Brokers to get alerts on suspicious trades in client accounts

Brokers to get alerts on suspicious trades in client accounts

Leading bourses BSE and NSE have put in place a mechanism that will generate automated alerts for stock brokers whenever suspicious transactions are detected in their clients’ accounts.

The alerts will be generated in case of unusual changes in the trading pattern of the clients, sudden trading in dormant accounts as also in suspected cases of circular trading, ‘pump-and-dump’, front running and ‘wash-sale’ activities.

Trading members have also been asked to analyse the trading activity of clients on the basis of transactional alerts and can seek explanations from them for entering into such transactions. They can seek documentary evidence such as bank statement and demat transaction or any other documents from the clients, as per the alerts triggered by their trading activities.

Besides, brokers have also been asked to conduct their due diligence procedures for the clients on a continuous basis. The two bourses have asked their members to put in place the required procedures, policies and processes after proper approvals of their relevant authorities latest by May 15.

The exchanges said that trading members are required to ensure that key KYC (Know Your Customers) parameters are updated on a periodic basis as well as latest information of the client is updated in UCC (Unique Client Code) database of the bourses.