₹1 lakh penalty for incorrect client data submission is harsh, says ANMI

Our Bureau Mumbai | Updated on June 23, 2021

Association urges NSE to withdraw penalty as client statement are system driven

The Association of National Exchanges Members of India has urged the National Stock Exchange to withdraw the levy of ₹1 lakh penalty on brokerages submitting incorrect data on client holding and cash and bank balances.

As per the new penalty structure by the NSE, a penalty will be levied in case of procedurally incorrect submission of Client level holding statement, cash and cash equivalent balances and bank account balances.

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In addition, a disablement of trading terminals for one day will be charged in case of material incorrect submission.

“The circular appears to be an outcome of erroneous presumptions and assumptions that the trading members deliberately submit incorrect data. The circular does not differentiate between intentional and unintentional submission of incorrect data,” said ANMI, in a letter to NSE.

Concerns raised

Raising a few concerns over the new penalty structure, ANMI stressed that reports are generated by system and hence, there is always a scope of technological error. Technical glitches on account of manual intervention could also attribute to submission of procedurally incorrect reports, it said.

Penalty should be levied only in case of intentional misreporting and not otherwise. Moreover, disabling trading terminal only if misreporting is repeated and in exceptional cases, it said.

ANMI also suggested members should be provided with a window for rectification and submitting reconciliation and their explanation should be taken into consideration.

If the wrong reporting is due to any technical glitches or the interpretation of the rules, by-laws and circular of the exchange, the same should be accepted and no penalty should be levied on the member, it said.

Published on June 23, 2021

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