Description

BSE introduces procedure for members to seek approval for surveillance software vendors, including requirements for in-house and third-party surveillance systems.

Summary

BSE has established a formal procedure for empanelment of surveillance software vendors, requiring trading members to submit applications and execute undertakings for both in-house developed and third-party surveillance software. This 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.

Key Points

  • Trading members must submit application (Annexure I) with details including member code, name, software vendor name and version
  • Application must specify surveillance software type: in-house or third-party vendor
  • Applicable segments: Cash Market (CM), Futures & Options (F&O), Currency Derivatives (CDS), and Currency Options (CO)
  • In-house surveillance software requires execution of undertaking on Rs. 1,000 stamp paper or applicable state stamp duty (whichever is higher)
  • Undertaking must be duly notarized on all pages and signed by authorized signatory
  • Registration based on application details and auditor’s certificate submitted to BSE
  • Members must declare all information provided is complete, true and based on verifiable records
  • Members must immediately inform BSE in writing of any changes to information furnished

Regulatory Changes

This circular formalizes the empanelment process for surveillance software vendors, implementing requirements under SEBI’s surveillance framework for trading members. The procedure ensures standardized compliance across all segments where members operate.

Compliance Requirements

  • For Members: Submit completed application form (Annexure I) with required details to BSE
  • For In-house Software: Execute undertaking (Annexure II) on appropriate stamp paper, notarized and signed by authorized signatory
  • Documentation: Provide auditor’s certificate along with application
  • Ongoing Obligation: Immediately notify BSE of any changes to information previously submitted
  • Legal Form: Undertaking must specify member’s legal structure (individual/partnership/LLP/company)
  • Registration Office: Provide registered office address or place of business details

Important Dates

  • Circular Date: December 26, 2025
  • Reference to SEBI Circular: July 04, 2024 (SEBI/HO/MIRSD/MIRSD-PoD 1/P/CIR/2024/96)
  • Reference to BSE Notices: July 01, 2021 (20210701-30) and December 31, 2024 (20241231-66)
  • No specific implementation deadline mentioned

Impact Assessment

Operational Impact: Trading members using surveillance software must ensure compliance with registration requirements. Members with in-house developed systems face additional compliance burden of executing notarized undertakings on stamp paper.

Cost Impact: Members must bear costs of stamp duty (minimum Rs. 1,000 or state stamp duty), notarization fees, and auditor certification fees.

Compliance Impact: Establishes formal accountability framework where members declare accuracy of information and commit to ongoing disclosure of changes. Creates audit trail for surveillance system approvals.

Market Impact: Minimal direct market impact, but strengthens overall surveillance infrastructure and member accountability for monitoring systems.

Impact Justification

Establishes framework for surveillance software approval affecting trading members' operational compliance, but does not impact market trading directly