Description

BSE extends the deadline for trading members to upload client KYC records to KRAs from the original timeline to January 30, 2026. Non-compliant PANs will be restricted from trading.

Summary

BSE has extended the deadline for trading members to upload client KYC records to KRA (KYC Registration Agencies) for validation to January 30, 2026. This follows multiple requests from trading members seeking additional time to comply with SEBI’s requirement to upload KYC data within 3 working days of completion. Clients whose PAN status is not validated by KRAs will be prohibited from trading and from squaring up open positions after the deadline.

Key Points

  • Trading members must upload completed client KYC records to KRAs within 3 working days (as per SEBI Circular dated October 12, 2023)
  • Sample comparison revealed several trading members have not met the 3-day upload timeline
  • Only clients with KRA status of “KYC Registered” or “KYC Validated” are permitted to trade
  • Extension granted to January 30, 2026, following requests from multiple trading members (originally mentioned in circular 20250926-73 dated September 26, 2025)
  • Post-deadline, non-validated PANs will face trading restrictions and position square-up restrictions
  • Members must monitor open positions of affected clients and take appropriate measures

Regulatory Changes

This circular provides a timeline extension for existing SEBI regulations:

  • Original Requirement (2011): SEBI Circular MIRSD/Cir-26/2011 (December 23, 2011) mandated KYC upload within 10 working days
  • Revised Requirement (2023): SEBI Circular SEBI/HO/MIRSD/SECFATF/P/CIR/2023/169 (October 12, 2023) reduced timeline to 3 working days from KYC completion
  • Trading Permission: SEBI Circular SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 (August 11, 2023) allows clients to begin trading upon KYC completion, but clients whose KYC attributes cannot be verified must not transact further until verification is completed

Compliance Requirements

For Trading Members:

  1. Upload all pending client KYC records to respective KRAs by January 30, 2026
  2. Ensure compliance with the 3-working-day upload timeline for all new client KYCs going forward
  3. Verify KRA status of all client PANs with respective KRAs
  4. Monitor open positions of clients with unvalidated KRA status
  5. Take appropriate measures to ensure clients with non-validated status do not trade or square up positions post-deadline
  6. Contact respective KRAs directly for queries or issues related to client KRA status

Client Impact:

  • Only clients with “KYC Registered” or “KYC Validated” status can trade
  • Clients with unvalidated PANs after January 30, 2026, will be restricted from trading and squaring up open positions

Important Dates

  • December 24, 2025: Notice date
  • January 30, 2026: Final deadline for trading members to upload pending client KYC records to KRAs
  • Post-January 30, 2026: Trading restrictions applied to non-validated PANs

Impact Assessment

Operational Impact:

  • Trading members must complete significant KYC upload backlogs within the extended timeline
  • Firms need to allocate resources for KYC data verification and upload processes
  • Members must implement monitoring systems for client KRA status and open positions

Market Impact:

  • Clients with unvalidated KYC status will lose market access after the deadline
  • Potential disruption to trading activity for affected clients
  • Enhanced compliance burden on trading members

Regulatory Impact:

  • Strengthens KYC compliance and interoperability across market participants
  • Reduces investor inconvenience through standardized KYC validation
  • Non-compliance may result in regulatory action against trading members

Risk Management:

  • Trading members must proactively manage clients with pending KYC validation to avoid forced position closures
  • Essential for seamless interoperability across market participants and preventing regulatory breaches

Impact Justification

Critical compliance requirement affecting all trading members. Non-compliance results in immediate trading restrictions for clients, impacting market access and operations.