Description

NSE circular mandating that clients with KYC 'On Hold' status for February 2026 uploads will be barred from trading and square-off from March 21, 2026, until KRA validation is completed.

Summary

NSE has issued updated guidelines pursuant to SEBI’s KYC Registration Agency (KRA) Regulations, 2011 and related SEBI circulars. Clients whose KYC records were uploaded to KRAs between February 1–28, 2026 and remain in ‘On Hold’ status (for both Aadhaar and Non-Aadhaar OVD) will be barred from trading and from squaring off open positions effective March 21, 2026, until they achieve KRA compliance.

Key Points

  • Clients with KYC status ‘On Hold’ for records uploaded between February 1–28, 2026 will not be permitted to trade on NSE from March 21, 2026
  • Affected clients will also be unable to square off existing open positions; those positions will expire naturally on the contract expiry date
  • The Exchange will flag non-compliant PANs (as provided by KRAs) as ‘Not Permitted to Trade’ from March 21, 2026
  • PANs that become KRA-compliant after the restriction date will regain trading access on T+1 basis, based on KRA data received on T Day
  • This circular also references SEBI’s October 2023 mandate for blocking debit transactions and suspending trading accounts upon investor demise, with KRAs sharing demise data daily
  • Non-compliant client lists are available on the NSE Member Portal (ENIT > Log > Downloads > <TM Code>_Non-Validated_Clients_by_KRA)

Regulatory Changes

  • References SEBI Circular SEBI/HO/MIRSD/FATF/P/CIR/2023/0144 (August 11, 2023) on KYC simplification and KRA risk management framework
  • References SEBI Circular SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/0000000163 (October 3, 2023) on centralized mechanism for reporting investor demise through KRAs
  • Continues the monthly circular series; latest prior circular was NSE/ISC/72795 dated February 13, 2026
  • Download Ref No: NSE/ISC/73218 | Circular Ref. No: 12/2026

Compliance Requirements

  • Trading Members must identify clients with ‘On Hold’ KYC status from the non-compliant client list on the ENIT portal
  • Members must notify affected clients to complete KYC validation with their KRA before March 21, 2026
  • Members must ensure that debit transactions are blocked and trading accounts are suspended for accounts flagged upon investor demise, as per existing SEBI norms
  • For queries, members should contact: uci@nse.co.in or Toll Free: 1800 266 0050 (option 5)

Important Dates

  • February 1–28, 2026: Period of KYC uploads to KRA that are subject to validation check
  • March 21, 2026: Effective date from which non-compliant clients will be barred from trading and square-off on NSE
  • T+1 restoration: Compliant clients regain trading access the day after KRA compliance confirmation is received by the Exchange

Impact Assessment

This circular has high operational impact on trading members with clients who submitted KYC in February 2026 but have not yet received KRA validation. Affected clients face a hard trading restriction — including inability to square off open derivatives positions — which could result in significant financial exposure if positions expire unfavorably. Trading members need to proactively identify and contact non-compliant clients well before March 21, 2026. The daily demise data sharing by KRAs also represents an ongoing compliance obligation for all SEBI-registered entities.

Impact Justification

Directly affects trading eligibility for clients with unvalidated KYC; trading members must act to avoid client disruption effective March 21, 2026.