Description

BSE framework establishing eligibility criteria and requirements for system auditors to conduct audits of trading members.

Summary

BSE has established a comprehensive framework for empanelment of auditors qualified to conduct system audits of trading members. The framework includes detailed eligibility criteria, undertaking requirements, and ongoing compliance obligations for system auditors.

Key Points

  • Auditors must possess valid CISA(ISACA), DISA(ICAI), CISM(ISACA), or CISSP(ISC2) certifications
  • Minimum experience requirements prescribed by BSE/SEBI must be met
  • Restrictions apply to new auditors with less than 3 years experience - limited to Type-II category trading members with fewer than 10,000 unique clients
  • Firms must maintain at least two certified partners/directors at all times
  • For Qualified Stockbrokers (QSBs), firms require at least three certified partners/directors with two being full-time
  • Auditors must maintain independence and avoid conflicts of interest
  • Geographic location capture required during physical visits for supervision/monitoring

Regulatory Changes

New requirements include:

  • Mandatory geo-location capture during physical audits per SEBI Circular SEBI/HO/MIRSD/TPD/CIR/2025/10 dated January 31, 2025
  • Enhanced independence requirements with restrictions on relationships with trading member directors/promoters
  • Structured experience-based limitations for junior auditors
  • Mandatory training/seminar participation requirements

Compliance Requirements

  • Submit duly notarized undertaking-cum-affidavit on Rs. 500/- stamp paper
  • Maintain current professional certifications and registrations
  • Comply with all applicable laws, rules, and regulations
  • Verify all areas in BSE system audit checklist with prescribed methodology
  • Maintain confidentiality of all audit information and data
  • Immediate notification to BSE of any regulatory actions or disciplinary proceedings
  • Consent to display contact information on BSE website/portal

Important Dates

  • Framework effective immediately upon circular publication
  • Ongoing compliance with updated requirements per SEBI Circular dated January 31, 2025

Impact Assessment

This framework strengthens the system audit process by:

  • Establishing clear professional standards and certification requirements
  • Implementing experience-based graduated responsibilities for auditors
  • Enhancing supervision and monitoring capabilities through geo-location tracking
  • Ensuring auditor independence and conflict-of-interest management
  • Creating accountability through comprehensive undertaking requirements

The framework affects all existing and prospective system auditors seeking empanelment with BSE and establishes BSE’s authority to de-empanel auditors at its discretion for non-compliance.

Impact Justification

Framework document establishing systematic procedures for auditor empanelment with specific technical and experience requirements