Market regulator SEBI (Securities and Exchange Board of India) has asked stock exchanges to report all major non-compliances and observations by system auditors of stock brokers on a quarterly basis.
The exchanges are also required to ensure that all major audit findings specifically in critical areas, are rectified or complied in a time-bound manner.
The system audit guidelines include System Audit Process, Auditor Selection Norms and Terms of Reference (TOR).
Exchanges are advised to keep track of findings of system audits of all brokers on quarterly basis and ensure that all major audit findings, specifically in critical areas, are rectified / complied in a time bound manner failing which follow up inspection of such brokers may be taken up for necessary corrective steps / actions thereafter, if any, SEBI said in a circular on Wednesday.
Stock Exchange should report all major non-compliances / observations of system auditors, broker wise, on a quarterly basis to SEBI.
For the current year, in case the stock brokers have commenced their annual system audit, they may follow existing annual system audit framework prescribed by exchanges.
"However, stock brokers who are yet to commence annual system audit should carry out their annual system audit as per the framework given in this circular," it added.