Description

BSE extends the deadline for Trading Members to upload client KYC records to KRAs from the 3-day requirement to April 3, 2026, with strict enforcement of KRA validation status for trading permissions.

Summary

BSE has extended the deadline for Trading Members to upload client KYC records to KRAs (KYC Registration Agencies) to April 3, 2026. This follows multiple requests from Trading Members who were non-compliant with SEBI’s revised 3-working-day timeline for KYC uploads. The circular emphasizes that only clients with KRA status of “KYC Registered” or “KYC Validated” will be permitted to trade on the exchange.

Key Points

  • Extended compliance deadline to April 3, 2026 for uploading client KYC records to KRAs
  • Original SEBI requirement: Upload KYC within 3 working days from completion of KYC process (revised from 10 days)
  • Only clients with “KYC Registered” or “KYC Validated” status are permitted to trade
  • Sample comparison revealed several Trading Members have not complied with the 3-day timeline
  • Clients whose KYC attributes cannot be verified will not be permitted to transact until verification is completed
  • Non-validated PANs will be barred from trading and cannot square up open positions

Regulatory Changes

This circular references multiple SEBI circulars establishing the regulatory framework:

  • SEBI Circular MIRSD/Cir-26/2011 (December 23, 2011): Original mandate requiring intermediaries to upload KYC to KRAs and dispatch documents 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): “Simplification of KYC Process and Rationalisation of Risk Management Framework at KRAs” - allows clients to transact upon KYC completion but prohibits unverified clients from further transactions

Compliance Requirements

For Trading Members:

  • Upload all pending client KYC records to respective KRAs by April 3, 2026
  • Ensure all active trading clients have KRA status of “KYC Registered” or “KYC Validated”
  • Monitor open positions of clients with non-validated KRA status
  • Take appropriate measures to ensure compliance before the deadline
  • Contact respective KRAs directly for any queries or issues related to client KRA status

Enforcement Actions:

  • PANs not validated by KRAs will not be permitted to trade on the Exchange
  • Such clients will not be allowed to square up their open positions
  • Non-upload of KYCs to KRAs constitutes non-compliance with regulatory requirements

Important Dates

  • December 23, 2011: Original SEBI circular mandating 10-day KYC upload timeline
  • August 11, 2023: SEBI circular on simplification of KYC process
  • October 12, 2023: SEBI revised KYC upload timeline to 3 working days
  • December 24, 2025: Exchange notice no 20251224-25 issued
  • January 30, 2026: Current circular issued
  • April 3, 2026: Extended compliance deadline for uploading client KYC records to KRAs

Impact Assessment

Operational Impact:

  • Trading Members with significant backlogs of non-uploaded KYC records must prioritize bulk uploads before April 3, 2026
  • Client trading activity will be disrupted for accounts lacking proper KRA validation
  • Members need to implement monitoring systems to track KRA status of active clients

Market Impact:

  • Ensures market integrity through proper KYC verification and interoperability across market participants
  • Reduces risk of unverified clients participating in securities markets
  • Potential temporary reduction in trading activity from clients with pending KRA validation

Compliance Impact:

  • High priority action item for all Trading Members
  • Non-compliance will result in immediate trading restrictions for affected clients
  • Members must proactively manage open positions for clients at risk of non-compliance
  • Strengthens regulatory oversight and standardization of KYC processes across intermediaries

Impact Justification

Critical compliance requirement affecting all Trading Members with immediate enforcement consequences. Non-compliant clients will be barred from trading and unable to square up positions.