Description

BSE extends the deadline for trading members to upload client KYC records to KRAs from the original timeline to January 30, 2026, with non-compliant clients to be barred from trading.

Summary

BSE has extended the deadline for trading members to upload client KYC records to KRAs (KYC Registration Agencies) for validation to January 30, 2026. This follows multiple requests from trading members for an extension of the compliance timeline originally set by circular 20250926-73 dated September 26, 2025. Trading members must ensure all client PANs have a KRA status of “KYC Registered” or “KYC Validated” by this deadline. Clients whose KYC is not validated by KRAs will be barred from trading and will not be allowed to square up open positions.

Key Points

  • Extension granted to January 30, 2026 for uploading client KYC records to KRAs
  • Only clients with KRA status “KYC Registered” or “KYC Validated” are permitted to trade
  • Non-validated clients will be barred from trading and cannot square up open positions
  • Sample comparison revealed several trading members have not complied with the revised 3-day timeline for KYC uploads
  • Members must closely monitor open positions of clients with pending KRA validation
  • Members should contact respective KRAs directly for queries related to client KRA status

Regulatory Changes

This circular provides a compliance extension but reinforces existing regulatory requirements:

  • SEBI Circular MIRSD/Cir-26/2011 (December 23, 2011): Original mandate requiring intermediaries to upload KYC to KRAs and dispatch KYC documents within 10 working days from execution date
  • SEBI Circular SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 (October 12, 2023): Revised timeline to 3 working days from completion of KYC process
  • SEBI Circular SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 (August 11, 2023): Allows clients to begin transacting upon KYC completion, but clients whose attributes cannot be verified must stop trading until verification is completed
  • BSE Circular 20250926-73 (September 26, 2025): Previous compliance deadline now being extended

Compliance Requirements

For Trading Members:

  1. Upload all client KYC records to respective KRAs by January 30, 2026
  2. Ensure all client PANs have KRA status of either “KYC Registered” or “KYC Validated”
  3. Verify KRA status of client PANs with respective KRAs
  4. Closely monitor open positions of clients with pending KRA validation
  5. Take appropriate measures to ensure compliance before the deadline
  6. Contact respective KRAs directly for any queries or issues related to client KRA status

Consequences of Non-Compliance:

  • Clients whose PANs are not validated by KRAs will not be permitted to trade on the Exchange
  • Such clients will not be allowed to square up their open positions
  • Non-upload of KYCs to KRAs constitutes non-compliance with regulatory requirements

Important Dates

  • December 23, 2011: Original SEBI circular mandating KYC upload within 10 working days
  • August 11, 2023: SEBI circular on simplification of KYC process issued
  • October 12, 2023: SEBI revised timeline to 3 working days for KYC uploads
  • September 26, 2025: Previous BSE circular (20250926-73) issued
  • December 24, 2025: Current circular issued granting extension
  • January 30, 2026: Extended deadline for compliance with KRA upload requirements

Impact Assessment

Operational Impact:

  • Trading members must prioritize uploading pending client KYC records to KRAs before January 30, 2026
  • Members need to conduct comprehensive audits of their client databases to identify PANs with incomplete or unvalidated KRA status
  • Potential disruption to client trading activities if KYC validation is not completed in time
  • Members with large client bases may face significant operational challenges in meeting the deadline

Market Impact:

  • Clients with unvalidated KYC will face trading restrictions, potentially affecting market participation
  • Ensures better interoperability across market participants and compliance with KYC norms
  • Reduces investor inconvenience by standardizing KYC verification processes
  • Strengthens market integrity by ensuring all active traders have properly validated KYC credentials

Risk Management:

  • Members must monitor and manage open positions of clients at risk of trading suspension
  • Failure to comply may result in forced position closures or client complaints
  • Regulatory scrutiny on members with high rates of non-compliance

Impact Justification

High severity as non-compliance will result in trading restrictions for clients. Affects all trading members and their client onboarding processes. Critical deadline of January 30, 2026 for KRA upload compliance.