Description

BSE informs trading members about clients with non-validated KYC ('On Hold') uploaded between February 1-28, 2026, who will be barred from trading and squaring off open positions effective March 21, 2026.

Summary

BSE has issued guidelines pursuant to SEBI’s KYC Registration Agency (KRA) Regulations, 2011, and related SEBI circulars. Clients whose KYC records remain ‘On Hold’ (unvalidated by KRAs) for uploads made between February 1–28, 2026 — covering both Aadhaar and Non-Aadhaar based OVDs — will be prohibited from trading on BSE and from squaring off open positions effective March 21, 2026. Open positions of such clients will be allowed to expire naturally on contract expiry dates.

Key Points

  • Clients with KYC status ‘On Hold’ for records uploaded to KRAs between February 1, 2026 and February 28, 2026 will not be permitted to trade on BSE from March 21, 2026.
  • Affected clients will also be unable to square off existing open positions; these positions will expire naturally on the respective contract expiry date.
  • BSE will flag non-compliant PANs (provided by KRAs) as ‘Not Permitted to Trade’ effective March 21, 2026.
  • Clients who subsequently become KRA-compliant will be permitted to trade on T+1 basis, based on KRA data received by the exchange on T Day.
  • Trading members must ensure demise data shared daily by KRAs is acted upon — debit transactions must be blocked and UCC inactivated/closed for deceased investors across all stock exchanges.
  • List of non-compliant clients is available at: \EQ\Transaction\March-2026\10-03-2026 Non_Validated_Clients_by_KRAs_Clgno_xxxx.TXT

Regulatory Changes

  • References SEBI Circular No. SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 dated August 11, 2023 on simplification of KYC process and rationalisation of Risk Management Framework at KRAs.
  • References SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/0000000163 dated October 03, 2023 on centralized mechanism for reporting investor demise through KRAs.
  • Continues the monthly Exchange Circular series, latest prior notice being No. 20260213-9 dated February 13, 2026.

Compliance Requirements

  • Trading Members: Must monitor the non-compliant PAN list provided by BSE and restrict trading for flagged clients from March 21, 2026.
  • Trading Members: Must act on daily demise data shared by KRAs — block debit transactions, suspend all trading account transactions, and inactivate/close UCC on all stock exchanges for deceased investors.
  • Clients: Must resolve their KYC ‘On Hold’ status with their KRA to regain trading access.
  • Contact for clarifications: 022-2272 8435 / 5785 or ucc@bseindia.com.

Important Dates

  • February 1–28, 2026: Period during which non-validated KYC records were uploaded to KRAs and are subject to this circular.
  • March 10, 2026: Date of this circular; non-compliant client list made available.
  • March 21, 2026: Effective date from which non-compliant clients will be blocked from trading and squaring off positions on BSE.

Impact Assessment

This circular has a high operational impact on trading members and affected retail/institutional clients. Any investor whose KYC was uploaded to a KRA between February 1–28, 2026 and remains unvalidated risks losing access to trading on BSE from March 21, 2026, including the ability to manage open derivative positions. Trading members face compliance obligations to proactively identify and communicate with affected clients. The restriction on squaring off open positions is particularly significant as it exposes clients to potential mark-to-market losses until contract expiry.

Impact Justification

Directly restricts trading for clients with non-compliant KYC, affecting exchange access and open positions for a potentially large segment of investors from March 21, 2026.