Description

BSE notifies trading members that clients with non-validated KYC status (on hold) uploaded to KRA between November 1-30, 2025 will be prohibited from trading effective December 20, 2025.

Summary

BSE has issued guidelines pursuant to amendments to SEBI KYC Registration Agency (KRA) Regulations, 2011. Clients whose KYC records uploaded to KRA between November 1-30, 2025 remain non-validated (on hold status) for any reasons will be prohibited from trading on the Exchange effective December 20, 2025. This applies to both Aadhaar and non-Aadhaar based OVD submissions. The Exchange will flag non-compliant PANs as “Not Permitted to Trade” based on data provided by KRAs. Trading members must also block debit transactions and suspend trading accounts for deceased investors as per centralized demise reporting mechanism.

Key Points

  • Clients with KYC status “On Hold” at KRAs (uploaded November 1-30, 2025) will be prohibited from trading from December 20, 2025
  • Affected clients cannot trade or square up existing open positions
  • Open positions will expire naturally on their respective contract expiry dates
  • Applies to both Aadhaar-based and non-Aadhaar based OVD KYC submissions
  • KRA provides demise data on daily basis for blocking debit transactions
  • Trading members must suspend all transactions and inactivate/close UCC for deceased investors
  • Non-compliant client list provided in file: Non_Validated_Clients_by_KRAs_Clgno_xxxx.TXT
  • Clients becoming KRA compliant will be permitted to trade on T+1 basis

Regulatory Changes

This circular builds upon previous SEBI regulations:

  • SEBI Circular No. SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 dated August 11, 2023 on simplification of KYC process and rationalization of Risk Management Framework at KRAs
  • SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/0000000163 dated October 03, 2023 on centralized mechanism for reporting investor demise through KRAs
  • Previous BSE notice no. 20251111-43 dated November 11, 2025 on similar guidelines

The amendments focus on stricter enforcement of KYC validation requirements and centralized reporting mechanisms for investor status updates.

Compliance Requirements

For Trading Members:

  1. Review the non-compliant client list provided at path: \EQ\Transaction\December-2025\10-12-2025
  2. Notify affected clients whose KYC records are on hold status
  3. Ensure clients complete KYC validation requirements before December 20, 2025
  4. Block debit transactions in accounts of deceased investors reported by KRA
  5. Suspend all transactions in trading accounts of deceased investors
  6. Inactivate/close UCC (Unique Client Code) in all stock exchanges for deceased investors
  7. Monitor daily demise data shared by KRA
  8. Track KRA compliance status for restoration of trading permissions on T+1 basis

For Clients:

  1. Complete KYC validation with KRA if currently on hold status
  2. Ensure all documentation meets validation requirements
  3. Comply before December 20, 2025 to avoid trading restrictions

Important Dates

  • November 1-30, 2025: Period during which non-validated KYC submissions are tracked
  • December 10, 2025: Circular issuance date
  • December 20, 2025: Effective date for trading prohibition on non-compliant clients
  • T+1 basis: Timeline for restoring trading permissions after KRA compliance

Impact Assessment

Market Impact: High - This circular will directly affect trading activity for clients with pending KYC validation. Trading members must proactively engage with affected clients to ensure compliance, or face potential loss of trading volumes.

Operational Impact: High - Trading members need to:

  • Review non-compliant client lists daily
  • Implement systems to flag and restrict non-compliant PANs
  • Manage client communications regarding KYC validation
  • Handle open position management for restricted clients
  • Monitor daily demise data and take immediate blocking actions

Compliance Impact: Critical - Non-compliance could result in regulatory action. Trading members must ensure robust processes for KYC validation tracking and deceased investor account management.

Client Impact: Affected clients will be unable to trade or close existing positions, potentially leading to forced expiry of open positions with associated financial implications.

Contact Information:

  • Phone: 022-2272 8435/5785
  • Email: ucc@bseindia.com
  • BSE Officials: Poonam Pisat (Assistant Vice President, Investigation), Vinayak Bhalavi (Deputy Manager, Investigation)

Impact Justification

Critical compliance requirement that will prohibit trading for non-compliant clients starting December 20, 2025. Affects all trading members and their clients with non-validated KYC status.