Description

NSE mandates trading members to conduct system audit for period ending September 30, 2025 using only empaneled auditors, with specific submission deadlines and geo-location tracking requirements.

Summary

NSE has issued mandatory guidelines for system audit of trading members for the half-year period ending September 30, 2025. All trading members must appoint only NSE-empaneled auditors and submit audit plans, preliminary reports, and action taken reports by specified deadlines. The Exchange has introduced technology-based monitoring measures including mandatory geo-location capture during auditor visits to member premises.

Key Points

  • Trading members must conduct system audit for period ending September 30, 2025
  • Only NSE-empaneled system auditors can be appointed (as per NSE/INSP/69631 dated August 12, 2025)
  • Mandatory geo-location tracking during auditor’s physical visits to trading member offices
  • Auditors must log into NSE web portal using member’s internet connectivity during visits
  • Trading members using algorithmic trading or offering algorithmic trading facilities require half-yearly system audit
  • Comprehensive audit trail documentation must be maintained for minimum 3 years
  • System auditors must preserve working papers, logs, screenshots for minimum 3 years

Regulatory Changes

  • Exchange will only accept system audit reports certified by empaneled system auditors effective from half year ending September 30, 2025
  • Introduction of mandatory geo-location capture mechanism for auditor visits
  • Requirement for auditors to submit visit details including entry/exit times and persons interacted with via NSE ENIT portal
  • Enhanced monitoring through technology-based measures as per SEBI Framework

Compliance Requirements

  1. Auditor Selection: Appoint only NSE-empaneled system auditors from the list available at https://inspection.nseindia.com/empanelment_auditor/auditor/viewEmpanelledAuditors/

  2. Audit Plan Submission: Submit complete audit plan via NSE ENIT portal including:

    • Details of appointed auditor
    • List of systems to be audited
    • Trading member office locations to be visited
    • Geo-location details of office locations

  3. Physical Visit Protocol:

    • Auditor must log into Exchange web portal during physical visit using member’s internet/network connectivity
    • No remote access to portal during physical visits
    • Submit all visit details including dates, entry/exit times, persons visited

  4. Record Maintenance:

    • Trading members: Maintain records of audit team members for minimum 3 years
    • System auditors: Preserve working papers, logs, screenshots, visit records for minimum 3 years

  5. Algorithmic Trading: Members using or offering algorithmic trading facilities must undergo half-yearly system audit

Important Dates

  • November 07, 2025: Deadline for submission of Audit Plan
  • November 30, 2025: Deadline for submission of Preliminary Audit Report
  • February 28, 2026: Deadline for submission of Action Taken Report (ATR) if applicable
  • Audit Period: April 2025 - September 2025 (Half Yearly)

Impact Assessment

Operational Impact: High - Trading members must immediately engage empaneled auditors and complete audit planning by November 7, 2025. The geo-location tracking requirement adds operational complexity requiring coordination between members and auditors.

Compliance Impact: High - Mandatory compliance for all trading members. Failure to submit reports by deadlines may result in regulatory penalties or sanctions.

Technology Impact: Medium - Members must ensure their internet connectivity and systems support auditor access to NSE web portal for geo-location capture.

Cost Impact: Medium - Engagement of empaneled auditors and maintenance of 3-year audit documentation requires resource allocation.

Regulatory Framework: Based on SEBI Circulars CIR/MRD/DMS/34/2013, SEBI/HO/MIRSD/TPD/CIR/2025/10, and CIR/MRD/16/2013 establishing framework for monitoring and supervision through technology-based measures.

Impact Justification

Mandatory compliance requirement for all trading members with strict deadlines. Non-compliance could result in regulatory action. Critical for members using algorithmic trading facilities.