Description

NSE circular mandating trading restrictions for clients whose KYC uploaded between September 1-30, 2025 remain 'On Hold' and not validated by KRAs, effective October 25, 2025.

Summary

NSE has issued guidelines regarding KYC validation requirements following SEBI amendments to KRA Regulations, 2011. Clients whose KYC records uploaded to KRAs between September 1-30, 2025 remain ‘On Hold’ (not validated) will face trading restrictions from October 25, 2025. Affected clients will be unable to execute new trades or square up existing positions until their KYC is validated. Trading members must access non-compliant client lists through the NSE member portal and ensure compliance.

Key Points

  • Clients with ‘On Hold’ KYC status (both Aadhaar and Non-Aadhaar based OVD) uploaded September 1-30, 2025 will be restricted from trading
  • Trading restrictions effective from October 25, 2025
  • Restricted clients cannot execute new trades or square up open positions
  • Open positions will naturally expire on respective contract expiry dates
  • NSE will flag non-compliant PANs as ‘Not Permitted to Trade’ from October 25, 2025
  • Clients achieving KRA compliance will be permitted to trade on T+1 basis
  • KRA shares demise data daily; trading members must block debit transactions and suspend trading accounts for deceased investors
  • Non-compliant client lists available on NSE member portal under ENIT > Log > Downloads

Regulatory Changes

This circular implements ongoing compliance with:

  • SEBI Circular No. SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 dated August 11, 2023
  • SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/0000000163 dated October 03, 2023 on centralized mechanism for reporting investor demise
  • Previous NSE Circular NSE/ISC/70132 dated September 10, 2025
  • Amendments to SEBI KYC Registration Agency (KRA) Regulations, 2011

The regulations mandate strict validation requirements for all KYC records and establish a centralized demise reporting mechanism through KRAs.

Compliance Requirements

For Trading Members:

  1. Download non-compliant client lists from member portal (https://inspection.nseindia.com/MemberPortal/)
  2. Access file path: ENIT > Log > Downloads
  3. Review file: _Non-Validated_Clients_by_KRA
  4. Notify affected clients about KYC validation requirements
  5. Ensure clients complete KYC validation before October 25, 2025
  6. Block debit transactions and suspend trading accounts for deceased investors based on daily KRA data
  7. Inactivate/close UCC in all stock exchanges for deceased investors

For Clients:

  1. Complete KYC validation requirements with KRA if KYC uploaded September 1-30, 2025 is ‘On Hold’
  2. Ensure validation completed before October 25, 2025 to avoid trading restrictions
  3. Once compliant, trading will resume on T+1 basis

Important Dates

  • September 1-30, 2025: KYC upload period covered by this circular
  • October 13, 2025: Circular issue date
  • October 25, 2025: Effective date for trading restrictions on non-validated clients
  • T+1: Trading resumes for clients who achieve KRA compliance on T day

Impact Assessment

Market Impact:

  • Clients with pending KYC validation will face immediate trading restrictions
  • Potential reduction in trading volumes if significant number of clients remain non-compliant
  • Open positions of non-compliant clients will expire naturally without ability to square up

Operational Impact:

  • Trading members must implement systems to identify and restrict non-compliant PANs
  • Additional workload for member firms to communicate with affected clients
  • Need for daily monitoring of KRA compliance status updates
  • Process integration required for handling deceased investor data from KRA

Compliance Impact:

  • Strengthens KYC validation framework and investor protection
  • Enforces stricter adherence to SEBI KRA regulations
  • Reduces risk of non-compliant trading activity
  • Improves accuracy of investor records through mandatory validation

Client Impact:

  • High severity for affected clients unable to trade or manage positions
  • Urgent action required from clients with pending KYC validation
  • Risk of forced position expiry for non-compliant clients with open positions

Impact Justification

High ranking due to mandatory trading restrictions affecting all clients with non-validated KYC from September 2025 uploads, with immediate deadline of October 25, 2025. Impacts both new trades and open position management.