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The Securities and Exchange Board of India has allowed stock exchanges to waive the penalty for modification of client code of non-institutional trades where a broker is able to produce evidence establishing that the modification was due to a genuine error.
In a circular late on Tuesday, SEBI said exchanges may give only one waiver per quarter for modification in a client code.
That is, if a waiver has already been given for client code modification from client code AB to client code BA, no more penalty waivers shall be allowed to the broker during the quarter for modifications related to client codes AB and BA.
However, proprietary trades (trades on the broker’s own account) would not be allowed to be modified as client trade and vice-versa, SEBI said.
Exchanges have been directed to submit a quarterly report to SEBI on all client code modifications where penalties have been waived. Exchanges have also been asked to take strict disciplinary action against brokers who frequently modify client codes.
Stock exchanges and clearing corporations have been directed to amend bylaws, inform brokers/ clearing members, disseminate the information on their Web sites, besides communicating the implementation status to SEBI.
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