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Standard Operating Procedure (SOP) for processing surveillance alerts for Depository Participant

Objective

To define the standard procedure for managing and processing surveillance alerts, generated both at the Depository Participant (DP) end and by Depository, ensuring timely, effective, and secure handling of alerts.

Scope

This SOP applies to all surveillance alerts generated through Depository or internally by the DP. It establishes guidelines for alert generation parameters, response timelines, escalation procedures, and regular review requirements

Role and Responsibilities

  • Compliance Officer

    Oversees SOP adherence, reviews alert parameters periodically, and ensures process improvement.

  • Alert Processor (Maker)

    Identifies, reviews, and initiates the first level of alert handling.

  • Checker

    Conducts secondary review to validate alert handling and ensures actions meet compliance standards.

Alert Generation Parameters

  • High-Value Transaction: Alerts for transactions exceeding a predefined threshold.
  • Transaction in Suspended ISIN: Transactions involving securities under suspension.
  • Simultaneous Changes in KYC and Demographic Details: When both KYC and personal details change in close proximity.
  • High-Value Transactions Post-Demographic Change: Large transactions following recent updates to account information.
  • Considerable Increase in Pledge Invocation:Considerable Increase in Pledge Invocation: A significant rise in pledging securities within a short time.
  • Considerable Increase in Pledge: Substantial growth in securities pledged by the account holder.
  • Account Closed Shortly After Opening: Account Closed Shortly After Opening: Accounts closed soon after being established.
  • Off-Market Transfers Following Demographic Changes: Transfers post-changes in account information.
  • Off-Market Transfers Around Lock-In Period for Preferential Allottees: Transfers occurring during sensitive lock-in periods.
  • Multiple Demat Accounts with Common Contact Details: Multiple accounts linked by:
    • Mobile number
    • Bank details
    • PAN
    • Email address

Procedures for Processing Alerts

  • Alert Identification: Alerts are automatically generated by Depository or DP's internal systems based on predefined parameters.
  • Initial Review (Maker): The Maker verifies alert details and assesses severity (low, medium, high).
  • Investigation and Response: Conduct an initial investigation, potentially contacting the relevant account holders for verification.
  • Final Review (Checker): Checker validates the actions taken by the Maker and confirms closure or escalation of the alert as necessary.

Escalation Procedure

Specific escalation paths depend on alert type and severity, with contacts for

  • Immediate Supervisors
  • Compliance Officer

Time-lines for Response

Time-line are as follows

  • Initial review within 24 hours
  • Investigation and response within 3 business days
  • Final closure within 7 business days or sooner if required

Periodic Review

Compliance Officer reviews the SOP and alert parameters quarterly to ensure compliance and operational effectiveness.

Maker-Checker Mechanism

DP follows a Maker-Checker approach, with actions by the Maker validated by the Checker to ensure oversight and compliance.

Policy for Same Mobile Number and/or email address captured for multiple accounts

As per the SEBI circular and Depository Circulars, Depository Participants and Stock brokers need to upload unique mobile numbers and email addresses for each client. Clients can only update unique mobile numbers and email IDs in their Demat or Trading Account.

As per Policy GuruStox LIMITED shall ensure that separate mobile number and email address are captured for each client (new as well as existing). However, under exceptional circumstances, the Company may, at the specific written request of a client in a prescribed Format (Family Declaration Form), upload the same mobile number or email address for more than one client, provided that such clients belong to one „Family‟ („Family‟ for this purpose has been defined as self, spouse, dependent children and dependent parents). Upon receipt of such request from the client, Company will update the “family flag” in respective client account.

As per Policy GuruStox LIMITED shall procure a 30 days‟ notice to the clients having same Mobile Number or Email IDs to provide a request to update the family flag or to provide the updated mobile number/email address for updating in the demat account. If no response is received from clients on Company notice, such accounts shall be suspended (suspended for debit) by Company.