Description

BSE extends the deadline for Trading Members to upload client KYC records to KRAs to January 30, 2026. Non-compliant clients will be restricted from trading and squaring off positions.

Summary

BSE has extended the deadline for Trading Members to upload client KYC records to KYC Registration Agencies (KRAs) to January 30, 2026. This extension follows requests from multiple Trading Members who were unable to meet the original timeline set in circular 20250926-73. SEBI regulations require KYC uploads within 3 working days of completion, but sample comparisons revealed widespread non-compliance. Clients without validated KRA status (“KYC Registered” or “KYC Validated”) will not be permitted to trade or square off existing positions after the deadline.

Key Points

  • Trading Members must upload client KYC records to KRAs and ensure validation by January 30, 2026
  • Only clients with KRA status of “KYC Registered” or “KYC Validated” are permitted to trade
  • SEBI mandates KYC upload within 3 working days from completion of KYC process (revised from 10 working days)
  • Sample comparison of PANs revealed several Trading Members have not complied with the 3-day timeline
  • Clients whose KYC attributes cannot be verified shall not be permitted to transact until verification is completed
  • Non-compliant PANs will be restricted from trading and squaring off open positions
  • Trading Members must monitor open positions of clients with unvalidated KRA status
  • Members should contact respective KRAs directly for queries related to client KRA status

Regulatory Changes

This circular reinforces existing SEBI regulations rather than introducing new changes:

  • SEBI Circular MIRSD/Cir-26/2011 (December 23, 2011): Original mandate requiring KYC uploads within 10 working days
  • 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): Clients may begin transacting upon KYC completion but cannot continue if attributes cannot be verified

The circular extends the implementation deadline but does not modify the underlying regulatory requirements.

Compliance Requirements

For Trading Members:

  1. Upload all pending client KYC records to respective KRAs by January 30, 2026
  2. Ensure client PANs have KRA status of either “KYC Registered” or “KYC Validated”
  3. Verify KRA status of client PANs with respective KRAs
  4. Monitor open positions of clients with unvalidated KRA status
  5. Take appropriate measures to ensure clients square off positions before restrictions apply
  6. Going forward, maintain 3-day timeline for KYC uploads as per SEBI circular dated October 12, 2023
  7. Contact respective KRAs directly for any queries or issues related to client KRA status

Client Impact:

  • Clients without validated KRA status will not be permitted to trade on the Exchange
  • Such clients will not be allowed to square up their open positions
  • Only clients with “KYC Registered” or “KYC Validated” status can continue trading

Important Dates

  • December 24, 2025: Circular issuance date
  • January 30, 2026: Extended deadline for Trading Members to upload client records to KRAs and complete validation
  • Post January 30, 2026: Clients with unvalidated KRA status will face trading restrictions

Reference Timeline:

  • December 23, 2011: Original SEBI mandate (10 working days)
  • August 11, 2023: SEBI circular on KYC simplification
  • October 12, 2023: SEBI revised timeline to 3 working days
  • September 26, 2025: Previous BSE circular 20250926-73

Impact Assessment

Operational Impact:

  • Trading Members must prioritize uploading pending client KYC records within the next 37 days
  • Resource allocation required for bulk KYC data uploads and verification processes
  • Need for enhanced monitoring systems to track client KRA status and open positions
  • Potential operational challenges in coordinating with multiple KRAs

Client Impact:

  • High-risk clients may face immediate trading restrictions if KYC is not uploaded/validated by deadline
  • Clients with open positions must close them before January 30, 2026, if KRA status remains unvalidated
  • Possible disruption to trading activities for non-compliant clients
  • Inconvenience to investors if Trading Members fail to complete uploads in time

Market Impact:

  • Ensures compliance with anti-money laundering and investor protection regulations
  • Improves interoperability across market participants through standardized KYC validation
  • May result in temporary reduction in active trading accounts if many clients have unvalidated status
  • Strengthens overall market integrity by ensuring all traders have properly verified KYC credentials

Compliance Risk:

  • Trading Members face regulatory action for continued non-compliance
  • Reputational risk if clients are unable to trade due to Member’s failure to upload KYC
  • Potential penalties for violation of SEBI circulars on KYC upload timelines

Impact Justification

Critical compliance requirement affecting all Trading Members and their clients. Non-compliance results in trading restrictions and inability to close positions, creating significant operational and client impact.