Risk Policy for Online/Offline Trading Platform

Transcription

1 Risk Policy for Online/Offline Trading Platform Success of Equity/Share Broking Business The Equity/Share Broking is very sensitive and high profile business. Now a days share broking business requires Quality Man-power, highly decorated/stylish office, strong infrastructure and highly professional marketing team. This business is very sensitive since it involves public money and hence quality man-power with strong infrastructure is required. Mainly in broking business we have witnessed the same old fashioned type organization. It lacks good man-power and infrastructure and hence the growth is stagnant. But, if an organization wants to grow bigger then it has to bear the pain of hiring quality man-power, focus on Information Technology, which is the back-bone of the business and very strong marketing, back-office and Risk Management Team. If an organization pumps in money to improve its IT, Infrastructure and Man-power, it will certainly grow much better and earn much better revenue than what it is earning now. Broking company must focus on few factors which are essential for running the business and day to day operation, which are: - 1. Good IT team and latest use of technology. 2. Very strong and powerful Risk Management System & Team. 3. Very Dynamic and professional Marketing Team. 4. Dynamic and professional Management. 5. Decentralizations of Authority and fixation of accountability and responsibility on the respective team leader. 6. Quality Research Team. 7. Lest interference by the Management/Board in day to day operation. 8. Strong MIS Reporting on daily basis. 9. Proper training and fixation of natural/realistic targets by the Board/Management. 10. Team work and proper policy implementation. 11. Consensus building among team before implementing any Policy/decision. 12. Proper and timely open meeting/interaction of team members with management and review of task and policy (ies). 13. Excellent work culture and work ethics. An organization cannot grow unless it has all the above mentioned factors and moreover, for growing bigger and better it always requires Strong RMS, IT and Marketing Team.

2 That s why BLACK FOX FINANCIAL PVT LTD is presenting it s Risk Policy:- 1. DEFINITIONS 1.1. Finance: The clear balance available in the customer s ledger account in our books. For the purpose, it is not enough to have received a cheque or intimation of an online credit to our Bank account. The amount should not only be reflected in our Bank account, but we should able to connect this credit to the specific customer Margin: The underlying stake provided by the customer in the form of Fund and/or stock to mitigate market (price) or settlement (auction) risk 1.3. Exposure: The aggregate of the customer s Obligations arising out of buy + sell trades awaiting settlement in the cash segment and The span + exposure + mark-to-market margins underlying the customer s open positions in the F&O segment and profit/ loss amounts that are yet to be settled on the closed positions Exposure multiple: The number of times that exposure is allowed on the underlying margin 1.5. POA accounts: Demat accounts with us where the customers have also executed a Power of Attorney (POA) in our favour to facilitate shifting of securities to our Pool, Margin or Collateral accounts Non-POA accounts: Demat accounts opened with us without any Power of Attorney (POA) in our favour. Such accounts would suffer from the following disabilities: Non-POA accounts would not qualify as margin for exposure against stocks Therefore, sales on the cash segment would have to be made either on the availability of cash margin or on the availability of the stocks (which are to be sold) in our pool account, by executing a transfer before the sale order is initiated Stock Qualifying for Margin in CASH SEGMENT Transactions: Securities in the approved list of NSE as per SEBI guidelines Other than A category stocks can be considered as a margin on a case to case approval basis (approval to be granted by Operation Head) provided they meet the following criteria: They are traded under the EQ segment of NSE or/and B group of BSE and basket of 3-4 scrip client should be provided Such scrip s will attract a minimum hair cut of 40%

3 Maximum value of margin (after hair cut) that can be considered against such scrips for a single client will be Rs 5 Lac other limits will be provided by MD s approval If scrip does not meet any one or more of the above criteria a specific approval of the MD will be required. Operation Head to put up such proposals to MD for approval. Telephonic approvals must have a follow up confirmatory mail form the Operation head to the RMS (Risk Management System) These securities should be available in the customer s POA Demat accounts If the customer holds a Non-POA Demat account, specific instructions on Depository Instruction Slip (DIS) would need to be obtained to transfer eligible stocks from his Demat account to our Margin account for availing exposure and such DIS should be provide before placing the order Stock Qualifying for Margin in F&O SEGMENT transactions: Securities in the approved list of NSE as per SEBI guidelines These securities should be available in the customer s POA Demat accounts If the customer holds a Non-POA Demat account, specific instructions on DIS would need to be obtained to transfer eligible stocks from his Demat account to our Margin account for availing exposure. Such instructions would be needed each time a margin request is made Square-off: The termination of client exposures on the market. Whenever the margin value falls below a certain percentage of the exposure on account of market volatility or due to MTM losses (the comfort level of the margin is the sole discretion of the Broker), the Risk department would square-off the transactions (positions) in the exposure so that the exposure is either fully terminated, or partially terminated in a manner that the margin value rises to acceptable levels. Positions can be terminated on the date of transaction itself or at any time till customer fully settles. 2. NATURE OF CUSTOMER TRANSACTIONS 2.1. Intraday - Cash segment: The amounts of purchase (or sale) in a scrip on any trading day that is reversed by the end of the day by making a contra sale (or purchase) of the exact same quantity, thereby nullifying the original position Delivery trades: The net purchase or sale of a scrip in a client account that is settled by way of a delivery. Delivery in respect of sale transactions in the cash segment has to be settled by the client by tendering securities in Demat form before the pay-in deadline. Else the client faces the risk of auction. A purchase transaction in the cash segment would fall into one or more of the following categories: Prompt Payment at Pay-in (PPP): Where a client makes the full cash available in our bank account to meet his entire obligation against the purchase transaction before the pay in date Buy Today Sell Tomorrow (BTST): A purchase order executed on the Exchange today and the (undelivered) purchased stock sold in its entirety on the

4 next trading day. In this case the first transaction would be settled on T+2 while the sale would be settled on the third business day after the purchase transaction Derivatives segment of NSE: All clients must tender an upfront initial margin as stipulated by the RMS from time to time. It will constitute the sum of SPAN and exposure margins (MTMV) stipulated by NSE. Mark to market losses /profits are required to be settled on a T+1 basis. 3. DEFAULT EXPOSURE MULTIPLES AND THEIR MANAGEMENT 3.1. Default Exposure Multiples shall be as under: Cash segment (Transactions in A1, A2 & B1groups of BSE and EQ group of NSE) Non-POA accounts x (Available margin) POA accounts x (Available margin) Buy 4x 6x Sell 4x 6x Intra-day* 6x (8x on request*) 6x (10x on request*) BTST 3x 3x 3.2. Notes: *Requests for seeking 8/10 times exposure multiple can be made by any relationship manager by addressing an from their id to Risk department and the request would be automatically acceded The Mark to Market Losses to be settled or collected from F&O customers in funds only The client must square-up all positions that have been created on an intra-day basis before 15:00 hrs. After hrs RMS will be squared all the intraday position by auto square off or manual basis. If the client wants to hold his intraday position he should provide scan copy of cheque before hrs Requests for availing exposure against sale of a non-approved security must be made to the RMS at least 60 minutes prior to the close of market hours on any day. No exposure against such sale will be allowed in the last 40 minutes of a trading day. 4. MANAGEMENT OF RISK 4.1. Futures and Options The clients must settle the debits, if any, arising out of MTM settlements. It is advisable that clients should have banking relationship with the same bank as Member Square-off in respect of client will happen in case of F&O positions whenever either of the following two conditions occur:

5 Against MTM: Such square-ups can take place any time during the trading day. When the MTM losses reach 40% of the initial margin tendered by a client, a margin call will be sent to the concerned branch for further taking up the matter with the client. RMS may square-up the position any time after the MTM losses touch 60% of the initial margin tendered by the client Against exposure: Such square-ups will start taking place 30 minutes prior to the close of market for the trading day. Any position where the initial margin available in the client s account is less than the requirement for SPAN, i.e there is a possibility of violation being reported to the exchange, the position will be reduced to bring it within the SPAN stipulation. This is against the background that typically exposure margins are of the order of % of the total initial margin collected by us under this policy and are therefore considered as adequate cushion against frequent square-offs on account of Initial Margin violation Head Operations, May from time to time, allow exceptions of various natures, on a one time or on an ongoing basis with regard to exposures in F&O segment. Such exceptions, however, may be withdrawn at a very short notice due to volatility in the market or due to increase in margins by the exchange or due to constrained availability of exposure to the company on account of market conditions or due to any other reason whatsoever. Such notice will be sent to MD and others in the hierarchy up to the level of branch managers before the exception is withdrawn. The MD may specific approval for a higher exposure Purchase of options will be allowed only against cash available in a client account. No purchase of option to be allowed against any unrealized cheque Cash Segment Intra-Day: These transactions are allowed at higher exposure multiples than the normal Buy/Sell transactions on the cash segment as they have to be terminated by day end. If not terminated, then transaction has to be brought within the delivery based exposure multiple by either terminating part of the transaction or through availability of higher margin 30 minutes before the close of trading day (i.e. by 3 pm, if trading hours conclude by 3.30 pm) In the cash segment, only the underlying transaction would be terminated in whole or in part (and not the stocks held as margin). In F&O, the open positions would be terminated All positions squared up by the RMS must be intimated to the client at the earliest but not later than the same calendar day and contract notes be dispatched as per exchange stipulations without any exception No cash is too accepted from any client under any situation for meeting a settlement obligation.

6 5. EXCEPTIONS 5.1. Exposure against unrealized Cheques* (in cash segment): Up to Rs. 5 lac (cheque value) on the approval of Operation Head (MD may authorize for amounts higher than Rs 5 lac). While granting such approvals the competent authority shall give due consideration to following factors: Quality of stock in which the position is proposed to be taken The Cliental Branch should be provided Scan copy of cheque or deposit slip Maximum risk involved vis a vis revenue generated from the client Track record of the client and collaterals available if any The exposure would be allowed only on 1x basis against such unrealized cheque. Requests to originate from the ids of the concerned authority and would need to go out to Risk department. The request has to be accompanied with a scan copy of the deposit slip and the cheque Unrealized cheque means a cheque which is entered in the back office application software but remains pending in the bank reconciliation process Exposure against unrealized Cheques (in derivatives segment for exposure): An unrealized cheque (only transfer cheques proceeds of which are realizable on the same day) for an amount up to Rs 4 lac can be considered for exposure on the approval of Operation Head provided that client already has clearly realizable resources to the tune of a similar matching amount in his F&O account with us. These resources may, however have already been used for availing an exposure in the F&O segment Exposure against unrealized Cheques (in derivatives segment for meeting debits on account of MTM): Unrealized cheque (only transfer cheques proceeds of which are realized 30 minutes before the end of trading day) towards MTM losses can be considered for an amount up to 20% of the applicable initial margin. Cheques for any larger amount, for the purposes of risk, will be treated as having a value of 20% of the initial margin applicable at that time. On the approval of Operation Head such cheques can be considered and positions be put on hold by the RMS for the trading day on which the approval is granted. This implies that at any time, if the initial margin of the client gets eroded to the tune of 60% due to MTM, RMS will have unconditional right to square-up the positions and protect the interests of the organization Requests for exceptions to originate from the ids of the concerned authority and would need to go out to Risk department Whenever any payment instrument tendered by a client gets dishonored due to insufficient funds, no exception is to be allowed to such client against unrealized cheques in future All exceptions granted by the suitable competent authorities will be subjected to a follow up review on a monthly basis so as to assess the quality of judgment exercised.

7 6. COMPLIANCES REGARDING ORDER PLACEMENT 6.1. All orders from the clients must have a trail such that it can be established that the trade took place based on an order from the client. To ensure this: 6.2. All orders placed by the clients on phone should be on a recorded line 6.3. Signed trade log confirming the orders placed by the client who visit our offices in person to place trades, must be kept at all times by the office from where the order was placed. The visit of the client should also be logged in the visitors register to be maintained by every office along with the time of visit and client s signatures Any exception to the above must meet the approval of a committee which shall be constituted for this purpose. 7. IMPORTANCE OF RISK DISCLOSURE TO CLIENTS 7.1. Exchanges and SEBI, require that the client member agreement and the risk disclosure document which stipulate various clauses regarding risk and market behaviors, must be read by the client and understood. It is the duty of every sales person who deals with a client to make him understand these topics for his clear understanding and also realize the full implications of dealing in the capital markets specially derivatives. 8. INTERPRETATION OF THE RISK POLICY 8.1. Any reference regarding interpretation of this policy will be made to the group MD who will have the final ruling on this subject.

8 Inactive Clients We at BFPL are regularly updating the information of our Clients. As per the NSE Circular dated Dec 03, 2009 NSE/INSP/13606 and Exchange Circular dated Feb 03, 2010 NSE/INSP/14048 we have framed our policy for Inactive Clients. INACTIVE CLIENTS Inactive Clients has been defined as Clients who has not done any trading for last one year. These Clients are not allowed to trade without submitting their KYC information to us. The Risk Department will update his system on fortnightly basis and only though accounts which are active for last one year will be allowed Trading. To start Trading for such clients prior permission of some higher officer of the Company required. The Risk Department will keep close watch on their transactions.

9 Anti Money Laundering Policy The Government of India has serious concerns over money laundering activities which are not only illegal but anti-national as well. As a market participant it is evident that strict and vigilant tracking of all transactions of suspicious nature required. Accordingly the Company has laid down following policy guidelines: Principal Officer: Mr. Suresh Bohra is appointed as the Principal Officer. He will be responsible for implementation of internal controls & procedures for identifying and reporting any suspicious transaction or activity to the concerned authorities. Principle officer has the right of timely access to customer identification data, other CDD information and is able to report the same to senior management or the board of directors. Purpose & Scope: As a Financial Market Intermediary (which includes a stock-broker, sub-broker) we need to maintain a record of all the transactions; the nature and value of which has been prescribed in the Rules under the PMLA. Accordingly all the back office and trading staff is instructed is instructed to observe the following safeguards: 1 No Cash transactions for trading in securities shall be allowed from any client in the normal course of business. 2 Maintain a record of all the transactions; the nature and value of which has been prescribed in the Rules notified under the PMLA. Such transactions include: O Cash transactions of the value of more than Rs 10 lakhs or its equivalent in foreign currency. O All series of cash transactions integrally connected to each other which have been valued below Rs 10 lakhs or its equivalent in foreign currency where such series of transactions take place within one calendar month. O All suspicious transactions whether or not made in cash. 3 Frequent off Market transfers from one BO account to another shall be scrutinized and asked for. In absence of valid reason case or found suspicious, it shall be brought to the notice of Principal Officer. 4 Trading beyond ones declared income: The turnover of the clients should be according to their declared means of income. Any abnormal increase in client s turnover shall be reported to Principal Officer. The Back Office staff should take due care in updating the clients financial details and shall periodically review the same.

10 Policies & Procedures: A) Client identification procedure: The Know your Client (KYC) Policy: - a) While establishing the intermediary client relationship - No account shall be opened unless all the KYC Norms as prescribed from time to time by the SEBI/FMC / Exchanges are duly complied with, all the information as required to be filled in the KYC form (including financial information, occupation details and employment details) is actually filled in and the documentary evidence in support of the same is made available by the client. Moreover all the supporting documents should be verified with originals and client should sign the KYC & MCA in presence of our own staff and the client should be introduced by an existing clients or the known reference. - The information provided by the client should be checked though independent source namely. - Pan No must be verified from Income Tax We Site - Address must be verified by sending Welcome Letter / Qtly Statement of Account, and in case any document returned undelivered the client should be asked to provide his new address proof before doing any further transaction. - Before opening of any new client account we have a procedure to verify the name of the new client against the database available on They also check the UN list of banned entity, SEBI banned entity list, and frozen ID list internally maintained within the organisation. - - We must exercise additional due diligence in case of the Clients of Special Category which include but not limited to :- i. Non resident clients ii. High networth clients ( i.e the clients having networth exceeding 20 Lakhs and doing the intra day trading volume of more than 2 Crore and daily delivery volume more than Rs 20 Lakhs) iii. Trust, Charities, NGOs and organizations receiving donations iv. Companies having close family shareholdings or beneficial ownership v. Politically exposed persons (PEP) of foreign origin vi. Current / Former Head of State, Current or Former Senior High profile politicians and connected persons (immediate family, Close advisors and companies in which such individuals have interest or significant influence) vii. viii. Companies offering foreign exchange offerings Clients in high risk countries (where existence / effectiveness of money laundering controls is suspect, where there is unusual banking secrecy, Countries active in narcotics production, Countries where corruption (as per Transparency International Corruption Perception Index) is

11 highly prevalent, Countries against which government sanctions are applied, Countries reputed to be any of the following Havens / sponsors of international terrorism, offshore financial centres, tax havens, countries where fraud is highly prevalent. ix. Non face to face clients x. Clients with dubious reputation as per public information available etc. xi. Such Other persons who as per our independent judgment may be classified as CSC. - In case we have reasons to believe that any of our existing / potential customer is a politically exposed person (PEP) we must exercise due diligence, to ascertain weather the customer is a politically exposed person (PEP), which would include seeking additional information from clients and accessing publicly available information etc. - The dealing staff must obtain senior management`s prior approval for establishing business relationships with Politically Exposed Persons. In case an existing customer is subsequently found to be, or subsequently becomes a PEP, dealing staff must obtain senior management`s approval to continue the business relationship. - We must take reasonable measures to verify source of funds of clients identified as PEP. - The client should be identified by using reliable sources including documents / information and we should obtain adequate information to satisfactorily establish the identity of each new client and the purpose of the intended nature of the relationship. - The information should be adequate enough to satisfy competent authorities (regulatory / enforcement authorities) in respect of statutory and regulatory requirement in future that due diligence was observed by the intermediary in compliance with the Guidelines. Each original document should be seen prior to acceptance of a copy. - Failure by prospective client to provide satisfactory evidence of identity should be noted and reported to the higher authority. - While accepting a client the underlying objective should be to follow the requirements enshrined in the PML Act, 2002 SEBI Act, 1992 and Regulations, directives and circulars issued there under so that we are aware of the clients on whose behalf we are dealing. b) While carrying out transactions for the client - RMS department should monitor the trading activity of the client and exercise due diligence to ensure that the trading activity of the client is not disproportionate to the financial status and the track record of the client.

12 - Payments department should ensure that payment received form the client is being received in time and through the bank account the details of which are given by the client in KYC form and the payment through cash / bearer demand drafts should not be entertained. B) Policy for acceptance of clients: The following safeguards are to be followed while accepting the clients: a) No account is opened in a fictitious / benami name or on an anonymous basis. To ensure this we must insist the client to fill up all the necessary details in the KYC form in our presence and obtain all the necessary documentary evidence in support of the information filled in KYC. We must verify all the documents submitted in support of information filled in the KYC form with the originals and in-person verification should be done by our own staff. Moreover new client should either be introduced by an existing customer or by the senior official of the company. In case we have any doubt that in-complete / fictitious information is submitted by the client, we must ask for such additional information so as to satisfy ourselves about the genuineness of the client and the information of the client before accepting his registration. We have maintained a updated list of individuals / entities which are subject to various sanctions / measures pursuant to United Nations Security Council Resolutions (UNSCR), available from the URL and verify the names of customers in such list of individuals and entities subject to various sanction measures of UN Security council Committee, other publicly available information and complying with Government order UAPA. b) Factors of risk perception of the client :- Risk Particulars Perception Factors of Risk Perception having regard to : Client`s Location ( Registered / Correspondence/ other address ) - Face to Face clients within city Low Risk - Face to Face clients of other than city Low Risk - Client Introduced by existing Face to Face Clients Low Risk - Client Introduced by other Existing Clients Medium Risk - Direct Clients of city Medium Risk - Direct Clients of other than city High Risk - Non resident Clients High Risk Nature of Business Activity, Trading Turnover etc -Retail clients ( average daily turnover < Rs 10 Lakhs or net settlement obligation < Rs 2 Lakhs ) Low Risk - Retail clients ( average daily turnover < Rs 25 Lakhs or net settlement obligation < Rs 5 Lakhs ) Medium Risk

13 - HNI Clients ( average daily turnover > Rs 25 Lakhs or net settlement obligation > Rs 5 Lakhs ) High Risk Manner of Making Payment - Regular payment through A/c payee cheque from the Bank A/c already mapped with us Low Risk - Payment through A/c payee cheque from the Bank A/c other than one already mapped with us Medium Risk - Payment through Banker`s Cheque / Demand Draft / Cash High Risk Client of Special Categories as defined under Para A (a) of these Guidelines Very High Risk c) Ensure that no account is opened where we unable to apply appropriate clients due diligence measures / KYC policies. This shall be applicable in cases where it is not possible to ascertain the identity of the client or information provided by the client is suspected to be non genuine or perceived non co-operation of the client in providing full and complete information. We should not continue to do business with such a person and file a suspicious activity report. We should also evaluate whether there is suspicious trading in the account and whether there is a need to freeze or close the account. C) Policy for Recruitment of personnel The HR Department is instructed to cross check all the references and should take adequate safeguards to establish the authenticity and genuineness of the persons before recruiting. The department should obtain the following documents: 1 Photographs 2 Proof of address 3 Identity proof 4 Proof of Educational Qualification 5 References D) Retention of records Records pertaining to active clients and staff details collected for recruitment shall be kept safely. Further company has a policy to retain all records relating to PMLA provision for at least a period of 10 years. We have also retained the statutory and regulatory compliance relating records and co-operate with law enforcement authorities with timely disclosure of information. E) Information to be maintained Company will maintain and preserve the following information in respect of transactions referred to in Rule 3 of PMLA Rules for the period of 10 years. I. Client Registration Forms II. Contract Note III. the nature of the transactions; IV. the amount of the transaction and the currency in which it denominated; V. the date on which the transaction was conducted; and VI. the parties to the transaction.

14 F) Employees Training Company adopted an ongoing employee training program so that the members of the staff are adequately trained in AML and CFT procedures. Training requirements have specific focuses for frontline staff, back office staff, compliance staff, risk management staff and staff dealing with new customers. It is crucial that all those concerned fully understand the rationale behind these guidelines, obligations and requirements, implement them consistently and are sensitive to the risks of their systems being misused by unscrupulous elements. G) Investors Education Implementation of AML/CFT measures requires back office and trading staff to demand certain information from investors which may be of personal nature or which have hitherto never been called for. Such information can include documents evidencing source of funds/income tax returns/bank records etc. This can sometimes lead to raising of questions by the customer with regard to the motive and purpose of collecting such information. There is, therefore, a need for the back office and trading staff to sensitize their customers about these requirements as the ones emanating from AML and CFT framework. The back office and trading staff should prepare specific literature/ pamphlets etc. so as to educate the customer of the objectives of the AML/CFT programme. H) Reporting to FIU As per our observations if any transaction of suspicious nature is identified it must be brought to the notice of the Principal Officer who will submit Suspicious Transaction Reporting (STR) to the FIU if required. Above said policies are reviewed by us on regular basis to keep it updated as per the various amendments in the PMLA rules.

15 Insider Trading Policy The Securities & Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, was amended on 22nd February 2002 (hereinafter referred to as Regulations ) in terms of which a Stock Broker is required, inter alia, to frame a Code of Conduct for Prevention of Insider Trading by Employees of a Stock Broker, including its Directors In line with the said Regulations, the following Code of Conduct (hereinafter referred to as the Code ) has been adopted by BLACK FOX FINANCIAL PVT LTD. (hereinafter referred to as BLACK FOX FINANCIAL PVT LTD. ), Member of the Stock Exchange, Mumbai & United Stock Exchange Ltd. Director BLACK FOX FINANCIAL PVT LTD. has appointed Mr. Suresh Bohra Director as Compliance and Principle Officer. The Compliance Officer shall be responsible for setting Policies and Procedures and monitoring the Rules & Regulations for the preservation of "Price Sensitive Information", pre-clearing of all Designated Employees and their Dependents Trades (directly or through respective Department heads as decided by the BLACK FOX FINANCIAL PVT LTD. Monitoring of Trades and the Implementation of the Code of Conduct under the overall Supervision of the Directors The Compliance Officer shall maintain a record of all BLACK FOX FINANCIAL PVT LTD. Employees and any Changes done in the Employees List from time to time & help to understand any Clarifications regarding SEBI (Prohibition of Insider Trading) Regulations, 1992 and BFPL s Code. Prevention of Price Sensitive Information Employees / Directors shall maintain the Confidentiality of all Price Sensitive Information & must not pass such Information directly or indirectly by way of making a Recommendation for the Purchase or Sale of Securities Price Sensitive Information is to be handled on a "Need to Know" basis, i.e. Price Sensitive Information should be disclosed only to those within BLACK FOX FINANCIAL PVT LTD., who need the Information to discharge their Duty and whose Possession of such Information will not give rise to a Conflict of Interest or Appearance of Misuse of the Information. All Files of BLACK FOX FINANCIAL PVT LTD., containing Confidential Information shall be kept Secure & all computer files must have Adequate Security of Login and Password, etc To prevent the Misuse of Confidential Information, BLACK FOX FINANCIAL PVT LTD. separates those Areas which routinely have access to Confidential Information, considered "Inside Areas" from those Areas which deal with Sale / Marketing / Investment Advise or other Departments providing Support Services, considered "Public Areas". The Employees in Inside Area may be physically segregated from Employees in Public Area. The Employees in the Inside Area shall not communicate any Price Sensitive Information to anyone in Public Area. Prevention of Misuse of Price Sensitive Information Employees / Directors shall not use Price Sensitive Information to Buy or Sell Securities of any sort, whether for their Own Account, their Relative s Account, BLACK FOX FINANCIAL PVT LTD. s Account or a Client's Account. The Trading Restrictions shall apply for Trading in Securities. All Directors / Employees of BLACK FOX FINANCIAL PVT LTD., who intend to deal in the Securities of listed Companies where BFPL has some assignments shall pre-clear the Transactions as per the pre-dealing Procedure as described here below. An Application may be made in such form as specify by BLACK FOX FINANCIAL PVT LTD. in this regard, to the Compliance Officer indicating the Name and Estimated Number of Securities that the Employees / Director intends to

16 deal in with details of Demat DP with which he has a Security Account, the Securities in such Depository Mode and any other details as may be prescribed by BLACK FOX FINANCIAL PVT LTD. in his rule & regulations. An Undertaking shall be executed in favor of BLACK FOX FINANCIAL PVT LTD. by such Employees / Directors incorporating, the following Clauses, as may be applicable That the Employees / Director does not received any "Price Sensitive Information" at the time of signing the Undertaking That in case the employees / director / partner receives "Price Sensitive Information" after the signing of the undertaking but before the execution of the transaction he/she shall inform the Compliance officer of the change in his position and that he/she would completely refrain from dealing in the securities of listed companies. That he / she has not contravened the Code of Conduct for prevention of Insider Trading as specified by BLACK FOX FINANCIAL PVT LTD. That he / she has made a Full and True Disclosure in the matter Restricted / Grey List In order to monitor above Procedures and Trading in Client Securities based on Inside Information, BLACK FOX FINANCIAL PVT LTD. shall restrict Trading in certain Securities and designate such List as Restricted / Grey List. Security of a Listed Company shall be put on the Restricted / Grey List if BLACK FOX FINANCIAL PVT LTD. is handling any Assignment for the Listed Company or preparing Appraisal Report. Any Security, which is being purchased or sold or is being considered for Purchase or Sale by BLACK FOX FINANCIAL PVT LTD. on behalf of its Clients shall be put on the Restricted / Grey List As the Restricted List itself is a Highly Confidential Information it shall not be communicated to anyone outside BLACK FOX FINANCIAL PVT LTD.. The Restricted List shall be maintained & kept by Compliance Officer Penalty for Contravention of the Code Any Employee / Director, who trades in Securities or communicates any Information or counsels any Person Trading in Securities, will be treated as Contravention of the Code & conduct, may be penalized and appropriate Action may be taken by BLACK FOX FINANCIAL PVT LTD. Employees / Directors of BLACK FOX FINANCIAL PVT LTD., who violate the Code, may also be subject to Disciplinary Action by the Company. The Action by BLACK FOX FINANCIAL PVT LTD. shall not preclude SEBI from taking any Action in case of Violation of SEBI (Prohibition of Insider Trading) Regulations, 1992 Information to SEBI in case of Violation of SEBI (Prohibition of Insider Trading) Regulations In case of any violation observed by BFPL / its Compliance Officer that there has been a Violation of these Regulations, BLACK FOX FINANCIAL PVT LTD. shall inform the SEBI

17 ERROR ACCOUNT POLICY (CLIENT CODE MODIFICATION) We at BLACK FOX FINANCIAL PVT LTD usually do not transfer the trades until and unless the reasons for the same are explained and approved by our Director or our Compliance officer. All the wrong trades transferred to right code are reported to exchange within the stipulated time given by exchange. We are maintaining a register for transfer of trade and the same is duly filed and approved by higher authority. Pursuant to SEBI recent circulars we have revised your policy as under: Hence forth client code modification will be allowed only when Error due to communication and/or punching or typing where original client code/name and modified client code/name are similar to each other but such modifications are not repetitive. Where original client code and modified client code belong to a Relative. (Relative for this purpose would mean Relative as defined under the Companies Act, 1956 ) Further we have to obtain letter from both the parties involved in transfer of trade whereas one party confirming that this particular trade belongs to them and other party confirming that trade transferred from their account does not belongs to them. Further we shall debit the penalty as per Exchange for modification of trades expect as for reasons mentioned above.

18 INVESTOR GRIEVANCE REDRESSAL MECHANISM BLACK FOX FINANCIAL PVT LTD. Endeavor to address all complaints regarding service deficiencies or causes for grievance, for whatever reason, in a reasonable time and manner. Arch realizes that quick and effective handling and resolution of Investor s complaints is essential to provide excellent client service. To achieve this, company has clearly documented policy for redressal of investor grievances. Through this policy, the company shall ensure that a suitable mechanism exists for receiving and addressing complaints from its investors with specific emphasis on resolving such complaints fairly and expeditiously. The policy seeks to ensure that: 1. Grievance, if any, that may arise pursuant to the Member client Agreement entered into shall as far as possible be redressed through the administrative mechanism of the Member and in compliant to the SEBI (Stock Broker & Sub Broker) Regulations 1992 and any amendments made thereto from time to time. 2. Complaints shall be resolved in a proper and time bound manner with detailed advice to the investor. In case the resolution needs time, an interim response, acknowledging the complaint shall be issued. 3. The Compliance Officer shall give quarterly report of the client s complaint to the directors with the details as Name of the Investor, Nature of the Complaint, date of Receipt of the complaint and status of resolving the same. For complaints remaining unresolved for a period of more than 15 days from the date of receipt, the Compliance Officer shall provide the justification to the Directors. 4. The Compliance officer shall also keep proper records of all the grievances/complaints received and resolved. 5. All employees at the investor facing channels and other support departments will be periodically trained in handling of complaints. 6. The quality of investor service rendered by the Member shall be reviewed/ examined by Company s Top Management at regular intervals. 7. The Grievance Redressal Mechanism with updated contact details and dedicated ID shall be a part of Risk Disclosure Document and shall be uploaded on the company s website.

19 GRIEVANCE REDRESSAL AND DISPUTE HANDLING MECHANISM For the timely and proper redressal of client s complaints and grievances, the member shall have the following Grievance Redressal and Dispute Handling Mechanism at place: The Member has appointed Mr. Subhash Sharma, as a first point for the redressal of the Client s complaints. The client can approach to the Compliance Officer at below mentioned contacts: BLACK FOX FINANCIAL PVT LTD. Address: :Room 101 (First Floor), P-27 Malviya Nagar New Delhi Tel: Mobile No ID: subhash@blackfoxindia.com If the client remains dissatisfied with the remedies offered or the stand taken by the Principal Officer/ Compliance Officer Mr. Suresh Bohra (Director) at below mentioned contacts: BLACK FOX FINANCIAL PVT LTD. Address: Room No. 101 (First Floor), P-27 Malviya Nagar New Delhi Direct No Mobile: ID: suresh@blackfoxindia.com For disputes or differences arising between the member and client which could not be resolved amicably, shall be settled in accordance with and subject to the provisions of the Arbitration and Conciliation Act, 1996 or any statutory requirement, modification or reenactment thereof for the time being in force. Such Arbitration proceedings shall be held at New Delhi. All the legal actions and proceedings are subject to jurisdiction of Court in New Delhi only and are governed by Indian Law.

20 OBJECT: POLICY FOR UN AUTHENTIC NEWS CIRCULATION To protect investor by stop un authentic news circulation by staff/other dealing person and by company infrastructure. Securities and Exchange Board of India (SEBI) is a regulatory body established by an Act of Parliament to protect the interests of investors in the securities market, to promote the development of, to regulate the securities market and for matters connected therewith or incidental thereto. The following caution is issued by SEBI in the interest of investors. SEBI has observed a proliferation of websites that offer investment advice to investors. Many of these websites offer investment advice not backed by any reasonable basis and prima facie appear to be misguiding. Investors should realize that when they follow such advice they are exposing themselves to undue risk in using unconfirmed information available on such Websites/ Blogs/astrology predictions or advice/ Newspaper Advertisements/ SMS s/ s/rumours/ advice rendered through television or print media and trading tips on an intra- day basis, short term basis or long term basis. The public in general is advised not to fall prey to or be lured by such sources of information promising quick gains and unrealistic high returns. It is advised that investors should take well informed investment decisions. The following may be borne in mind: Deal only with/ through SEBI registered intermediaries. Do not get carried away by advertisements promising unrealistic gains and windfall profits. Do not invest based on market rumours or unconfirmed or unauthentic news. Be aware that advice through television or print media does not mean that it is the opinion of the channel or publisher. Be extra cautious while using information available from media sources such as Websites/ Blogs/ Newspaper Advertisements/ SMS s s/rumors/ advice through television or print media for information and tips for intra-day, short term or long term investing. Do not be guided by astrological predictions on share prices and market movements. Do not make investment decisions on the basis of implicit/explicit promises made by anyone. Do not be unduly influenced by indicative returns. Do not be unduly influenced by Bull Runs/Bear Runs while making investment decisions