System Audit of Trading Members (Type - III) · 07 Oct 2026

National Stock Exchange of India Limited

Circular

DEPARTMENT: INSPECTION

Download Ref No: NSE/INSP/76769
Date: October 07, 2026
Circular Ref. No: 49/2026

To All Trading Members,

Sub: System Audit of Trading Members (Type – III)

This is with reference to SEBI Circular No. CIR/MRD/DMS/34/2013 dated November 6, 2013, SEBI/HO/MIRSD/TPD/CIR/2025/10 dated January 31, 2025, Exchange Circular Ref Nos. NSE/CMTR/26285, NSE/FAOP/26283 and NSE/CD/26284 dated March 25, 2014, regarding System Audit of Stockbrokers / Trading members and Exchange Circular No. NSE/INSP/66456 dated February 03, 2025, regarding “Framework for Monitoring and Supervision of System Audit of Stockbrokers (SBs) through Technology based Measures“. Further, as per the provisions outlined in SEBI Circular No. CIR/MRD/16/2013 dated May 21, 2013, stockbrokers who use Algorithmic Trading or offer Algorithmic Trading facilities to their clients are required to undergo a half-yearly system audit.

Trading members (Type – III) are required to conduct system audit for period ending September 30, 2026, as per Auditor selection norms given in Annexure A and submit the report to the Exchange as per the timelines specified below:

Member’s attention is also drawn to Exchange Circular Ref No. NSE/INSP/69631 dated August 12, 2025, regarding Empanelment of Auditors for conducting System Audit. As mentioned in the circular, the Exchange shall accept the System Audit Report certified by empaneled system auditor with effect from the half year ending September 30, 2025, and the subsequent periods thereafter.

The list of System Auditor empaneled with NSE is available on the website at the following link.

Link: https://inspection.nseindia.com/empanelment_auditor/auditor/viewEmpanelledAuditors/

Further, as part of technology-based monitoring and supervision of System Audits of Stock Brokers (SBs), Exchange has enabled a functionality in the mobile application ‘NSE Member Portal’ to capture/record office location/address visited by system auditor of trading member for system audit, physical visit date/time, geo location & audit team details. The mobile application – ‘NSE Member Portal’ is available for download on both Android and iOS platforms via the Play Store and App Store, respectively. The guidelines for use of the mobile application – ‘NSE Member Portal’ during the audit process by system auditors are provided in the Auditor Submission User Manual/Help File available under the auditor login in ENIT.

(Path to download the help file: ENIT➔ NEW-TRADE➔ Trade➔ System Audit➔ System Audit Help File➔ Auditor Submission)

Trading members and auditors are advised to take note of the following key guidelines throughout the system audit lifecycle:

1. Ensure that only system auditors empaneled by the Exchange in accordance with the selection criteria communicated vide NSE Circular Ref No. NSE/INSP/69631 dated August 12, 2025, are selected/appointed for conducting audits.
2. Trading Members are required to submit complete details of audit plan at the time of auditor registration after discussion/consultation with the appointed auditor via NSE ENIT portal by November 5, 2026. This should include details of auditor, list of systems and trading members office locations to be visited by auditor for system audit, and these details shall be utilized for capturing geo location of trading members office locations.
3. During the physical visit for system audit, auditors must log into the Exchange mobile application – NSE MEMBER PORTAL to enable/capture geo-location. Auditors shall mandatorily mark entry time at the time of entry to member premises and exit time before leaving from the member premises on the mobile application. Additionally, System Auditor must submit/enter all visit-related details in Exchange provided mobile application including Team members details, Audit period, trading member's address. System Auditor shall use the same credentials to log on to web portal and Mobile Application.
4. Trading Members are required to maintain comprehensive records of the audit team members who visit their premises for a minimum period of three years.
5. System Auditors shall preserve working papers, logs, screenshots, records of visits to the premises of the entity, POC and other evidence in support of the audit for a period not less than three years.
6. As part of System Audit guidelines, auditors shall submit the list of systems/processes etc. being audited along with details of samples reviewed in the format provided via Annexure B – Assessment Detail Report.
7. The Action Taken Report, if applicable, shall be validated by the same auditor who conducted the system audit.
8. QSBs are mandated to submit the system audit report after approval from their respective Governing Board and Standing Committee on Technology (SCOT) or equivalent Technology Committee (TC).
9. Other Trading Members are mandated to submit the system audit report on approval of Proprietor/Partner/Director or equivalent responsible official through SCOT or TC.
10. While selecting/appointing system auditors, Trading Members are advised to assess the number of members the auditor is currently servicing and the size of their audit team. This evaluation is essential to ascertain that the audit is comprehensive, and the auditors can dedicate adequate time and resources to ensure the integrity and effectiveness of the audit process is not compromised.

Further, System Auditors will be provided with Algo MIS Link under Auditor MIS Tab which will be a screen-based submission where a list of all the Registered Algo IDs/TOR of trading members shall be provided for ease of reference. In case any Algo ID is not complying with 38 checks of Section 4, auditor shall provide the details of non-compliant ToR point(s) along with their observations. Members are requested to note that disciplinary action, as specified in Sr. No. 15 of Annexure 1.2 of NSE Circular No. NSE/INSP/73792 dated April 17, 2026, shall apply if an Algo ID/s with reported non‑compliances or significant deficiencies in the System Audit Report is being used for trading before submission of the audited/rectified ATR.

The detailed updated TOR of System Audit applicable for audit period ending September 30, 2026, has been enclosed in Annexure C. All the areas included in the System Audit TOR shall be considered as Critical accordingly System auditors are advised to perform the system audit thoroughly.

Additionally, system auditor shall also be provided details of vendor/in-house developed products & application being used and registered with Exchange by trading member, through a separate link <Version Compliance Confirmation> for which system auditor shall confirm whether the trading member has deployed the latest version in live environment and provide its version number being used for each product in last two columns through screen-based submission.

The system audit report can be submitted only after submission of “Algo MIS Report”, “Version Confirmation Report”, “Assessment Details Report” and details of physical visit by system auditor in NSE Member Portal mobile application. Submission of system audit report shall be considered complete only after the trading member submits the report to the Exchange after providing management comments.