Attention Traders: Sebi Updates Framework on Unique Client Code, PAN

Sebi, the market regulator, on Monday simplified the enforcement criteria for representatives of commodity derivatives exchanges to collect and retain copies of their clients' PANs and encouraged the use of e-PAN.

Sebi has tweaked regulations relating to the Unique Client Code (UCC) and the mandatory requirement of a Permanent Account Number in a circular (PAN). From April 1, 2021, the latest changes will be implemented.

What is Unique Client Code?

Aim to promote the maintenance of their clients' databases and to improve the knowledge of your client (KYC) standards; all brokers have been required to use specific client code linked to the respective client's PAN information, which will serve as an exclusive client identifier.

It has been agreed to amend certain provisions of SEBI, in order to rationalize the enforcement obligation of collecting and storing copies of clients' PAN by their respective members and to promote the use of e-PAN:

• For all clients transacting on the commodity derivatives market, members of exchanges with a commodity derivatives segment must use a Unique Client Code (UCC).
• Exchanges with commodity derivatives segments would not enable trades to be executed without the members of the exchange uploading their UCC data.
• For this reason, members must obtain and keep copies of Permanent Account Numbers (PANs) provided by the Income Tax (IT) Department for all of their clients in their backoffice after checking their validity.
• In the case of an e-PAN, however, members must check the validity of the e-PAN using the information on the IT Department's website and keep a soft copy of the PAN in their records.
• They can submit PAN or e-PAN information to the exchanges as part of the Unique Client code.
• Members must collect and keep copies of Permanent Account Numbers (PANs) provided by the Income Tax (IT) Department for all of their clients in their back-office after checking their validity.