Description

New guidelines requiring KRA validation for client trading with specific restrictions for non-compliant KYC from August 2025.

Summary

BSE issues guidelines following SEBI’s amendment to KYC Registration Agency Regulations, introducing strict validation requirements for client trading. Clients with non-validated KYC from August 1-31, 2025 will face trading restrictions from September 22, 2025.

Key Points

  • KRAs will report deceased investor PANs daily for account blocking
  • Trading members must block debit transactions for deceased investor accounts
  • Clients with “On Hold” KYC status from August 1-31, 2025 cannot trade from September 22, 2025
  • Non-compliant PANs flagged as “Not Permitted to Trade” from September 20, 2025
  • Compliant clients can resume trading on T+1 basis after validation
  • List of non-compliant clients provided in specified file path

Regulatory Changes

  • Implementation of centralized mechanism for reporting investor demise through KRAs
  • Enhanced KYC validation requirements with trading restrictions for non-compliance
  • Daily reporting system for deceased investor PANs
  • Automated flagging system for non-validated KYC accounts

Compliance Requirements

  • Trading members must block debit transactions for deceased investor accounts based on daily KRA reports
  • Inactivate/close UCC in all stock exchanges for deceased investors
  • Ensure clients with non-validated KYC cannot trade until compliance achieved
  • Monitor daily KRA communications for compliance updates
  • Contact BSE at 022-2272 8435/5785 or ucc@bseindia.com for clarifications

Important Dates

  • August 1-31, 2025: Period for KYC uploads subject to new validation requirements
  • September 20, 2025: Non-compliant PANs flagged as “Not Permitted to Trade”
  • September 22, 2025: Trading restrictions effective for non-validated KYC clients
  • T+1 basis: Compliant clients permitted to trade after validation

Impact Assessment

High impact on market operations as clients with non-validated KYC face complete trading restrictions. Open positions for non-compliant clients will naturally expire on contract expiry dates. Enhanced compliance burden on trading members for daily monitoring and account management based on KRA reports.

Impact Justification

Mandatory KYC compliance with trading restrictions affects all market participants