Description
BSE mandates trading members to conduct system audits of their trading facilities for the period ended March 31, 2026, with preliminary reports due by June 30, 2026, and action taken reports by September 30, 2026.
Summary
BSE has issued a notice requiring all trading members to carry out system audits of their trading facilities for the period ended March 31, 2026. The notice references SEBI Circular No. CIR/MRD/DMS/34/2013 dated November 6, 2013, SEBI/HO/MIRSD/TPD/CIR/2025/10 dated January 31, 2025, and the Exchange’s own framework for monitoring and supervision of system audits through technology-based measures.
Key Points
- System audit is applicable to trading members based on broker type, physical presence, and terminal count
- Three tiers of audit applicability with different Terms of Reference (ToR) and submission periodicity
- Brokers using BOLT/BOLT PLUS or Application Service Provider (ASP) software are exempt
- Preliminary audit reports are due by June 30, 2026 for all audit periods
- Action Taken Reports (ATR), where applicable, are due by September 30, 2026
- Annual audit frequency applies if a broker is a depository participant or offers other financial services
Regulatory Changes
This notice operationalizes the framework established under:
- SEBI Circular CIR/MRD/DMS/34/2013 (November 6, 2013) — original system audit framework for stockbrokers
- SEBI Circular SEBI/HO/MIRSD/TPD/CIR/2025/10 (January 31, 2025) — updated framework for monitoring and supervision via technology-based measures
- Exchange Notice 20250813-60 (August 13, 2025) and Exchange Notice 20250902-57 — additional compliance requirements referenced
Compliance Requirements
Type I Brokers — TOR II (Once in Two Years):
- Presence in not more than 10 locations AND IML/IBT/DMA/STWT terminals not more than 50
- Audit period: April 2024 – March 2026
Type I Brokers — TOR II (Annual):
- Presence in more than 10 locations OR terminals exceeding 50
- Audit period: April 2025 – March 2026
- Also annual if the broker is a depository participant or offers other financial services
Type II/III Brokers — TOR III (Half Yearly):
- Algo users (may also be Type II brokers)
- Audit period: October 2025 – March 2026
All eligible trading members must engage qualified auditors to conduct the system audit and submit reports via the prescribed Exchange mechanism.
Important Dates
| Audit Period | Preliminary Report Due | ATR Due (if applicable) |
|---|---|---|
| Half Yearly (Oct 2025 – Mar 2026) | June 30, 2026 | September 30, 2026 |
| Yearly (Apr 2025 – Mar 2026) | June 30, 2026 | September 30, 2026 |
| Once in 2 Years (Apr 2024 – Mar 2026) | June 30, 2026 | September 30, 2026 |
Impact Assessment
This is a recurring compliance obligation affecting a broad set of BSE trading members. The audit scope covers trading system infrastructure, cybersecurity controls, and technology resilience. Members using Exchange-provided software (BOLT/BOLT PLUS) or ASP-provided platforms are excluded, narrowing the compliance burden to proprietary-system operators. Algo traders face the most frequent audit cycle (half-yearly), reflecting heightened regulatory scrutiny of automated trading. Non-compliance could attract regulatory action from SEBI or the Exchange. Members should initiate audit engagement immediately given the June 30, 2026 deadline.
Impact Justification
Routine periodic compliance requirement affecting all eligible trading members; excludes BOLT/BOLT PLUS and ASP software users. Deadlines are two months away, giving members adequate time to comply.