SORM Policy – System and Order Risk Management Framework
Brief
SEBI issued Notification no. LAD-NRO/GN/2010-11/21/29390 dated December 10, 2010 according to which, following categories of associated persons associated with a registered stock broker/trading member/clearing member in any recognized stock exchanges, who are involved in, or deal with any of the following:
a.Assets or Funds of investors or clients
b.Redressal of investor grievances
c.Internal control or risk management
d.Activities having a bearing on operational risk
shall obtain the valid certification of NISM Series VII - Securities Operation and Risk Management (SORM) within two years from the date of such notification. Simultaneously, whenever the company employs any associated person specified as mentioned above, the said associated person shall obtain valid certification of NISM Series VII – Securities Operation and Risk Management (SORM) within one year from the date of his / her employment.
Definition - Associated Person
“Associated Person” means a principal or employee of an intermediary or an agent or distributor or other natural person engaged in the securities business and includes an employee of a foreign institutional investor or a foreign venture capital investor working in India.
Exemption
For this purpose, the company considers following activities as basic elementary level / clerical level.
| Sr No | Internal Control or Risk Management | Redressal of Investor Grievances | Activities having a being on operational risk and dealing with assets of funds of investors of clients |
|---|---|---|---|
| 1 | In-warding or collateral’s /Cheques | In-warding of complaints | Person performing maker entries |
| 2 | Person performing market entries | Seeking documents from clients | Maker entry in the database |
| 3 | Maker entry in the database | Person performing maker entries | Preparing of MIS |
| 4 | Photocopying, printouts, scanning of documents | Maker entry in the database | Generating of reports, Files |
| 5 | Preparing of MIS | Photocopying, printouts, scanning of documents | Photocopying, printouts, scanning of documents |
| 6 | Sending of letters / reports to clients, Exchanges, SEBI | Preparing of MIS | Dispatching documents to clients |
| 7 | Attending Calls, etc. | Sending of letters / reports to clients, Exchanges, SEBI updation, data entry, uploading on SCORES | Sending of letters / reports to clients, Exchanges, SEBI |
| 8 | -- | Attending calls, etc. | Attending calls, etc. |
However, any of the work (as stated herein above) being performed by such persons, obtaining, NISM- SORM Certification shall be optional provided that they are supervised by his / her supervisor who shall have to obtain / continue to have NISM – SORM Certification or such other prescribed certification at all times.
In case of any query, employees are requested to obtain clarification from the Compliance Officer of the Company.
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ATTENTION INVESTORS!
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Beware of guaranteed returns:
Beware of fixed/guaranteed/regular returns/ capital protection schemes. Brokers or their authorized persons or any of their associates are not authorized to offer fixed/guaranteed/regular returns/ capital protection on your investment or authorized to enter into any loan agreement with you to pay interest on the funds offered by you. Please note that in case of default of a member claim for funds or securities given to the broker under any arrangement/ agreement of indicative return will not be accepted by the relevant Committee of the Exchange as per the approved norms. -
Do not keep funds idle:
Do not keep funds idle with the Stock Broker. Please note that your stock broker has to return the credit balance lying with them, within three working days in case you have not done any transaction within last 30 calendar days. Please note that in case of default of a Member, claim for funds and securities, without any transaction on the exchange will not be accepted by the relevant Committee of the Exchange as per the approved norms. -
Check account settlements:
Check the frequency of accounts settlement opted for. If you have opted for running account, please ensure that your broker settles your account and, in any case, not later than once in 90 days (or 30 days if you have opted for 30 days settlement). In case of declaration of trading member as defaulter, the claims of clients against such defaulter member would be subject to norms for eligibility of claims for compensation from IPF to the clients of the defaulter member. These norms are available on Exchange website at following link: https://www.nseindia.com/invest/about-defaulter-section. -
No direct security transfers:
Brokers are not permitted to accept transfer of securities as margin. Securities offered as margin/ collateral MUST remain in the account of the client and can be pledged to the broker only by way of ‘margin pledge’, created in the Depository system. Clients are not permitted to place any securities with the broker or associate of the broker or authorized person of the broker for any reason. Broker can take securities belonging to clients only for settlement of securities sold by the client. -
Keep contact details updated:
Always keep your contact details viz. Mobile number/Email ID updated with the stock broker. Email and mobile number is mandatory and you must provide the same to your broker for updation in Exchange records. You must immediately take up the matter with Stock Broker/Exchange if you are not receiving the messages from Exchange/Depositories regularly. -
Verify trades regularly:
Don't ignore any emails/SMSs received from the Exchange for trades done by you. Verify the same with the Contract notes/Statement of accounts received from your broker and report discrepancy, if any, to your broker in writing immediately and if the Stock Broker does not respond, please take this up with the Exchange/Depositories forthwith. -
Review weekly statements:
Check messages sent by Exchanges on a weekly basis regarding funds and securities balances reported by the trading member, compare it with the weekly statement of account sent by broker and immediately raise a concern to the exchange if you notice a discrepancy. -
Avoid unauthorized transfers:
Please do not transfer funds, for the purposes of trading to anyone, including an authorized person or an associate of the broker, other than a SEBI registered Stock broker.”