Description

BSE mandates trading suspension for clients with non-validated KYC uploaded to KRAs between November 1-30, 2025, effective December 20, 2025. Members must block debit transactions and suspend trading accounts for deceased investors.

Summary

BSE has issued guidelines following SEBI amendments to KYC Registration Agency (KRA) Regulations, 2011. Clients whose KYCs uploaded to KRAs between November 1-30, 2025 remain “On Hold” (non-validated) will face trading restrictions from December 20, 2025. Trading members must implement centralized demise reporting mechanisms and block transactions for deceased investors. Non-compliant PANs will be flagged by the Exchange, preventing new trades and position squaring until KYC validation is completed.

Key Points

  • Clients with non-validated KYC (uploaded Nov 1-30, 2025) will be barred from trading effective December 20, 2025
  • Applies to both Aadhaar and non-Aadhaar based OVD KYCs marked “On Hold” by KRAs
  • Non-compliant clients cannot square up existing open positions; positions will expire naturally on contract expiry dates
  • KRA shares demise data daily; trading members must block debit transactions and suspend trading accounts for deceased investors
  • Once KYC becomes compliant, trading will resume on T+1 basis based on KRA information received on T Day
  • Non-compliant client list available at: \EQ\Transaction\December-2025\10-12-2025\Non_Validated_Clients_by_KRAs_Clgno_xxxx.TXT

Regulatory Changes

This circular implements:

  1. SEBI Circular SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 (August 11, 2023): Simplification of KYC process and rationalization of Risk Management Framework at KRAs

  2. SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/0000000163 (October 3, 2023): Centralized mechanism for reporting investor demise through KRAs

  3. Previous BSE Notice 20251111-43 (November 11, 2025): Monthly guidelines on KYC compliance requirements

Amendments strengthen KYC validation processes and establish systematic mechanisms for handling non-compliant accounts and deceased investor records across all SEBI-regulated entities.

Compliance Requirements

For Trading Members:

  1. Non-Validated KYC Clients:

    • Monitor daily non-compliant client lists provided by BSE
    • Ensure clients complete KYC validation requirements before December 20, 2025 deadline
    • Inform affected clients about trading restrictions
    • Track KRA compliance status updates

  2. Deceased Investor Accounts:

    • Process daily demise data shared by KRAs
    • Block all debit transactions in deceased investor accounts
    • Suspend all transactions in trading accounts
    • Inactivate/close UCC (Unique Client Code) across all stock exchanges

  3. Monitoring and Reporting:

    • Download daily non-compliant client files from specified path
    • Verify client KYC status with KRAs
    • Update systems to reflect trading permissions on T+1 for newly compliant PANs

For Clients:

  • Complete KYC validation with KRAs immediately if KYC is “On Hold”
  • Provide all required documentation to remove “On Hold” status
  • Ensure compliance before December 20, 2025 to avoid trading suspension

Important Dates

  • November 1-30, 2025: Period during which non-validated KYCs uploaded to KRA are subject to December restrictions
  • December 10, 2025: Circular issuance date
  • December 20, 2025: Effective date for trading restrictions on non-compliant clients
  • T+1: Trading resumption for clients who become KRA-compliant (T = day KRA compliance information received by Exchange)
  • Daily: KRA shares demise data and non-compliant client lists

Impact Assessment

Operational Impact:

  • High: Trading members must implement robust systems to track daily KRA compliance updates and deceased investor data
  • Members need to modify surveillance and risk management systems to flag non-compliant PANs
  • Increased client communication requirements to ensure timely KYC validation
  • Resource allocation needed for processing non-compliant client lists and account blocking procedures

Market Impact:

  • Medium to High: Potential reduction in trading volumes if significant number of clients have non-validated KYCs
  • Clients with open positions and non-compliant KYC face forced expiry of positions (cannot square up)
  • Market liquidity may be affected if large participant base falls under restrictions

Client Impact:

  • High: Clients with “On Hold” KYC status face complete trading suspension including inability to close existing positions
  • Financial exposure risk for clients unable to manage open positions during restriction period
  • Operational burden on clients to complete validation procedures urgently

Compliance Impact:

  • Strengthens regulatory framework for investor protection and FATF compliance
  • Improves data integrity across KRAs and stock exchanges
  • Enhances systematic handling of deceased investor accounts preventing unauthorized transactions

Contact Information: Members requiring clarification should contact BSE at 022-2272 8435/5785 or ucc@bseindia.com (Poonam Pisat, Assistant Vice President, Investigation; Vinayak Bhalavi, Deputy Manager, Investigation)

Impact Justification

Mandatory trading restrictions affecting all clients with non-validated KYC. Critical compliance deadline of December 20, 2025. Impacts trading members' operational processes for client account management and deceased investor handling.