Description

NSE circular summarizing common violations observed during inspections of Trading Members and Authorised Persons for October 2024 to March 2025 and April 2025 to September 2025, advising members to strengthen compliance systems.

Summary

NSE has issued Circular Ref. No. 9/2026 (Ref No: NSE/INSP/73503) listing common violations and deficiencies observed during inspections of Trading Members and Authorised Persons (APs) for two half-year periods: October 2024 to March 2025 and April 2025 to September 2025. This is a continuation of the earlier circular NSE/INSP/65693 dated December 19, 2024. All trading members are advised to review these violations and strengthen their compliance frameworks accordingly.

Key Points

  • Authorised Persons (APs) found receiving or paying funds directly from/to clients and third parties
  • APs influencing clients and conducting unauthorized trading using client credentials (User ID and Password)
  • APs seeking authorization to trade on behalf of clients without proper approval
  • APs trading in client accounts with a focus on generating brokerage rather than client interest
  • Email IDs or mobile numbers of APs incorrectly mapped to clients in UCC (Unique Client Code) records
  • Trading Members not conducting AP inspections as per prescribed regulatory requirements
  • APs issuing advertisements, promotional material, or performance/return claims via print, digital, or social media without prior Exchange approval through the Trading Member
  • Non-maintenance of pre-trade confirmations or order placement evidence for clients mapped to APs
  • APs offering fixed, periodic, or assured returns and engaging in mis-selling, profit sharing, account handling, or unauthorized Portfolio Management Services (PMS)
  • AP terminals not located at the address reported to the Exchange
  • Terminals found at inspection sites not operated by the registered AP or their employees
  • Mandatory disclosures (Notice Board, AP approval letter, SEBI Registration Certificate, Do’s and Don’ts, Investor Charter, Complaint Register) not displayed or maintained at AP offices
  • Non-reporting or incorrect reporting of clients mapped to APs

Regulatory Changes

No new regulatory changes introduced. This circular reiterates and updates the list of existing compliance requirements as observed through inspection findings for the two most recent half-year periods.

Compliance Requirements

  • All Trading Members must ensure APs do not handle client funds directly
  • Trading Members must prevent APs from accessing or using client login credentials
  • APs must not be authorized to trade on clients’ behalf without proper documented authorization
  • All AP advertisements and promotional content must receive prior Exchange approval via the Trading Member
  • Pre-trade confirmations and order placement evidence must be maintained for all clients mapped to APs
  • APs must not offer assured or fixed returns or engage in unauthorized PMS activity
  • AP terminals must be operational at the registered/reported address
  • All mandatory display requirements (Notice Board, Investor Charter, Complaint Register, etc.) must be fulfilled at every AP office
  • Trading Members must report accurate client-to-AP mapping in UCC records
  • Trading Members must conduct AP inspections as per prescribed frequency and requirements
  • Full list of violations available on NSE website: https://www.nseindia.com/trade/common-irregularities-observed-during-inspection-by-exchange

Important Dates

  • Circular Date: March 27, 2026
  • Inspection periods covered: October 2024 to March 2025 and April 2025 to September 2025
  • Reference Circular: NSE/INSP/65693 dated December 19, 2024

Impact Assessment

This circular has broad compliance implications for all NSE Trading Members and their Authorised Persons. The violations listed — ranging from unauthorized trading and fund handling to mis-selling and missing disclosures — represent serious regulatory risks. Trading Members found in violation during future inspections could face penalties, suspension, or cancellation of membership. The advisory nature of this circular provides members an opportunity to self-audit and rectify gaps before the next inspection cycle. No direct market impact is expected, but non-compliant brokers and APs face significant operational and reputational risk.

Impact Justification

High importance as it lists regulatory violations that all trading members must rectify; medium impact as it is advisory/compliance-focused rather than a market-moving event.