On Jan. 4, IND CDSL issued communique on report and alert facility.
IND CDSL issued a communique to participants on the surveillance obligations of depository participants (DPs) to put into place a framework to generate various alerts.
Follows IND BSE Jul. 2021 updated member surveillance obligations, see #110050.
Summary
In communique CDSL/OPS/DP/SYSTM/2021/309, DPs were advised to put in place a surveillance framework to generate different types of alerts and casting obligations.
IND CDSL confirmed that necessary development has been made in REL ID application for login to new surveillance application for submission of various required reports
These include quarterly reporting of status of the alerts generated by DPs, reporting instances with adverse observation for alerts generated by DPs and INF CDSL alerts.
DPs can give rights to existing users in CDAS system or create separate users, such as compliance officer or a senior official, to allow them access to surveillance application.
The user creation and user activation process are the same as user creation for web CDAS application and the new relevant user manual is attached to the communique.
Amendment to Previous Communique
DPs should refer to part F in earlier Communique CDSL/OPS/DP/SYSTM/2021/309 that shows Status of Alerts generated by the Depository Participant instead of Status of Alerts generated by the Depository and all of the DPs are advised to note this error.
They must ensure compliance, making any changes in back office system, as required.
Effectiveness
Changes in the system will be released on Jan. 7, 2022.
Feb. 2023 Surveillance Obligation
On Feb. 10, 2023, IND CDSL released a functionality regarding the surveillance related alerts related to account opening, off-market transfer, pledge/unpledge/invocation.
Depository participants (DPs) are required to submit count of alerts within 15 days of quarter end; Dos shall ensure alerts checked, compliance is submitted within 30 days.
If suspicious activities being carried out by beneficial owner is found, such alerts must be reported; DPs are expected to generate additional alerts to detect and prevent any type of market manipulation activity carried out by clients, on top of alerts suggested.
Oct. 2023 Surveillance Portal Enhancements
On Oct. 27, 2023, IND CDSL issued communique to inform depository participants (DPs) that enhancement in surveillance portal has been made re bulk upload facility.
This enhancement addresses the surveillance alerts assigned to DP by CDSL.
DPs will be able to submit their remarks and due diligence confirmation which may facilitate prompt addressal of surveillance alerts; communique encloses the detailed procedure for enabling necessary rights and bulk upload in CDAS-surveillance portal.
This is a 5-step procedure; CDSL advised DPs to do sample enquiry on the alerts for which DP have uploaded their comments, to ensure DP comments properly updated.
Jun. 2024 Reporting Format Amendment
On Jun. 20, 2024, IND CDSL reminded DPs of obligation to generate surveillance alerts.
Starting Sep. 30, 2024, DPs must use new format for quarterly reports; this format includes additional columns to provide a comprehensive overview of alerts generated.
Participants can submit the report in new format for the quarter ended Sep. 2024.
DPs are required to prepare an SOP for processing surveillance alerts, which should include parameters for alert generation, response timelines, escalation procedures.
The SOP and alert parameters must be periodically reviewed by the compliance officer.
Ensure maker-checker mechanism is followed during processing, disposal of alerts.
DPs must dispose of alerts within 30 days from their generation; non-compliance, such as delays in processing or reporting alerts, could lead to further disciplinary actions.
The surveillance policy of the participants must be reviewed annually.
Regulators
IND CDSL
Entity Types
Bank; Depo; Exch
Reference
Com CDSL/OPS/DP/SYSTM/2024/341, 6/20/2024; Com CDSL/OPS/DP/SYSTM/2023/628, 10/27/2023; Com CDSL/SURV/DP/POLCY/2023/88, 2/10/2023; Com CDSL/OPS/DP/SYSTM/2022/5, 1/4/2022; Com CDSL/OPS/DP/SYSTM/2021/309, 7/15/2021
