Description

BSE issues guidelines on KYC validation requirements and trading restrictions for non-compliant clients, with October 27, 2025 deadline for clients with KYC on hold.

Summary

BSE has issued guidelines pursuant to amendments in SEBI KYC Registration Agency Regulations, 2011. The circular mandates that clients whose KYC are not validated by KRAs (marked as “On Hold”) for KYCs uploaded between September 1-30, 2025 will be prohibited from trading on the exchange from October 27, 2025. Trading members must also implement blocking of debit transactions and inactivation of UCCs for deceased investors based on daily PAN lists from KRAs. The Exchange will flag non-compliant PANs as “Not Permitted to Trade” from October 25, 2025.

Key Points

  • Clients with KYC “On Hold” (uploaded September 1-30, 2025) cannot trade from October 27, 2025
  • Non-compliant clients cannot square up open positions; positions will expire naturally
  • BSE will flag non-compliant PANs from October 25, 2025
  • PANs that become KRA compliant will be permitted to trade on T+1 basis
  • Daily PAN lists of deceased investors must be processed by trading members
  • Debit transactions must be blocked and UCCs inactivated/closed for deceased investors
  • Both AADHAAR and Non-AADHAAR based OVD KYCs are covered
  • Non-compliant client list provided at \EQ\Transaction\October-2025\13-10-2025 Non_Validated_Clients_by_KRAs_Clgno_xxxx.TXT

Regulatory Changes

This circular implements changes following:

  • SEBI Circular SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 dated August 11, 2023
  • SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/0000000163 dated October 03, 2023
  • Previous BSE notice 20250910-24 dated September 10, 2025

Key regulatory changes include:

  • Centralized mechanism for reporting investor demise through KRAs
  • Mandatory blocking of debit transactions for deceased investors
  • Stricter enforcement of KYC validation requirements with trading restrictions
  • Daily automated flagging of non-compliant PANs by the Exchange

Compliance Requirements

For Trading Members:

  1. Receive daily PAN lists of deceased investors from KRAs
  2. Block debit transactions in trading accounts for deceased investors
  3. Inactivate/close UCCs in all stock exchanges for deceased investors
  4. Process non-compliant client lists from BSE
  5. Ensure clients with KYC on hold complete validation requirements
  6. Monitor daily updates from KRAs for compliant PANs

For Clients:

  1. Complete KYC validation with KRAs to avoid “On Hold” status
  2. Ensure KYC documents meet validation requirements (AADHAAR/Non-AADHAAR OVD)
  3. Resolve any pending KYC issues before October 27, 2025

Important Dates

  • September 1-30, 2025: KYC upload period for affected clients
  • October 13, 2025: Circular issuance date
  • October 25, 2025: Exchange begins flagging non-compliant PANs as Not Permitted to Trade
  • October 27, 2025: Trading restrictions become effective for non-compliant clients
  • T+1 basis: Compliant PANs permitted to trade after KRA validation (where T = KRA information received date)

Impact Assessment

Market Impact:

  • Clients with unvalidated KYC cannot participate in trading from October 27, 2025
  • Open positions of non-compliant clients cannot be squared off, leading to natural expiry
  • Potential reduction in trading volumes if significant number of clients remain non-compliant

Operational Impact:

  • Trading members must establish daily processes to receive and act on KRA PAN lists
  • Systems need to be updated to automatically block non-compliant PANs
  • Administrative burden on brokers to communicate with affected clients
  • Need for coordination between KRAs, exchanges, and trading members

Client Impact:

  • High urgency for clients with pending KYC validation to complete requirements
  • Risk of forced position expiry for non-compliant clients with open positions
  • Loss of trading privileges until KYC validation is completed
  • T+1 delay in resuming trading even after becoming compliant

Contact Information:

  • Phone: 022-2272 8435/5785
  • Email: ucc@bseindia.com
  • Officers: Keyur Punatar, Poonam Pisat (Investigation Department)

Impact Justification

High severity due to trading restrictions effective October 27, 2025 for clients with non-validated KYC. Affects all trading members and clients with KYC on hold from September 1-30, 2025.