MANDATORY DOCUMENTS POLICIES AND PROCEDURE
This document outlines various policies and procedures framed and followed by KSL with respect to its dealing with its clients as a stockbroker on NSE and BSE. The policies and procedures as stated herein below are subject to change from time to time at the sole discretion of KSL, depending upon the regulatory changes, its risk management framework, other market conditions, etc.
A. Refusal of order for penny stock
Following types of scrips will come under penny stock if it falls in any one category as mentioned below as part of the due diligence and risk management policy of KSL
1. Scrips which are quoting at less than Rs. 10/ on any of the Exchanges.
2. Scrips appearing in the list of illiquid securities issued by the Exchanges periodically.Scrips appearing in the list of illiquid securities issued by the Exchanges periodically.
3. Securities forming part of Trade to Trade Settlement
4. Securities forming part of Z group.
5. Scrips on which VaR is more than 50%
6. Scrips whose average daily volume is less than 15000 shares (collectively for all Exchanges) in last seven days. Trading in penny stocks will be allowed to clients at the sole discretion of KSL. Also KSL may restrict the quantity/amount which a client is allowed to buy/sell the penny stock. If the client wants to purchase penny stock then KSL may insist up to 100% advance payment/sufficient clear ledger balance and similarly, if the client wishes to sell a penny stock, then KSL may insist that shares should be first transferred to the beneficiary Demat account of KSL Under no circumstances, KSL shall be responsible for non-execution/delay in execution of orders and consequential opportunity loss or financial loss to the client.
B. Setting up client’s exposure limits.
1. Exposure-based and/or Margin based limits will be given to the clients for doing trades in Cash Segment.
2. Limits will be given on the basis of credit balance and/or collateral/securities of the Client available with KSL valued after a haircut.
3. Certain multiple times margin-based limits may be given on the available credit balance and/or on the collateral/securities of the clients available with KSL valued after a haircut. However, on case to case basis, excess limits may be allowed.
4. Securities shall be valued after appropriate cut based on the type of scrip, nature of scrip, liquidity, volatility of scrip, etc. from time to time. KSL may at its sole and absolute discretion allow a clean exposure limit up to a certain amount to the client without insisting on any credit balance and/or margin. The quantum of clean exposure limit shall be decided by KSL. On a case-to-case basis, KSL may at its sole and absolute discretion give higher clean exposure limits to a certain set of clients. KSL reserves the right to withdraw the clean exposure limit granted to the client at any point of time at its sole and absolute discretion. The client cannot raise any concern/dispute for the same.
1. Margin-based limits will be given to the clients for doing trades in the derivatives segment.
2. Limits in the derivatives segment will be given on the basis of free credit balance and/or collateral securities of the client available with KSL valued after a haircut.
3. Securities shall be valued after appropriate haircuts based on the type of scrips, nature of scrips, liquidity and volatility of scrips, etc. from time to time.
4. A client will be normally allowed limits till the client has a free credit balance and/or collateral/securities valued after a haircut. In case of excess limit is availed, the same will be regularized by the end of the trading session/day. However, on case to case basis, the excess limit may be allowed to be carried forward. KSL may from time depending on market conditions, profile and history of the client, type and nature of scrips, etc., may at its sole discretion change the rate of haircut applicable on the securities/collaterals number of times the limits to be given in Cash/Derivatives segments and take such steps as KSL may deem necessary.
C. Applicable Brokerage Rate
The brokerage rate applicable on the Client’s trade will be as per agreed rates as mentioned in the KYC form at the time of opening the client’s trading account. Any higher brokerage will be levied only if agreed in writing between KSL and the client. If the Client has any grievances regarding the rate of brokerage charged then he should intimate the same to KSL within 4 days of the receipt of the contract note. The brokerage rate at no point in time will exceed the rates as may be specified by the Exchanges/SEBI from time to time. Unless otherwise agreed the brokerage will be exclusive of the following
1. Service Tax and Education Fess
2. SEBI/Exchange/ Clearing Member Charges
3. Stamp Duty
4. Statutory Charges payable to Exchange/SEBI/Govt. Authorities etc. Any other charges towards customized/specialized service.
D. Imposition of penalty/delayed payment charges by either party, specifying the rate and the period In case of delay in payment by the client to KSL on its due date, KSL in respect of such delayed payment will be entitled to recover late/ delayed payment charges. The said delayed payment shall include amounts payable by the client to KSL in respect of initial margin, mark to market, shortfall of margin(s) in prescribed modes, and/or other margins and pay-in obligations. Late payment charges will be levied up to 2% per month or a part of a month on a delayed period. The trade of the client may not be executed by KSL if the client does not clear dues along with delayed payment charges within three months of the due date. The client will not be entitled to any interest on the credit balance / excess margin available / kept with KSL. A delayed payment charge is only a penal measure. The client should not construe it as a funding arrangement. The client cannot demand the continuation of service on a permanent basis citing a levy of delayed payment charges. KSL may impose fines/penalties for any order/trades/ deal/actions of the clients which are contrary to this agreement/rules/ regulations/ bylaws of the exchange or any other law for the time being in force at such rates and in such form as it may deem fit. Further, where the KSL has to pay any fine or bear any punishment from any authority in connection with/as consequences of/in relation to any of the order/ trades/ deal/ actions of the client, the same will be borne by the client.
E. The right to sell client’s securities or close client’s positions, without giving notice to the client, on account of non-payment of client’s dues. Normally the client shall not trade without adequate margin/securities and that it shall be the client’s responsibility to ascertain in advance the margin/securities requirement for its order/ trades/deal and to ensure that the required margin/securities is made available to KSL in such form and such manner as may be required by KSL. If the client’s order is executed despite a shortfall in the available margin, the client shall, whether or not KSL intimates such shortfall to the client, make up for the shortfall suomotto immediately. The client shall be responsible for all orders (including any orders that may be executed without the required margin in the client’s account) and/or any claim/loss/damage arising out of the non-availability / shortage of margin/securities required by KSL and/ or by Exchange. The client shall fulfill all its obligations/liabilities to KSL, failing which KSL has the right, not the obligation to square up all or any outstanding position and/or take offsetting positions and/or sell the margin/securities available with KSL without giving any notice to the client. KSL may also square up all or any outstanding position and/or sell the margin/securities available with KSL as a part of risk management at any time without giving any notice to the client. In case of purchase on behalf of a client, the KSL may close out its transaction by selling securities, in case the Client fails to make full payment to KSL for the same before the time intimated by KSL.ln case of sale on behalf of a client, the KSL may close out its transaction by purchasing the securities. The clients shall be liable for any losses, costs and be entitled to any surplus, which may result from the above. Shortages in obligation arising out of internal netting of trades.
Internal Shortages means one client has failed to give the delivery of the securities sold, which has resulted in short delivery to another client (s) of KSL. If a selling client who has sold shares of particular scrip on T day do not deliver shares latest by T +2 (i.e. by pay-in-day) and such quantity of shares results in internal shortages, then such quantity of internal shortages will be purchased from the market on the pay-in day or as and when available in the market in the “internal shortage account”. On T =2 (i.e. pay-in day) provisional debit will be given to the client’s account at T + 1 day’s closing rate + 20%, corresponding to the internal shortage. On the payout day of securities purchased in the internal shortage account, the provisional debit bill amount will be reversed and the client account will be debited with the amount at which securities are purchased on T +2 day. Fines/penalties/charges may be levied on account of internal shortage to selling clients.
Due to internal shortage on account of internal netting of trades, the buyer client shall receive late delivery of securities. Buyer shall have no claims/rights against KSL for the delay in delivery of securities. It may also be possible that KSL may not be able to obtain the required securities due to market conditions, then in such cases, the buyer clients account will be credited and the seller clients account will be debited as per the closeout rate provided by the exchange for the relevant Auction settlement. Provisional debit bill amount will be reversed in the seller’s client account. In case of securities having corporate actions, all cases of short delivery of cum transactions which cannot be auctioned on cum basis or where the cum basis auctioned payout is after the book closure I record date, would be compulsory closed out at higher of the 20% above the official closing price on the auction day or the highest traded price from first trading day of the settlement till the auction day. The above procedure is subject to change from time to time according to the change in the settlement procedure of the Exchange.
F. Conditions under which a client may not be allowed to take further position or KSL may close the existing position of a client:- Under the following conditions KSL will not allow the clients to take further positions or KSL may close the existing position of a client:-Conditions under which a client may not be allowed to take further position or KSL may close the existing position of a client:- Under the following conditions KSL will not allow the clients to take further positions or KSL may close the existing position of a client:-
1. Insufficient/inadequate margin (s) and/or insufficient/inadequate free credit balance are available with KSL.
2. Scrips/stocks falling in Penny Stocks in clause (a) above.
3. Bogus/Manipulated/Nongenuine scrips or securities.
4. Illiquid contracts/options
5. Trades that appear in the sole and absolute discretion of KSL seem to be Synchronized trades/Circular trading /Artificial trading /manipulative in nature, etc.; Ban by Regulatory authorities.
6. Where the name of the client apparently resembles the name appearing in the list of debarred entities published by SEBI/ Exchanges and other regulatory authorities (where the information available for the debarred entity (other than the name) is not sufficient enough to establish that the client and such debarred entity are one and the same);
7. The client fails to furnish documents/information as may be called for by KSL from time to time as per regulatory requirements and/ or as per its internal policy.
8. In the event of death or insolvency of the client or the client otherwise becoming incapable of receiving and paying for or delivering or transferring securities which he has ordered to be bought or sold.
In addition to the above KSL can also close the position of the client in case the client fails to pay his / her obligation before the pay-in schedule of the exchange and/or as demanded by KSL. Depending on the market circumstances if KSL is of the view that the positions of the clients are at risk then KSL may close the existing position without waiting for the pay-in schedule of the exchange.
G. Temporarily suspending or closing a client’s account at the client’s request.
At the written request of the client, the trading account will be suspended I closed. In case the client requests for closing the account then the client’s funds and securities due to/from the client will have to be settled at the earliest. Also, the client will give confirmation of no dues (funds and securities) to KSL. Only after the settlement of funds and securities the clients’ accounts will be closed. If a client wishes to resume trading then the client has to give a written request to KSL for the same. In case after the closing of the account, the client wishes to resume trading with KSL then fresh KYC formalities will be done.
H. Deregistering a client.
KSL may at its sole discretion deregister a client without giving any specific reason. Necessary communication will be done by KSL to the client in writing or by email. On giving the intimation to de-register the client’s funds and securities if any will be settled at the earliest. The client will be given the necessary notice period as required by the SEBII Exchange from time to time. Due to de-registration, KSL shall have the right to close out the existing open positions/contracts, sell/liquidate the margin (in any form) to recover its dues, if any, before de-registering the client. Any action taken by KSL in terms of this policy shall not be challenged by the client, and KSL shall not be liable to the client for any loss or damage (actual/notional), which may be caused to the client as a result. Also while de-registering the client, KSL may retain a certain amount} securities duel belonging to the client for meeting any future losses, liability, penalties, etc. arising out of dealing of the client with KSL. In case if any securities retained by KSL is sold/liquidated to recover any such losses, liability, penalties, etc., KSL shall have the sole authority to decide the mode, manner, and the price at which to affect the sale of securities and the client can not raise any dispute as to the manner, mode and the price at which the securities are sold by KSL. In any of the above circumstances, if the client is able to justify his innocence either by providing any record, document, or otherwise to the full satisfaction of KSL, KSL may reconsider its decision of de-registering the client. However, in no circumstances any action taken by KSL till the date of re-registration shall be challenged by the client and KSL shall not be liable to the client for any loss or damage (actual/notional), which may be caused to the client as a result.
Policy for Inactive clients
Any client who has not traded for the last 365 days or such period as may be decided in any segment of any exchange with KSL then that client code will be inactive and will be kept in dormant mode. If the client wants to active his/her account he/she will have to request in writing to KSL for reactivating the same in the format prescribed by KSL along with necessary documents. After the client is made inactive its funds and securities if any available with KSL will be settled at the end of the quarter in which its trading account is made inactive. Client Acceptance of Policies and Procedures stated hereinabove I/We have read and fully understood the policies and procedure started hereinabove. I /We hereby agree to abide by the same. I/We do hereby agree not to call into question the validity, enforceability, and applicability of any provision/clauses of this document in any circumstance whatsoever. These policies and procedures may be amended/changed unilaterally by the broker, provided the change is informed to me/us through any one or more means or methods. I/We agree never to challenge the same on any grounds including delayed receipt / non-receipt or any other reasons whatsoever. These policies and procedures shall always be read along with the agreement and shall be compulsorily referred to while deciding any dispute/difference or claim between me/us and KSL before any court of law / judicial/adjudicating authority including the arbitrator