MSD57331

National Stock Exchange of India Limited
Circular
Department: MEMBER SERVICE
Download Ref No: NSE/MSD/57331 Date: June 28, 2023
Circular Ref. No: 39/2023
All Members,
Consolidated Circular for Non-Neat Frontend (NNF) Facility
Exchange provides a trading front-

front-end according to his requirements, NSE offers a facility to its members by which members can use their own
trading front-end software in order to trade on the NSE trading system. This software may be developed either by
in-house teams/non-empanelled vendors or procured through Exchange Empaneled Vendors. A member may also
opt to avail the services provided by Application Service Providers (ASPs) empaneled with the Exchange. This facility
-NEAT Fronte ) facility is available to all members of the Exchange.
Exchange has been issuing various circulars from time to time for matters related to captioned subject. To provide
users easy access to all applicable circulars at one place a consolidated circular is being issued considering circulars
issued till June 15, 2023. This consolidated circular encapsulates regulations / instructions of all earlier circulars
issued by Exchange from time to time and new instructions as applicable.
No information has been rescinded for this consolidation, however, in future for any rescinded information,
members may note the below:
Notwithstanding such rescission
a. Anything done or any action taken or purported to have been done or contemplated under the rescinded
guidelines before the commencement of this Master Circular shall be deemed to have been done or taken or
commenced or contemplated under the corresponding provisions of the Master Circular or rescinded guidelines
whichever is applicable.
b. The previous operation of the rescinded guidelines or anything duly done or suffered thereunder, any right,
privilege, obligation or liability acquired, accrued or incurred under the rescinded guidelines, any penalty,
incurred in respect of any violation committed against the rescinded guidelines, or any investigation, legal
proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty as aforesaid, shall
remain unaffected as if the rescinded guidelines have never been rescinded
The list of Exchange circulars compiled in this Consolidated Circular is given in Appendix at the end.
In event of any further queries or information relating to Non-NEAT Frontend (NNF) Facility, please contact us
on 1800 266 0050 (Option 1)/ msm@nse.co.in
For and on behalf of
Bharat Gandhi
Chief Manager
Toll Free No Email id

1800-266-0050 (Option 1) msm@nse.co.in
Page 2 of 48
Table of Contents
Section 1: Scheme Governing Use of Facility Relating to Non-Neat Frontend (NNF) ........................... 4
Section 2: Registration Process of Non-Neat frontend facility for members ...................................... 11
Section 3: Testing of software used in or related to Trading and Risk Management ......................... 16
Section 4: Computer to Computer link (CTCL) Facility .......................................................................... 18
Section 5: Internet Trading including Securities Trading using Wireless Technology ....................... 20
Section 6: Direct Market Access ............................................................................................................... 25
Section 7: Smart Order Routing ............................................................................................................... 28
Section 8: Algorithmic Trading ................................................................................................................. 31
Section 9: NNF Request Cancellation ...................................................................................................... 35
Section 10 : Surrender of NNF Registrations / Undertaking .................................................................. 35
Section 11: Safeguards to avoid trading disruption in case of failure of software vendor ................. 36
Section 12: Empanelment of Vendors for providing software used in trading and risk management
...................................................................................................................................................................... 37
Section 13: Empanelment of Application Service Providers (ASP) for providing software used in
trading and risk management ................................................................................................................... 40
Section 14: Registration of Foreign Independent Software Vendors (ISVs) ........................................ 43
Section 15: Identification of order through NNF terminal Ids ............................................................... 44
Appendix - List of circulars issued by the Exchange............................................................................... 45
Page 3 of 48
Section 1: Scheme Governing Use of Facility Relating to Non-Neat Frontend (NNF)
(Only for member reference, not to be submitted)
With an objective to facilitate orderly use of Non-Neat Frontend (NNF) facility and to make various conditions and /
or requirements governing the use of Non-Neat Frontend (NNF) facility in a transparent manner and to have its due
and strict compliance, the scheme containing various conditions and / or requirements is formulated as under:
For the purpose of this scheme,
Non-Neat Frontend (NNF) shall mean and include use of software, which has been developed and maintained by
a member / application service provider / vendor duly empanelled with the Exchange.
'Software‟ shall mean electronic systems or applications used by stock brokers / trading members for connecting
to the stock exchanges and for the purposes of trading and real-time risk management, including software used for
Compute to Computer Link (CTCL), Internet Based Trading (IBT), Direct Market Access (DMA), Securities Trading
using Wireless Technology (STWT), Smart Order Routing (SOR), Algorithmic Trading (AT) etc.
1.1. PRE- REQUISITIES FOR OBTAINING PERMISSION FOR NNF FACILITY
1.1.1. In pursuance to the application made in the form as may be prescribed by the Exchange for NNF facility by
any member, the member shall deemed to have agreed by the provisions mentioned in the scheme
hereunder, and the amendments made thereto by the Exchange from time to time.
1.1.2. A member shall produce the proof, wherever applicable, relating to registration obtained under (1.1.4) to
the Exchange to facilitate the Exchange to extend the NNF facility. The member shall also ensure that the
activity carried out through use of the NNF facility is strictly in accordance with the approved network
diagram and the requirements specified by the Exchange / DOT / MTNL and / or other appropriate
government / statutory authorities.
1.1.3. A member who intends to develop and maintain software to support NNF facility to be registered by the
Exchange shall pay a one-time fee towards in-house registration and a recurring annual fee as may be
prescribed by the Exchange from time to time. For the purpose of calculation of recurring charges, the
financial year shall be considered as the basis for the year. The recurring charges shall be apportioned on a
pro-rata basis for the financial year from the day on which the application is received.
1.1.4. A member shall, at its own expense and except VSATs, provide all lines, cabling, hardware, equipment and
other communication facility required for transmission of the data between the receiving premises and the
e necessary approval in writing from relevant
authorities.
1.1.5. A member shall pay license fee / charges / royalty as may be levied by DOT / MTNL / Exchange / any other
government / statutory authorities from time to time.
1.1.6. A member shall ensure that the telecommunication network used by the member shall be as per the
requirements specified by the Exchange / DOT / MTNL / any other government / statutory authorities from
time to time.
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1.1.7. A member shall submit an acceptance certificate in the form as may be specified by the Exchange from time
to time as the condition precedent for the purpose of permitting use of NNF facility by the Exchange, after
completing necessary test and fully satisfying the Exchange that the NNF facility is fault-free. The Member
shall enter into a specific agreement with the Clients whom Member permit NNF facility as per the format
provided by the Exchange.
1.2. CONTINUED PERMISSION REQUIREMENTS
1.2.1. A member shall make the NNF facility available to any approved person, as the case may be, only after
obtaining prior written permission of the Exchange and such permission shall be subject to such conditions
and / or requirements as may be stipulated by the Exchange from time to time.
1.2.2. A member shall ensure that no CTCL facility is extended to any user / person unless such user / person has
passed a NCFM and / or equivalent certification program of the appropriate modules.
1.2.3. A member shall upload the details relating to the approved persons in the format prescribed by the
Exchange from time to time before extending facility of use of CTCL to any approved person. The member
shall also upload details of any change in any of the details relating to use of the CTCL facility and / or the
approved person.
1.2.4. A member shall ensure that directly and / or ind

provided to any other person / office / premises / address in contravention with any of the provisions
contained in the Bye-laws, Rules, Regulations, and Circulars relating to requirements concerning location of
NNF terminals and usage thereof and also as specified by the Securities Exchange Board of India.
1.2.5. A member shall take all necessary steps to ensure that branches and / or their Authorised Persons have not
provided any extension of CTCL facility connected through VSAT / Leased Line with the Exchange by means
of any connectivity viz. dial up / Leased Line / ISDN / Wireless media / other mode without prior uploading
of the user details with location.
1.2.6. A. member shall be responsible and shall take all such steps / actions and put in place requisite mechanism
to ensure and keep ensuring that no approved person, in any way, is able to make the CTCL facility further
available to any other person nor shall the CTCL facility is extended outside the premises for which details
are uploaded to the Exchange. In case any member fails to strictly adhere to these requirements, the
Exchange may, at its discretion, take such action as it may deem fit, which may include immediate
withdrawal of the CTCL facility either in part or in full, without any notice / reference to the member, and
such disciplinary action against the member.
1.2.7. A member shall use the physical connection / link provided for the purpose of having simultaneous access
to NNF facility and the NEAT trading system.
1.2.8. A member and their branches and / or their Authorised Persons shall execute any of the orders received
from any of their constituents only in the respective name / client code of the constituent and no order
received from any of the constituents shall be executed under PRO code and / or under other client code.
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1.2.9. A member shall not, under any circumstances, either through the software or otherwise, match any of the
orders entered by his / its approved persons from the terminals extended by such member and that the
member shall ensure to route all the orders, entered by his / its approved persons, to the trading system of
the Exchange where such orders can be matched by the centralized computer trading system of the
Exchange.
1.2.10. A member shall ensure to put in place a system based control on the trading limits / position limit and / or
exposure taken in respect of all his / its clients and adequate system control for setting pre-defined limits
on the exposure and turnover for each of the clients. The system should also be capable of assessing risk of
a client as soon as any order is received by the system for processing it for execution. Acceptance / rejection
of any order shall be intimated to the respective clients within a reasonable period. Reports relating to
margin requirement, payment and delivery obligations, etc. shall be informed or made available to the
clients through the system.
1.2.11. A member shall not advertise or use any software / program which may directly or indirectly facilitate
matching of orders between or among two or more clients by way of grouping or otherwise. The NNF facility
being used by a member shall have inbuilt feature of pushing in all the orders, entered by any of the approved
persons only through the server of the member, which in turn will push such orders to the trading system of
the Exchange for the purpose of execution.
1.2.12. A member shall not develop and / or use any software / program which shall either directly or indirectly
ll mean and include any software or facility by the use of which, upon the fulfilment of certain
specified parameters, without the necessity of manual entry of orders, buy/sell orders are automatically
generated and pushed into the trading system of the Exchange for the purpose of matching.
1.2.13. A member shall be responsible to settle all the trades executed by any approved person through the use of
the NNF facility, whether such trades were executed with or without the knowledge of the member and that
the member shall be bound to honor / comply / fulfil all the obligations / liabilities / commitments arising
out of and / or in connection with the trades executed by the approved person/s as if such trades were done
by the member and / or permitted by the member.
1.2.14. A member shall maintain all systems logs and make the same available for inspection at the discretion of,
and demand by, the Exchange / SEBI at any time.
1.2.15. A member shall ensure to undertake periodic audit of their NNF facility at such time intervals and from such
qualified persons as may be directed by the Exchange from time to time and submit a certificate duly issued
by such qualified person to the Exchange within the time as may be stipulated by the Exchange.
1.2.16. A member shall ensure to carry out necessary changes in the NNF facility used for accessing the trading
system of the Exchange, within such time as may be intimated by the Exchange, from time to time. No
modification of any part of the software has been / will be effected without prior written permission of the
Exchange.
1.2.17. A member shall not develop / use any software for accessing the trading system of the Exchange, whether
through the Compute to Computer Link (CTCL), Internet Based Trading (IBT), Direct Market Access (DMA),
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Securities Trading using Wireless Technology (STWT), Smart Order Routing (SOR), Algorithmic Trading (AT)
or otherwise, which software, in the opinion of the Exchange, may resemble and / or result and / or may give
appearance of NEAT software in any manner.
1.2.18. A member shall not assign and / or otherwise transfer any one or more rights and / or obligations relating to
the use of the NNF facility, without prior written permission of the Exchange.
1.2.19. A member shall not use, without prior written permission of the Exchange, the name of the Exchange to
directly
1.2.20. A member shall ensure that the NNF facility is flexible for effecting any changes at a short notice and has
inbuilt functionalities / features in respect of online surveillance, trade by trade position monitoring and
other risk management aspects.
1.2.21. A member shall treat, as confidential, all information obtained from the Exchange pursuant to this scheme
and shall not divulge such information to any person (except employees of the member who need to know
such information) without prior written permission from the Exchange and that the member shall ensure
that all his / its employees are aware by and strictly comply with this requirement without exception. It is
clearly understood that the forgoing obligation as to confidentially shall survive any termination of the
availability of use of the NNF facility envisaged under this scheme.
1.2.22. A member shall not, either by himself / itself and / or through any person acting on his / its behalf issue /
release / publish any advertisement, brochure / pamphlet / booklet, notice or any other promotional
material on any aspect relating to the use of the NNF facility, in any form, whether written or otherwise,
except in accordance with the code of advertisement as may be prescribed by the Exchange from time to
time and after prior written permission of the Exchange.
1.2.23. Any declaration and / or notice required to be given by any member to the Exchange shall be sent by
registered letter or facsimile transmission or at e-mail address specifically provided by the Exchange for this
purpose.
1.2.24. Besides the conditions and / or requirements as may be stipulated under clause (1.2.1) by the Exchange, all
the provisions contained in the Bye-laws, Rules, Regulations and Circulars relating to use and operation of
the NEAT trading system shall mutatis mutandis be applicable to the use and operation of the NNF facility.
1.2.25. A member shall ensure that the guidelines issued by SEBI/NSE in relation to Compute to Computer Link
(CTCL), Internet Based Trading (IBT), Direct Market Access (DMA), Securities Trading using Wireless
Technology (STWT), Smart Order Routing (SOR), Algorithmic Trading (AT), etc. are strictly adhered to. A
member shall ensure that the following security measures are inbuilt in the NNF system as the case may
be:
• User Id.
• First level password (Private code).
• Automatic expiry of passwords at the end of reasonable duration. Re-initialise access on entering
fresh password.
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• All transaction logs with proper audit facilities to be maintained in the system with unique
numbering for orders and trades.
• Secured Socket Level Security for server access through internet.
• Suitable Firewalls between trading set-up directly connected to an Exchange trading system and
ing set up.
• Integrating any advanced level security as specified by NSE / SEBI from time to time.
• Adherence to the following systems operations procedure:
o Follow identical logic / priorities used by the Exchange to treat client orders.
o Maintain all activities / alerts log with audit trail facility.
1.2.26. The member shall follow and comply with such orders or instructions including any such order or instruction,
as may be issued by the Exchange or any committee of the Exchange duly constituted for the purpose, in
the event of the member committing any violation of any Rules, Bye Laws, Regulation, NNF scheme or
practice or code of conduct prescribed by the Exchange in respect of the conduct of the business in the
Exchange and those maybe in force from time to time.
1.3. RIGHTS OF THE EXCHANGE
1.3.1. The Exchange may, at its discretion, provide access to the NNF facility provided by the Member from any
location, as may be
such receiving premises at his cost.
1.3.2. The Exchange may, at its discretion, make the NNF facility available to the member upto such time as the
Exchange may deem fit and that the NNF facility may, at any time, be withdrawn, at its discretion by the
Exchange, without giving any notice / reference to the member and / or reasons whatsoever.
1.3.3. The Exchange shall, at its discretion, have an absolute right to inspect the software used by any member
either in his / its own office and / or extended such facility at any other location, at any time and without
prior notice.
1.3.4. A member shall render and / or shall cause to render all possible assistance and cooperation to the official
of the Exchange by providing access to any kind of information in any form as such official may require at
any location whether details of such location are uploaded or not, and shall produce such documents,
records, accounts, books, data etc, howsoever stored, including data stored in magnetic tapes, floppy
diskettes etc., and provide any other information as may be required by the Exchange.
1.3.5. Without prejudice to any other right under any law for the time being in force or which may become
applicable at any time, the Exchange shall have the exclusive right to take, at its discretion, such actions,
steps, measures, proceedings, decisions within such period of time and upon such conditions and / or
requirements as the Exchange may deem fit upon any member non-complying and / or delaying in
compliance and / or failing to comply with any of the conditions and / or requirements contained in this
scheme and / or amendments thereto or upon suspension or termination of any member on any account
whatsoever. It is understood that such actions, steps, proceedings, decisions may inter-alia include
immediate withdrawal of use of NNF facility accessing the trading system of the Exchange, without notice /
reference to the member and / or such disciplinary action as the Exchange may deem fit and that the
Page 8 of 48
member shall abide by and be bound by such actions, steps, measures, proceedings, decisions as may be
initiated by the Exchange from time to time.
1.3.6. No forbearance, delay or indulgence by the Exchange in enforcing any of the conditions and / or
requirements contained in this scheme and / or amendments thereto and / or under the Bye-laws, Rules,
Regulations and Circulars, shall prejudice and / or restrict the rights of the Exchange nor shall any waiver of
the right of the Exchange operate as a waiver of any subsequent breach. No right, power or remedy herein
conferred upon or reserved for the Exchange is exclusive of any other right, power or remedy available to
the Exchange and that each such right, power or remedy shall be cumulative.
1.3.7. The Exchange has and shall have an absolute right to add, modify, amend and / or delete any of the
conditions and / or requirements contained in this scheme and such additions, modifications, amendments
and / or deletions shall be applicable and come into force as may be notified by the Exchange from time to
time and that every member and / or every approved person associated with the member shall abide and /
or be bound by such additions, modifications, amendments and / or deletions as if such additions,
modifications, amendments and / or deletions are part of this scheme.
1.4. GENERAL
1.4.1. Non-Exclusivity
The NNF facility made available to any member by the Exchange shall be on a non-exclusive basis and shall
be available only at the discretion of the Exchange.
1.4.2. Notice of withdrawal by member

• withdraw
the NNF facility. Such withdrawal shall be subject to such conditions and / or requirements as may be
stipulated by the Exchange, including payment of such amount to and / or by the Exchange, as may be
decided by the Exchange at its discretion.
• A member is aware that the Exchange is the absolute owner of the proprietary rights in respect of the
APIs entrusted to the member for the purpose of developing the software and that he shall not
duplicate, sell, assign, license or part in any other mode and / or method for consideration or otherwise
and / or transfer the APIs to any third party any time.
• The member shall forthwith inform the Exchange in writing as and when any notice is received by the
member in connection with any institution of winding up proceedings against the member and that the
member shall inform the Exchange in writing before the member initiates any winding up proceedings
to be wound up. The member further undertakes, that it shall inform the Exchange in writing on the
onset of any circumstance which is likely to or may render the member to be wound up or which is likely
to or may render the member liable to be subject to winding up proceedings.
1.4.3. Indemnifying the Exchange

A member shall be deemed to have indemnified and keep indemnified the Exchange harmless against every
and all claims, demand, damages, liabilities, losses and / or expenses suffered by such member directly by
reason of the use and / or non-use of the NNF facility by any member / approved person and / or by reason
of any member / approved person not complying with and / or delaying in compliance with and / or failure
in compliance with and / or contravening with any of the conditions and / or requirements contained in this
scheme and / or amendments thereto, including in relation to the proprietary rights of API vested in the
Page 9 of 48
Exchange. The Member shall be fully responsible and liable for all the orders emanating through their
Compute to Computer Link (CTCL), Internet Based Trading (IBT), Direct Market Access (DMA), Securities
Trading using Wireless Technology (STWT), Smart Order Routing (SOR) and Algorithmic Trading (AT)
systems.
1.4.4. No warranty by the Exchange

A member agrees and is fully aware that the Exchange does not, in any manner, warrant that the use of the
NNF facility, accessing the trading system of the Exchange, will be error-free and / or uninterrupted.
1.4.5. No liability to the Exchange

The Exchange shall not, in any way, be responsible for development, maintenance, updates, upgrades, error
fixes or any other support to the software being used for NNF facility by any member and shall not be liable
for any loss suffered by any member due to the use of software for extending the NNF facility.
Also, the Exchange shall, in no way, be liable for any direct and / or indirect damage, costs, claims and / or
expenses whatsoever, in connection with:
• Mechanical or electrical or telephone or network breakdown or power failure or malfunction of any of
the servers or auxiliary equipment used by a member and / or any other cause beyond the reasonable
control of the Exchange.
• Special direct / indirect economic or consequential loss or damage including, but not limited to loss of
profit, business revenue, opportunity costs, goodwill, or anticipated saving.
• Any event of a force majeure.
•
fires, floods, epidemic quarantine restrictions, declared general strikes in relevant industries, Act of
God, Act of the Government of India and / or any concerned State Government and any such other acts
or events beyond the control of the Exchange. Further, this will not be prejudicial to the rights already
accrued to the Exchange due to failure by any member to perform either in full or in part any of the
obligations prior to the occurrence of the event of Force Majeure.
1.4.6. No guarantee
It is clearly understood that neither the Exchange nor the directors, managers, officers, employees, or
agents of the Exchange guarantee the functioning of the NNF facility nor uninterrupted connectivity to the
trading system of the Exchange. The Exchange and the directors, managers, officers, employees and agents
of the Exchange shall not be, in any way, liable to any member and / or his / its approved person or to any
other person for any problem in performance or interruption of NNF facility or for any damages,
consequential or otherwise, arising therefrom or occasioned thereby. No proceedings shall be issued by
any member / approved person / third party against the Exchange or against any of the directors, managers,
officers or employees of the Exchange for any act of commission or omission done in discharge of official
functions.
1.4.7. Applicability of this scheme

This scheme shall be applicable not only to the information services and terminal equipment already offered
by any member to any approved person but shall also be applicable to any information services and terminal
equipment that may be developed by any member in future, even if any member has either altered and / or
intends to alter mode of supplying information to any approved person, except where the member has
obtained permission, in writing, for such alteration with complete details, from the Exchange.
Page 10 of 48
Section 2: Registration Process of Non-Neat frontend facility for members
Exchange and for the purposes of trading and real-time risk management, including software used for Computer-
to-Computer Link (CTCL), Internet Based Trading (IBT), Securities Trading through Wireless Technologies (STWT),
Direct Market Access (DMA), Smart Order Routing (SOR), Algorithmic Trading (AT), etc.
2.1. Pre-requisites for NNF Software Registration:
2.1.1. NNF Undertaking Submission

Members desirous of seeking / availing Non-Neat Frontend (NNF) facility are required to submit an NNF
undertaking stating that they will abide by all the conditions and / or requirements mentioned in the
comprehensive scheme governing use of facility relating to NNF prior to seeking registration of their
Product/Software (Ref. section I).
2.1.2. Operational guidelines for submitting Initial Undertaking

2.1.2.1. Members are required to submit a one-time undertaking on stamp paper, duly notarized, stamped
and signed by the authorized signatory. Members are required to upload scan copies of following
list of documents through online portal ENIT → ENIT New Trade→ Undertaking submission.
List of documents Format

Format of the Initial Undertaking to be given by the members
applying for NNF facility Annexure I
Board Resolution / Partnership deed -
Checklist Annexure-Checklist
2.1.2.2. Post confirmation from Exchange regarding completeness and correctness of the documentation,
Members are required to send the hardcopies of the Undertaking to below mentioned address of
the Exchange:
Member Service Department,
National Stock Exchange of India Ltd
Exchange Plaza
Bandra-Kurla Complex
Bandra (East)
Mumbai 400051.
2.1.2.3. Requests will be processed on receipt of originals at the concerned department.
2.1.3. Operational guidelines for submitting Subsequent undertaking

Members seeking subsequent from additional empanelled vendor or ASP or
In-House software, are required to submit an additional undertaking on ENIT.
2.1.4. Members are required to note the following:

2.1.4.1. Submission of scan copy of NNF undertaking (on stamp paper) through ENIT and physical copy
submission is a one-time activity i.e. it needs to be submitted only once by the member at the time
of first undertaking submission for either In-house or Empanelled vendor product or ASP.
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2.1.4.2. The NNF undertaking (on stamp paper) need not to be submitted again for opting registration for
additional empanelled vendor/In-House software/ASP.
2.2. Software Registration Guidelines:
2.2.1. Operational guidelines for members procuring software from the Exchange Empanelled Vendors.
The current list of empanelled vendors is as below:
Sr. No. Vendor Name
1 M/s. Tata Consultancy Services Ltd.

2 M/s Refinitiv India Private Limited
3 M/s. NSE.IT Ltd.
4 M/s. Geojit Technologies Pvt. Ltd.
5 M/s. 63 Moons Technologies Limited
6 M/S Dion Global Solutions Limited
7 Prism Cybersoft Pvt Ltd
8 M/s FIS Solutions (India) Private Limited
9 M/s. Greeksoft Technologies Pvt. Ltd.
10 M/s uTrade Solutions Private Limited
11 M/s. Multitrade Softech Pvt. Ltd.
12 M/s. Symphony Fintech Solutions Pvt. Ltd.
13 M/s. Saral Information Technologies Pvt Ltd
14 M/s Intellect Software Solutions Pvt Ltd
15 M/s. Rupeeseed Technology Ventures Private Limited
The updated list is available on the Exchange website at the following path:
https://www.nseindia.com/trade/platform-services-non-neat-empanelled-vendors-of-the-exchange
2.2.2. Members seeking registration for new software/systems of CTCL, AT, IBT, STWT or DMA are required to
submit following documents through the online portal ENIT. For SOR, member is required to submit the
application in physical form - along with below mentioned documents:
2.2.2.1. Auditor report - Member shall submit - system audit report in the prescribed format Annexure II.
In this report, the system auditor shall cover the following areas of audit and submit the findings:
• Risk Management
• Security Policy and implementation
• Capacity Management
• Disaster Recovery and Backups
• Vulnerability Test
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2.2.2.2. certificate -In the auditor certificate, the auditor shall inter alia certify satisfactory test
undertaken in User Acceptance Test (UAT) at Member end, Exchange Test Environment and Mock
Testing or Simulated (as applicable). The format is attached as Annexure III.
2.2.2.3. Vendor confirmation letter Annexure V to be provided (only in case of AT)
2.2.3. Members seeking registration for modified software/systems of CTCL, AT, IBT, STWT or DMA shall
provide the following documents through the online portal ENIT. For SOR, member is required to submit
the application in physical form - along with below mentioned documents:
Sr.No. Request Type Documents

1 Change in software and Server • Auditor Report Annexure II
• Auditor Certificate Annexure III
• Vendor confirmation letter (only incase
Annexure V
2 Change in Software • Auditor Certificate Annexure III

• Vendor confirmation letter (only incase
Annexure V
3 For any change other than • Auditor Certificate Annexure III

RMS/ OMS/ Feature/
Functionality of software
Please note, separate application should be submitted for each type of software/systems.
2.2.4. Operational Guidelines for members developing software in-house/non-empanelled vendors
2.2.4.1. Members seeking registration for new software/systems of CTCL, AT, IBT, STWT or DMA shall
provide the following documents through the online portal ENIT. For SOR, member is required to
submit the application in physical form - along with below mentioned documents:
2.2.4.2. Auditor report - Member shall submit a -system audit report in the prescribed format Annexure
II. In this report, the system auditor shall cover the following areas of audit and submit the
findings:
a. Risk Management
b. Security Policy and implementation
c. Capacity Management
d. Disaster Recovery and Backups
e. Vulnerability Test
2.2.4.3. in this report, the auditor shall inter alia certify satisfactory test undertaken
in User Acceptance Test (UAT) at Member end, Exchange Test Environment and Mock Testing (or
Simulated, as applicable). The format is enclosed as Annexure III
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2.2.4.4. Product write-up including write up on Risk Management Systems.
2.2.4.5. Charges for member seeking inhouse registration for software developed through inhouse team or
non-empanelled vendor as follows:
Particulars Charges + applicable taxes

One Time charges Rs.1,50,000/-
Annual recurring charges Rs. 50,000/-
2.2.4.6. The members shall pay the annual charges for the first year in advance along with the application.
The annual charges shall be calculated on a pro-rata basis from the date of registration of the
or the first year. Any excess amount paid for the
first year (on pro-rata basis) shall be adjusted towards annual charges for the next financial year.
Members are requested to pay the annual charges within due date, else it may attract interest on
late payment of the annual fees.
2.2.4.7. Members seeking registration for modified software/systems of CTCL, AT, IBT, STWT or DMA shall
provide the following documents through the online portal ENIT. For SOR, member is required to
submit the application in physical form - along with below mentioned documents:
Sr.No. Request Type Documents

1 Change in software and Server • Auditor Report Annexure II
or Change in Server • Auditor Certificate Annexure III
• Product and RMS writeup
2 Change in Software • Auditor Certificate Annexure III
• Product and RMS writeup
3 For any change other than • Auditor Certificate Annexure III
RMS/ OMS/ Feature/ • No change letter Annexure IV
Functionality of software
Please note, separate application should be submitted for each type of software/systems.
2.2.5. Operational guidelines for members availing the services provided by Application Service Providers
(ASPs)
The current list of empaneled ASPs is as below:

Sr.No. ASP Name
1 M/s. BSE Tech Infra Services Private Limited
2 M/s Finspot Technology Solutions Pvt Ltd
The updated list is available on the Exchange website at the following path:
https://www.nseindia.com/trade/platform-services-non-neat-empanelled-vendors-of-the-exchange
Page 14 of 48
2.2.5.1. Members wishing to avail of the Non-Neat Frontend (NNF) facility provided by ASPs are required
to submit an NNF undertaking stating that they will abide by all the conditions and / or
requirements mentioned in the comprehensive scheme governing use of facility relating to NNF
(Refer-section I). List of documents to be submitted by members availing the software/system
provided by Application Service Providers is enclosed:
List of documents Formats

NNF undertaking (To be executed on Stamp paper should be duly Annexure I
notarized and stamped and signed by the authorized signatory.)
ASP TM enrollment form Annexure VI
User id application form Annexure VII
Service provider agreement between Member & ASP (to be
Annexure VIII
submitted to ASP)
Board Resolution/Partnership deed -
Checklist Annexure-Checklist
Page 15 of 48
Section 3: Testing of software used in or related to Trading and Risk Management
Definition:
Exchange and for the purposes of trading and real-time risk management, including software used for Computer-
to-Computer Link (CTCL), Internet Based Trading (IBT), Direct Market Access (DMA), Securities Trading through
Wireless Technologies (STWT), Smart Order Routing (SOR), Algorithmic Trading (AT). Members must obtain prior
registration from the exchange before putting the software to use.
3.1. Testing of Software:
3.1.1. Testing in simulated test environment:

It is mandatory for members to test new software or existing software that has undergone change prior
to seeking registration from the Exchange.
Members desirous of seeking access to the Exchange test market environment may refer to the relevant
circulars issued from time to time.
3.1.2. Mock / Simulation testing:

New / existing software that has undergone change needs to be mandatorily tested in mock /
simulation environment.
The exchange conducts contingency drill / mock testing session as per the calendar published every
year. For details related to mock, members may refer to the relevant circulars issued in this regard.
Members desirous of seeking access to the Exchange Simulated Market environment may refer to the
relevant circulars issued from time to time.
3.1.3. User Acceptance Test (UAT):

The trading member shall undertake UAT of the software to satisfy themselves that the newly
developed / modified software meets its requirements.
3.2. Trading members seeking registration for new software or change to the existing registered software shall be
required to engage system auditor(s) to examine reports of tests performed in test environment, contingency
drill / mock environment or simulated environment as applicable and UAT and to certify that the tests were
satisfactorily undertaken. Trading members shall be
Exchange prescribed format at the time of seeking registration for the software.
3.3. Trading members shall ensure that all user-ids approved for Algorithmic trading, irrespective of the algorithm
having undergone change or not, shall participate in the contingency drill / mock trading session or in the
simulation environment at least on one trading day during each calendar month. This shall be audited and
reported in the System Auditors report.
3.4. For pre-registration / periodic system audit of CTCL, IBT, DMA, STWT, SOR and AT, trading members shall
engage a system auditor with any of the certifications as specified by SEBI. While finalizing the system auditor,
trading members shall ensure that the system auditor does not have any conflict of interest with the trading
member and that the directors / promoters of the system auditor are not directly or indirectly related to the
current directors or promoters of the trading member.
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3.5. Trading members shall submit the application as mentioned in the registration process and seek registration
from the Exchange for deployment of the software.
3.6. With regard to changes / updates to stock broker's trading software that intend to modify the 'look and feel'
and do not affect the risk management system of the stock broker or the connectivity of the trading software
with stock exchange's trading system, it is clarified
IV and applicable documents as mentioned in section II.
3.7. Trading members are advised to put in place adequate mechanism to restore their trading systems to
'production state' at the end of testing session so as to ensure integrity of their trading system.
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Section 4: Computer to Computer link (CTCL) Facility
National Stock Exchange of India (NSE) has offered a facility to its members by which members would be allowed
to use their own trading front-end software in order to trade on the NSE trading system (NEAT). This Computer-to-
Computer Link (CTCL) facility is available only to trading members of NSE.
4.1. About the CTCL Facility:
4.1.1. Members can use their own software running on any suitable hardware/software platform of their choice.
This software will be a replacement of the NEAT front-end software that is currently used by members
to trade on the NSE trading system. Members would be able to customize the software to meet their
specialized needs, like provision of on-line trade analysis, risk management tools, integration of back-
office operations etc. The dealers of the member may trade using the software, remotely through the
n private network, subject to approvals from Department of Telecommunication etc. as
may be required in this regard.
4.1.2. Trading members shall be responsible to create the entire CTCL set-up at their offices and registered
dealers/branch premises. This would include procurement of application software, hardware, setting up
a network etc. The Exchange shall provide the required technical details of the connectivity of the CTCL
server to the NSE trading system and other technical support.
4.2. CTCL software:

4.2.1. Members may procure the CTCL software from registered software vendors who are empanelled with
NSE or they may develop the software through their own in-house development team or may procure
the software from other non-empanelled vendors.
4.2.2. Members are fully responsible to procure/develop the CTCL application including procurement of
computer hardware. The Exchange shall help members to establish the computer to computer link,
however the members are fully responsible to implement the solution at their end. It may be noted that
members are solely responsible for all the contracts they enter into with any CTCL vendor. The Exchange
shall not be liable for any loss, damage or other costs arising in any way out of the failure of the system.
4.3. Reference points while developing CTCL software

4.3.1. The product should have the basic order entry facilities as provided in the NEAT trading system and
should satisfy the conditions as undertaken by the member contained in the Scheme notified by the
Exchange. Broad points of reference are indicated below:
A Order Management
1 Order entry- attributes
2 Book Types
3 Order confirmation
4 Order status
5 Order modification
6 Order cancellation
7 Outstanding orders
8 Order history / reports
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4.3.2. The Trading system does not have the default option of providing preference to any particular trading
venue at the time of placement of orders. As and where applicable, users are provided all exchange
options available and users are required to choose one, while placing each order.
4.3.3. With respect to using Exchange data, members may kindly take note of Exchange circular
registered for trading with the member on the Exchange in any segment.
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Section 5: Internet Trading including Securities Trading using Wireless Technology
Internet Based Trading:
The Securities & Exchange Board of India (SEBI) has approved the report on Internet Trading brought out by the
SEBI Committee on Internet Based Trading and Services and has issued circular no. SMDRP/Policy/Cir-6/00 dated
January 31, 2000.
Internet based trading can take place through order routing systems, which will route client orders, to exchange
trading systems, for execution of trades on the existing stock exchanges. SEBI registered brokers can introduce the
service only after obtaining permission from respective Stock Exchanges.
5.1. Members seeking permission for offering Internet based trading services are required to ensure compliance
with the minimum conditions specified in the SEBI circular. The criteria are mentioned as below:
5.1.1. Networth Requirement:

The trading member must have a minimum net worth of Rs.50 lacs if the member is providing the
Internet based facility on his own. However, if some members collectively approach a service provider
for providing the internet trading facility, net worth criteria as stipulated by the stock exchange will apply.
The Networth computation shall be as per methodology prescribed by Exchange / SEBI from time to
time.
5.1.2. Operational and System Requirements:

5.1.2.1. Operational Integrity The system used by the broker has provision for security, reliability and
confidentiality of data through use of encryption technology. (Basic minimum security standards
are specified in following paras). Trading members must also ensure that records maintained in
electronic form are not susceptible to manipulation.
5.1.2.2. System Capacity Trading members shall maintain adequate backup systems and data storage
capacity. Trading members shall ensure that they have adequate system capacity for handling
data transfer and arranged for alternative means of communications in case of Internet link failure.
5.1.2.3. Minimum qualification for personnel - The employees working on Internet based trading are
required have a minimum educational qualification of graduate and have NCFM or equivalent
certification.
5.1.3. Client Broker Relationship:

5.1.3.1. Know Your Client
and have sufficient, verifiable information about clients, which would facilitate risk evaluation of
clients.
5.1.3.2. Rights and Obligations In order to bring uniformity on the requirement of documentation for
trading account opening process, in view of the SEBI circular no CIR/MIRSD/16/2011 dated
Rights and Obligations
Internet based trading. The client shall further confirm having read and understood the contents
Trading Member shall
also display the standard set of documents on designated website. Further, in this
regard refer SEBI/Exchange circular issued from time to time.
5.1.3.3. Investor Information - The member web site providing the internet-based trading facility should
contain information meant for investor protection such as rules and regulations affecting client
member relationship, arbitration rules, investor protection rules etc. The member website
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providing the Internet based trading facility should also provide and display prominently, hyper
link to the website/ page on the website of the relevant stock exchange(s) displaying rules/
regulations/circulars. Ticker/quote/order book displayed on the web site of the broker should
display the time stamp as well as the source of such information against the given information.
5.1.3.4. Order/Trade Confirmation - Order/Trade confirmation should also be sent to the investor through
of display of such confirmations on real time basis on the member website. The investor should be
allowed to specify the time interval on the website itself within which he would like to receive this
information through email. Facility for reconfirmation of orders which are larger than that specified
ded on the internet-based system.
5.1.4. Risk Management:

5.1.4.1. Trading members must have a system-based control on the trading limits of clients, and exposures
taken by clients. Members must set pre-defined limits on the exposure and turnover of each client.
5.1.4.2. The member systems should be capable of assessing the risk of the client as soon as the order
comes in. The client should be informed of acceptance/rejection of the order within a reasonable
period. In case system based control rejects an order because of client having exceeded limits
etc., the member system may have a review and release facility to allow the order to pass through.
5.1.4.3. Reports on margin requirements, payment and delivery obligations, etc. should be informed to the
client through the system.
5.1.5. Contract Notes:

Contract notes must be issued to clients as per existing regulations, within 24 hours of the trade
execution.
5.1.6. Cross Trades:

As in the case of existing system, trading member using Internet based systems for routing client orders
will not be allowed to cross trades of their clients with each other. All orders must be offered to the
market for matching.
5.1.7. Others:
Security, Standards of Web Interface Protocols and System operations.
In addition to the requirements mentioned above, all existing obligations of the broker as per current
regulations will continue without changes.
5.2. Securities Trading through Wireless medium on Wireless Application Protocol (WAP) platform.
A broker providing stock trading through WAP must be a SEBI registered broker who also has an Internet
website which complies with all the requirements laid in para 5.1 above. With regard to the requirements
mentioned in the aforesaid circular, some additional requirements are to be met by the broker for providing
securities transaction through WAP. These requirements are provided in the following criteria:
5.2.1. Network Security:
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5.2.1.1. The break in data encryption at the WAP gateway server raises security issues. Until the
shortcoming is addressed by WAP, the WAP server should be hosted by the broker itself and not
by a third party.
5.2.1.2. Suitable firewalls should be installed between trading set-up directly connected to an Exchange
trading system and the WAP server.
5.2.1.3. WTLS (Wireless Transport Layer Security) level security or a higher level of security (as and when
available) for wireless communication is mandatory for wireless transactions.
5.2.1.4. The WTLS encrypts data upto the WAP Gateway server. Transmission from the WAP Gateway
server to the Internet server should be secured using Secured Socket Level Security, preferably
with 128 bit encryption, for server access through Internet. Alternately, the WAP Gateway server
and Internet server may be co-hosted. The server resource should not be shared for any other
applications.
5.2.1.5. The following security measures applicable for fixed Internet based systems should be made
mandatory:
• User ID
• First Level password (Private code)
• Automatic expiry of passwords at the end of a reasonable duration. Reinitialize access on
entering fresh passwords.
• All transaction logs with proper audit facilities to be maintained in the system.
5.2.1.6. Digitally signed transactions ensure client authentication and support non-repudiation. Digital
certification should be mandatory for participants as and when certification agencies are notified
by Government / SEBI.
5.2.1.7. In case of failure of the network, alternative means of communication such as telephone, Internet
or e-mail should be available.
5.2.2. Price Quotes/ Order/ Trade Confirmations:

5.2.2.1. Stock quotes should be time-stamped.
5.2.2.2. All orders and trades must be identified by a unique ID. Order confirmation must be provided to
the user on submitting the order. Order modification/cancellation facilities must also be provided.
This may be provided using alternate protocols in case the same is not supported by WAP.
5.2.2.3. Trade confirmation should be provided to the user through e-mail and/or on the mobile phone.
5.2.3. System operations:

5.2.3.1. Brokers should follow the similar logic/priorities used by the Exchange to treat client orders.
5.2.3.2. Orders/ trades placed through either fixed Internet or WAP system should be accessible from both
systems.
5.2.3.3. Trading Members should maintain all activities/ alerts log with audit trail facility.
5.2.3.4. Trading member Web Server should have internally generated unique numbering for all client
order/trades.
5.2.4. Risk Management:

It is emphasised that risk management should be comprehensive, and the risk management systems
should take into account the overall positions of clients, irrespective of the medium of trading.
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5.3. Securities Trading Using Wireless Technology:
The Securities & Exchange Board of India (SEBI) has approved providing Securities Trading using Wireless
Technology (STWT) facility vide circular no.CIR/MRD/DP/25/2010 dated August 27, 2010.
5.3.1. Members seeking permission for offering STWT are required to ensure compliance with the minimum
conditions specified in the SEBI circular and as amended / updated from time to time.
5.3.2. Only SEBI registered members who have been granted permission by the Exchange for providing
Internet based trading services are eligible to introduce the service after obtaining permission from the
Exchange.
5.3.3. All relevant requirements applicable to internet-based trading shall also be applicable to securities
trading using wireless technology.
5.3.4. Securities Trading using Wireless technology shall include devices such as mobile phone, laptop with
data card, etc, that use Internet Protocol (IP).
5.3.5. In addition, trading members shall ensure compliance with the following:
5.3.5.1. There shall be secure access, encryption and security of communication for internet-based trading
and securities trading using wireless technology. DOT policy and regulation shall govern the level
of encryption.
5.3.5.2. Adequate measures should be taken for user identification, authentication and access control
using means such as user-id, passwords, smart cards, biometric devices, or other reliable means,
to prevent misuse of facility by unauthorized persons.
5.3.5.3. Unique identification number as given in case of internet-based trading shall be made applicable
for securities trading using wireless technology.
5.3.5.4. In case of failure of the wireless network, alternative means of communication for placing orders
should be available.
5.3.5.5. In order to bring uniformity on the requirement of documentation for trading account opening
shall further con

document(s) at the time of account opening. Further, in this regard refer SEBI/Exchange circular
issued from time to time.
5.3.5.6. Trading Member shall also display the standard set of documents on designated
website. As it may not be possible to give detailed information to the investor on a hand held device
e.g. mobile phones, it may be ensured that minimum information may be given with addresses of
the Internet website/web page where detailed information would be available.
5.3.5.7. Order confirmation should be provided to the user on submitting the order. Order modification /
cancellation facilities should also be provided. Trade confirmation should be provided to the user,
along with history of trades for the day.
5.3.5.8. Session login details should not be stored on the devices used for internet-based trading and
securities trading using wireless technology.
5.3.5.9. Network security protocols and interface standards should be as per prevalent industry standards
and sound audit trails should be available for all transactions conducted using wireless devices.
5.3.5.10. located in
India.
5.3.5.11. Trading Members shall arrange for periodic systems audits of their systems to ensure that
requirements specified in the circulars are being met.
Page 23 of 48
5.4. Additional Requirements for Internet Based Trading (IBT) and Securities trading using Wireless
Technology (STWT)
Trading members shall comply with the following:
5.4.1. The broker shall capture the IP (Internet Protocol) address (from where the orders are originating), for
all IBT/ STWT orders.
5.4.2. The brokers system should have built-in high system availability to address any single point failure.
5.4.3. There should be secure end-to-end encryption for all data transmission between the client and the
broker through a Secure Standardized Protocol. A procedure of mutual authentication between the client
and the broker server should be implemented.
5.4.4. The broker system should have adequate safety features to ensure it is not susceptible to internal/
external attacks.
5.4.5. In case of failure of IBT/ STWT, the alternate channel of communication shall have adequate capabilities
for client identification and authentication.
5.4.6. Two-factor authentication for login session may be implemented for all orders emanating using Internet
Protocol. Public Key Infrastructure (PKI) based implementation using digital signatures, supported by
one of the agencies certified by the government of India, is advisable. Further the two factors in the Two-
factor authentication framework should not be same.
5.4.7. In case of no activity by the client, the system should provide for automatic trading session logout.
5.4.9. Member should prominently display the details of brokerage/charges to be levied for each order on the
Trading (WT) applications prior to placement of order.
5.4.10. Further to the above, the following practice is advisable

The back-up and restore systems implemented by the broker should be adequate to deliver sustained
performance and high availability. The broker system should have on-site as well as remote site back-
up capabilities.
5.5. Submission of statistics for IBT/STWT:

5.5.1. Trading Member registered for providing IBT/STWT facility are required to report / confirm statistics for
IBT/STWT. The trading members are required to report / confirm segment-
upload this information on a weekly basis with the flexibility of reporting / confirming the information for
previous 30 days.
5.5.2. Additionally, Members would also be required to provide the segment-
ENIT → New Trade →Trade Compliance (Post Trade) → IBT Volume Confirmation
ENIT → New Trade →Trade Compliance (Post Trade) → STWT Trade Details
5.6. Additional Safeguards:

5.6.1. Members may take such other measures and implement such other safeguards as they deem fit to
ensure security and integrity of transactions conducted using wireless technology.
Page 24 of 48
Section 6: Direct Market Access
The Securities & Exchange Board of India (SEBI) has approved providing Direct Market Access (DMA) facility and
has issued circular no.MRD/DoP/SE/Cir-7/2008 dated April 03, 2008.
Direct Market Access (DMA) facility allows members to provide direct trading terminals to clients through various
connectivity modes. Direct Market Access (DMA) is used to describe clients / investor accessing the market and
Members seeking permission for offering Direct Market Access (DMA) are required to ensure compliance with the
minimum conditions specified in the SEBI/ Exchange circulars.
6.1. Application for permission:

6.1.1. Brokers interested to offer DMA facility shall apply to the stock exchanges giving details of the software
and systems proposed to be used, which shall be duly certified by a System Auditor.
6.2. Eligibility:
6.2.1. DMA facility may be used by the client or an investment manager of the client. DMA facility is being
permitted to institutional clients as specified in SEBI circular. Only SEBI registered entity shall be
permitted to act as an investment manager on behalf of institutional clients. In case of DMA is used by
the clients through an investment manager, the investment manager may execute the necessary
documents (Refer annexure) on behalf of the clients.
6.2.2. DMA facility can be extended to the below mentioned categories of clients:
▪ Institutional clients
▪ FPI (category I & II)
▪ Body Corporates including Limited Liability Partnership (LLP)**
▪ Primary Dealers
**A
the Limited Liability Partnership Act, 2008.
6.3. Operational Specifications:

6.3.1. All
in India.
6.3.2. The broker should ensure sound audit trail for all DMA orders and trades and be able to provide
identification of actual user-id for all such orders and trades. The audit trail data should be available for
at least 5 years.
6.3.3. The DMA system shall have sufficient security features including password protection for the user ID,
automatic expiry of passwords at the end of a reasonable duration, and re-initialisation of access on
entering fresh passwords.
6.3.4. In case where the clients access the DMA server of the broker through a third party service provider, the
password maintenance and authentication can be done either by the broker of by third party network
service provider, so long as the broker ensures secured access and communication and a sound audit
trail for all DMA orders/ trades. The authorized user and client details should be part of the order details
received and authenticated at the DMA server of the broker.
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6.3.5. The trading members and the DMA clients are required to have appropriate agreements with the third-
party service provider for ensuring secured access and communication.
6.3.6. Trading members, while submitting the application for DMA with the Exchange are required to confirm
compliance of the above.
6.3.7. Brokers should follow the similar logic/priorities used by the Exchange to treat DMA client orders.
Brokers should maintain all activities/ alerts log with audit trail facility. The DMA Server should have
internally generated unique numbering for all such client order/trades.
6.3.8. A systems audit of the DMA systems and software shall be periodically carried out by the broker as may
be specified by the exchange and certificate in this regard shall be submitted to the exchange.
6.3.9. The trading members should provide for adequate systems and procedures to handle the DMA trades.
6.4. DMA Facility through Investment Manager:

6.4.1. The facility of DMA provided by the stock broker shall be used by the client or an investment manager of
the client. A SEBI registered entity shall be permitted to act as an investment manager on behalf of
institutional clients. In case the facility of DMA is used by the client through an investment manager, the
investment manager may execute the necessary documents on behalf of the client(s).
6.4.2. The exchange/ Trading members shall ensure that proper audit trails are available to establish identity
of the ultimate client.
6.5. Risk Management:

6.5.1. The broker shall ensure that trading limits/ exposure limits/ position limits are set for all DMA clients
based on risk assessment, credit quality and available margins of the client. The broker system shall
have appropriate authority levels to ensure that the limits can be set up only by persons authorized by
the risk / compliance manager.
6.5.2. The broker shall ensure that all DMA orders are routed through electronic/automated risk management
systems of the broker to carry out appropriate validations of all risk parameters including Quantity Limits,
Price Range Checks, Order Value, and Credit Checks before the orders are released to the Exchange.
6.5.3. All DMA orders shall be subjected to the following limits:
6.5.3.1. Order quantity / order value limit in terms of price and quantity specified for the client.
6.5.3.2. All the position limits which are specified in the derivatives segment as applicable.
6.5.3.3. Net position that can be outstanding so as to fully cover the risk emanating from the trades with
the available margins of the specific client.
6.5.3.4. Appropriate limits for securities which are subject to FII limits as specified by RBI.
6.5.4. The broker may provide for additional risk management parameters as they may consider appropriate.
6.6. Broker to be liable for DMA trades:

6.6.1. The broker shall be fully responsible and liable for all orders emanating through their DMA systems. It
shall be the responsibility of the broker to ensure that only clients who fulfil the eligibility criteria are
permitted to use the DMA facility.
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6.7. Cross Trades:
6.7.1. Brokers using DMA facility for routing client orders shall not be allowed to cross trades of their clients
with each other. All orders must be offered to the market for matching.
6.8. Terms and Conditions document:

6.8.1. Exchange shall specify from time to time the categories of investors to whom the DMA facility can be
extended. Brokers shall specifically authorize clients or investment managers acting on behalf of clients
for providing DMA facility, after fulfilling Know Your Client requirements and carrying out necessary due
diligence. The broker shall maintain proper records of such due diligence.
6.8.2. In order to bring uniformity on the requirement of documentation for trading account opening process,
in view of the SEBI circular no CIR/MIRSD/16/2011 dated August 22, 2011, the specific Broker Client
Agreement for the purpose of DMA is
client (s) for availing the DMA facility.

6.8.3. In case the DMA facility provided by the stock broker is used by the client the paragraphs one to eighteen
of Part A of Annexure-IX shall be applicable. In case the DMA facility provided by the stock broker is used
by the client through an investment manager the paragraphs one to eighteen of Part B of Annexure-IX
shall be applicable.
6.8.4. Additionally, the investment manager shall provide to the stock broker the details as specified at
Annexure-X and Annexure X1 to be submitted by the institutional clients to trading member for
execution of Direct Market Access (DMA) orders by Investment Manager not registered in India.
6.9. Other legal provisions:

6.9.1. In addition to the requirements mentioned above, all existing obligations of the broker as per current
regulations and circulars will continue without change. Exchanges may also like to specify additional
safeguards / conditions as they may deem fit for allowing DMA facilities to their brokers.
Page 27 of 48
Section 7: Smart Order Routing
The Securities & Exchange Board of India (SEBI) has approved providing Smart Order Routing (SOR) facility vide
circular no. CIR/MRD/DP/26/2010 dated August 27, 2010. SOR would enable the brokers trading engines to
systematically choose the execution destination based on factors viz. price, costs, speed, likelihood of execution
and settlement, size, nature or any other consideration relevant to the execution of the order.
7.1. Guidelines on Smart Order Routing facility:
7.1.1. Stock broker interested to offer Smart Order Routing facility shall apply to the respective stock
exchanges.
7.1.2. Stock broker shall submit a third party system audit of its Smart Order Routing system and software.
7.1.3. Stock broker shall provide the following to the respective stock exchanges:
7.1.3.1. An undertaking to the respective stock exchanges that Smart Order Routing shall route orders in a
neutral manner.
7.1.3.2. Provide the features of the Smart Order Routing to stock exchange.
7.1.4. Stock exchange shall ensure that brokers adhere to the best execution policy while using Smart Order
Routing.
7.1.5. Stock Broker shall communicate to all clients the features, possible risks, rights, responsibilities and
liabilities associated with the smart order routing facility. The client desirous of availing such facility shall
do so by entering into a broker-client agreement, as applicable. For the existing clients, the same shall
be implemented through an addendum to the existing broker-client agreement, as applicable.
7.1.6. Stock broker shall maintain logs of all activities to facilitate audit trail. Broker shall maintain record of
orders, trades and data points for the basis of decision.
7.1.7. In case the client has availed Smart Order Routing facility and does not want to use the same for a
particular order, the same shall be well documented by the stock broker.
7.1.8. System audit of the Smart Order Routing systems and software shall be periodically carried out by the
brokers as may be specified by the exchange and certificate in this regard shall be submitted to the
exchange.
7.1.9. Stock broker shall ensure that Smart Order Routing is used to route orders only to recognised stock
Exchange.
7.1.10. Stock broker shall ensure that Smart Order Routing is not used to place orders at venues other than the
recognised stock exchanges.
7.1.11. Stock broker shall carry out appropriate validation of all risk parameters before the orders are placed in
the Smart Order Routing system.
7.1.12. All orders emanating from the Smart Order Routing system to be tagged with the unique identifier as
specified by the Exchange from time to time.
7.1.13. Stock broker shall ensure that alternative mode of trading system is available in case of failure of Smart
Order Routing facility.
7.1.14. The broker server routing orders placed through Smart Order Routing system to the exchange trading
system shall be located in India. Stock exchange shall permit SOR registered brokers to offer SOR facility
through all their servers irrespective of their location in India.
7.1.15. All other existing obligations for the broker as per current regulations and circulars will continue.
7.1.16. Stock broker shall permit smart order routing for all orders, without restricting to any specific type of
order. The choice on order types shall be left to the client.
Page 28 of 48
7.2. Application for Permission:
7.2.1. Members desirous of providing SOR facility shall make an application to the Exchange as follows:
• Application
• Undertaking
• Feature List
The format of the Application for SOR is enclosed (Annexure XI, XII and XIII)
The format of the Application for SOR is enclosed (Annexure XIV)
7.2.2. Auditor Report and Certificate:

7.2.2.1. The software and systems proposed for SOR is required to be audited by qualified System Auditor
and before grant of permission, the auditor is also required to confirm that the testing is
successfully completed in the prescribed format (Refer Annexure II and Annexure III in the
Registration Process)
7.2.3. Eligibility:
7.2.3.1. SOR facility is allowed to be offered to all class of investors as specified in SEBI circular.
7.2.4. Rights and Obligations:

7.2.4.1. Trading Members shall communicate to all clients the features, possible risks, rights,
responsibilities and liabilities associated with the smart order routing facility.
7.2.4.2. In order to bring uniformity on the requirement of documentation for trading account opening
Smart Order Routing. The client shall
document(s) at the time of account opening. Trading Member shall also display the standard set
ed website. Further, in this regard refer SEBI/Exchange
circular issued from time to time.
7.2.5. Best Execution Policy:

7.2.5.1. This Best Execution Policy sets forth policy and execution methodology for client execution on the
best terms. Upon acceptance of a client order for securities listed on a securities exchange within
India and on specific client instruction regarding execution, trading member shall endeavor to
execute that order in accordance with the following policy:
• Where the security is listed and/or traded on multiple recognised stock exchanges (multiple
listing), the trading member shall determine the recognised stock exchange where to route
the order or part of the order based on factors like price, costs, speed likelihood of execution
and settlement size and nature relevant to the execution of the order.
7.2.6. Procedures for granting permission for Smart Order Routing:

7.2.6.1. The Exchange shall grant permission to members for Smart Order Routing (SOR) on a case-by-
case basis. Members are required to specify all the other recognised stock exchange(s) for which
the SOR facility is being implemented at the time of seeking permission for the SOR facility from
the Exchange. Further, members would be required to seek re-registration from the Exchange in
case any changes to the registered SOR facility including inclusion of other recognised stock
Page 29 of 48
exchange(s) to the SOR facility and / or material changes in the software/system of the smart order
routing facility.
7.2.6.2. Members are required to test the software and make the necessary application in the prescribed
format. The Exchange would grant permission to the member to commence SOR facility. In case
of rejection of the application on smart order routing, the exchange shall communicate such
reasons of rejections to the member.
7.2.7. Audit Trail:

7.2.7.1. Member should maintain logs of all activities of registered SOR facility to facilitate audit trail. The
members should maintain record of orders, trades and data points for the basis of decision for
routing of orders using SOR facility.
7.2.8. Submission of statistics for Smart Order Routing:

7.2.8.1. Trading Member registered for providing SOR facility are required to confirm statistics for Smart
Order Routing. The trading members are required to confirm segment-
required to confirm this information on a weekly basis with the flexibility of confirming the
information for previous 30 days.
7.2.8.2. Additionally, Members would also be required to provide the segment-wise
ENIT → New Trade →Trade Compliance (Post Trade) → SOR Volume Confirmation
7.3. Additional Safeguards:

7.3.1. Members may take such other measures and implement such other safeguards as they deem fit to
ensure security and integrity of transactions.
7.4. Systems Operations:

7.4.1. Whether the requirements of systems operations as stipulated by SEBI in this regard are complied with
(A certificate in this regard as per Annexure-XII shall be enclosed)
7.5. Risk Management:

7.5.1. Whether the requirements of Risk Management as stipulated by SEBI in this regard are complied with (A
certificate in this regard as per Annexure XII shall be enclosed)
7.6. Others:
7.6.1. A comprehensive write-up on the feature list of the system for Smart Order Routing which will include
details of the best execution policy to be enclosed. The write-up should include details of user
authentication, best execution policy, risk management, etc.
Page 30 of 48
Section 8: Algorithmic Trading
Definition:
Algorithmic trading means any order that is generated using automated execution logic through the trading member
front end.
8.1. Guidelines on Decision Support Tools / Algorithms trading:
8.1.1. Trading members desirous of placing orders generated using algorithms are required to ensure
compliance to the following:
8.1.1.1. The Algorithmic orders are routed through broker servers located in India.
8.1.1.2. Proper procedures, systems and technical capabilities are in place to carry out trading through the
use of algorithms.
8.1.1.3. Algorithms are safeguarded from misuse or unauthorized access. Additionally, procedures and
arrangements are in place to safeguard algorithms from misuse or unauthorized access.
8.1.1.4. The system has the capabilities to monitor algorithms real-time to identify those algorithms that
may not behave as expected and bring it to the notice of the Exchange immediately.
8.1.1.5. The system maintains logs of all trading activities including record of control parameters, orders,
trades and data points emanating from trades executed through algorithm trading to facilitate
audit trail.
8.1.1.6. The system releases further order(s) only after accounting for all executed, unexecuted and
unconfirmed orders placed earlier. Further, system shall have pre-defined parameters for an
automatic stoppage in the event of Algo execution leading to a loop or a runaway situation.
8.1.1.7. Any modifications / Change to the registered decision support tool / Algorithm to be effected only
on prior registration of Exchange.
8.1.1.8. All Algorithmic orders emanating from the system to be tagged with the 15-digit NNF code and
unique algo identifier as specified by the Exchange from time to time.
8.1.1.9. Adhere to the guidelines for identification of dysfunctional Algo for orderly trading and market
integrity as specified by SEBI / Exchange. Further, members shall take necessary measures /
action as mandated by the Exchange.
8.1.1.10.All orders generated by the Algorithmic trading products are offered to the market for matching
and no cross trades are generated.
8.1.1.11.The Trading system does not have the default option of providing preference to any particular
trading venue at the time of placement of orders. As and where applicable, users are provided
all exchange options available and users are required to choose one, while placing each order.
8.1.1.12.Algo orders with order type as Market Order are not permitted.
8.1.2. Additional guidelines for Commodity Derivatives Segment
8.1.2.1. Immediate Or Cancel (IOC) orders shall not be allowed to be placed using algorithmic trading.
8.1.2.2. The orders of clients are routed through member server only and client orders are not placed
directly to the Exchange System.
8.1.2.3. The member shall not use algorithms that may not be conducive to efficient price discovery or fair
play.
Page 31 of 48
8.1.2.4.
shall also make half yearly review of effect of the approved strategies on liquidity and would
discontinue / disapprove any strategy which fails to induct liquidity.
8.2. Procedure for granting permission to trading members:

8.2.1. Applications for trading through Decision Support Tools / Algorithms may be submitted through the
Exchange electronic interface provided in ENIT →New Trade→NNF Registration under the following
categories:
8.2.1.1. Approved algorithms

This procedure will be applicable for granting registration to trading members for a particular
8.2.1.2. Non-approved algorithms

This procedure will be applicable for granting registration to trading members for a particular
Non-Approved -House
developed by the member or vendor supplied.
8.2.1.3. DMA Client Algorithms
This procedure will be applicable for granting registration to trading member for a particular
-house developed by
member, vendor supplied or client proprietary algorithms.
Further, members shall be required to seek Exchange permission before effecting any changes to the
software.
8.3. Risk controls:

8.3.1. Trading member shall ensure that all algorithmic orders are routed through electronic / automated risk
management system and meets the minimum levels of risk controls as specified below:
S No Risk Control Applicability

At Individual Order Level:
1. Price Check Algo orders shall not be released in breach of the price bands
/dummy filters as defined by the Exchange in respective
segments.
2. Quantity Check Algo orders shall not be released in breach of order quantity limit
per order as defined by the Exchange in respective segments.
3. Order Value Check
the Exchange for the security in respective segments

4. Trade Price Protection Check Algo orders shall not be released in breach of the bad trade price
for the security in respective segments
5. Market price protection Check Market orders emanating from Algo system shall not be released
beyond a pre-set percentage of LTP. The limit thus set shall be
less than the applicable circuit limits as prescribed above.
Members shall ensure that the pre-set percentage of LTP shall
necessarily be accompanied by a limit price that shall form part
of the order message at the time of sending to the Exchange.
Page 32 of 48
At Client Level:
6. Cumulative Open Order Value Algo orders shall not be released in breach of Individual client
Check level cumulative open order value check at the client level. Open
order value for a client is the total value of its unexecuted orders
released from trading members system. System shall not permit
th
7. Automated Execution Algo shall account for all executed, unexecuted, and
Check unconfirmed orders placed by the system before releasing
further orders. Algo system shall have pre-defined parameters
for an automatic stoppage in event of Algo execution leading to
a loop or a runaway situation.
8. Net Position Vs. available Algo orders shall not be released in breach of Net positions as
margin against the available margin defined by the trading member for
the client.
9. RBI Violation checks for FII Algo orders shall not be released for security restricted by RBI
Restricted stocks. from time to time.
10. MWPL violation check Algo orders shall not be released in breach of market wide
position limit as defined by the Exchange for the security in
respective segments.
11. Position Limit Check Algo orders shall not be released in breach of position limit as
defined by the trading member for the client. (In case of
commodity derivatives, the net positions of the client / member
are not in violation of the position limits prescribed for the
respective commodity.)
12. Trading Limit Check Algo orders shall not be released in breach of overall trading
limits as defined by the trading member for the client.
13. Exposure Limit check at Algo orders shall not be released in breach of exposure limit as
individual client level and at defined by the trading member for the client.
overall level for all
clients
14 Security Wise Limit Check Orders shall not be released in breach of security-wise value
limit as defined by the trading member for individual security.
15 Efficient Price Discovery and The algorithm strategy/ies are conducive to efficient price
Fair Play Check discovery and fair play and shall not take liquidity away from the
market (applicable to algorithm strategy/ies in the Commodity
Derivative segment).
irements
1. Circuit Breaker Check Price limit checks are ineffective for Market Orders by definition.
Using a static reference price (e.g. Arrival-Mid) allows setting an
ultimate price beyond which Algo will not participate.
Intermittent risk checks should be built in with dynamic price
reference such that there is a combination of soft and hard alerts
/ checks which alert the Trader and require his/her attention and
intervention.
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2. Market Depth Check Circuit breaker checks, whilst setting an ultimate price beyond
which it will not participate, still allows Algo to participate up to
and including that price. This check can specifically help better
control the liquidity seeking Algorithms. Generally, in this alert,
a real time order book-based check is required to ensure that no
single trade impacts price significantly.
Market depth checks operate to calculate how many price levels
will be taken out if an order were to execute in the market. A
check like Market Depth Checks should be built-in so that
algorithmic orders from the Exchange are pulled out if there is
not enough liquidity available up-to X% from Far Touch. Far
touch is the best price on the opposite side.
3. Last Price Tolerance (LPT) One limiting factor of market depth checks is that the Far Touch
Check can move rapidly, taking the Market Depth Limit along with it.
Last Price Tolerance check can help Algorithm from not
participating at a dislocated far touch price.
A check like LPT should be built-in so that if the Far Touch moves
rapidly, this check can act as an additional control.
4. Fair Value Check Fair Value checks operate to prevent algorithms from following
a temporary price spike by setting a secondary limit based on a
short term moving average.
A check like this should be built in so that when exceptional
volumes have trades either due to a large block/fat finger error
in split seconds (fractions of second); Fair Value Check will help
cancel the noise and further unintended cascading effect.
The stock brokers that provide the facility of algorithmic trading shall subject their algorithmic trading
system to a system audit every six months in order to ensure that the requirements prescribed by SEBI /
stock exchanges with regard to algorithmic trading are effectively implemented.
Page 34 of 48
Section 9: NNF Request Cancellation
Market Participants (Trading members & Empanelled Vendors) who have erroneously placed registration request
for NNF products through ENIT & if they wish to cancel their request, can place NNF cancellation request on ENIT
at the following path:
Member login: ENIT →New Trade→NNF → Cancellation
Vendor login: ENIT → Product Registration → Cancellation
Note: The NNF registration requests with status shall only be allowed for cancellation.
Section 10: Surrender of NNF Registrations / Undertaking

10.1. Trading members indenting to discontinue their NNF facility partial / full i.e. Surrender of all or selected NNF
products (CTCL, IBT, STWT, DMA & Algo) and/or In-House NNF facility can submit the request through Member
Portal on the tab NEW-ENIT-TRADE at the following path: Trade → NNF Surrender → Surrender Request.
10.2. Following options are available with the members:

10.2.1. Option has been provided for partial and complete surrender.
10.2.2. The surrender request can be submitted segment -wise.
10.2.3. Upon submission of surrender requests, members can view the same in MIS report available on the path:
-NEW- → Trade → NNF Surrender → Surrender MIS.
10.3. In-House facility Surrender:

10.3.1. Members intending to discontinue the usage of In-house NNF facility can submit an online application
for surrender of In-House facility.
10.3.2. -NEW- →
Trade → NNF Surrender → Surrender Request.
10.3.3. Members are required to surrender all registrations sought for In-House products before placing the
request for surrender of In-House facility.
10.3.4. Members may also note that only upon surrender of In-House registration by selecting the request type
-House
facility from the subsequent financial year.
Note: A detailed user manual for the module is also available in ENIT interface
Page 35 of 48
Section 11: Safeguards to avoid trading disruption in case of failure of software vendor
Software vendors who provide software to market participants and market infrastructure institutions for the purpose
of trading, risk management, clearing and settlement play a crucial role in the securities market. Any inability on the
part of such software vendors to provide software or related services in timely and continuous manner may create
a situation of stress in the securities market.
11.1. In view of the above, trading members are advised to take the following measures:
11.1.1. Explore the possibility of establishing a 'software escrow arrangement' with their existing software
vendors.
11.1.2. In case of large stock brokers, consider reducing dependence on a single software vendor for trading and
risk management systems, by engaging more than one software vendor.
11.1.3. Consider including the following in their contracts with the software vendors:
• Access to documents related to design and development specifications in the event software vendor
fails to provide continuous and timely services to the stock broker;
• Development of expertise at the end of the stock broker through appropriate training with regard to0
software usage and maintenance;
• Appropriate penalty clauses for cases of disruptions to the trading system of the stock broker on
account of (a) software vendor failing to provide continuous and timely services to the stock broker or
(b) glitches to the software provided by the software vendor;
obligation on the part of the software vendor to cooperate in case of audit of software including forensic
audit, if required.
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Section 12: Empanelment of Vendors for providing software used in trading and risk management
The Exchange provides a facility to software vendors providing software used in trading and risk management
including software used for Computer-to-Computer Link (CTCL), Internet Based Trading (IBT), Direct Market
Access (DMA), Securities Trading using Wireless Technology (STWT), Smart Order Routing (SOR), Algorithmic
Trading (AT), etc. to trading members of the Exchange, to be empanelled with the Exchange.
Vendors desirous of being empanelled with the Exchange shall be evaluated on the basis of various parameters inter
alia including background, infrastructure, systems etc. The details of the criteria are enclosed as Annexure A.
Vendors desirous of being empanelled with the Exchange would require to meet the said criteria.
12.1. Charges for empanelment

12.1.1. The charges as mentioned below shall be payable only by empanelled vendors.
• One time charge of Rs.10 lakhs + applicable taxes
• Recurring annual charge of Rs.2.50 lakhs + applicable taxes
12.1.2. The financial year shall be considered as the basis for the yearly period for the recurring charges. The
vendor shall be required to pay one-time fee of Rs.10 lakhs and the annual charge of Rs.2.50 lakhs +
applicable taxes for the first year in advance at the time of making the application for empanelment.
12.1.3. For the first year, the annual charge shall be calculated on a pro-rata basis from the date of empanelment
of the vendor's application till March 31st. Since the vendor pays the entire amount of Rs.2.50 lakhs for
the first year at the time of application, the excess amount after calculation of amount due for the first
year (on pro-rata basis as above) shall be adjusted towards annual charges for the next financial year.
12.1.4. The vendor shall be billed for annual charges at the start of the financial year and are required to pay the
annual charges within due date, else it may attract interest on late payment of the annual fees.
Note: No charges are payable to the Exchange by members procuring software from empanelled vendors.
12.2. Procedure for empanelment

12.2.1. A vendor is required to be introduced by a trading member who completes the necessary formalities as
an inhouse member. The vendor can apply for empanelment after the software for the introducing
member is registered and the member is granted permission for trading using the software.
12.2.2. The vendor shall make an application to the Exchange for empanelment as per specified format and shall
execute an undertaking in favour of the Exchange. The formats of the application form and undertaking
format are enclosed as Annexure B and C respectively.
12.2.3. On receipt of the above duly complete application i.e. Annexure A, B, C, and on payment of
empanelment charges, the vendor shall be empanelled with the Exchange subject to vendor meeting the
minimum requirements.
12.3. Registration for various software used in trading and risk management to be provided by vendor is a
separate process. Accordingly, vendors are required to apply separately for registration of the same through
separate Vendor Login provision on ENIT interface.
Page 37 of 48
Note: Vendors are required to pay only a one time charge and annual charges towards empanelment fees. Vendors
are not required to pay additional charges at the time of registration for every software.
12.4. Testing facility provided by NSE for testing software used in trading and risk management:
The Exchange provides a facility for testing software used in trading and risk management
testing environment. Vendors desirous of availing access of the test market environment shall refer to the
relevant circulars issued from time to time.
12.5. Application and procedure for permission of software used in trading and risk management:
12.5.1. Empanelled vendors seeking registration for new software/systems or any modifications thereof of
CTCL/AT/IBT/STWT or DMA shall provide the following documents through the online portal ENIT (for
registration of SOR, empanelled vendor shall submit the application in physical form)
12.5.2. Vendor are required to apply for User credentials to access the Vendor ENIT interface as per format
specified in Annexure E. On activation of the user credentials, vendor would be able to submit the
software registration requests through online portal.
12.5.3. Vendors desirous of applying to the Exchange for permission for providing software used in trading and
risk management to the trading members of the Exchange shall make separate applications for every
product that they intend to seek registration for.
12.6. At the time of application, new/modification, Vendors shall provide:

12.6.1. Product write up including write up on Risk Management Systems.
12.6.2. Annexure B2) duly certifying that software to be used by trading members
for connecting to the stock exchanges and for the purposes of trading and real-time risk management, is
in compliance with the various SEBI/Exchange circulars relevant at the time of application, more
specifically with respect to Order Management, Systems and Network, Access and Security controls,
Cyber Security & Cyber Resilience framework and Risk checks.
12.6.3. For modification- if there is no change in the feature / functionalities / strategy logic/ Order
management system/ Risk management checks and algorithm logic/broadcast handler of software.
Vendor shall submit the No change letter (Annexure D)
Type of Request Documents
• Annexure B2)
New
• Product and RMS Write-up
• No-Change Letter (Annexure D)
Modification (For any change other than RMS/ OMS/ Feature/

Functionality of software)
**For any other change, apart from mentioned above, vendors are requested to provide
the documents as applicable for new request.
Page 38 of 48
12.6.4. On successful completion of documentation, software shall be registered with the exchange &
registration shall be granted to the vendor.
12.6.5. Vendors may also refer the Auditor Selection norms (Annexure C) for selecting the auditor to certify their
documents.
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Section 13: Empanelment of Application Service Providers (ASP) for providing software used in
trading and risk management
Members desirous of using services provided by Application Service Providers (which may inter-alia include
providing / maintaining software / hardware / other infrastructure etc.) for providing trading and real-time risk
management services shall be permitted to do so subject to the Application Service Provider (ASP) being
empanelled with the Exchange for providing such services.
13.1. Empanelment of ASPs

ASPs desirous of being empanelled with the Exchange shall be evaluated on the basis of various parameters
inter alia including background, infrastructure, systems and security. The details of the criteria are enclosed
as Annexure F. ASPs desirous of being empanelled with the Exchange would require to meet the said criteria.
13.2. Charges for empanelment

13.2.1. The charges as mentioned below shall be payable only by empanelled ASPs. There shall be no charges
payable by members using the services of the ASP.
• One time charge of Rs.10 lakhs + Applicable Taxes
• Recurring annual charge of Rs.2.50 lakhs + Applicable Taxes
ASP shall be required to pay of the one-time fee of Rs.10 lakhs and the annual charge of Rs.2.50 lakhs +
Applicable Taxes for the first year in advance at the time of making the application for empanelment.
13.2.3. For the first year, the annual charge shall be calculated on a pro-rata basis from the date of empanelment
of the ASP's application till March 31st. Since the ASP pays the entire amount towards annual charges of
Rs.2.50 lakhs for the first year at the time of application, the excess amount after calculation of amount
due for the first year (on pro-rata basis as above) shall be adjusted towards annual charges for the next
financial year.
13.2.4. The ASP shall be billed for annual charges at the start of the financial year and are required to pay the
13.3. Procedures for empanelment

13.3.1. The ASP shall make an application to the Exchange for empanelment as per specified format and shall
execute an undertaking in favour of the Exchange. The formats of the application form and undertaking
are enclosed as Annexure G and H respectively.
13.3.2. On receipt of the above duly complete application i.e. Annexure G, H and on payment of empanelment
charges, the ASP shall be empanelled with the Exchange subject to ASP meeting the minimum
requirements.
13.4. Testing facility provided by NSE for testing software:

13.4.1. The Exchange provides a facility for testing software used in trading and risk management on the
13.4.2.
issued from time to time.
Page 40 of 48
13.5. Application and procedure for registration of software used in trading and risk management for ASP:
13.5.1. Applications for software used in trading and risk management shall be submitted to the Exchange.
13.5.2. ASPs shall make separate applications for every product that they intend to seek registration for.
13.5.3. At the time of product application, ASPs shall provide:

• Product write up/brief including write up on Risk Management Systems.
• In case of new software/systems of CTCL, IBT, STWT, DMA or SOR, applicant shall submit a
one-time system audit report as enclosed (Annexure 1). In this report, the system auditor shall
cover the following areas of audit and submit his findings:
a) Risk Management
b) Security Policy and implementation
c) Capacity Management
d) Disaster Recovery and Backups
e) Vulnerability Test
13.5.4. - in this report, the auditor shall inter alia certify satisfactory test undertaken in User
Acceptance Test (UAT), Exchange Test Environment and Mock Testing (or Simulated, as applicable). The
format is enclosed as Annexure 2
13.5.5. - in this report, the auditor shall duly certify that software to be used by trading
members for connecting to the stock exchanges and for the purposes of trading and real-time risk
management, is in compliance with the various SEBI/Exchange circulars relevant at the time of
application, more specifically with respect to Order Management, Systems and Network, Access and
Security controls, Cyber Security & Cyber Resilience framework and Risk checks. This format is enclosed
as Annexure 3
13.5.6. For product modification - ASPs shall provide, No change letter (Annexure 4), only if there is no change
in the feature / functionalities / strategy logic/ Order management system/ Risk management checks
/broadcast handler of software
13.5.7. Application Service Provider (ASPs) seeking registration for new software/systems of CTCL, IBT, STWT
or DMA shall provide the following documents through the online portal ENIT (for SOR, ASP shall submit
the application in physical form):
Type of Request Documents
• Auditors Report (Annexure 1)
New • Annexure 2 & 3)
• Product and RMS Write-up
• Annexure 2)
Modification • No-Change Letter (Annexure 4) (For any change other than
RMS/ OMS/ Feature/ Functionality of software)
For any other change, apart from mentioned above, vendors are requested to provide the
documents as applicable for new request.
Page 41 of 48
13.5.8. On successful completion of documentation, product shall be registered with the exchange & registration
shall be granted to the ASP.
13.5.9. ASPs may also refer the Auditor Selection norms (Annexure C) for selecting the auditor to certify their
documents.
13.5.10. Registration for new software/systems is not extended for Algorithmic Trading (AT).
13.6. Periodic submission of System Audit of Application Service Provider (ASP):

Empaneled ASPs of the Exchange are required to carry out Annual system audit of the (Non NEAT Frontend)
NNF facility & also conduct an additional system audit w.r.t. security controls built in their ASP platform.
Report 1: For Annual system Audit of NNF facility, empanelled ASPs of the Exchange are required to submit
the report to the Exchange as per the latest Terms of Reference (TOR) applicable for Type II Members audited
by CISA / CISSP / CISM / DISA certified auditor. Details of the latest TOR and auditor selection norms are
provided in the circular issued by Inspection team on a yearly basis.
Report 2: For submission of additional system audit w.r.t. security controls built in ASP platform & as a part
of Regulatory requirement, ASPs are required to follow auditor selection norms (refer Annexure L) & provide
the following information:
• Details regarding the security controls built in the ASP platform for each version/ instance.
(to be provided in a tabular format).
• Finding / Observations reported by the auditor to be submitted in the enclosed format.
(refer Annexure M and N).
13.6.1. ASPs shall submit both the audit reports every year for the period April to March within the timelines to
avoid any penal/disciplinary action, as prescribed by the Exchange from time to time. This certificate
along with the original audit report and/or re-confirmatory audit report shall be submitted to the
Exchange in accordance with the below timelines.
System Audit Report as per Type II TOR and Re-confirmatory Audit Report submission (if
Preliminary Audit Report submission w.r.t. security applicable) w.r.t. security controls built in their
controls built in their ASP platform ASP platform
On or before 30 June. On or before 30 September.
13.6.2. Submission of system audit report shall be considered complete only after ASP submits report to the
Exchange after providing management comments.
Page 42 of 48
Section 14: Registration of Foreign Independent Software Vendors (ISVs)
The Exchange is providing a facility to Foreign Independent Software Vendors (ISVs) who provide trading solutions
for brokerage for exchanges globally and developing / want to develop software for NSE trading members to register
with the Exchange as ISVs.
directly fro
considered as empaneled with the Exchange.
Exchange. The procedure for providing registration to trading members for software procured from / developed by
-
empaneled vendors / developing in-house software.
Vendors desirous of being registered as ISV with the Exchange shall be evaluated on the basis of various parameters
inter alia including background, infrastructure, systems etc. The details of the criteria are enclosed as Annexure I.
Vendors desirous of being registered as ISV with the Exchange would be required to meet the said criteria.
14.1. Procedure for ISV Registration

14.1.1. The vendor shall make an application to the Exchange for Registration as an ISV as per specified format.
The format of the application form is enclosed as Annexure J. On receipt of the above duly complete
application form and the charges and the vendor meeting SEBI / Exchange minimum requirements, the
ISV shall be issued a letter of provisional registration with the Exchange along with ISV Terms of Conduct
(as per attached Annexure K).
14.1.2. The vendor shall be required to submit the hard copy of the ISV Terms of Conduct to the Exchange by
acknowledging the acceptance (signed by authorized signatory) of the terms and conditions. On receipt
of the acknowledged ISV Terms of Conduct, the vendor shall be registered with the Exchange.
14.2. Charges for ISV Registration

14.2.1.
One-time charge of Rs.10 lakhs + applicable taxes
vendor shall be required to pay of the one-time fee of Rs.10 lakhs and the annual charge of Rs.2.50
lakhs+ applicable taxes for the first year in advance at the time of making the application for registration.
14.2.3. For the first year, the annual charge shall be calculated on a pro-rata basis from the date of receipt of the
vendor's application till March 31st. Since the ISV pays the entire amount of Rs.2.50 lakhs for the first
year at the time of application, the excess amount after calculation of amount due for the first year (on
pro-rata basis as above) shall be adjusted towards annual charges for the next financial year.
14.2.4. The ISV shall be billed for annual charges in at the start of the financial year and are required to pay the
Page 43 of 48
Section 15: Identification of order through NNF terminal Ids
Trading members are required to identify the orders emanating from NNF terminals by populating the 15-digit NNF
field in the order structure for every order. Many trading members have approached the Exchange to clarify the
method to populate the 15 digit NNF field.
Trading members are required to populate the 15-digit NNF field in the order structure for every order emanating
from NNF terminal as per the sections provided below :
15.1 Identification for first 12-digits:
Value Description
12 digit CTCL id 12 digit CTCL (Dealer) id for orders entered using CTCL terminals
111111111111 Internet based trading (IBT) order identification
222222222222 Direct Market Access (DMA) order identification
333333333333 Securities trading using wireless technologies (STWT) order identification
15.2 Identification for 13th digit
Value Description
-algorithmic orders)
non-algorithmic orders using SOR)
15.3 Identification for 14th & 15th digits
15.3.1 Trading members are required to populate the 14th & 15th digits for identification of vendor / In-house
member.
Value Description
00 Vendor code for In-house
15.3.2 Member are required to mandatorily populate the 15 digit code in the NNF field for orders emanating
from NNF terminal.
Page 44 of 48
Appendix - List of circulars issued by the Exchange.
Members are requested to refer Exchange circulars issued and updated from time to time for detailed information
on the subject. Non-comprehensive list of important circulars is shared below.
Sr.No. Date Subject Circular No.

1 12 May 2000 COMPUTER TO COMPUTER LINK (CTCL) FACILITY NSE/CMT/1641
2 12 May 2000 Internet Based Trading Services NSE/CMTR/1642
Securities Trading Through Wireless Application
3 24 November 2000 NSE/CMT/2112
Protocol (WAP)
4 18 December 2000 Internet Based Trading Services NSE/cmtr/2169
5 19 December 2000 CTCL facility / Internet Based Trading Services NSE/CMTR/2174
Free Release of NNF document to members and
6 28 January 2003 NSE/CMT/3896
revision of fee/charge on CTCL
7 30 September 2003 COMPUTER TO COMPUTER LINK (CTCL) FACILITY NSE/CMT/4449
8 30 September 2003 COMPUTER TO COMPUTER LINK (CTCL) FACILITY NSE/CMT/4450
9 30 September 2003 COMPUTER TO COMPUTER LINK (CTCL) TRADING NSE/CMT/4451
10 09 January 2004 CTCL FACILITY/ INTERNET BASED TRADING SERVICES NSE/CMT/4718
Norms for client passwords for Internet based trading
11 01 July 2005 NSE/CMTR/6343
services
Guidelines for developing in house software for
12 15 July 2005 NSE/CMTR/6386
CTCL/Internet based trading facility
13 10 November 2006 Internet based trading services (CM) NSE/cmtr/8089
14 03 April 2008 DIRECT MARKET ACCESS FACILITY NSE/CMTR/10537
16 09 May 2008 DIRECT MARKET ACCESS FACILITY NSE/CMTR/10679
17 01 July 2008 DIRECT MARKET ACCESS FACILITY NSE/CMTR/10918
18 09 April 2009 Unauthorized Usage of CTCL Trading Features NSE/CMTR/12231
19 26 February 2009 DIRECT MARKET ACCESS FACILITY NSE/CMTR/12070
21 22 September 2010 Securities Trading Using Wireless Technology NSE/CMT/15788
22 13 October 2010 Smart Order Routing NSE/CMTR/16007
23 14 December 2010 Identification of order through NNF terminal NSE/CMTR/16519
Registration of Foreign Independent Software Vendors
24 21 January 2011 NSE/CMTR/16829
(ISVs)
25 24 February 2011 Smart Order Routing NSE/CMTR/17073
Review of Internet Based Trading (IBT) and Securities
26 01 July 2011 NSE/CMTR/18245
trading using Wireless Technology (STWT)
Page 45 of 48
Submission of Application for various NNF products
27 08 July 2011 NSE/CMTR/18314
through Electronic mode
28 08 April 2012 Broad Guidelines on Algorithmic Trading NSE/CMTR/20460
Guidelines governing Decision Support Tools /
29 30 April 2012 NSE/CMTR/20662
Algorithms for trading through Non-Neat front end
30 20 July 2012 Submission of Undertaking NSE/CMTR/21322
31 07 August 2012 Clarification on Direct Market Access NSE/CMTR/21430
Consolidated Circular for trading through Decision
32 28 September 2012 NSE/CMTR/21793
Support Tools/Algorithms
Norms for client password for Internet based trading
33 27 December 2012 services (IBT) and Securities Trading through Wireless NSE/CMTR/22421
Technology (STWT)
34 22 May 2013 Broad Guidelines on Algorithmic Trading NSE/CMTR/23476
Testing of software used in or related to Trading and
35 20 August 2013 NSE/CMTR/24218
Risk Management
36 27 September 2013 NSE/CMTR/24583
Risk Management
37 12 February 2014 NSE/CMTR/25842
Risk Management
Safeguards to avoid trading disruption in case of failure
38 13 February 2014 NSE/CMTR/25859
of software vendor
39 05 November 2014 Trading system Password policy NSE/CMTR/27999
40 01 June 2016 Direct Market Access Facility NSE/MA/32486
Digital submission of Direct Market Access (DMA)
41 23 June 2016 NSE/MA/32631
approval application
42 17 February 2017 Digital submission of Vendor Applications NSE/MSD/34210
43 11 January 2018 Digital submission of Vendor Applications NSE/MSD/36728
44 26 April 2018 Unique Identifier for Algorithms NSE/MSD/37635
45 25 June 2018 Unique Identifier for Algorithms NSE/MSD/38128
Board Guidelines on Algorithmic Trading for national
46 21 September 2018 NSE/MSD/38931
commodity derivatives Exchanges
47 21 September 2018 NSE/MSD/38935
Risk Management
48 26 September 2018 Empanelment of Vendors /ASP's NSE/MSD/38973
Digital submission of Vendor Applications-Direct Market
49 02 November 2018 NSE/MSD/39319
Access
Non Neat Systems - Operational Guidelines for
50 17 June 2019 approval of Non NEAT Front End (NNF) software for NSE/MSD/41332
Members
Page 46 of 48
51 17 June 2019 approval of Non NEAT Front End (NNF) software for NSE/MSD/41334
Empanelled Vendors (EVs)
Non Neat Systems - Operational Guidelines for approval
52 17 June 2019 of Non NEAT Front End (NNF) software for Application NSE/MSD/41333
Service Providers (ASPs)
53 17 October 2019 Non Neat Systems- Digitization NSE/MSD/42427
Non Neat Systems - Digitization of Vendor STWT

Applications
Non Neat Systems Digital acceptance of surrender
55 30 January 2020 NSE/MSD/43376
request
56 24 April 2020 Non Neat Systems - Empanelment of Vendors NSE/MSD/44225
57 30 June 2020 Non-Neat System Approvals NSE/MSD/44832
58 08 July 2020 Non-Neat System Approvals NSE/MSD/44952
59 06 August 2020 Non-Neat System Approvals NSE/MSD/45262
60 14 September 2020 NEAT System Approvals -Timeline extension NSE/MSD/45663
61 23 September 2020 Non-Neat System Approvals Reminder NSE/MSD/45801
Members availing the Non NEAT Front End (NNF)
services provided by Application Service Providers
(ASPs)
Non Neat Systems - Testing of software used in or
related to Trading and Risk Management
Non Neat Systems - Testing of software used in or
64 10 December 2020 NSE/MSD/46601
related to Trading and Risk Management
65 10 March 2021 NSE/MSD/47592
Members
Non-Neat Systems - Digital acceptance of surrender
66 30 June 2021 NSE/MSD/48790
request of consolidated Algo IDs
67 21 August 2021 Pre Trade Risk Controls NSE/SURV/49368
68 21 August 2021 Pre Trade Risk Controls NSE/INSP/49369
Non Neat Systems Digital acceptance of cancellation
69 18 October 2021 NSE/MSD/49980
request
70 14 June 2022 Implementation of Two Factor Authentication NSE/COMP/52623
Unique Device Identifiers for orders placed through
71 10 October 2022 Internet Based Trading (IBT) and Securities trading NSE/COMP/54007
using Wireless Technology (STWT
72 28 December 2022 Display of Brokerage, Statutory & Regulatory Levies NSE/INSP/55031
Page 47 of 48
Placing Orders at fair prices and Market Price Protection
73 17 January 2023 NSE/SURV/55281
check
Periodic submission of System Audit of Application
74 26 April 2023 NSE/MSD/56491
Service Provider (ASP)
Direct Market Access (DMA) to SEBI registered Foreign
75 12 May 2023 Portfolio Investors (FPIs) for participating in Exchange NSE/MSD/56681
Traded Commodity Derivatives (ETCDs)
This consolidated circular is a compilation of relevant circulars issued which are operational as on date of this
circular. Efforts have been made to suitably incorporate and update the applicable provisions of existing circulars as
per above table.
Page 48 of 48

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National Stock Exchange of India Limited

Download Ref No: NSE/MSD/57331 Date: June 28, 2023

Circular Ref. No: 39/2023

Consolidated Circular for Non-Neat Frontend (NNF) Facility

Exchange provides a trading front-

Notwithstanding such rescission

For and on behalf of

National Stock Exchange of India Limited

Toll Free No Email id

For the purpose of this scheme,

1.1. PRE- REQUISITIES FOR OBTAINING PERMISSION FOR NNF FACILITY

1.2. CONTINUED PERMISSION REQUIREMENTS

1.2.4. A member shall ensure that directly and / or ind

1.3. RIGHTS OF THE EXCHANGE

such receiving premises at his cost.

1.4.2. Notice of withdrawal by member

1.4.3. Indemnifying the Exchange

1.4.4. No warranty by the Exchange

1.4.5. No liability to the Exchange

1.4.7. Applicability of this scheme

2.1. Pre-requisites for NNF Software Registration:

2.1.1. NNF Undertaking Submission

2.1.2. Operational guidelines for submitting Initial Undertaking

List of documents Format

2.1.2.3. Requests will be processed on receipt of originals at the concerned department.

2.1.3. Operational guidelines for submitting Subsequent undertaking

2.1.4. Members are required to note the following:

2.2. Software Registration Guidelines:

The current list of empanelled vendors is as below:

Sr. No. Vendor Name

1 M/s. Tata Consultancy Services Ltd.

2.2.2.3. Vendor confirmation letter Annexure V to be provided (only in case of AT)

Sr.No. Request Type Documents

2 Change in Software • Auditor Certificate Annexure III

3 For any change other than • Auditor Certificate Annexure III

2.2.4. Operational Guidelines for members developing software in-house/non-empanelled vendors

Particulars Charges + applicable taxes

Sr.No. Request Type Documents

The current list of empaneled ASPs is as below:

List of documents Formats

3.1. Testing of Software:

3.1.1. Testing in simulated test environment:

3.1.2. Mock / Simulation testing:

3.1.3. User Acceptance Test (UAT):

4.1. About the CTCL Facility:

4.2. CTCL software:

4.3. Reference points while developing CTCL software

5.1.1. Networth Requirement:

5.1.2. Operational and System Requirements:

5.1.3. Client Broker Relationship:

5.1.4. Risk Management:

5.1.5. Contract Notes:

5.1.6. Cross Trades:

Security, Standards of Web Interface Protocols and System operations.

5.2.1. Network Security:

5.2.2. Price Quotes/ Order/ Trade Confirmations:

5.2.3. System operations:

5.2.4. Risk Management:

shall further con

Trading (WT) applications prior to placement of order.