Description

SEBI clarifies parameters for determining registered clients and categorization of proprietary trading members under the CSCRF guidelines.

Summary

SEBI has issued clarifications regarding the implementation of the Cybersecurity and Cyber Resilience Framework (CSCRF) for regulated entities. The circular clarifies two key aspects: the determination of total registered clients based on Unique PAN (excluding closed accounts) and the categorization criteria for trading members engaged in both clientele and proprietary trading.

Key Points

  • Registered clients count should be based on Unique PAN including active and inactive status, excluding closed accounts
  • Trading members with clientele trading turnover less than 10% of proprietary trading turnover will be categorized as proprietary stockbrokers
  • Clarifications build upon previous SEBI circulars dated August 20, 2024, and subsequent updates through August 28, 2025
  • All Investment Advisors must comply with these clarifications

Regulatory Changes

The circular modifies the interpretation of “Number of total registered clients” as specified in Clause 2.1.1, Table 1 of SEBI Circular No. SEBI/HO/ITD-1/ITD_CSC_EXT/P/CIR/2025/60. The parameter now explicitly includes clients with active and inactive status based on Unique PAN, while excluding clients marked as closed in the UCC database.

Compliance Requirements

Trading members and regulated entities must:

  • Calculate registered clients using Unique PAN methodology excluding closed accounts
  • Determine if clientele trading turnover is less than 10% of proprietary trading turnover for proper categorization
  • Review and align with CSCRF requirements based on their categorization
  • Investment Advisors must take note and ensure compliance with these clarifications

Important Dates

  • Notice Date: September 2, 2025
  • Reference period for turnover calculation: April 1 to March 31 (financial year)
  • Previous related circulars: August 20, 2024, December 31, 2024, March 28, 2025, April 30, 2025, August 28, 2025
  • FAQs issued: June 11, 2025

Impact Assessment

These clarifications will affect how trading members and investment advisors categorize themselves under the CSCRF framework. Trading members engaged in mixed trading activities may benefit from reduced compliance requirements if their clientele trading is below the 10% threshold. The clarification on client counting methodology ensures consistent application across all regulated entities.

Impact Justification

Important regulatory clarifications affecting trading members and investment advisors but operational in nature