Risk Management

Consolidated Policy on Risk Management System

It is for the information of all the Clients/Sub brokers/Authorized Persons/Employees of M/s. BgSE Financials Limited (hereinafter referred as “BFSL”) that a Master Policy on Risk Management is reproduced as below for the smooth functioning of the operational activities of the Company.
  • Cash Segment

    • Minimum BMC of Rs. 50,000/- (Rupees Fifty Thousand) (in cash only) need to be kept with BFSL by Sub-broker/AP for each Exchange for Cash Segment.
    • Additional Capital is collected in the form of Cash/FDR/ but in the ratio of 25:75
    • For DBT member, deposit of Rs.2, 00,000/- (Rupees Two Lakhs only) in cash as minimum balance required for Sub broker and in addition to that, Rs.1, 00,000/- (Rupees One Lakh only) per Exchange is also required to be deposited.
    • Additional deposit, where given, can be in ratio of 25:75 where 25 % in cash and 75% in form of FDs.
    • However, shares are not accepted for “CM” segment.
    • BMC deposit with Parent Exchange cannot be transferred to BFSL
  • F & O Segment

    • Minimum BMC of Rs. 1,00,000/- (Rupees One Lakh) (cash only) need to be kept with BFSL by Authorised Person for F & O Segment.
    • Client needs to maintain minimum capital of Rs.20, 000/- (Rupees Twenty Thousand) (cash only) in F&O segment.
    • Additional Capital is collected in the form of Cash/FDR/Securities and should be in the ratio of 50:50 only, where 50% is cash/FDR, and 50% is securities.
No restriction on Turnover Limit. (In-traday )
  • Cash Segment

    • Gross Exposure allowed to the Sub-broker/AP across his/her Clients shall be 20 times of the capital adequacy deposit brought in by the Sub-broker/AP/Client (in case of client specific arrangements) (Base Minimum Capital plus additional capital*) depending upon market condition.
    • Exposure is given at Sub-broker/AP level.
    • Sub-brokers/AP may fix the exposure at their discretion to respective Client, subject to the total exposure permitted to them.
    • No margin shall be collected in cash market as pay-in of funds and securities itself is collected on T+1 day
  • F&O Segment

    • The Authorised Person and Clients will have to pay initial exposure margins, span margins and any other margin as specified by the relevant authority from time to time on real time basis. If at any point of time applicable margins in the account of any applicant reaches 100% of limit allowed in F&O segments, system shall not accept fresh orders from those users and terminal shall be in ‘squaring off’ mode. Under these circumstances, APs/Clients will have to square off his/her positions or deposit additional margins. Margins in F&O can be deposited in the form of cash, FDR or other approved securities and that deposit is to be made in the prescribed ratio of cash and non cash components. At present, it is 50:50 for APs/Clients i.e 50% cash and 50% non cash components. Here, FDR/BG shall be considered as cash equivalent for calculating the above said ratio.
    • Any M2M margin will be collected from AP’s/Client’s bank account on T+1 day and BFSL may call it on T-day as well if the circumstances warrant for the same, i.e in the event of huge volatility.
Free, i.e. unutilized margin available in cash of any Sub broker/AP/Client with the Company may be released only upon request on T+1 day if the amount is upto Rs.5,00,000/- (Rupees Five Lakhs Only) and on T+2 if the amount is more than Rs.5,00,000/-. It can be released by BFSL itself on T-day but in case of shortfall in pay- in only. FDR shall be released upon receipts from respective Exchange.
  • On ‘T ‘day

    • Pay-in obligations of shares of Clients are lifted from ‘Client’s Beneficiary A/c’ (if holdings are available for respective Clients) NSE & BSE CM A/cs.
    • Further those clients, who have given POA, the shares are lifted from their respective DP beneficiary account maintained with BFSL DP.
    • For those clients who have given POA, but shares are not available in beneficiary A/c, BFSL uploads instruction for the settlement obligation for the respective Clients (the instruction status shall be shown as ‘OVER DUE ‘ ), if shares are available at any time before T+2 Pay in dead line, the above instruction shall be settled.
    • The Clients who have not given POA will transfer the shares from their DP account to company’s pool a/c or client Beneficiary a/c themselves against their obligations.
  • On T +1 day

    All the above ‘T’ day’s process continues
  • On ‘T’ day

    The shares received in BFSL CM pool a/cs on ‘T’ day, towards client’s settlement obligations for NSE & BSE, are uploaded to NSCCL and BOISL as early pay in.
  • On T +1 day

    The shares received in BFSL CM pool a/cs on ‘T+1’day, towards clients settlement obligations for NSE & BSE, are uploaded to NSCCL and BOISL as early pay in.
  • For Cash Segment

    • Each Sub broker is treated as a particular ‘Branch’.
    • BFSL opens separate bank account for each Sub broker (branch) concerned, in the name and style of ‘BgSE Financials Ltd’ (with Sub broker code) and account is operated by authorized BFSL officials only.
    • The branch Bank A/cs are opened either in Canara Bank, HDFC Bank or ING Vysya bank.
    • The Client’s pay-in cheques are deposited in their respective branch A/c.
  • On ‘T+1’ day

    • Exchange wise/ Settlement No. wise * pay in obligation of a branch is collected from the respective bank (branch) accounts on net basis.
    • BFSL sent debit advises to respective banks towards pay-in obligation of branches. (Canara bank by soft copy, ING VYSYA bank by hard copy of pay-in statement, and HDFC bank, pay in is collected from BFSL HO online).
  • On T+2 days

    Any shortfall of pay-in obligation on T+1 Day from any branch shall be collected on T+2 day.
F & O Segment
  • In F&O segment, Clients are of 2 categories, such as:-

    • Clients having bank account with any of the three designated banks (CANARA Bank/HDFC Bank/ ING VYSYA Bank).
    • Clients who do not have bank account with any of the designated banks and such Clients’ F&O trading accounts are treated as “F& O Running Account”
  • On ‘T’ Day

    F&O Bills are posted to clients’ F&O ledger a/c on a daily basis.
  • On T+1 Day

    • For the Clients who have opened bank account with CANARA Bank/HDFC Bank/ ING Vysya Bank:
      • Settlement pay-in amounts are collected from clients’ respective bank accounts.
      • Receipt entries are posted to clients’ F&O ledger a/c.
    • For ‘F&O – Running Account’.
      • BFSL is having CA-2911 with Canara Bank for maintaining settlement funds of those clients who have opted for ‘F&O Running Account’.
      • Clients need to maintain credit balance in their F&O Settlement Ledger accounts.
      • F&O bills are posted to clients’ F&O Settlement Ledger account daily.
      • If Client’s F&O Settlement a/c is having debit balance:
        • The amount is transferred from F&O Capital/Credit balance, if any available, in cash segment to F&O settlement a/c.
        • Further shortfall, if any, Authorized Person is informed to make arrangement to collect the funds from clients on an immediate basis.
        • Payment cheques received from Clients are deposited to CA-2911-‘F&O Running A/c’ by giving credit to respective Clients’ F&O settlement ledger A/c.
        • The sum total of all the clients debit balances for the bill date are transferred from CA-2911 to F&O settlement A/c of BFSL on a daily basis.

The pay-in accounts must be collected from branch bank account of the respective Sub broker in cash segment and from Clients/APs’ bank account in F&O segment on T+1 day. If there is any default in pay-in amount, then warning shall be issued to make pay-in immediately followed by suspension of trading in the respective segment on all the terminals of Sub brokers. The trading is restored only upon the realization of pay-in amount along with penalties. At the second level where the debts outstanding cross a threshold of T+5 days, the respective client’s account with debit balance for more than T+5 days is suspended for further buying. However, in certain cases and on written request of Sub broker, BFSL may allow buying where sufficient margin is there and Sub broker has made the pay-in at Branch Level but this is not permitted beyond 25 days under any circumstances.

addition to the above, following penal action for default/delay in pay-in shall be there as enumerated in the following table:

Particulars Action
If delay/delay in pay in is upto two times during the last two months Nil
If delay/delay in pay in is upto three times during the last two months Exposure will be reduced by 20% at Branch level/Authorized person level.
If delay/delay in pay in is upto four times during the last two months Exposure will be reduced by 30% at Branch level/Authorized person level.
If delay/delay in pay in is upto five times or more during the last two months Exposure will be reduced by 40% at Branch level/Authorized person level.

The abovementioned reduction in exposure shall remain for three months in case of first time delay/ default and for six months in case of repetitive instances. The exercise shall be undertaken on the first trading day of each month.

  • For those clients who have not opted for ‘Running Account’

    • On T+2 day, pay-out of securities are transferred to the Clients’ own beneficiary Id, provided Clients’ account does not have any debit balance.
    • For clients having debit balance, the shares are transferred to ‘Running a/c.’
  • For those Clients who have opted for ‘Running a/c’

    On T+2 day, the shares are transferred to Clients’ ‘Running a/c.’
  • Pay out of securities from ‘Running a/c”

    • Based on Sub-broker/AP Request.

      The pay-out requests received through Sub brokers are processed on a daily basis and the shares are transferred from ‘Running a/c’ to Clients’ ‘Beneficiary a/c’ (of those clients who have cleared the debit balances).

    • Transfer of shares from Running A/c to Client beneficiary account for those clients who are not opted for Running A/c. (those shares moved to Running A/c. due to debit balance on T+2 day).

      Every Wednesday and Friday, BFSL, at its own volition, transfers the shares from ‘Running a/c’ to respective Clients’ ‘Beneficiary a/c’. (For those Clients who have cleared the debit balances as on the time of transfer.)

    • Quarterly settlement of shares (Pay-out)

      The shares which were kept in ‘Running A/c’ are transferred by BFSL to respective Clients’ ‘Beneficiary a/c’ on the last day of every calendar quarters, provided clients do not have any debit balance.

  • Cash segment: on t+2 day:

    Settlement wise, payout of funds are transferred to the respective branch accounts, provided the particular branch is having pay-out for the settlement on net basis.
  • For those clients who have opened Bank account with CANARA Bank/HDFC Bank/ ING Vysya Bank

    • On T+1 Day
      • Settlement pay-out amounts are transferred to Clients’ respective bank accounts.
      • Payment entries are posted to clients F&O ledger a/c.
    • Note: F&O Settlement ledger a/c becomes ‘Zero balance’ on T+1 day. However, F&O Capital Ledger credit balance continues till Authorized Person gives request for the release. However, the same is to be settled on quarterly/monthly basis (as per the choice of the clients).

  • For ‘F&O – Running Account’

    • Daily F&O bills are posted to Clients’ F&O Settlement Ledger account on ‘T’ day.
      • On T+1 day

        The sum total of all the Clients’ credit balances for the bill date are transferred from F&O settlement a/c of BFSL to CA-2911 (Running a/c) on a daily basis.

        Note: Both, F&O Settlement ledger credit balance and Capital ledger credit balances, if any, are continuing till Clients/AP give request for the release of funds and they are settled once in quarter/month.

In order to facilitate effective surveillance mechanism system, BFSL shall investigate the alerts generated by the Exchange. The procedure for the same is as provided below:
  • Alerts to be downloaded provided by the Exchange: -

    Exchange shall be providing the transaction alerts, which can be of following types:

    • Significant increased in client activity
    • Sudden trading activity in dormant accounts
    • Client(s)/group of clients dealings in common scrips
    • Client(s)/group of clients concentrating in a few illiquid scrips
    • Circular trading
    • Reversal of trades
    • Wash sales
    • Orders away from market rates

    The above mentioned transactions are an indicative list. There may be more alerts in addition to the above said type of alerts

  • Analysis

    Alert generated on the above mentioned basis shall be analyzed by Surveillance Department and C &S Department, which may include

    • To seek clarification from such client(s)/group of clients for entering into such transactions
    • To seek documentary evidence, such as, Demat transaction statement/or any other documents related to such transactions and the statement shall be at least +/- 15 days from the date of transaction. Financial details, post trading pattern of client(s)/group of clients and publically available information should also be used to analyze the generated alerts.
    • After analyzing the documentary evidence and explanation furnished by the client(s)/group of clients, Surveillance Department and C &S Department shall record its observations for such transactions of client(s)/group of clients within maximum of 30 days of date of alert generation.
    • If there is any adverse observation, the same shall be reported to the respective exchange within maximum of 45 days of alert generation.

KYC department is to carry out the due diligence of clients of the Company on a continuous basis. It is to be made sure that the KYC parameters are updated on periodic basis, i.e, address proof, telephone numbers, E-mail Ids PAN details, and financials. Similarly, KYC department, on the basis of information, can establish groups/associations amongst clients, to identify multiple accounts, common accounts/group accounts of clients

The above said process will be directly under the control of the Whole Time Director, Chief Operating Officer & Compliance Officer, of BFSL.

Under Section 54 EC of Income Tax, 1961 an investor need not pay any tax on any long-term capital gains arising on sale of any asset, if the amounts of capital gains are invested in certain specified bonds. Rural Electrification Corporation Limited (REC) & National Highways Authority of India (NHAI) are permitted to issue capital gains bonds under Section 54 EC.

Some key features of Section 54 EC bonds are:

  •   AAA rated
  • Interest is taxable although no TDS is deducted
  •  Lock-in of 3 years and non- transferable
  •  Minimum investment-1 Bond amounting to ` 10,000/- and maximum investment-500 Bonds amounting to ` 50 lakhs in a financial year
  • Rate of Interest 5.25% p.a. payable annually
  •  Bonds can be held in Demat /Physical Form
  • Facility of Payment of Interest and Redemption through NECS
  • The Bonds will automatically redeem after expiry of three years
Prevent unauthorized transactions in your account --> Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day.......... Issued in the interest of Investors is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account