Description
NSE mandates all trading members to conduct and submit internal audit reports for the half year ended September 30, 2025, through the Inspection module by November 30, 2025.
Summary
NSE has issued requirements for all trading members to conduct complete internal audits for the half year ended September 30, 2025. The audit reports must be submitted electronically through the Inspection module in the Member Portal and must be certified by empaneled auditors only. Trading members must also submit a digitally signed undertaking regarding upfront margin collection.
Key Points
- Complete internal audit required for half year ended September 30, 2025
- Reports must be submitted electronically through Inspection module in Member Portal
- Only reports certified by empaneled auditors will be accepted
- Mandatory undertaking required regarding short/non-collection of upfront margins from clients
- Undertaking must be digitally signed by proprietor, partner, or designated director
- Internal auditor cannot submit report until undertaking is submitted
- Members must comply with SEBI provisions on appointment and rotation of internal auditors (SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016)
- Sample dates/clients data available in auditor’s login for checklist points
- Exchange provides data on holding statements, UCC-wise settlement files, authorized persons lists, and SEBI warning letters
- Changes in sampling criteria and methodology compared to previous half year
- Auditors must provide number of instances verified and amounts involved for non-compliance observations
- Appropriate remarks mandatory for “Not Applicable” points
- Compliance status of previous inspections/internal audit observations required
- Critical non-compliances involving client funds/networth must be reported immediately
Regulatory Changes
Updated sampling criteria and methodology for sample selection compared to previous half year submissions. Internal auditors must refer to Annexure III for detailed sampling requirements before initiating audits.
Compliance Requirements
For Trading Members:
- Conduct complete internal audit for half year ended September 30, 2025
- Submit audit report electronically through Inspection module
- Use only empaneled auditors for certification
- Submit digitally signed undertaking on upfront margin collection
- Comply with SEBI provisions on auditor appointment and rotation
- Register auditors to enable data retrieval from their logins
For Internal Auditors:
- Complete registration from members before initiating audit
- Retrieve sample dates/clients data from respective login
- Review data provided by Exchange (holding statements, settlement files, AP lists, SEBI warnings)
- Follow updated sampling criteria per Annexure III
- Provide mandatory details for non-compliance observations (instances verified, amounts involved)
- Provide appropriate remarks for all “Not Applicable” points
- Submit compliance status of previous inspection/audit observations
- Immediately report critical non-compliances regarding client funds/networth
Important Dates
- Half Year Ended: September 30, 2025
- Submission Deadline: November 30, 2025 (within two months from end of half year)
Impact Assessment
This circular has significant impact on all NSE trading members as it mandates comprehensive internal audit compliance within a strict timeline. Non-compliance or late submission will result in penalties and disciplinary actions as per NSE Circular NSE/INSP/53530 dated September 2, 2022. The requirement for digitally signed undertakings on upfront margin collection and immediate reporting of critical non-compliances strengthens regulatory oversight of trading operations. The enhanced data availability and stricter reporting requirements increase transparency and accountability in the trading member ecosystem.
Impact Justification
Mandatory compliance requirement for all trading members with penalties for non-submission; critical internal audit deadline affects all trading operations