Securities and Exchange Board of India (Sebi) on Friday came out with the much awaited regulations for uniform Know Your Client KYC Registration Agency (KRA). The move would benefit investors as it would save them the trouble of repeating the KYC process while investing in various financial products.
It has been over four months since the market regulator gave the go-ahead for a KRA. The regulator has allowed stock exchanges, depositories or any other Self Regulatory Organisation (SRO) to form wholly-owned subsidiaries that could be registered as a KRA.
A KRA will make life simpler for investors who have to go through the entire KYC procedures each time they want to register with a new broker or a fund house.
The role of a KRA will be to complete the KYC procedures for a client and make it available to all capital market intermediaries that avail of its services. If there is more than one KRA inter-operability will have to be put in place so as to avoid any kind of duplicacy. The KRA will have to maintain a net worth of at least R25 crore on a continuous basis.
Sebi will consider applications to grant certificates of initial registration to a wholly owned subsidiary of a recognised stock exchange having a nation-wide network of trading terminals, a wholly owned subsidiary of a depository or any other intermediary registered with the Board. A wholly owned subsidiary of a Self Regulatory Organisation (SRO) registered under SEBI (Self Regulatory Organization) Regulations, 2004. Sebi, in its circular, has stated that, ?The applicant shall have a net worth of at least R25 crore on a continuous basis.?
The certificates of initial registration of KRA will granted under sub-regulation shall be valid for a period of five years from the date of its issue to the applicant.
Sebi also said that, KRA shall be responsible for storing, safeguarding and retrieving the KYC documents and it shall retain the original KYC documents of the client, in both physical and electronic form.
The market regulator has also directed that KRAs shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines and instructions issued by the board or the central government and for redressal of client?s grievances. The compliance officer shall immediately and independently report to the Sebi board any non-compliance observed by him.