SEBI proposes client code modification by market makers of ETFs without penalty

As an Ease of Doing Business measure, market regulator Securities and Exchange Board of India (SEBI) has proposed that client code modifications may be permitted from the market makers to the mutual fund associated exchange traded fund (ETF) scheme without levy of any penalty to enable the net settlement by the market makers.

Stock exchanges had made a representation to the SEBI regarding this. SEBI has also proposed that, penalties on client code modification by certain category of clients may also not be made applicable if the client code modification is carried out from one unique client code (UCC) to another provided that the UCCs are under the same PAN.

SEBI has also proposed that client code modification by other category of investors may be permitted without imposing any penalty. SEBI has proposed that client code modification by Institutional clients like banks, domestic financial institutions, insurance companies, pension funds, statutory bodies may be permitted without any penalty.

In the non-institutional clients, clearing their trades through custodians like portfolio management services (PMSs), Non-Resident Indians (NRIs), individuals or proprietorship firms, Hindu Undivided Families (HUFs), body corporates, etc., who have more than one UCC under the same Permanent Account Number (PAN), should also be allowed modification of client code without attracting any penalty.