Description

NSE mandates electronic submission of Action Taken Reports (ATR) for internal audit non-compliances within 2 months of audit report due date, with January 31, 2026 deadline for H1 FY2025-26.

Summary

NSE has issued detailed guidelines on the electronic submission of Action Taken Reports (ATR) for non-compliances identified in internal audit reports. Trading members must close all non-compliances within 2 months from the end of the due date for submission of the Internal Audit Report. For the half-year ended September 30, 2025, the ATR submission deadline is January 31, 2026. The circular provides step-by-step procedures for submitting ATR through the Inspection module in the Member Portal and warns of monetary penalties and disciplinary actions for non-compliance.

Key Points

  • Action Taken Reports must be submitted electronically through the Inspection module in the Member Portal under the Internal Audit Tab
  • Trading members have 2 months from the end of the internal audit report due date to close all non-compliances
  • For H1 FY2025-26 (half-year ended September 30, 2025), ATR submission deadline is January 31, 2026
  • Members must assign ‘Internal Audit-ATR’ role to auditors for ATR submission or create new sub-user login
  • ATR is considered complete only after submission to Exchange and receipt of acknowledgment email
  • ATR saved in system or submitted only by auditor will not be considered as final submission
  • Reference to earlier circular NSE/INSP/71579 dated December 1, 2025

Regulatory Changes

This circular reinforces the electronic submission framework for Action Taken Reports, replacing or supplementing previous manual processes. It establishes a standardized digital workflow through the Member Portal’s Inspection module, ensuring systematic tracking and accountability for audit non-compliances.

Compliance Requirements

For All Trading Members:

  • Close all non-compliances reported in internal audit reports within 2 months of audit report due date
  • Submit Action Taken Report electronically through Member Portal’s Inspection module
  • Ensure acknowledgment email is received from Exchange to confirm successful submission
  • Notify internal auditors about these requirements and ensure compliance

For Critical Non-Compliances: Immediate action required (without waiting for ATR submission) for:

  • Shortfall of client funds/securities/commodities
  • Networth shortfall or incorrect reporting resulting in shortfall
  • Not meeting minimum networth criteria for margin trading facility where shortfalls are not recouped
  • Offering fixed/assured/periodic returns to clients
  • Mobilizing deposits from investors

Auditor Login Setup:

  • Members must create auditor login via Member Portal (https://inspection.nseindia.com/MemberPortal/)
  • Assign ‘Internal Audit-ATR’ role to existing Internal Auditor user ID, or
  • Create new sub-user from Member’s ENIT admin login

Penalties:

  • Monetary penalties and disciplinary actions per Exchange Circular NSE/INSP/70746 dated October 10, 2025 will be initiated if:
    • Observations are not closed in the ATR
    • ATR is not submitted within due date

Important Dates

  • December 12, 2025: Circular issue date
  • January 31, 2026: Deadline for submission of Action Taken Report for half-year ended September 30, 2025
  • Reference Date: December 1, 2025 - Earlier circular NSE/INSP/71579 on same subject
  • Reference Date: October 10, 2025 - Exchange Circular NSE/INSP/70746 on penalties and disciplinary actions

Impact Assessment

Operational Impact:

  • Trading members must establish robust internal processes to track and close audit non-compliances within strict 2-month timelines
  • Requires coordination between compliance teams, internal auditors, and operational departments
  • Members need to ensure auditor access setup and familiarization with Member Portal’s Inspection module

Compliance Impact:

  • Failure to submit ATR or close observations will trigger automatic penalty mechanisms
  • Critical non-compliances require immediate remediation without waiting for regular ATR cycles
  • Enhanced accountability through digital acknowledgment system prevents disputes over submission status

Technology Impact:

  • Members must ensure their authorized personnel have access to Member Portal
  • IT teams need to manage user role assignments and sub-user creation for auditors
  • Electronic submission creates audit trail and improves regulatory oversight

Financial Impact:

  • Potential monetary penalties for non-compliance with ATR submission deadlines
  • Cost of remedying critical non-compliances, particularly networth shortfalls
  • Disciplinary actions may include trading restrictions or suspension in severe cases

Contact Information for Clarifications:

Impact Justification

High importance due to mandatory compliance requirement for all trading members with strict deadlines and potential disciplinary actions. Affects operational compliance framework and requires immediate action for critical non-compliances like client fund shortfalls.