Execution of commodity derivatives trades will be prohibited without an upload of clients’ UCC details, which should be accompanied by the PAN or e-PAN.
SEBI (Securities and Exchange Board of India) has directed members of exchanges with a commodity derivatives segment to use the Unique Client Code (UCC) and Permanent Account Number (PAN) for all clients transacting in commodity derivatives starting from 1 April.
In a circular dated 8 March, the regulator said it decided to modify certain provisions of a September 2016 circular to rationalise the requirement for members of exchanges to collect and maintain copies of clients’ PAN cards, and enhance the use of e-PANs.
SEBI said exchanges having a commodity derivative segment must ensure that the members of their exchanges collect copies of PAN cards issued to their existing as well as new clients after verifying them against the originals.
Members of the exchanges are also required to cross-check the details collected from their clients with the details on the ITD (Income Tax Department) website, for all clients.
In regards to the e-PAN, members shall verify the authenticity of e-PAN with the details on the ITD website and maintain soft copies of the PAN in their records, SEBI said.
Guidelines on the use of the UCC for trading on commodity derivative exchanges have also been amended, making it mandatory for members of exchanges with a commodity derivatives segment to use the UCC for all clients transacting in commodity derivatives.
SEBI directs exchanges with a commodity derivatives segment to prohibit the execution of trades by members without a corresponding upload of the UCC details.
Members of exchanges are directed to upload details of PAN or e-PAN as part of the UCC, verify the information, and retain a copy of the document.
SEBI said all other provisions of the September 2016 circular remain in force.