New Delhi: To bring stability and integrity in the securities market, Sebi today directed all commodity derivatives exchanges to conduct annual system audit of their trading members and monitor the same.
The framework of system audit for trading members should cover audit process, selection norms for auditor and terms of reference for brokers, Securities and Exchange Board of India (Sebi) said in a circular.
It has prescribed stock broker system audit framework and mandated commodity exchanges to ensure conduct of system audit of its members as per the prescribed framework and monitor the same.
The markets watchdog has begun regulating commodity exchanges following the merger of FMC with Sebi. As per Sebi, technological advancements and various market events have necessitated reviewing the existing system audit framework for trading members.
"The provisions relating to Type I Brokers...shall not be applicable to Type I Brokers. However, such provisions shall be included in the TOR (term of reference) of the annual system audit for national commodity derivatives exchanges," the regulator said.
The circular would come into force from financial year 2016-17 onwards.
"For the financial year 2015-16, the brokers/trading members who have commenced their annual system audit, may follow existing annual system audit framework prescribed by exchanges, if any. However, stock brokers/ trading members who are yet to commence annual system audit should carry out their system audit as per the prescribed framework," Sebi noted....