural expiry of existing positions

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 which non-validated KYC clients are affected
  • Daily basis: KRA reporting of deceased PANs and compliance updates

Impact Assessment

High impact on market participants with significant operational implications. All clients with KYC validation issues from July 2025 face immediate trading restrictions. Trading members must implement robust systems to handle daily PAN updates and compliance monitoring. The measure affects both new account openings and existing client operations, requiring immediate system updates and client communication protocols.

Impact Justification

Significant trading restrictions affecting all clients with non-validated KYC from July 2025, with immediate compliance deadlines