Surveillance Policy – Market Monitoring & Risk Control Measures

Surveillance Policy

1. Applicability:

a. The policy is applicable to the stock broking operations of AUM SECURITIES PRIVATE LIMITED. The policy is approved in the meeting of Board of Directors of AUM SECURITIES PRIVATE LIMITED

b. The policy is framed in accordance with the provisions of SEBI Circular No. SEBI/HO/ISD/ISD/CIR/P/2021/22 dated 01.03.2021, NSE Circular No. NSE/SURV/48818 dated September 01, 2021, BSE Circular 20210701-30 dated September 01, 2021 and CDSL communique No. CDSL/OPS/DP/SYSTM/2021/309 dated July 15, 2021.

2. Surveillance Policy for Stock Broking:

a. The Stock Exchanges viz. NSE and BSE are providing alerts based on predefined criteria to the all the stock brokers including AUM SECURITIES PRIVATE LIMITED through their portals. The same has been listed out here below. As per applicable Circulars, AUM SECURITIES PRIVATE LIMITED is reviewing these alerts and taking appropriate actions after carrying out due diligence viz. either disposing off alerts with appropriate reasons/findings recorded or filing Suspicious Transaction Report (STR) with FIU-India in accordance with provisions of PMLA (Maintenance of records) Rules,2005.

Receipt of Alerts from Exchanges / generated on E-Boss & ENIT

In order to facilitate effective surveillance mechanisms at the Member level, the Exchanges provides following mandatory transactional alerts along with other alerts to the trading members through e-BOSS (BSE) and ENIT (NSE). This facilitates the trading members to effectively monitor the trading activity of their clients.

BSE – Alerts can be downloaded by log-in into e-Boss Surveillance System.

NSE - Alerts can be downloaded by log-in into ENIT- ENIT Compliance- Investigation Department – Transactional Alerts.

b. Suspicious / Manipulative activity identification and reporting process

i. Suspicious / Manipulative activity identification and reporting process include gathering of client information, analysing client activity, seeking documentary evidence required, monitoring the trading activities, record maintenance and reporting.

ii. Client Information

Implementing Anti Money Laundering Policy viz a viz KYC standard for new clients acceptance and implementing high standard of due diligence process.

Periodic updating of client database and having system to do continues due diligence.

Identification of Beneficial Ownership

Identification of Multiple Accounts/common Accounts/group of clients

Analysing common emails, mobile numbers, address and other linkages

Other publicly available information

iii. Analysing Client Activity

Client’ trading pattern or activity shall be analysed based on Alert received/generated through exchange system. There are alerts which require only client confirmation or explanation or trading history analysis and there are other alerts which require documentary evidence viz. Bank Statement or Demat Statement for +/- 15 days as per Exchange requirements.

Transaction Alerts falling under Sr. No. 1 & 2

It requires only trading history analysis, last 12 months trading turnover analysis, turnover v/s income range comparison and client confirmation on sudden activity in dormant account. Member shall also take reasonable steps to analyse these types of alerts and shall be required to close the status of alerts or report the exchange in case of any adverse findings.

In case of transactional alerts from Sr. No. 3 to 13,

Apart from analysing trading history and income comparison, member shall take explanations regarding alerts received from the exchange and also ask for +/- 15 Days Bank Statement in case of Funds Movement and Demat Statement in case of movement of shares and Compliance Manager/Operation Manager shall verify whether the funds/securities for the settlement of such trades actually belongs to the client for whom the trades were transacted or not.

Members shall record observation for such transactional alerts and maintain records with regards to such analysis. In case, client failed to provide explanation or documentary evidences, such client shall be deactivated and shall be activated only after they satisfy all requirement of this policy.

3. In addition to the above alerts, AUM SECURITIES PRIVATE LIMITED has framed its Surveillance Policy for Stock Broking to generate alerts as per guidance provided by SEBI/Exchanges. The same has been listed out below:

1. Trading activity in a single day by one client or group of clients who have contributed more than 5% in a single scrip or a single derivative contract.
2. A client or a group of clients who are either new client/ clients or who have reactivated their trading account after significant time gap and who have contributed more than 10% of the total trading volume of a single scrip or derivative contract in a single day.
3. Client or a group of clients dealing frequently in small quantities. Minimum market lot in a scrip / contracts.
4. Trading activity of a client found to be disproportionate considering a reported income range detail or net worth.
5. A client who has submitted frequent modification request for changes in his/her/its demographic details of address, email id, mobile number, bank details etc.
6. A client or a group of clients who have been found to have direct or indirect connection with a listed company and who have executed any transactions prior to any dissemination of any price sensitive information by such listed company.
7. A client or group of clients having more than 10% volume of any scrip listed in for ‘information list’ or ‘current watch list’.
8. A client or group of clients which persistently earn or incur high amount of Profit/loss through their trading activities or clients who appear to have executed trades with the objective of transfer of profits or losses.
9. A client who is having turnover more than 10% of the total turnover of the script and has pledged of his/her/it’s such holding for margin purpose and who has also significant trading volume in the same scrip which he/she/it holds.
10. In case of a client or a group of clients who have been identified as per any of the above 9 criteria and whose orders are placed through a dealing office which is far from such client’s address as per his/her/its KYC.
11. A client having demat account with AUM SECURITIES PRIVATE LIMITED and who has holding in a scrip of more than 5% of paid-up capital of a listed company which has received the same shares though off-market transfer.
12. A client who has received shares of a listed company through multiple off-market transfer and has pledged such shares.
13. Identification of IP addresses of clients to identify multiple client codes trading from same IP address.
14. Clients who are connected with each other as per key KYC parameters of the clients as updated by respective client.

a. The stock broking operation shall review the alerts provided by Stock Exchanges on an ongoing basis and shall ensure to process the same as early as possible. In any case, these alerts will be processed within 45 days from the date of generation of the alert by the Stock Exchanges.

In case of any delay in disposing off any alerts, reasons for the same shall be recorded.

b. The stock broking operation shall, in case of reporting of any transaction as STR to FIU- India, shall evaluate whether any further action including suspension of the trading activity of the suspect client(s), reporting to Stock Exchanges/SEBI and/or other Regulatory Authorities.

c. The stock broking operation shall maintain records for such period as is prescribed under PMLA (Maintenance of Records) Rules, 2005, and Securities Contracts (Regulation) Rules, 1957 and any other directions as may be issued by SEBI/ Stock Exchanges from time to time.

4. Surveillance Policy for operations as Depository Participant:

a. CDSL is providing transactional alerts on Fortnightly basis based on threshold defined by CDSL to the all the Depository Participants including AUM SECURITIES PRIVATE LIMITED through CDSL report download utility. As per applicable Communiques, AUM SECURITIES PRIVATE LIMITED is reviewing these alerts and taking appropriate actions after carrying out due diligence viz. either disposing off alerts with appropriate reasons/findings recorded or filing Suspicious Transaction Report (STR) with FIU-India in accordance with provisions of PMLA (Maintenance of records) Rules,2005.

b. In addition to the same, AUM SECURITIES PRIVATE LIMITED has framed its Surveillance Policy for Stock Broking operations to generate alerts as per guidance based on following criteria:

1. Multiple Demat accounts opened with same PAN/mobile number/ email ID/ bank account details/ address. While reviewing BO account details, the details of existing BO shall also be considered.
2. Email/ letters sent to clients on their registered email ID/address which bounces/ returns undelivered.
3. A BO who has submitted modification request for changes in his/her/its demographic details of address, email id, mobile number, bank details, POA holder, Authorized Signatory etc. at least twice in a month.
4. Frequent off-market transfer of securities more than twice in a month without genuine reasons.
5. Off-market transactions not commensurate with the income/net-worth of the BO.
6. Pledge transactions not commensurate with the income/net-worth of the BO.
7. High value off-market transfer immediately after modification of either email ID/mobile number/ address without genuine reason.
8. Review of reasons for off-market transfer provided by the BO which appears non-genuine based on either profile of the BO or on account of reason codes, including frequent off- market transfer with reason code gift/donation to unrelated parties and/or with reason code off-market sales.
9. Sudden increase in transaction activity in a newly opened account in a short span of time. An account in which securities balance suddenly reduces to zero and an active account with regular transaction suddenly becomes dormant.

c. The DP shall review the alerts provided by CDSL on fortnightly basis and shall ensure to process the same as early as possible. In any case, these alerts will be processed within 30 days from the date of generation of the alert by CDSL.

1. In case of any delay in disposing off any alerts, reasons for the same shall be recorded.

d. The DP shall identify suspicious/ manipulative activities undertaken by any client through monitoring of transaction(s).

e. The DP shall, in case of reporting of any transaction as STR to FIU-India, shall evaluate whether any further action including disassociating with the suspect client(s) and reporting to CDSL/SEBI and/or other Regulatory Authorities.

f. The DP shall maintain records for such period as is prescribed under PMLA (Maintenance of Records) Rules, 2005, and Securities Contracts (Regulation) Rules, 1957, SEBI (Depository and Participants) Regulations,1996, DP Operating Instructions and any other directions as may be issued by SEBI/ Stock Exchanges from time to time.

5. Process of disposal of alerts and action:

a. The designated officials who are tasked to review the alerts on daily basis shall review the same.

b. If the designated official finds after review and due diligence that the alert is required to be closed, the official shall close the same with appropriate remarks.

c. If the designated official after due diligence and making such inquiry as such official finds necessarily comes to a conclusion that the alert warrants an action, the official will forward the same with his/her views to the Compliance Officer for his/her approval.

d. The Compliance Officer, after review of the alerts along with the submitted comments of the designated official, decides to close the alert, he/she shall close it with appropriate remarks. If the Compliance Officer finds that action in respect of such alert is warranted, he/she shall take such actions including filing STR with FIU-India, informing to Stock Exchanges and CDSL and/or discontinue the relationship with the client.

e. The report of such instances along with adverse observations and details of actions taken shall be submitted to the Stock Exchanges/ CDSL within 45 days from date of identification of such instances.

f. The records of alerts generated, disposed of as closed and details of action taken wherever applicable shall be maintained with such security measures as would make such records temper proof and the access is available on to designated officials under the supervision of the Compliance Officer.

6. Obligations of Compliance Officer/ Designated Director and Internal Auditor of the Stock Broking Business and Depository Participant operations:

a. The surveillance activities of the stock broking operations and that of DP operations shall be conducted under overall supervision of the Compliance Officer of EQUIRUS AUM SECURITIES PVT. LTD. The policy implemented by AUM SECURITIES PRIVATE LIMITED in accordance with the provisions of Prevention of Money Laundering Act, 2002 and rules made thereunder as Reporting Entity.

b. A quarterly MIS shall be put up by the Compliance Officer to the board and the Designated Director giving number of alerts generated during the quarter, number of alerts closed, number of alerts on which action taken with details of action taken and number of alerts pending at the end of the quarter along with reasons for pendency and action plan for closure. The Board as well as the Designated Director shall be appraised of any exception noticed during the disposal of the alerts.

c. The Designated Director shall be responsible for all surveillance activities carried out by the trading member.

d. AUM SECURITIES PRIVATE LIMITED shall submit its surveillance policy to the internal auditor for stock broking operations and internal auditor of DP operations for review and shall satisfy the queries/questions, if any, raised by the internal auditor with respect to the implementation of the surveillance policy, its effectiveness and the alerts generated.

7. Obligation of Quarterly reporting of status of the alerts generated for Stock Broking Operations and Depository Participant Operations:

a. A quarterly statement providing duly approved status of alerts in respect of stock broking operations on quarterly basis shall be submitted to BSE and NSE in the following format within 15 days after the end of the quarter:

A. Status of Alerts generated by the Trading Member:

B. Details of alerts referred to the Exchange

C. Details of any major surveillance action taken (other than alerts referred to Exchanges) if any during the quarter

In case AUM SECURITIES PRIVATE LIMITED does not have anything to report, a “NIL Report” shall be filed within 15 days from the end of the quarter.

b. A quarterly statement providing duly approved status of alerts in respect of DP operations on quarterly basis shall be submitted to CDSL in the following format within 15 days after the end of the quarter:

A. Status of Alerts generated by the Depository Participant:

B. Details of any major surveillance action taken (other than alerts reported to CDSL) if any during the quarter

In case AUM SECURITIES PRIVATE LIMITED DP operation does not have anything to report, a “NIL Report” shall be filed within 15 days from the end of the quarter.

Data Privacy and Security

We are committed to protecting the privacy of our clients and have implemented necessary measures to safeguard personal information:

Two-Factor Authentication (2FA): Clients must use 2FA for secure access to trading platforms and back-office systems.

Data Encryption: All sensitive data is encrypted during transmission and storage.

Access Controls: Strict access controls are enforced to limit data access to authorized personnel only.

Regular Audits: Periodic audits are conducted to ensure compliance with data protection standards.

These measures are in line with SEBI and exchange guidelines for internet-based trading.

Client Responsibilities

Clients are expected to:

Maintain the confidentiality of their login credentials and 2FA information.

Promptly notify us of any unauthorized access or suspicious activities.

Provide accurate and up-to-date information during account opening and KYC processes.

Comply with all applicable laws and regulations governing trading activities.

Failure to adhere to these responsibilities may result in account restrictions or termination

8. Review of Policy:

The Surveillance Policy shall be reviewed on periodic basis and at least once a year (01/10/2025) by the Compliance Officer to ensure that the same is updated in line with market trends, updated regulations, and practices.