Policies

INSIDER TRADING POLICY FOR TRADING IN SECURITIES of ALDAN INVESTMENTS PVT LTD having SEBI Registration No. INB010824135

SEBI has enacted the Prohibition of Insider Trading Regulations, 2002 AND subsequent insider trading regulations 2009 which is applicable to all market intermediaries like ALDAN INVESTMENTS PVT LTD Pursuant to the said regulations and amendments in the said regulations from time to time, it is necessary that ALDAN INVESTMENTS PVT LTD. being a capital market intermediary, do comply and follow the prescribed procedures in order to prevent the misuse of price sensitive information which an employee/client/director/officer of the company may have access to.

The Board of Directors at their Committee meeting held on 01/04/2007 have examined the provisions of the said Regulations and have amended the code of trading in securities by all the Employee/clients.

For the purposes of implementation of the code for trading in securities by employee/clients, definitions along with explanations where thought necessary are given as under:

II. DEFINITIONS:

“Securities” include-

Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;
Derivative;
Units or any other instrument issued by any collective investment scheme to the investors in such schemes;
Government securities;
Such other instruments as may be declared by the Central Government to be securities; and
Rights or interests in securities.

Explanation: Mutual fund units, derivative products like futures and options are also covered.

“Client Company” means a listed company which has given mandate or proposes to give any mandate in relation to preparation of any research report, credit rating report, appraisal report or valuation report.

“Compliance Officer” means a senior officer(s) of the Company who are appointed as Compliance Officer(s) for overseeing the compliance with Prohibition of Insider trading.

“Price Sensitive Information” means any information which relates directly or indirectly to a company and which if published is likely to materially affect the price of securities of such company and includes-

periodical financial results of the Company
intended declaration of interim/final dividend
issue of securities or buy-back of securities
any expansion plans or execution of new projects
amalgamation, mergers or takeovers,
disposal of the whole or substantially the whole of the undertaking,

any significant changes in policies, plans or operations of the Company

III. Basic procedures for personal investments:

Moral conduct: Every employee/client is expected to put the interest of the Company before his/her personal interest.

Prevention of misuse of Price Sensitive Information: Employee/clients should not use price sensitive information to buy or sell securities of any sort, whether for their own account or relatives.

Transactions: All Employee/clients should do all their transactions only through ALDAN INVESTMENTS PVT LTD LTD.

No Speculation or short sales permitted: Employee should not speculate in shares/derivatives. All purchase transactions have to be delivery based. Selling securities for which delivery has not been taken is prohibited.

Front Running transactions are strictly prohibited. Front running means transacting in a security knowing fully well that ALDAN INVESTMENTS PVT LTD also intends to transact in the same security if any.

No passing of price sensitive information: Designated Employee/clients/Directors/ Dependent Persons are prohibited from passing on information to anybody inducing him/her to buy/sell securities.

Special Restrictions of Employee/clients in research department:
Designated Employee/clients/Directors working as Research Analysts for preparing research reports of a client company shall disclose their shareholding/interest in such company to the compliance officer and shall not trade in securities of such client company for a period of atleast 30 days from publication /preparation of such report. For this purpose, any employee/client in the research department should inform the company’s name of which is preparing a report and give an undertaking in the format prescribed in Annexure .

In case any employee/client leaves ALDAN INVESTMENTS PVT LTD, he/she shall be required to give an undertaking that he/she will not deal with any transaction on the basis of unpublished price sensitive information.

Penalty for contravention of code of conduct

Any Directors/Designated employee/clients/dependent persons who trades in securities or communicates any information or counsels any person trading in securities, in contravention of this code of conduct may be penalised and appropriate action may be taken against him which may include disciplinary action by the company, which may include wage freeze, suspension, etc.

RISK MANAGEMENT POLICY

Limit Setting:-

Limits shall be monitored on daily basis, taking following criteria’s: Turnover, Exposure, Past trends, Location, Deposit/Collateral.

Margins:-

Client level margin will be at management discretion in cash segment Criteria to collect margin will be on the basis of volume of client and brokerage earned from clients.

Same client should not figure in default list in more than 5 days in a month

Trading:-

Trading in illiquid scrip shall not be permitted. On detection of such trading, the risk manager shall use his discretion to shutdown the terminal after intimating branch manager and sub broker

Pay-in Of Fund & Stock:-

Third party pay-in of securities & fund will not be accepted. Same way pay out of shares and fund will be directly done to client account only.

Settlement of Fund & Securities:-

Settlement of Fund & Securities will be made once in a quarter incase of clients authorizing through running account. In case of retention of fund & securities if any, the reason for the same shall be provided in client ledger confirmation.

Collections:-

Cash will not be accepted under any circumstances except cheque bouncing.

Collection of cheques from clients must be done by T+2 days except clients who have authorized us to have running account balance.

Internal Control Policy

1) Procedures

a) Client Registration

We are having 3898 active clients as on 31-Mar-2010.
Yes, all the client registration documents are maintained and dully filled in the prescribed format from all the clients.
Generally walk-in clients are not entertained by us. We are not having any marketing team to get the new business. Generally, clients are introduced by sub-brokers, authorized persons or by our employees.
Financial Proof like Bank Statement, Copy of Updated Bank Pass Book for individual clients and Income tax Return Proof for corporate account etc are obtained by the clients for assessing financial capability of the client.
Documents are maintained with registered office and same are available whenever required by us or by statutory authorities.
On request of walk-in client for desire to commence trading with us, we explain the process and documents required for registration. Also we explain them the risk involved in dealing in Securities. On receipt of documents along with client registration documents duly filled in, the forms and documents are checked by our designated employee who cross verifies original documents. PAN no. as per copy of PAN card is cross verified with income tax of india.gov.in site and one copy of the same is attached with KYC documents. Similarly he does in person verification and signs in KYC documents. In case the client is introduced by Sub-broker, tripartite agreement is obtained duly signed by Sub-broker and client. The said documents are cross verified by person in charge of creating UCC in Back Office and at Exchange level. On receipt of confirmation, one copy of KYC documents are given to Client and acknowledgement for the same is obtained.

b) Closure of client accounts / Dormant Account

What type of documentation (both inward and outward) you undertake for closure of account - On the request of client, we take an account closing letter from the client and then the account is deactivated. In case of any dispute with clients, new trades are not executed and account is suspended.
Incase of dormant account (six month), what extra caution you take before execution of trade in such account - In case there is interval of more than six months between last trade and fresh order, dealer immediately confirms the identity of the client and then only fresh order is placed.
Transfer of client from one branch to another – An account transfer letter is taken by the client and the position is square off in the old account and then new account along with the new client code is activated in back office as well as UCC is uploaded to the exchange.
In case there is interval of more than 2 years between last trade and fresh order, dealer immediately confirms the identity of the client and then only fresh order is placed. We have handed over the list of dormant account to our dealers which we update periodically.

c) Order Receipt and Execution

Orders are placed by client through telephone, e-mail, fax or personal visit by client at dealing office. List of specified clients is allotted to specified Dealers and no other dealer is allowed to execute trade unless authorized in certain circumstances by Management.

d) Sending Contract Notes, Daily Margin Statement, Quarterly Statement of Accounts
to client

We sent physical as well as digital CNs to clients and daily logs for the same are kept. We have taken consent from clients for sending CNs via email specified by them. Daily margin statements are also sent through e-mail ID of the clients and logs are being maintained. Quarterly statement of accounts is sent in soft copy within one month from the end of the quarter.
If the client wants to change his email address a letter from the client is obtained.

e) Risk Management

Policy of collection of pay in, margin, limits setting for exposures & turnover for clients, terminals, branches & sub-broker level. Pay-in of funds in Cash segment and MTM in F & O segment is collected from client on T+1 day basis. Collection of Margin in Cash segment is at the discretion of Management. Initial Margin as prescribed by Exchange in F & O segment is collected from clients on upfront basis. Collateral securities are also collected in advance from clients towards margin. Limits for exposure and turnover are set according to income declared by client in KYC documents and money deposited by client before trading.

Terminal wise limits for branches & sub-brokers are set by Management according to the requirements.

Till receipt of pay-in of funds from clients, shares purchased by clients are kept in our Beneficiary account. Debit balances are regularly monitored by director and follow-up is made with clients and sub-brokers. Periodicity of such monitoring every week, outstanding balances are reviewed by Management

Soft Copy Risk management Policy and Internal Control Policy is already given during Inspection.

f) Liquidation of Client Position

First clients are informed by mail that its position would be squared off incase the client is default. Soft copy of Daily margin report is mailed to client which helps the client to know its margin position. However in case client does not make payment & if the margin is not sufficient the shares are sold/ as per exchange guidelines or position is squared off in case of F&O segment.

g) Policy of Internal Shortage

We follow exchange policy for internal shortages.

h) Transfer of Trades

We do not transfer any trades between the clients except in case of punching error by dealer. Dealers are warned to enter correct client code in Terminals and no. of error trades per Dealer is reviewed periodically.

i) Investor Redressal Mechansim

Any complaints received from client either at HO or at branch is properly read and response is given immediately to clients. Any complaints received through exchange are replied immediately within time frame given in the letter. E-mail ID provided for investor grievances are regularly checked by management.

E-mail Id for redressal of investor grievances are informed to the clients and it is printed on the Contract Note.
Investor complaints are figuring out as per the Exchange, All records are recorded in the Register of complaints either received by way of letter or telephonic call, personal representation, e-mail, etc.
Compliance Officer of the Company monitors the pending investor complaints and redressal.
P O D of courier for hard copies sent to the clients is maintained and log file of the soft copy mailed to the clients are kept for the record.
We ensure that our back office staff place accurate client code on the cheque and demand draft received from clients which are properly accounted in the respective client ledger.
We are maintaining only one back office software named Lidha Didha.
In case there is interval of more than six months between last transaction and fresh transaction, back office staff immediately confirms the identity of the client and then only further procedure is conducted.
POA executed with the client is only for Pay-in purpose and it allows the client to operate bank & DP account on his own. POA is given for the limited purpose of movement of funds and securities for meeting pay-in obligations / margin obligation of the respective client only. Our Staff first check POA and then mapped with the back office.
NA.

j) Allotment Surrender Of trading Terminals, Opening & Closing of Branches

Terminals are allotted after scrutiny of NCFM certificates for NSE cash segments and NCFM /BCD certificates in case of F & O segment. Details of terminal ID are uploaded through ENIT. In case of surrender of trading terminals IDs are deactivated in ENIT.

Before opening any branches/sub-brokers offices proper due diligence is carried out. In case of closing of any branches, one month notice is issued to all the clients registered with respective branches we follow exchange prescribed guidelines before surrender of sub-broker registration.

k) Branch / Sub-broker, Audits

Branch inspection is been conducted. And the areas covered in such inspections. Are mentioned below:

Mechanism of pay-in and pay-out of funds and securities - Generally pay-in and pay-out of funds & securities is taken place at HO level.
Statement of Accounts are issued from the Registered Office itself
No cash dealing with clients are done neither by the branch nor by the registered office.

Contract notes are issued directly by the registered office.
Uploading of CTCL terminals are done by registered office
Shifting of NEAT terminals will be done by the registered office itself.
We have instructed our branch to keep watch on if any illegal or Unauthorised activity carried out at the said location.

Terminals givens to branch are operated by approved users only.
No advertisement has been given by branch.
Notice Board and SEBI registration certificate is displayed properly as required by NSE

Internal Audit System is conducted every year.
The irregularities and recommendation / suggestion pointed out in Internal Audit reports are placed before Board of Directors.

The recommendations / suggestion set in the Internal Audit Report is implemented on forth night basis.

l) PMLA

We have included all the important provisions prescribed in AML Act in our policy. Principal Officer is responsible for implementation and periodic review of policy. All steps are taken as prescribed in policy to identify sufficient information in order to identify persons who beneficially own or control securities account. We follow PMLA policy for categorizing the clients with Risk parameters and obtain additional documents if needed. Unless and until all requisite documents are obtained from client as prescribed by SEBI, account is not opened. Before registering a client, Exchange/Regulators sites information on such entities are verified. We do due diligence of special category clients as per our PMLA policy. We have set certain parameters like highest Order quantity, turnover of client vs his financial position, etc to generate alerts. We scrutinize the alerts generated on case to case basis and after through review with consent of Management arrive at a decision. As prescribed in PMLA Policy, we have designated Principal Officer for immediate reporting of any suspicious transaction to FIU. Periodic information/training is provided to staff members by Principal Officer.

CLIENT CODE MODIFICATION/TRANSFER OF TRADE POLICY

Following procedure is adopted when there is an error by dealer while punching order placed by client. The error will be genuine & non existence of client code & being entered in Terminal or wrong client code entered by a Dealer:

CLIENT CODE MODIFICATION DURING MARKET HOURS

On execution of trade, Dealer immediately informs Client on telephone or confirms trade if client is sitting in Dealing office. If client do not confirm the trade or refuses to confirm the trade as the said trade is not belonging to him, Dealer immediately take steps to find the correct client code as per his records/refers to voice logger and informs the Director/Branch Manager about dealing punching error. After filling Error report and signing the same, Director/Branch Manager authorizes the client code change. If there is a genuine punching mistake and client code entered is non existent, after filling Client code Error Sheet and taking approval from Director/Branch Manager, correct client code is entered. Similarly, letter is obtained from clients before sending Contract Notes to them.

CLIENT CODE MODIFICATION AFTER MARKET HOURS

Client code modification after market hours is done on an exceptional basis only. If a Dealer could not contact a client during market hours immediately after execution of trades and client refuses to accept the trade or client code is nonexistent, Dealer inquires other clients mapped with his terminal or refers to Voice logger and on getting correct client code, after filling Client code Error Sheet and taking approval from Director/Branch Manager, correct client code is entered. Similarly, letter is obtained from clients before sending Contract Notes to them.

Monitoring mechanism in place to review such transfer of trades.

Management has proper Monitoring mechanism in place to review such transfer of trades. Each code change is reviewed by Management in order to ensure that there is no regular pattern observed. Also no. of daily punching errors made by each Dealer is reviewed and based on findings they are warned and instructed. Even clients are called to find out reason for such code changes.

Steps taken to find out reason for such transfer

For each client code change, Management asks Dealers to write reasons for the same in Client code Error Sheet. Unless Management satisfied with the reason, no client code change is allowed.

Steps taken to avoid such Instances of errors

As mentioned above, Dealers are asked to write reason in Client code Error Sheet. Daily monitoring of such client code changes are done by Management and Dealers are instructed to remain careful while executing the trades. Daily trades of a Client is monitored if they are five or more modifications are observed in a week and such clients are not allowed to trade unless Management is satisfied with the reasons given by such client.

Prevention of Money Laundering Act, 2002

Policy framed based on Prevention of Money Laundering Act, 2002, the Rules framed there under and Circulars issued by Regulatory Authorities.

A. Principal Officer

As per the requirement of Prevention of Money Laundering Act, 2002, a Principal Officer will be appointed and informed to FIU. Principal Officer will be responsible for reporting any transactions covered under Prevention of Money Laundering Act, 2002.

B. Customer Due Diligence

1. New customer acceptance procedures adopted include following processes:

An updated list of individuals and entities which are subject to various sanction measures such as freezing of assets/accounts, denial of financial services etc., as approved by Security Council Committee established pursuant to various United Nations' Security Council Resolutions (UNSCRs) can be accessed in the United Nations website at http://www.un.org/sc/committees/1267/consolist.shtml. Before opening any new account, it will be ensured that the name/s of the proposed customer does not appear in the list. Further, continuously scan all existing accounts to ensure that no account is held by or linked to any of the entities or individuals included in the list. Full details of accounts bearing resemblance with any of the individuals/entities in the list should immediately be intimated to SEBI and FIU-IND

Customer identification and verification depending on nature /status of the customer and kind of transactions that are expected by the customer. Also at the time of commencement of an account-based relationship, identify its clients, verify their identity and obtain information on the purpose and intended nature of the business relationship.
One certified copy of an ‘officially valid document’ containing details of his identity and address, one recent photograph and such other documents including in respect of the nature of business and financial status of the client.
False / incorrect identification of documents
Client should remain present for registration personally
Compliance with guidelines issued by various regulators such as SEBI, FIU, RBI etc.
Establishing identity of the client, verification of addresses, phone numbers and other details.
Obtaining sufficient information in order to identify persons who beneficially own or control the trading account. Whenever it is apparent that the securities acquired or maintained through an account are beneficially owned by entity other than the client
Verification of the genuineness of the PAN provided by the client such as comparing with original PAN, checking details on the Income tax website etc.
Checking original documents before accepting a copy.
Asking for any additional information as deemed fit on case to case basis to satisfy about the Genuineness and financial standing of the client.
Whether the client has any criminal background, whether he has been at any point of time been associated in any civil or criminal proceedings anywhere.
Checking whether at any point of time he has been banned from trading in the stock market.

And in all other cases, verify identity while carrying out:

transaction of an amount equal to or exceeding rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected, or
any international money transfer operations.

(1 A) Identify the beneficial owner and take all reasonable steps to verify his identity.

(1 B) Ongoing due diligence with respect to the business relationship with every client and closely examine the transactions in order to ensure that the same is consistent with knowledge of the customer, his business and risk profile.

(1 C) Member shall keep any anonymous account or account in fictitious names.

2. For existing clients processes include:

Review of KYC details of all the existing active clients in context to the PMLA 2002 requirements.
Classification of clients into high, medium or low risk categories based on KYC details, trading activity etc for closer monitoring of high risk categories.
Obtaining of annual financial statements from all clients, particularly those in high risk categories.
In case of non individuals client additional information about the directors, partners, dominant promoters, major shareholders is obtained.

C. Risk based approach:

Following Risk based KYC procedures are adopted for all clients:

Large number of accounts having a common account holder
Unexplained transfers between multiple accounts with no rationale
Unusual activity compared to past transactions
Doubt over the real beneficiary of the account
Payout/pay-in of funds and securities transferred to /from a third party
Off market transactions especially in illiquid stock and in F & O, at unrealistic prices
Large sums being transferred from overseas for making payments
Inconsistent with the clients’ financial background

D. Clients of special category (CSC)

Non resident clients,
High net-worth clients,
Trust, Charities, NGOs and organizations receiving donations,
Companies having close family shareholdings or beneficial ownership,
Politically exposed persons (PEP). Politically exposed persons are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc. The additional norms applicable to PEP as contained in the subsequent clause 5.5 (Page 19 of the Master Circular) shall also be applied to the accounts of the family members or close relatives of PEPs,

Companies offering foreign exchange offerings,
Clients in high risk countries (where existence / effectiveness of money laundering controls is suspect or which do not or insufficiently apply FATF standards, where there is unusual banking secrecy, Countries active in narcotics production, Countries where corruption (as per Transparency International Corruption Perception Index) is highly prevalent, Countries against which government sanctions are applied, Countries reputed to be any of the following – Havens / sponsors of international terrorism, offshore financial centers, tax havens, countries where fraud is highly prevalent,
Non face to face clients,
Clients with dubious reputation as per public information available etc.
Where the client is a juridical person, verify that any person purporting to act on behalf of such client is so authorized and verify the identity of that person.

E. Monitoring & Reporting of Suspicious Transactions:

“Suspicious transaction" means a transaction whether or not made in cash, which to a person acting in good faith -

gives rise to a reasonable ground of suspicion that it may involve proceeds of an offence specified in the Schedule to the Act, regardless of the value involved; or
appears to be made in circumstances of unusual or unjustified complexity; or
appears to have no economic rationale or bonafide purpose; or
gives rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism;’.

Ongoing monitoring of accounts which includes

Identification and detection of apparently abnormal transactions.
Generation of necessary reports/alerts based on clients’ profile, nature of business, trading pattern of clients for identifying and detecting such transactions. These reports/alerts are analyzed to establish suspicion or otherwise for the purpose of reporting such transactions.

Following parameters are used:

Clients whose identity verification seems difficult or clients appear not to cooperate
Substantial increase in activity without any apparent cause
Large number of accounts having common parameters such as common partners / directors / promoters / address / email address / telephone numbers / introducers or authorized signatories;
Transactions with no apparent economic or business rationale
Sudden activity in dormant accounts;
Source of funds are doubtful or inconsistency in payment pattern;
Unusual and large cash deposits made by an individual or business;
Transfer of investment proceeds to apparently unrelated third parties;
Multiple transactions of value just below the threshold limit of Rs 10 Lacs specified in PMLA so as to avoid possible reporting;
Clients transferring large sums of money to or from overseas locations with instructions for payment in cash;
Purchases made on own account transferred to a third party through off market transactions through DP Accounts;
Suspicious off market transactions;
Large deals at prices away from the market.
Accounts used as ‘pass through’. Where no transfer of ownership of securities or trading is occurring in the account and the account is being used only for funds transfers/layering purposes.
All transactions involving receipts by non-profit organizations of value more than rupees ten lakh, or its equivalent in foreign currency;
clients of high risk countries, including countries where existence and effectiveness of money laundering controls is suspect or which do not or insufficiently apply FATF standards, as ‘Clients of Special Category’. Such clients should also be subject to appropriate counter measures. These measures may include a further enhanced scrutiny of transactions, enhanced relevant reporting mechanisms or systematic reporting of financial transactions, and applying enhanced due diligence while expanding business relationships with the identified country or persons in that country etc.
Irrespective of the amount of transaction and/or the threshold limit envisaged for predicate offences specified in part B of Schedule of PMLA, 2002, file STR if we have reasonable grounds to believe that the transactions involve proceeds of crime.”

F. Reporting of Suspicious Transactions:

All suspicious transactions will be reported to FIU. Member and its employees shall keep the fact of furnishing information in respect of transactions referred to in clause (D) of sub-rule (1) of rule 3 strictly confidential.
The background including all documents/office records /memorandums/clarifications sought pertaining to such transactions and purpose thereof shall also be examined carefully and findings shall be recorded in writing. Further such findings, records and related documents should be made available to auditors and also to SEBI /Stock Exchanges/FIU-IND/Other relevant Authorities, during audit, inspection or as and when required. These records are required to be preserved for ten years as is required under PMLA 2002.
The Principal Officer and related staff members shall have timely access to customer identification data and other CDD information, transaction records and other relevant information. The Principal Officer shall have access to and be able to report to senior management above his/her next reporting level or the Board of Directors.

G. Ongoing training to Employees:

Importance of PMLA Act & its requirement to employees through training.
Ensuring that all the operating and management staff fully understands their responsibilities under PMLA for strict adherence to customer due diligence requirements from establishment of new accounts to transaction monitoring and reporting suspicious transactions to the FIU.
Organising suitable training programmes wherever required for new staff, front-line staff, supervisory staff, etc.

H. Audit and Testing of Anti Money Laundering Program.

The Anti Money Laundering program is subject to periodic audit, specifically with regard to testing its adequacy to meet the compliance requirements. The audit/testing is conducted by Trading Member’s own personnel not involved in framing or implementing the AML program. The report of such an audit/testing is placed for making suitable modifications/improvements in the AML program.

I. Maintenance of record of transactions prescribed under Rule 3 of PML Rules as mentioned below:

all cash transactions of the value of more than rupees ten lakh or its equivalent in foreign currency;
all series of cash transactions integrally connected to each other which have been valued below rupees ten lakh or its equivalent in foreign currency where such series of transactions have taken place within a month and the aggregate value of such transactions exceeds rupees ten lakh;
all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place, all suspicious transactions whether or not made in cash and by way of as mentioned in the Rules.

J. Policy for inactive clients account:

Inactive client means client who is inactive during last 12 months immediately preceding the end of the previous month.
A list of inactive clients shall be prepared from the back office software on the last day of every month and shall be submitted to the concerned department after confirmation with the management. The management will approve a final list of inactive clients.
A copy of the list is also forwarded to dealers who operate our BOLT or NEAT terminals.
The concerned department shall mark the client status as "inactive" or "dormant" in various front office software of CTCL and IML and back office accounting software.
After inactive marking, if any orders are received, the dealer shall take reasonable steps to identify the identity of the client and to ensure that the orders are received from the same client. The dealer shall use various techniques like call back, asking personal detail questions, last trade date, outstanding positions etc to confirm the identity of the caller. They may use any other technique which is reasonable. In case of a doubt the case shall be referred to the management or concerned Sub-Broker or introducer.
Dormant client has to update their KYC details at the time of fresh order, if required.