Description

SEBI imposes penalties on Angel One Limited for violations related to unauthorized users operating trading terminals mapped to authorized persons and failure to maintain proper records.

Summary

SEBI issued an adjudication order against Angel One Limited (Registration No. INZ000161534) for violations discovered during a thematic inspection conducted jointly with NSE. The inspection, carried out on July 30, 2024, covered the period from January 01, 2024 to June 30, 2024 and focused on authorized persons using large numbers of trading terminals for proprietary trade. The order identifies three key violations related to Mr. Ashwin Thakkar, an authorized person of Angel One Limited.

Key Points

  • Angel One Limited is a SEBI-registered stock broker (Registration No. INZ000161534)
  • Thematic inspection conducted on July 30, 2024 for period January-June 2024
  • Six unapproved/unauthorized users operated trading terminals mapped to AP Mr. Ashwin Thakkar
  • Four trading terminals were not operated from locations reported to the stock exchange
  • Noticee failed to promptly update correct revised income/net-worth details of the authorized person in the UCC database
  • Violations of multiple NSE circulars and SEBI (Stock Brokers) Regulations 1992
  • Inspection findings communicated on December 06, 2024
  • Angel One Limited submitted responses on January 03, 2025 and April 07, 2025

Regulatory Changes

This order reinforces existing regulatory requirements rather than introducing new changes. It emphasizes strict compliance with:

  • NSE Circular No. NSE/MEMB/3574 dated August 29, 2002
  • NSE Circular No. NSE/MEMB/3635 dated September 25, 2002
  • NSE Circular No. NSE/MSD/34638 dated April 13, 2017
  • NSE Circular No. NSE/MSD/56778 dated May 22, 2023
  • NSE Circular No. NSE/COMP/56947 dated June 02, 2023
  • NSE Circular No. NSE/INSP/42448 dated October 18, 2019
  • SEBI (Stock Brokers) Regulations 1992, specifically regulation 9(b), 9(f), and 26(xix)

Compliance Requirements

For Stock Brokers:

  • Ensure only approved and authorized users operate trading terminals mapped to authorized persons
  • Maintain accurate records of terminal locations and ensure terminals operate only from reported locations
  • Promptly update authorized person details including income and net-worth in exchange UCC database
  • Implement robust internal controls to prevent unauthorized terminal access
  • Maintain compliance with all NSE circulars regarding authorized person operations
  • Ensure adherence to Schedule II, Clause A(5) of Brokers Regulations regarding proper supervision

For Authorized Persons:

  • Ensure personal trading terminals are not accessed by unauthorized individuals
  • Maintain accurate location information for all trading terminals
  • Provide timely updates of financial details to stock brokers

Important Dates

  • Inspection Period: January 01, 2024 to June 30, 2024
  • Onsite Inspection Date: July 30, 2024
  • Findings Communication: December 06, 2024
  • Noticee Response Dates: January 03, 2025 and April 07, 2025
  • Adjudication Order Number: Order/JS/YK/2025-26/31785

Impact Assessment

Market Impact: Limited direct market impact as this is an entity-specific enforcement action. However, it serves as a precedent for regulatory scrutiny of authorized person operations.

Industry Impact: Signals heightened regulatory focus on authorized person trading activities and terminal usage. Other stock brokers should review their internal controls regarding:

  • Terminal access authorization and monitoring
  • Location verification systems
  • Client/AP database maintenance procedures

Operational Impact: Angel One Limited may face:

  • Financial penalties (amount to be determined in final order)
  • Reputational concerns
  • Need for enhanced compliance systems and controls
  • Potential restrictions on authorized person operations

Compliance Significance: This order underscores SEBI’s commitment to enforcing stock broker regulations, particularly regarding proper oversight of authorized persons and their trading activities. The case highlights the importance of maintaining accurate records and preventing unauthorized access to trading infrastructure.

Impact Justification

Adjudication order against a major stock broker for regulatory violations involving unauthorized terminal usage and record-keeping failures. Important for broker compliance standards but limited direct market impact.