Internal Audit of Trading Members
NSE circular NSE/INSP/76701 · 01 Oct 2026
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The National Stock Exchange of India Limited requires trading members to conduct an internal audit for the half year ending September 30, 2026. Members must engage an empaneled auditor to verify books of accounts, records, and documents. Auditors must follow prescribed sampling criteria. Members must submit the audit report electronically through the Inspection module by November 30, 2026. Auditors must report critical non-compliances to the Exchange within two days of discovery. Members must close all reported non-compliances by January 31, 2027. The Exchange may impose penalties or disciplinary actions for late submissions, incomplete reports, or failure to resolve non-compliances. The Exchange may also discontinue or dis-empanel audit firms for non-compliance.
What you must do
- Conduct an internal audit for the half year ended September 30, 2026.
- Submit the internal audit report electronically through the Inspection module by November 30, 2026.
Document text
Annexure I
CERTIFICATE FOR INTERNAL AUDIT
We have examined the relevant books of accounts, records and documents maintained by M/s. _________________________, (name of the trading member) bearing SEBI registration number _________________________) a member of the National Stock Exchange of India Limited for the following segments to fulfill the internal audit requirement as prescribed by SEBI vide Circulars dated 22 August 2008 & 21 October 2008 for the half year ended_________________________.
| Segment (Capital Market / Equity Derivatives Segment / Debt Segment /Currency Derivatives/Securities Lending & Borrowing segment/Commodity Derivative Segment) | Activity - Trading | SEBI registration number |
|---|---|---|
The purpose of this Audit is to examine that the processes, procedures followed, and the operations carried out by the Trading Member are as per the applicable Acts, Rules, Regulations, Bye-laws and Circulars prescribed by SEBI and the stock exchange.
We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of this Internal Audit. In our opinion proper books of accounts, records, and documents, as per the regulatory requirement have been maintained by the member, so far as it appears from examination of the books.
We have conducted the audit within the framework provided by SEBI/Stock Exchange for the purpose of this Internal Audit.
Based on the scrutiny of relevant books of accounts, records and documents , and to the best of our knowledge and explanations given to us, we certify that the Member has complied with the relevant provisions of SEBI Act, 1992, Securities Contracts (Regulation) Act 1956, Securities Contracts (Regulation) Rules 1957, SEBI (Stock Brokers) Regulations, 1992 and various circulars of SEBI and with the Rules, Bye laws, Regulations of NSEIL and various circulars issued by the Stock Exchange except otherwise mentioned in the Annexure to this report.
We declare that the audit firm meets the eligibility criteria as prescribed vide Annexure A of Exchange Circular no. NSE/INSP/58709 dated September 29, 2023.
Further, we declare that we do not have any direct / indirect interest in or relationship with the member or its shareholders / directors / partners / proprietors / management, other than the proposed Internal Audit assignment and also confirm that we do not perceive any conflict of interest in such relationship / interest while conducting internal audit of the said member.
In our opinion and to the best of our information and according to the explanations given to us by the proprietor/partners/directors/ compliance officer, the Report provided by us as per the Annexure and subject to our observations, which covers the entire scope of the Audit, is true and correct.
______________________________________________________________________________
Company Secretary / Cost and Management Accountant / Chartered Accountant
(Seal & Signature)
(Name of the Partner)
Membership no. / CP. No.
UDIN No.
Place: -
Date: -
Annexure III A
In cases where material non-compliances are observed are observed in the inspections(s), for which action letters are issued during the half year period i.e., October 2025 to March 2026, then internal auditor shall select the samples prescribed in Annexure III A for these respective non-compliances. Incremental samples may be sourced from the Member. Details of violations for the previous half year period i.e., October 2025 to March 2026, shall be made available in the auditor login
| Sr No | Material Non-compliances | Corresponding internal audit point | Prescribed sampling | Sampling in case of repeat violation |
|---|---|---|---|---|
| 1 | Member has not maintained evidence in respect of orders placed by clients | Member has executed trades of clients only after keeping evidence of the client placing such order and maintained the record of the same in the manner specified by SEBI from time to time | 6 Dates (1 date in each month having highest turnover) each for placing, modifying and cancelling the order
Less than 500 active clients during the audit period- Minimum of 25 clients having top turnover on the sample dates Between 500 to 1000 active clients - Minimum of 50 clients having top turnover on the sample dates More than 1000 active clients - Minimum of 75 clients having top turnover on the sample dates | Number of clients to be verified to be increased by 50% as under.
Less than 500 active clients during the audit period- Minimum of 40 clients having top turnover on the sample dates Between 500 to 1000 active clients - Minimum of 75 clients having top turnover on the sample dates More than 1000 active clients - Minimum of 110 clients having top turnover on the sample dates |
| Member has mandatorily used telephone recording system to record the order instructions received from clients through telephone. | ||||
| 2 | Funding of client transactions | Member has not funded its clients in contravention to the Exchange / SEBI requirements i.e. member has not granted further exposure to the clients when debit balances arise out of client's failure to pay the required amount and such debit balance has not continued beyond the fifth trading day, as reckoned from date of pay-in (Except in accordance with Margin Trading Guidelines) | 1. 75% - Top aggregate debit balance clients (across all segments) as on any random date | Number of clients to be verified to be increased by 50% as under
Less than 500 active clients during the audit period - Minimum of 40 clients traded during the audit period. Between 500 to 1000 active clients -Minimum of 75 clients traded during the audit period. More than 1000 active clients - Minimum of 110 clients traded during the audit period |
| 2. 25%- Top clients with highest net buy position in CM segment during the audit period i.e. clients with more bought positions
Less than 500 active clients during the audit period - Minimum of 25 clients traded during the audit period. Between 500 to 1000 active clients - Minimum of 50 clients traded during the audit period. More than 1000 active clients - Minimum of 75 clients traded during the audit period. | ||||
| 3 | Shortfall /Non-availability of client funds | Member has ensured that the funds available in the client/USCNBA/DSCNBA/settlement bank accounts and balances available with clearing Member and funds with Exchange/ clearing corporation are not less than the funds payable to the client at all times. | 6 dates - Verify the details submitted as on the first Friday of every month | Total 9 dates as under 6 dates - first Friday of every month.3 dates based on highest creditor balances. In case dates are common with the 6 dates as above then select the next highest date |
| Funds of clients having credit balance has used for margin obligation of respective client only and not for obligation of any other clients / Proprietary trading | 6 dates based on the highest margin obligation across all segments. | 9 dates based on the highest margin obligation across all segments. | ||
| Client’s funds and securities & commodities are used only for the purpose of the respective client’s transactions. If not, instances to be provided in remarks column. | For verification of Funds pay-in verification
| For verification of Funds pay-in verification
| ||
| 4 | Non-settlement of client funds | Trading member has done actual settlement of clients’ funds for the month/quarter as per the annual calendar for settlement (quarterly/monthly) prescribed by the Exchange. |
Source details
- Source
- National Stock Exchange of India
- Type
- circular
- Published by source
- 01 Oct 2026
- Document number
- NSE/INSP/76701
- Issuing division
- Inspection
- Coverage area
- securities