Extension for Upload of Client Records to KRAs for Validations

Description

SEBI extends the deadline for Trading Members to upload client KYC records to KRAs from the original timeline to April 03, 2026, with non-compliant clients restricted from trading.

Summary

BSE has extended the deadline for Trading Members to upload client KYC records to KYC Registration Agencies (KRAs) to April 03, 2026. This follows multiple requests from Trading Members seeking an extension from the original 3-day timeline mandated by SEBI Circular dated October 12, 2023. The exchange emphasizes that only clients with “KYC Registered” or “KYC Validated” status are permitted to trade. Non-compliant PANs will be restricted from trading and cannot square up open positions.

Key Points

• Extension granted until April 03, 2026 for uploading client KYC records to KRAs
• Original requirement: 3 working days from completion of KYC process (SEBI Circular October 12, 2023)
• Sample comparison revealed several Trading Members have not complied with the 3-day timeline
• Only clients with “KYC Registered” or “KYC Validated” status are permitted to trade
• Non-validated PANs will be restricted from trading and cannot square up open positions
• Trading Members must closely monitor open positions of such clients

Regulatory Changes

The circular references the evolution of KYC upload timelines:

• Original mandate (December 23, 2011): 10 working days from execution of documents
• Revised mandate (October 12, 2023): 3 working days from completion of KYC process
• Current extension: Compliance deadline extended to April 03, 2026

SEBI Circular dated August 11, 2023 permits clients to begin transacting upon KYC completion, but clients whose KYC attributes cannot be verified must stop transacting until verification is completed.

Compliance Requirements

For Trading Members:

• Upload all client KYC records to respective KRAs by April 03, 2026
• Ensure client KRA status is either “KYC Registered” or “KYC Validated” before permitting trading
• Closely monitor open positions of clients with non-validated KRA status
• Take appropriate measures to ensure compliance
• Contact respective KRAs directly for queries or issues related to client KRA status

Enforcement Actions:

• KRA status of PANs will be verified with respective KRAs
• PANs not validated by KRAs will not be permitted to trade on the Exchange
• Such clients will not be allowed to square up open positions

Important Dates

• December 24, 2025: Exchange notice no 20251224-25 issued regarding KYC compliance
• January 30, 2026: Current circular issued granting extension
• April 03, 2026: Extended deadline for KYC upload compliance

Impact Assessment

Operational Impact:

• High impact on Trading Members who have not completed KYC uploads for their client base
• Immediate action required to upload pending KYC records to avoid client trading restrictions
• Trading Members need to audit their UCC database against KRA records

Client Impact:

• Clients with non-validated KRA status will face trading restrictions post-deadline
• Existing open positions cannot be squared up if KRA status is not validated
• Potential inconvenience to investors if KYC uploads are not completed timely

Market Impact:

• Ensures seamless interoperability across market participants
• Strengthens regulatory compliance framework for client onboarding
• Improves investor protection through proper KYC verification

Risk Factors:

• Trading Members face operational risk of client trading disruption if non-compliant
• Clients may face liquidity constraints if unable to square up positions
• Regulatory action possible against non-compliant Trading Members

Impact Justification

Critical compliance requirement affecting all Trading Members with direct impact on client trading permissions. Non-compliance results in immediate trading restrictions for clients.