Description

NSE implements trading restrictions for clients with non-validated KYC from August 2025, effective September 20, 2025.

Summary

NSE issued guidelines following SEBI KYC Registration Agency (KRA) Regulations amendments. Clients with non-validated KYC uploaded between August 1-30, 2025 will be prohibited from trading and closing positions from September 20, 2025 until compliance is achieved. The exchange will also implement centralized demise reporting mechanisms through KRAs.

Key Points

  • Non-validated KYC clients (both Aadhaar and Non-Aadhaar based) from August 1-30, 2025 face trading restrictions
  • Trading prohibition effective September 20, 2025 until KRA validation completed
  • Open positions cannot be squared off and will naturally expire on contract expiry dates
  • KRA compliant clients can resume trading on T+1 basis after validation
  • Daily demise data sharing by KRAs requires account blocking and UCC closure
  • Non-compliant client lists available through NSE member portal

Regulatory Changes

  • Amendment to SEBI KYC (Know Your Client) Registration Agency (KRA) Regulations, 2011
  • Centralized mechanism for reporting investor demise through KRAs
  • Enhanced validation requirements for KYC compliance
  • Automated flagging system for non-compliant PANs

Compliance Requirements

  • Trading members must block debit transactions for deceased investor accounts
  • Suspend all trading account transactions for deceased investors
  • Inactivate/close UCC in all stock exchanges for deceased investors
  • Monitor daily demise data shared by KRAs
  • Ensure client KYC validation through KRAs before allowing trading
  • Access non-compliant client lists through member portal for monitoring

Important Dates

  • August 1-30, 2025: KYC upload period for affected clients
  • September 20, 2025: Trading restriction effective date for non-validated clients
  • T+1: Trading resumption timeline after KRA compliance achieved
  • Daily: KRA demise data sharing frequency

Impact Assessment

High impact on market participants with non-validated KYC status, affecting their ability to trade or manage existing positions. Trading members must implement additional compliance monitoring systems. Clients risk position expiry if validation not completed timely. Enhanced regulatory oversight strengthens market integrity through improved KYC processes.

Impact Justification

Trading restrictions affect all non-compliant clients and their ability to trade or close positions