Description

SEBI clarifies implementation guidelines for CSCRF including client count determination and proprietary trading categorization for regulated entities.

Summary

SEBI has issued clarifications to the Cybersecurity and Cyber Resilience Framework (CSCRF) for regulated entities, specifically addressing how to determine the number of registered clients and categorization criteria for proprietary trading members. These clarifications build upon previous circulars and FAQs issued throughout 2024-2025.

Key Points

  • Registered clients count should be based on Unique PAN including both active and inactive status
  • Clients marked as “Closed” in UCC database should be excluded from the count
  • Trading members with clientele trading turnover less than 10% of proprietary trading turnover will be categorized as proprietary stockbrokers
  • Clarifications apply to all Investment Advisors registered with BSE

Regulatory Changes

The circular clarifies two key aspects of CSCRF implementation:

  1. Client Count Determination: Modifies the interpretation of “Number of total registered clients” as specified in Clause 2.1.1, Table 1 of SEBI Circular dated April 30, 2025. The count now explicitly includes clients with active and inactive status based on Unique PAN, while excluding clients marked as “Closed” by stockbrokers/trading members.

  2. Proprietary Trading Categorization: For entities engaged in both clientele and proprietary trading, those with clientele trading turnover less than 10% of proprietary trading turnover during the financial year (April 1 to March 31) will be categorized as proprietary stockbrokers/trading members for CSCRF applicability.

Compliance Requirements

  • Trading members must accurately determine their registered client count using Unique PAN methodology
  • Exclude clients with “Closed” status from client count calculations
  • Trading members engaged in mixed trading must assess their turnover ratio to determine proper categorization
  • Investment Advisors must comply with these clarified guidelines immediately

Important Dates

  • Notice Date: September 2, 2025
  • Reference Period for Turnover Assessment: April 1 to March 31 (financial year)
  • Previous Related Circulars: August 20, 2024 (initial framework), December 31, 2024, March 28, 2025, April 30, 2025, August 28, 2025
  • FAQ Date: June 11, 2025

Impact Assessment

These clarifications will primarily impact trading members and investment advisors in determining their categorization under CSCRF. Entities with mixed trading operations may benefit from reduced compliance requirements if they qualify as proprietary traders based on the 10% threshold. The clarified client counting methodology ensures consistent reporting across all regulated entities and may affect the compliance tier for some organizations.

Impact Justification

Important compliance clarification affecting categorization and reporting requirements for trading members and investment advisors