Description

BSE implements trading restrictions for clients with non-validated KYC from August 2025, effective September 22, 2025.

Summary

BSE has issued guidelines pursuant to SEBI KYC Registration Agency (KRA) Regulations amendments. Clients with KYC “On Hold” status from August 1-31, 2025 will be prohibited from trading and cannot square up positions effective September 22, 2025. Trading members must comply with centralized demise reporting mechanism and block transactions for deceased investors.

Key Points

  • Clients with non-validated KYC from August 1-31, 2025 cannot trade from September 22, 2025
  • Open positions of non-compliant clients will expire naturally on contract expiry dates
  • Exchange will flag non-compliant PANs as “Not Permitted to Trade” from September 20, 2025
  • KRA-compliant clients will be permitted to trade on T+1 basis after validation
  • Trading members must block debit transactions for deceased investors reported by KRAs

Regulatory Changes

  • Implementation of centralized mechanism for reporting investor demise through KRAs
  • Simplification of KYC process and rationalization of Risk Management Framework at KRAs
  • Enhanced validation requirements for both AADHAAR and Non-AADHAAR based OVD documents

Compliance Requirements

  • Trading members must ensure compliance with SEBI circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/0000000163 dated October 03, 2023
  • Block debit transactions and inactivate/close UCC for deceased investors based on daily KRA reports
  • Monitor and process non-compliant client lists provided in specified file location
  • Ensure KYC validation compliance for all client trading activities

Important Dates

  • August 1-31, 2025: KYC upload period for affected clients
  • September 20, 2025: Exchange flags non-compliant PANs as Not Permitted to Trade
  • September 22, 2025: Trading restrictions effective for non-validated clients
  • Daily basis: KRA reports on deceased investors and compliance status updates

Impact Assessment

  • Operational Impact: Trading members must implement systems to process daily KRA reports and manage client restrictions
  • Client Impact: Non-compliant clients face complete trading prohibition until KYC validation
  • Market Impact: Potential reduction in trading volumes from restricted client access
  • Compliance Cost: Additional monitoring and validation processes for trading members
  • Risk Management: Enhanced investor protection through improved KYC validation and deceased investor controls

Impact Justification

Trading ban for non-compliant clients affects market access and operational compliance for trading members