The Policies are being prepared keeping best practices and is subject to review every Yearly.
Version 1.1
SURVEILLANCE POLICY OF DEPOSITORY PARTICIPANT
1. Background:
Surveillance is the process of collecting and analyzing information concerning markets in order to detect unfair transactions that may violate securities related laws, rules and regulations. Depository Participants have the responsibility of monitoring the activity in demat accounts of their clients. In order to achieve this and to create safer markets, Estee Advisors Private Limited would have in place adequate surveillance policies and system in order to monitor suspicious/manipulative transactions and curb such activities, if any.
2. Objective:
In order to facilitate an effective surveillance mechanism to monitor the transactions in demat account this Surveillance Policy is being formulated, in compliance and/or as mandated by Securities and Exchange Board of India, & The Depositories.
3. Responsibility:
- The Compliance Officer shall be responsible for the implementation and supervision of this Policy.
- The Compliance Officer shall take all necessary steps to analyses, monitor, document and report the findings to the Board Members as well as the depository and/or regulatory bodies, in a time bound manner, as detailed hereunder and/or as mandated by the regulatory bodies.
- The Compliance Officer shall exercise their independent judgment and take adequate precautions to ensure implementation of an effective surveillance mechanism, based on the day-to-day activities of the clients, general market information and the facts and circumstances.
- The Internal Auditor of the Company shall review the Policy, its implementation, documentation, effectiveness and review the alerts generated during the period of audit and shall record the observations with respect to the same in their Internal Audit Reports.
- The Board of Directors shall peruse, review and provide necessary guidance with regard to the “Surveillance Policy”, periodically, for strengthening the processes.
4. Alert Generation System: The Compliance officer generates appropriate surveillance alerts / reports at the end of each day from the Back Office Software which are analyzed to identify suspicious transactions.
As per the communiqué issued by the Depository below are the indicative themes for generation of surveillance alerts:
| S.No. | Indicative themes |
| 1 | Alert for multiple demat accounts opened with same demographic details: Alert for accounts opened with same PAN /mobile number / email id/ bank account no. / address considering the existing demat accounts held with the DP. |
| 2 | Alert for communication (emails/letter) sent on registered Email id/address of clients are getting bounced. |
| 3 | Frequent changes in details of demat account such as, address, email id, mobile number, Authorized Signatory, POA holder etc. |
| 4 | Frequent Off-Market transfers by a client in a specified period |
| 5 | Off-market transfers not commensurate with the income/Networth of the client. |
| 6 | Pledge transactions not commensurate with the income/Networth of the client. |
| 7 | Off-market transfers (High Value) immediately after modification of details in demat account |
| 8 | Review of reasons of off-market transfers provided by client for off-market transfers vis-à-vis profile of the client e.g. transfers with reason code Gifts with consideration, frequent transfers with reason code Gifts/Donation to unrelated parties, frequent transfers with reason code off-market sales |
| 9 | Alert for newly opened accounts wherein sudden Increase in transactions activities in short span of time and suddenly holding in demat account becomes zero or account becomes dormant after some time. |
| 10 | Any other alerts and mechanism in order to prevent and detect any type of market manipulation activity carried out by their clients |
5. Policy Procedures for Disposition of Alerts:
Downloading of Transactional Alerts: The Alerts provided by the Depository (CDSL) and internally generated by the Back Office Software shall be downloaded by compliance officer on a regular basis and alerts register shall maintained for recording of all alerts generated.
Client(s) Information: The KYC team shall carry out the necessary Due Diligence of the client(s), whose name appears on the Transaction Alerts. The said officer shall ensure that the KYC parameters are updated on a periodic basis as prescribed by Securities & Exchange Board of India (SEBI) and latest information of the client is updated in CDSL system. Based on the Client Information, the said officer shall establish Groups/Association amongst clients to identify multiple accounts/ common account/group of clients.
Documentation: The compliance Team in order to analyse the activity of the Client(s)/Group of Client(s) identified based on the Transaction Alerts, shall do the following:
- Seek explanation from such identified Client(s)/Group of Client(s) for entering such transactions.
- Seek documentary evidence such as Bank Statement/Demat Transaction Statement or any other documents to satisfy itself.
- In case of Funds, Bank Statements of the Client(s)/Group of Client(s) from which Funds pay-in have been met, to be sought.
- In case of Securities, Demat Account Statements of the Client(s)/Group of Client(s) from which Securities pay-in have been met, to be sought.
- The period of such statements mentioned in point (c) & (d) may be at least +/- 15 days from the date of transactions to verify whether the funds/ securities for the settlement of such trades actually belongs to the client to whom the trades were transacted.
Analysis: Upon receipt of the above-mentioned documents, the Compliance Officer shall analyse the documents sought from the Client as well as the KYC & KRA of the Client and shall record the observations for such identified transactions or Client(s)/Group of Client(s).
In case adverse observations are recorded, the Compliance Officer shall report all such instances to the Depository (CDSL) within 7 days of the alert generation
6. Time Frame for Disposition of Alerts:
All the alerts downloaded will be analysed by Compliance officer keeping in view Client Type, Risk Categorization, Income Range Selected and Past transactions in account. In case of transactional alerts provided by Depository we shall ensure that all alerts are reviewed, and status thereof (Verified & Closed / Verified & Reported to Depository) including action taken is updated within 30 days.
In case the matter prolongs beyond 30 days the same should be reported to the Board of Directors, by the Compliance Officer, citing reasons for such delay. The Compliance Officer may seek extension of the time from the Depository, whenever required, under intimation to the Board of Directors and reason for the same shall be documented.
7. Management Information System (MIS):
- A quarterly MIS Report shall be put up by the Compliance Officer to the Board of Directors on the number of alerts pending at the beginning of the quarter, generated during the quarter, disposed off during the quarter and pending at the end of the quarter.
- Internal Auditor shall verify and submit separate report with regard to “Surveillance Policy” its implementation, effectiveness and also review the alerts generated during the period of audit in respect of the Compliances made and pending actions, if any. Further, they shall verify that the quarterly MIS is prepared and placed before the Board of the DP.
- Principal Officer under the PMLA and Compliance Officer of the Company would be to be responsible for all surveillance activities carried out for the record maintenance and reporting of such activities under the supervision of the Designated Director
8. Record Maintenance & Reporting:
- The Compliance Officer shall be responsible for all surveillance activities of DP carried out by the Company and for the record maintenance of such activities.
- The Compliance Officer shall be assisted by the Risk Management Team and the KYC & KRA Officer for the surveillance activities and shall have the discretion to take assistance/help from any professionals and/or software for the better implementation of the surveillance activities, without diluting the accountability and responsibility of the Compliance Officer.
- Each alert received from the Depository shall be backed by necessary supporting documentary evidence collected from clients, any other additional details as may be deemed fit may be captured and placed before the Board of Directors for review.
9. Review
The Surveillance policy of the company is reviewed once in a financial year. In case of regulatory change in between then it is reviewed and updated to comply with the new regulatory order\ guidance within the time frame specified by the regulators.