The Securities and Exchange Board of India (SEBI) has issued a draft circular inviting public comments on the guidelines for SMS and email alerts to investors by stock exchanges. Originally established in 2011, these guidelines required securities brokers to upload separate cell phone numbers and email addresses for each customer, with exceptions for family members in specific circumstances. The proposed amendments seek to extend this exception to non-individual customers, such as Hindu Undivided Families (HUFs), partnerships, trusts and corporations, thereby making compliance easier for these entities. Under the revised framework, brokers can upload shared contact details of authorized persons of these non-individual clients where there is pre-approval. The draft circular is open for public comments until November 18, 2024, and SEBI encourages stakeholders to submit their comments online. Following the feedback period, the new arrangements will be implemented immediately, with exchanges required to inform their members and update relevant regulations accordingly. This initiative is part of SEBI’s ongoing efforts to improve investor protection and ensure the integrity of securities markets. The circular is available on the SEBI website under the “Legal → Circulars” section.

Securities and Exchange Board of India

DRAFT CIRCULAR FOR PUBLIC COMMENTS

SMS and E-mail alerts to investors from the stock exchanges

Background

1. With a view to protecting investors against unauthorized transactions in their accounts, SEBI vide circular CIR/MIRSD/15/2011 dated August 2, 2011 has issued guidelines regarding SMS and email alerts to investors by scholarships. As a result, securities dealers are required to upload certain information about their clients, including a separate mobile phone number and email address for each client. However, in exceptional circumstances, the stockbroker may upload the same mobile number/email address for multiple clients, provided that such clients belong to the same family. “Family” for this purpose would mean oneself, one’s spouse, one’s dependent children and one’s dependent parents.

2. Currently, the exception provided above covers individual customers only and does not cover other categories of customers such as HUF, Partnership, Trust and Corporate. Therefore, in order to facilitate compliance for non-retail customers, it is proposed to also create an exception for non-retail customers.

Public comments:

The draft circular relating to “SMS and E-mail alerts for investors via stock exchanges” is filed with Appendix A. Comments/suggestions must be submitted no later than November 18, 2024, via the following link:

If there is a technical problem submitting your comment via the online public comment form, you can write to (email protected) with the subject: “Public comments on the draft circular – SMS and e-mail alert to investors by the stock exchanges”.

Appendix A

DRAFT CIRCULAR

SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/XXX

DD-MM-YYYY

HAS,

All recognized scholarships

Madam/Sir,

Below: SMS and E-mail alerts to investors by stock exchanges

1. SEBI, see Circular no. CIR/MIRSD/15/2011 of August 2, 2011 (hereinafter referred to as “Circular”) and article 33 of the Main Circular for securities brokers of August 9, 2024 (hereinafter referred to as “Main Circular”), have issued guidelines regarding SMS and E-mail alerts to investors by stock exchanges.

2. Item iv of Article 2B of the Circular and Article 33.2.4 of the Main Circular stipulate the following regarding the uploading of mobile phone number and email by stock brokers:

Stock brokers should ensure that a separate mobile number/email address is uploaded for each client. However, in exceptional circumstances, the stockbroker may, upon specific written request of a client, upload the same mobile number/email address for multiple clients provided that such clients belong to the same family. “Family, for this purpose, would mean oneself, one’s spouse, one’s dependent children and one’s dependent parents.

3. Based on the statement received from the Brokers’ Industry Standards Forum (ISF), it is further clarified that, in exceptional circumstances, the securities broker may, upon the specific written request of a client, download the same cell phone number/email address. address of more than one customer provided that such customer belongs to a single family (in case of individual customers) or that customer is the authorized person of an HUF, company, partnership or a trust (in the case of non-individual clients).

The family/person authorized for this purpose must include:

A. In the case of individuals, yourself, your spouse, dependent children and dependent parents.

b. In case of HUF, Karta or any of the co-partners as per prior approval of Karta.

c. In case of a partnership business, any of the partners according to the prior approval of all authorized partners.

d. In the case of a trust, one of the trustees or beneficiaries in accordance with the resolution passed by the trust.

e. In case of companies, the authorized person operating the trading account in accordance with the board resolution adopted by the company.

4. Accordingly, SEBI circular no. CIR/MIRSD/15/2011 of August 2, 2011 and Article 33 of the Main Circular for Securities Dealers of August 9, 2024 are amended to the extent of paragraph 3 as detailed above. All other provisions specified in the SEBI Circular dated August 2, 2011 and the SEBI Master Circular for Stock Brokers dated August 9, 2024 will continue to apply.

5. The provisions of this circular will come into force with immediate effect.

6. Scholarships must:

6.1. bring the provisions of this circular to the attention of their members and also disseminate them on their websites;

6.2. make necessary amendments to the relevant statutes, rules and regulations for the implementation of the above direction;

7. This circular is issued in exercise of the powers conferred under Section 11(1) of Chapter IV of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development and regulate the securities markets and will come into force from the date of this circular.

8. This circular is available on the SEBI website at sebi.gov.in in the category: “Legal → Circulars.