Description

BSE introduces procedure for empanelment of surveillance software vendors and registration requirements for in-house and third-party surveillance software used by trading members.

Summary

BSE has established a formal procedure for empanelment of surveillance software vendors. Trading members using surveillance software (either in-house developed or third-party) must seek BSE’s registration by submitting an application with required details. The circular references SEBI circular SEBI/HO/MIRSD/MIRSD-PoD 1/P/CIR/2024/96 dated July 04, 2024, and BSE notices dated July 01, 2021 and December 31, 2024. Members using in-house surveillance software must execute an undertaking on Rs. 1000/- stamp paper (or applicable state stamp duty, whichever is higher), duly notarized.

Key Points

  • Two types of surveillance software covered: In-house developed and Third-party vendor software
  • Application required for all segments: Cash Market (CM), Futures & Options (F&O), Currency Derivatives (CDS), and Commodity Options (CO)
  • Members must provide surveillance software vendor name and version details
  • Application must be submitted by authorized signatory with stamp/seal
  • In-house software requires execution of undertaking on stamp paper
  • Undertaking must be notarized on all pages and signed by authorized signatory
  • Trading members must declare all information provided is complete, true, and based on verifiable records
  • Members must inform BSE immediately of any changes to furnished information

Regulatory Changes

Formalization of surveillance software empanelment process for trading members. This builds upon:

  • SEBI circular SEBI/HO/MIRSD/MIRSD-PoD 1/P/CIR/2024/96 dated July 04, 2024
  • BSE notice no. 20210701-30 dated July 01, 2021
  • BSE notice no. 20241231-66 dated December 31, 2024

Establishes structured application and undertaking framework for both in-house and third-party surveillance software registration.

Compliance Requirements

For Trading Members:

  • Submit Annexure I application form with member code, name, and surveillance software details
  • Specify application type (in-house or third-party)
  • Indicate applicable segments (CM, F&O, CDS, CO)
  • Provide surveillance software vendor name and version
  • Authorization by designated signatory with stamp/seal

For In-house Surveillance Software:

  • Execute Annexure II undertaking on Rs. 1000/- stamp paper or applicable state stamp duty (whichever is higher)
  • Get undertaking notarized on all pages
  • Sign, stamp, and seal by authorized signatory on all pages
  • Provide entity details (individual/partnership/LLP/company)
  • Submit auditor’s certificate to BSE
  • Ensure software complies with SEBI and BSE circular provisions
  • Maintain verifiable records for all furnished information
  • Inform BSE immediately in writing of any changes to furnished information

Important Dates

No specific deadline mentioned. Circular establishes ongoing procedure for empanelment.

Impact Assessment

Operational Impact: High - All trading members using surveillance software across any segment must comply with this registration and empanelment procedure. Members with in-house solutions face additional documentation requirements including notarized undertakings on stamp paper.

Compliance Burden: Moderate to High - Requires formal application process, auditor certification for in-house software, legal documentation on stamp paper, and ongoing obligation to report changes.

Market Surveillance: Positive - Strengthens market surveillance framework by ensuring all surveillance software used by members is registered and meets BSE/SEBI standards, enhancing market integrity and investor protection.

Vendor Impact: Third-party surveillance software vendors will need to work with trading members to complete empanelment process, potentially creating standardization in surveillance tools used across the market.

Impact Justification

Mandatory compliance requirement for all trading members using surveillance software across all segments (CM, F&O, CDS, CO). Requires formal application, auditor certification, and execution of undertaking on stamp paper.