Description

BSE circular establishing framework and undertaking requirements for empanelment of system auditors for Trading Members.

Summary

BSE has issued a framework for empanelment of auditors qualified to conduct system audits of Trading Members. The circular includes an undertaking-cum-affidavit template that auditors must execute on Rs. 500/- stamp paper to be eligible for empanelment.

Key Points

  • Auditors must be independent practicing qualified individuals/firms with valid CISA, DISA, CISM, or CISSP certifications
  • Firms/LLPs/Companies must have at least two Partners/Directors with required certifications at all times
  • For Qualified Stockbroker audits, minimum three Partners/Directors required with at least two being full-time
  • New auditors with less than 3 years experience restricted to Type-II Trading Members with less than 10,000 unique clients
  • Maximum 3 yearly system audits allowed for inexperienced auditors per submission period
  • Auditors must participate in BSE training programs and maintain confidentiality

Regulatory Changes

  • Formal framework established for system auditor empanelment
  • Mandatory undertaking-cum-affidavit requirement on stamp paper
  • Geographic location tracking requirement during physical visits as per SEBI circular
  • Specific experience and certification requirements codified

Compliance Requirements

  • Execute undertaking-cum-affidavit on Rs. 500/- stamp paper (notarized, signed, stamped)
  • Maintain valid CISA/DISA/CISM/CISSP certifications
  • Demonstrate relevant experience as prescribed by BSE/SEBI
  • Ensure independence and no conflict of interest with Trading Members
  • Participate in mandatory BSE training programs
  • Immediately report any regulatory actions or disciplinary proceedings
  • Allow BSE to capture geo-location during physical visits for supervision

Important Dates

  • Framework effective immediately upon circular issuance
  • Ongoing compliance with certification and experience requirements
  • Training participation as and when scheduled by BSE

Impact Assessment

  • Standardizes auditor qualification and empanelment process
  • Enhances oversight and supervision of Trading Member system audits
  • May impact availability of qualified auditors, particularly for new entrants
  • Strengthens regulatory compliance framework for market infrastructure auditing
  • Geographic tracking requirement improves audit supervision capabilities

Impact Justification

Important framework for auditor empanelment but affects service providers rather than direct market operations