POLICIES AND PROCEDURES (Reference para 8 of SEBI Circular No. MIRSD/SE/CIR-19/2009 dated December 03, 2009)

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1 POLICIES AND PROCEDURES (Reference para 8 of SEBI Circular No. MIRSD/SE/CIR-19/2009 dated December 03, 2009) A. Refusal of orders/restrictions on trading in penny stocks and illiquid stocks Edelweiss may at his discretion refuse to execute any buy or sell of any scrip / shares / stock / derivatives contract on behalf of the client including but not restricted to dealings in penny stocks, illiquid stocks, infrequently traded stocks/contract, stocks in Z category, Trade to Trade or any other category etc if Edelweiss/Exchanges/Regulatory Authorities is of the view that such execution would adversely affect market integrity or give rise to regulatory / disciplinary actions/ concerns. The restriction on the stock/securities may be as to the price, quantity or mode of placement of orders. Edelweiss reserves the right to disable certain scrips for trading on online trading platform and/or on sub broker/authorised person s terminals and/or on terminals at various locations of Edelweiss or put quantity or price restrictions while putting trade orders. The penny stock would mean any stock trading at a price less than Rs. 10 or at a price less than the face value or any other stock specified by the Regulatory Body/Stock Exchange as such or which are appearing in the list of illiquid securities issued by the Exchanges every month. In general terms, it is a low priced, speculative security or a very small company, regardless of market capitalization. The above referred restrictions are placed on the trading activities of the client as the stock may be exposed to price rigging and other market manipulative activities. Clients may note that for risk mitigation, Edelweiss shall have the right to reject the orders placed by the client and/or put circuit breakers to discourage trades getting executed at unrealistic prices from the current market price of the security or prohibit the client from trading in illiquid securities which creates artificial liquidity or manipulates prices or to discourage client from cross/ synchronized trading and Edelweiss shall not be liable for any loss arising out of non acceptance or rejection of the client orders for any such reason if the client fails to give sufficient reason for placing such orders. B. Setting up client s exposure limits Edelweiss may at its discretion permit/allow such exposure limit for trading by Client as it deems fit (including but not limited to exposure limits, turnover limits, limits as to number, value and/kind of securities/ contracts in respect of which buy or sell orders can be placed) despite the fact that the client may have adequate or more than adequate required margin in place. Such exposure limit may operate specific to a security or contract and/or on an aggregate basis whether on the buy or the sell side, based on Edelweiss assessment of the associated risks having due regard to all relevant factors. Further, Edelweiss may modify, change or alter such limit or the conditions attached thereto from time to time as may be deemed fit on the basis of its risk perception and other relevant factors. Further Edelweiss may as risk containment measure at any time at its sole discretion and without prior notice, prohibit or restrict the client to place the orders or trade in all or some of securities/contracts despite the fact that the client may have adequate or more than adequate required margin in place. At the sole discretion of Edelweiss, the client shall be permitted to trade upto a pre-determined number of times of the margin (the Multiple ) and the quantum of the Multiple on the margin C. Brokerage Rates Brokerage will be charged to the client based on the brokerage rates specified in the account opening form or as per the product / scheme opted by the client from time to time. Based on the value of business done by the client and risk perception, Edelweiss may increase/reduce the brokerage rate at its sole discretion, subject to the brokerage limits as prescribed by SEBI/Exchange. Updated brokerage rate will be communicated through the r e l a t i o n s h i p m a n a g e r / e m a i l communication/through various modes of communication and will get reflected in the contract notes for future trades. The Brokerage will be charged within the limits as prescribed by SEBI/Exchange. The Client shall also liable to pay all the applicable taxes including Securities Transaction Tax, Service Tax, Stamp duties and other charges/statutory levies, if any as may be levied from time to time. D. Imposition of penalty/delayed Payment Charges: The Client shall pay to Edelweiss brokerage, commission, fees, account opening/ maintenance charges, charges for availing research reports, charges for availing special facility for mobile broking /SMS facility or any other charges for the special services/ facilities availed by the Client, inter settlement charges, auction charges, penalties levied by the exchanges for client limit violation, charges for dishonor of cheque(s) given by the client, statutory levies, service tax, and other taxes and trade/transaction expenses including inter alia depository charges, annual maintenance charges, settlement charges etc. as are applicable from time to time. If the Client fails to make or some 27 Version VIII

2 payment of the amount due within the time frame specified by the Bye-laws, Rules and Regulations of the Exchange and/or as per the policy of Edelweiss, Edelweiss shall be entitled to levy such charges by way of penalty or delayed payment charges not exceeding 18% per annum on amount due as Edelweiss may deem fit to deter them from delaying the payment in future. The Client authorizes Edelweiss to directly debit the charges to the Client trading account and to set off a part or whole of the collateral/ ledger balances i.e. by way of appropriation of the relevant amount of cash or by way of sell or transfer of all or some of the securities, without notice, or invoke the pledged shares placed as margin/ collateral with Edelweiss, and/ or any credit in any account of the Client in any of the segment of the Stock Exchange, against the outstanding/dues, to the extent of settlement / margin obligation in the account of the Client for any segment of the Stock Exchanges. The adjustment, so done, shall be by way of a passing necessary journal voucher entries. Further, Edelweiss agree to pay penalty charges not exceeding 18% Per annum on amount due to the client if the same is not refunded to the client within the scheduled time after receipt of pay out request from the Client i.e. by 1600 hrs from Monday to Friday (except on a bank and / or trading holiday). Delayed Payment charges will be calculated considering balance lying across all Exchange/s and Segment/s on any given day. Edelweiss may at its sole discretion depending on various factors including credit history of the client, increase or decrease the charges and will be communicated through the relationship manager/ communication/ through various modes of communication. E. The Right to sell Client s securities or to close Client s positions without notice to Client on account of non-payment of client s dues If a client fails to make payment of consideration due to Edelweiss in respect of any one or more securities purchased by him before the pay-in date notified by the Exchange from time to time, Edelweiss shall be at liberty to sell / liquidate the securities received in pay-out, as per the policy of Edelweiss, after taking into account any amount lying to the credit of the Client. The loss, if any on account of liquidation shall be to the account of the Client. Without prejudice to Edelweiss other rights, Edelweiss shall be entitled to liquidate/close out all or any of the Client s positions, without giving notice to the Client, for non-payment of margins or other amounts, outstanding debts, etc. Edelweiss on best effort basis will try and inform the client and give him reasonable time for payment. However it will be the responsibility of client to track his margins/obligations by going through margin statements sent to the client on daily basis. Any and all losses and financial charges on account of such liquidation/closing-out shall be charged to and borne by the Client. Edelweiss has the right but not obligation, to cancel all pending orders and to sell/close/liquidate all open position /securities / shares when mark to market percentage reaches or crosses stipulated margin percentage, whichever is earlier. In the event of such square off, the client agrees to bear all the losses based on actual executed prices. The client shall also be solely liable for all and any penalties and charges levied by the exchange(s). F. Shortages in obligations arising out of internal netting of trades. If the Client fails to deliver any one or more securities to the pool account of Edelweiss in respect of the securities sold by the Client which turns out to be an internal position, on or before the pay-in date notified by the Exchange from time to time, for such un-discharged obligation in relation to delivering, any one or more securities, attempt shall be made by Edelweiss to buy the shares from the market on the pay in day or on the next working day on behalf the client who has delivered short and deliver the same to the client who has bought them. However, in case for any reason, whatsoever Edelweiss is unable to buy such quantity, the outstanding obligation of the Client shall be settled in the manner it deems fit and appropriate. The loss, if any, on account of the close out shall be to the account of the Client. G. Conditions under which Client may not be allowed to take further position or Edelweiss may close the existing position of the Client Edelweiss may at any time at its discretion disallow the Client from creating further/fresh position in any segment on any exchange or close out any existing position of the Client based on various factors as listed below but not limited to: If there is a continuous debit Balance in client s account or having insufficient margin in client s account required to maintain his open position. If client is not responding satisfactorily to the Company/regulatory enquiry on trades undertaken by him explaining the rationale for transactions or fails to provide documents to prove beneficial ownership of shares, submit proof of income/net worth etc. If there is an order by SEBI or any other appropriate authority debarring the client from dealing in securities market or an order to suspend/seize client s account by any authority. In case of dormant/inactive account and At the discretion of the company and thereafter sending a written intimation to the client 28 Version VIII

3 H. Temporary Suspension /Closure of a client s Account Edelweiss shall if so required in writing by the Client temporarily suspend/ disable trading in the Client s account unless so required for the purpose of closing of transactions referred to in (E)and (G) above and maintain such suspension/disablement till such time the Client makes a specific request in that regard. Edelweiss as a protective measure and also good governance carries out internal checks on the transactional activities in the clients accounts to verify trading in dormant accounts, trading in illiquid scripts, any manipulated activities by the Client s (detectable), If there is not a single active demat account linked to trading account, ECN bounces and trading activities not commensurate with income declared, other money laundering activities, first time trade in future and options, spurt in volumes and any other activities w h i c h E d e l w e i s s m a y f e e l i s derogatory/detrimental to the market or client. These activities are carried out as proactive measures and some of them as various regulatory requirements. In above cases, Edelweiss may deactivate the client account in the system for the purpose of further trading activity with or without notice. The Client agrees to co-operate with Edelweiss to maintain the integrity of the market. Edelweiss or its employees or employees of any it s group companies will not be held liable for any of the losses or notional losses that may occur in Client account due to any of the above actions. I. Deregistration of a Client Edelweiss may at any time, as it considers necessary shall be entitled, at its sole / absolute discretion to not to allow the Client to trade, unless such Client provides margins to the extent as may be specified by Edelweiss considering various risk factor. Edelweiss shall be entitled to suspend or terminate this relationship without prior notice in any of the following circumstances but not limited to: The Client has breached the relationship. Upon the death, winding up, bankruptcy, liquidation or legal incapacitation of the Client or is designated as a defaulter by any credit rating agency or subject to any proceedings under any bankruptcy/insolvency law or suffered to be taken any action for its reorganization, l i q u i d a t i o n o r d i s s o l u t i o n o r a n y action/proceedings have been initiated by the relevant Regulator / Authority including without limitation to SEBI. The Client fails to maintain the Bank Account and/or the Securities Account (Or any replacement thereof) as a defaulter by any credit rating agency or any action or proceedings have b e e n i n i t i a t e d b y t h e r e l e v a n t Regulator/Authority including without limitation to SEBI. If the client being a partnership firm, steps taken by the client and/or its partners for dissolution of the partnership If the client being a company, goes into liquidation or has a receiver appointed in respect of its assets or refers itself to the Board of Industrial and Financial Reconstruction or under any other law providing protection as a relief undertaking. The Client has misrepresented facts at the time of entering into this relationship or at the time of giving instructions or otherwise. Any proceedings or investigations that involve the Client or his/its properties have been initiated or is ongoing. The client fails to fulfill his/its payment obligations under this relationship or otherwise due to Edelweiss; The Client has violated the applicable laws particularly the Securities law and Bye-laws, Rules and Regulations of the respective Stock Exchanges on which the Client trades, If the Client migrates to a jurisdiction which prohibits trading in Indian securities or otherwise subjects Edelweiss or any of its employees to any licensing or registration requirements. J. Inactive (Dormant) Accounts A Trading account in which no trades are done across any segment of any Exchange/s for Ninety days would be termed as Inactive or Dormant trading account. Edelweiss does not freeze any Inactive or Dormant trading account. However, any trade emanating from such trading accounts pursuant to the same being classified as Inactive or Dormant trading account would be subject to necessary due diligences and confirmations as Edelweiss may deem fit. K. Penal charges that may be debited to the Client s account Edelweiss reserves the right to debit client s ledger for any penal charges that may be charged by any Regulators/ Exchanges/Depositories on Edelweiss on the client level for any default/violation of any Regulators/Exchanges/ Depositories guidelines/requirements occurring due to omission or commission of any act on the part of the client. This may interalia include penalty for: 29 Version VIII

4 Short delivery of securities Violation of client level position limits Shortfall in Margin payment Client code modification Charges for dishonor of cheque(s) given by the Client or Any other penal charges which may be levied by Exchange or any regulatory/government authority due to any activities of client. Edelweiss shall have the right to recover such charges like any other trade dues payable by the client and may also recover the same by selling Client s securities. L. Third party funds and securities In accordance with SEBI circular dated August 27, 2003, Edelweiss requires all its Clients to make pay-in of funds and securities from the account held in their name mapped to the trading /demat account towards their settlement and margin obligations. Similarly, payout of funds will only be made in client s name and securities will be transferred only to Client s demat account registered with Edelweiss. Receipt/payments of funds/securities will be accepted/given only from/to the details mapped to the trading and demat accounts. Payment made from any other account (other than mapped with Edelweiss) will be treated as third party. In no circumstance, third party funds and securities will be accepted towards settlement and/or margin obligation. In case, Edelweiss observes that payment of funds or securities towards pay-in/margin obligation has been met from third party account, Edelweiss reserves right not to give credit of funds/securities to client/ park it in separate suspense account / reverse the credit given and/or return the same to the source account from where funds/securities were received, if identified. Client will be solely liable on account of any shortfall in meeting pay in/margin obligation in this regard. Wherever, client gives POA on demat account to Edelweiss, Edelweiss treats the securities lying in the account as securities margin. Therefore, client needs to ensure that only securities belonging to the client are retained in the account and appropriate proof regarding purchase/gift etc. needs to be provided to Edelweiss. In absence of the same, Edelweiss reserves right to transfer the securities to source account from where securities were transferred to POA demat account. In case client transfers securities to POA account from third party account and sells the securities, Edelweiss reserves the right to withhold the payout, at its discretion, till client obtains NOC from the account holder from whose account shares were transferred for sale, in the event of Edelweiss finding the activity of client affecting the market integrity in any manner. M. Cash Deposit Edelweiss does not deal in cash with clients/subbroker/authorised persons and appropriate disclosure has been made in the account opening/client registration forms. In case client directly deposit cash in Edelweiss designated client bank account, then Edelweiss will not give credit of the same to client s trading account. As soon as client provides appropriate proof of cash deposit, Edelweiss will refund such amount to the Client. Clients are hereby advised that they should not deposit any cash directly in bank accounts of Edelweiss and/or should not deal in cash with any official/sub-broker/ authorised person of Edelweiss. Edelweiss shall be entitled to change or alter this Policy or any part thereof, without giving any reason thereof to the Client. Notwithstanding any such change or alteration all rights, liabilities and obligations of the parties arising out of or in respect of transactions entered into prior to such change or alteration shall continue to subsist and vest in / be binding on the respective heirs, executors, administrators, legal representative or successors, as the case may be. Notice of such alteration may be provided by Edelweiss by updating the same on the website. The Client is bound by such online changes or alterations in the Policies & Procedures of Edelweiss. I/We hereby further confirm/undertake that the investments/trading done in securities market are from my/our own/borrowed sources of funds and I/we confirm that the funds utilized for trading activity by me/us is in compliance with the rules, regulations and guidelines stipulated under PMLA. (17) (Client Signature) Date : 30 Version VIII

5 ANTI MONEY LAUNDERING AWARENESS - EDUCATING CLIENTS ABOUT AML PROVISIONS This is must read/ understood and to be complied by everybody dealing/ desirous in dealing in Capital and / or Derivatives (including Currency Derivative) 1. Prevention of Money Laundering Act, 2002 (PMLA) is enacted to prevent the financing of terrorism and to prevent laundering of money i.e. to prevent legalizing or officializing or canalizing the money generated from illegal activities like drug trafficking, organized crimes, hawala rackets and other serious crimes etc. 2. PMLA is a part of the Global measures being taken by all the countries under the initiatives of United Nations. 3. It is an obligation of individual/entities to whom PMLA is applicable, to report certain kind of transactions routed through them to Financial Intelligence Unit (FIU), a department specially set up to administer PMLA under the Ministry of Finance. 4. PMLA is, inter-alia, applicable to various intermediaries which includes stock brokers, commodity brokers, sub-brokers, authorised person and depository participant etc. 5. As per PMLA the following type of transaction are to be reported to FIU: - (A). All cash transactions of the value of more than `. 10 Lacs or its equivalent in foreign currency. (B). All series of cash transactions integrally connected to each other which have been valued below `. 10 Lacs or its equivalent in foreign currency where such series of transactions takes place within one calendar month. (C). All suspicious transactions whether or not made in cash and including, inter-alia, credits or debits into a n y n o n monetary accounts such as demat account. 6. Any such above transaction(s), though not executed but attempted and failed are also required to be reported 7. The suspicious transaction(s) can be related to the transaction(s) under the circumstances such as: - (A). Client(s) whose identity verification seems difficult or client(s) that appear not to co-operate;(b). Asset management services for client(s) where the source of the funds is not clear or not in keeping with client(s) apparent standing /business activity; (C). Client(s) based in high risk jurisdictions; (D). Substantial increases in business without apparent cause; (E). Client(s) transferring large sum of money to or from overseas locations with instructions for payment in cash; (F). Attempted transfer of investment proceeds to apparently unrelated third parties; (G). Businesses undertaken by offshore banks/financial services; (H). Businesses reported to be in the nature of export/import of small items; (I). Unusual transactions by Clients of Special Categories (CSCs). 8. Clients of Special Categories includes: - (A). Non-resident client; (B). High net-worth client (having annual income + networth of more than `. 1 Crore) ; (C). Trust, Charities NGOs and organizations receiving donations; (D). Company having close family shareholdings or beneficial ownership; (E). Civil Servant or family member or close relative of civil servant; (F). Bureaucrat or family member or close relative of bureaucrat; (G). Current or Former MP or MLA or MLC or their family member or close relative; (H). Politician or their family member or close relative; (I). Current or Former Head of State or of Governments or their family member or close relative; (J). Senior government/judicial/ military officers or their family member or close relative; (K). Senior executives of state-owned corporations or their family member or close relative; (L). Companies offering foreign exchange offerings; 9. While opening the new account all the prescribed procedures of KYC and Client Identifications should strictly be followed in the context of ensuring the compliance under PMLA. 10. All the record of transaction(s) and client identifications must be preserved in a manner which can be retrieved promptly and reported to the authorities in the specified format as and when required. 11. The Clients are advised to be fully conversant with the provisions of PMLA and any amendments thereto from time to time and to co-operate with intermediaries by providing the additional information(s)/document(s), if asked for, to ensure the compliance requirements under PMLA. 12. The Client are advised to provide certain information which may be of personal nature or has hitherto never been called for such information can include documents evidencing source of funds/income taxreturns/bank records etc. You are advised to co-operate with us whenever such information is sought for from PMLA perspective. 13. The Clients are advised to be vigilant and to refrain from temptation of easy monetary gains, by knowingly or unknowingly supporting the people who are involved in the activities which are endangering freedom and causing damage to the nation. The Clients are supposed to provide their active co-operation in the due compliance of the law. 14. Please visit the website of Financial Intelligence Unit ( and Securities and Exchange Board of India ( for any further information on the subject. 31 Version VIII

6 The information is sought under the Prevention of Money Laundering Act, 2002, the rules notified there under and SEBI and Exchange Guidelines issued on Anti Money Laundering FINANCIAL STATUS AND OTHER DETAILS a. Annual Income (Last 3 years from the date of the opening of this account) st 1 Year : nd 2 Year : nd 3 Year : b. Networth Details (as on the date of account opening) c. Please tick mark the additional applicable category to you Non resident client High net-worth client (having annual income + networth of more than `. 1 crore) Trust,Charities, NGOs and organizations receiving donations, Company having close family shareholdings or beneficial ownership Civil Servant or family member or close relative of civil servant Bureaucrat or family member or close relative of bureaucrat Current or Former MP or MLA or MLC or their family member or close relative Politician or their family member or close relative Current or Former Head of State or of Governments or their family member or close relative Senior government/judicial/ military officers or their family member or close relative Senior executives of state-owned corporations or their family member or close relative Companies offering foreign exchange offerings None of the above Client Name : (18) (Client Signature) 32 Version VIII

7 Edelweiss Broking Limited, Edelweiss House, Off CST Road, Kalina, Mumbai Toll Free No. : helpdesk@edelweiss.in 33