AP and Branch Inspections

End-to-end inspection services for branches and Authorised Persons ensuring compliance with SEBI and exchange requirements.

Overview

Structured AP and branch inspections protect investors and ensure orderly functioning of financial markets.

Stock Brokers are required to conduct periodic inspections of Branches and Authorised Persons (APs) in accordance with regulatory requirements prescribed by SEBI and Stock Exchanges.

As per the latest framework on supervision of APs and Branches, members are required to implement a structured inspection program, covering defined scope, methodology, timelines and reporting requirements.

These inspections ensure that the Branches and APs function in line with the regulatory framework that intends to ensure protection of the interest of investors and orderly functioning of the markets.

What regulators mandate

Three core regulatory requirements that every stock broker must fulfil for AP and branch inspections.

Inspection Coverage Norms

Minimum 50% of APs and branches inspected annually.

Each AP and branch to be inspected at least once in two years. High-risk APs with high turnover or complaints require annual or immediate inspection.

Risk-Based Inspection Triggers

Inspections triggered by complaints, turnover spikes and alerts.

Priority inspections required for high-turnover APs, unauthorised trading complaints, social media alerts and sudden increases in client base, turnover or commissions.

Submission and Record Keeping

Quarterly inspection reports submitted to exchanges with 5-year records.

Inspection reports submitted to exchanges on a quarterly basis. All records and inspection trails maintained for a minimum period of five years as required by regulations.

What gets inspected

Branch and AP inspections cover six critical operational, compliance and control areas during every engagement.

Client Dealing Conduct

Verification of client registration, fund movement and transaction authorisation.

Clients registered directly with the trading member. No movement of funds or securities between client and AP. No cash dealings, unauthorised transactions or assured return schemes.

Unauthorised Activity Monitoring

Detection of mis-selling, assured returns and illegal trading schemes.

Review of complaints against APs. Social media and market intelligence monitoring. Identification of suspicious client interactions and detection of dabba trading or unauthorised schemes.

Terminal and Trading Controls

Terminals mapped and certified operators verified at each location.

Terminals mapped and reported correctly to the exchange. Use of authorised and certified terminal operators verified. Voice recording systems availability checked. Trading by unauthorised persons prevented.

Reporting Delay Violations

Branch infrastructure, records and mandatory display requirements verified.

Adequate office infrastructure and manpower reviewed. Proper segregation of AP and broker operations verified. Mandatory regulatory information display confirmed. Records, logs and backups maintained properly.

Documentation and Communication

Contract notes, margin statements and complaint handling reviewed.

Contract notes and margin statements issued only by the trading member. Proper handling and tracking of client communications verified. Complaint handling and TAT adherence reviewed thoroughly.

Regulatory Reporting Compliance

AP details, UCC mapping and regulatory update compliance checked.

Correct reporting of AP details including address, directors and terminals verified. Timely update of changes submitted to exchanges. Proper AP details mapping in UCC database reviewed.

Benefits

Structured compliance and process review delivers accuracy, control strength and complete inspection preparedness for regulated entities.

Quality Assurance

Consistent inspection quality maintained across every AP and branch location. Complete and accurate documentation ready for exchange submission. Expert team identifying critical observations others may miss

Early Risk Detection

Early detection of unauthorised activities and regulatory risks across your AP network. Improved supervision over all branches and Authorised Persons. Reduced likelihood of exchange penalties and observations.

Consistent Inspection Quality

Why SecMark

End-to-end inspection support across planning, execution, reporting and post-inspection corrective action management.

Inspection Planning Coverage

Risk-based identification of APs and branches for inspection. Annual inspection planning aligned with regulatory criteria. Required inspection coverage and frequency ensured across all locations.

Onsite Inspection Execution

Onsite and remote inspections conducted. Records, bank accounts and demat accounts verified. Mystery shopping and surprise checks performed where required. Social media and activity monitoring included.

Gap and Risk Identification

Identification of control gaps and non-compliances across all inspection areas. Analysis of client dealings, transactions and complaints. Detection of potential regulatory risks before they attract exchange attention.

Reporting and Documentation

Detailed inspection reports prepared in regulatory formats. Documentation aligned with exchange submission requirements. Maintenance of complete audit trail and supporting evidence for every inspection conducted.

Technology-Driven Approach

In-house auditing and management reporting software manages information collection, evaluation, onsite geo-tagged visits, report drafting, response tracking and rectification recording across every inspection engagement.

Post-Inspection Follow-Up Support

Assistance in corrective action planning and implementation. Follow-up verification of corrective measures implemented. Support provided during regulatory review or exchange inspection queries post-engagement.

For more information you can reach out to us by filling the contact us form / Call: 9869265949