1. Preface

Risk Management is an integral part of any organization. We need to deal with various kind of risk like Credit Risk, Market Risk, Default Risk, Liquidity Risk and other Risk.

In Securities Market, customers have to be alerted with respect to their obligations, open positions, market conditions, margin requirements, regulatory requirements and steps initiated by brokers in case of changing market situations.

With a view to enhance customer knowledge and safeguarding investor interests, STOCKHOME INDIA LIMITED have revised a comprehensive Risk Management & Surveillance ( RMS ) Policy to make sure that customers are aware of criteria based on which STOCKHOME INDIA LIMITED monitors risk and initiates actions to safeguard the interest.

Major parameters of RMS Policy are mentioned below:

2. Setting up clients exposure limit Cash Segment:

Exposure constitutes both a purchase and sale transactions of shares & securities. A purchase transaction includes buying of securities and it remains as exposure till client gives full payment for the shares bought. A sale involves a share delivery obligation to the exchange and it remains an exposure till the client delivers the shares. Exposure will mean the aggregate of the outstanding purchase and sales.

Exposure limit of the client will be set on the basis of available base capital as defined below. The limits may be allowed on a multiplier basis to the available base capital depending on the market conditions and the risk perception about the market/client. However in exceptional situations STOCKHOME INDIA LIMITED may use its own discretion in providing the limits and may change for a client or for all depending on market conditions.

Base Capital constitutes of Margin Ledger +/- Party Ledger + Collateral Stocks (Stocks given to STOCKHOME INDIA LIMITED as Margin) + Debit Stock (Stock withheld by STOCKHOME INDIA LIMITED against ledger debits) +Outstanding Stocks (Stocks yet to receive from exchange) – Shortages (Stock sold but not delivered to broker for pay in within T+2 days) + Value of stocks held in

# All stocks are valued after hair cut applied by STOCKHOME INDIA LIMITED The exposure in offline segment will be as under:-

The market would be categorized as Panic Market if the index movement is 6 % in a single day or a cumulative movement of 10 % ( either side movement ) in consecutive sessions or is declared specifically by STOCKHOME INDIA LIMITED in case of emergency for the limited purpose of this Risk Management Policy.

The exposure in online segment will be as under: -

Customer can utilize the limit as per his desire for the available product. In case the same is used for one product then the limit will be adjusted for other product automatically. Further trading limits are provided only on realized cheques and fund transfer done

using payment gateway in both the segment.

# The above exposure limits can be reduced to one time based on clients profile & STOCKHOME INDIA LIMITED’s risk appetite.

# In addition to above, STOCKHOME INDIA LIMITED applies specific scrip wise Margin, hence few scrips can attract higher Margin than the normal margin available for liquid scrips, this can vary in the range of 50% to 100 %.

In other case the exchange increases the margin requirement in any scrip, STOCKHOME INDIA LIMITED can reduce the exposure in that particular scrip as per the exchange margin requirement i.e. say exchange has increased the margin in scrip XYZ Ltd. by 100 %, STOCKHOME INDIA LIMITED may reduce the exposure to half in XYZ Ltd. apart from this scrip, client will be having normal exposure in total as per above guidelines.

F&O Segment:

Derivative segment is a margin driven segment. Margin will be collected as per the requirement of the exchange i.e. SPAN margin

+ exposure margin + additional margin (as any made applicable by the exchange ). In case of panic market additional margin can be collected by STOCKHOME INDIA LIMITED looking at market conditions.

Scrip’s acceptable as collateral – only approval list of stocks as per exchange for F&O margin will be accepted after a haircut applicable as per exchange. However STOCKHOME INDIA LIMITED may accept on its own discretion, the stocks which are not in the list of exchange defined illiquid scrip.

Scrip wise Exposure Limits:

Cash Segment

To keep in mind the surveillance measures and also to stop unusual activities in illiquid stocks,scrip wise limits will be set on the basis of following parameters at STOCKHOME INDIA LIMITED level.

1. Avg. Volume signifies total of average traded quantity of both the exchange for previous 10 days

2. No trades will be allowed in physical scrips F&O Segment

To bring the control on risk related to trading in illiquid securities in F&O segment we have decided following parameters:

3. Right to sell clients securities ( RMS Selling ) or close clients positions on account of non-payment of clients dues :

It is client’s obligation to clear his obligations on T+2 days ( T indicates Trading day ). The client shall timely provide funds/securities to STOCKHOME INDIA LIMITED for the purchase/sale of securities for meeting his obligations to the exchange. In case of client falling short of providing fund/securities, STOCKHOME INDIA LIMITED has the right to close the positions/ sell the clients securities with or without giving prior notice to client to the extent of ledger debit and/or to the extent of margin obligation STOCKHOME INDIA LIMITED can liquidate the securities bought or collaterals given or any other securities given by client in any other form for clearing the clients obligation.

RMS Selling criteria in Cash Segment

RMS selling in clients account will be done on T+5 days ( T indicates Trading day) for the ledger debit on due basis. For example, if the position has been taken on Monday then the funds payment is due on Wednesday (T+2 day). Shares so bought on Monday will be withheld by STOCKHOME INDIA LIMITED till the debit is cleared. If the funds are not received by Friday, shares will be sold on following Monday.

In case stock valuation falls below 20% of the total ledger debit, square off can be done even before T+5 days.

RMS Selling criteria in F&O Segment :

In case of F&O segment, RMS selling will be done on T+2 basis for the Mark to Market (MTM) debit/Margin Shortfall. If MTM reaches 80% of the deposit RMS selling can be done even before above stipulates days.

In case of panic market conditions, RMS selling will be done on T+1 basis. Selling sequence when STOCKHOME INDIA LIMITED does RMS selling.

1. The open position in F&O segment will be squared off towards margin shortage.

2. In case there is ledger debit in client’s accounts, collateral stocks to the extent of ledger debit (including MTM) will be sold off. Further client will be suspended from Trading on RMS selling day and suspension would be removed after selling.

Surveillance and monitoring is very crucial part of today’s trading system. Effective surveillance can achieve investor protection, market integrity and safeguard or capital market. The main objective of surveillance is to stop suspicious and manipulated trading activity by individual or group of individuals on the exchange platform.

1. Background

We along with our Employees/Authorized Persons are the first touch point in the securities market for investors and are expected to have reasonably fair understanding about their client(s) and its trading activity. Thus, Exchanges/regulators have entrusted on us the first level of the responsibility to ensure that neither us nor our client(s) are misusing the trading system by indulging in manipulation or any other illegal activities which can cause risk to the integrity of the market and distorts the equilibrium of the market.

Objectives of framing a surveillance policy covering

• Alerts to be generated.

• Threshold limits and the rationale for the same.

• Review process.

• Time frame for disposition of alerts and if there is any delay in disposition, reason for the same should be documented.

• Suspicious/Manipulative activity identification and reporting process.

• Record Maintenance.

2. Surveillance framework

It is mandatory under the exchange/regulatory directives to have in place appropriate Surveillance Policies and Systems to detect, monitor and analyze transactions. For the above we have to co‐relate the transaction data with their clients’

Information/data and. Detect suspicious/manipulative transactions is an on-going continuous process with analysis of trades and transactions and carrying out Client Due Diligence (CDD) on a continuous basis.

In order to implement the exchange directives, they have provided us alerts which have to be generated by us. In addition to this we have also developed in‐house surveillance software. The details of both these have been enumerated below:

1. Analysis of Client(s) transaction(s)/alert(s):

On receiving the said alerts from the exchange we shall analyze each and every alerts with the information available with us. In order to analyze/verify such alert we shall examine trading activity of the Client(s)/Group of Client(s) or scrip's identified based on above alerts.

(a) We may seek written explanation/undertaking from such identified client(s)/Group of client(s) for entering into such transactions. (b) We also ask for documentary evidences such as Bank statement / Demat transactions or holding statement within the period of such transactions or more than that. We may also ask for financial details of the client such as income tax return, salary slip, annual returns etc.

After analyzing the documentary evidences, such as the bank / demat statement or any other documents relevant to the said alert

/ transaction, we shall record its observation for such identified transactions or Client(s) / Group of Clients(s). In case any adverse observations are recorded, we shall report all such instances to the exchange.

2. Frame for disposition of alerts:

In case adverse observations/alerts are recorded, we shall report such instances to the exchanges within 45 days of alert generation. In case there is delay, we shall seek extension of the time period from the exchange after giving proper reason for delay.

3. Suspicious/Manipulative activity identification and reporting process:

After analysis of the transaction/alerts, documentary evidences and information available with us, we shall identify the suspicious/manipulative transactions of any of the client/group of clients, if any and shall report the same to the exchange within the prescribed time limit. Further we may stop/banned client for doing further trading at our end.

4. Record maintenance:

We shall maintain and keep all such records and documentary evidences that has been analyzed/taken by us either in soft copy or in hard copy for the time period as prescribed by the regulatory authority. We shall produce such records as and when asked by exchanges or by the regulatory authority.

(V) Transaction Alerts

Based on the trading activities, risk profile and UCC details of the Clients, the suspicious trading alerts are generated by our systems based on the financial values, Risk Profile, Concentrated trading, Abnormal trading, Placing un wanted trades, Trading in illiquid shares, Commodities, Far off illiquid Futures and options, Transactions more than Rs.10 Lacs etc., Depositary systems also generates Alerts based on the High Value Transactions and Frequent Off Market Trades.

The National stock Exchange Generates the Transactional Alerts on Continuous basis such Alerts includes the following:

The senior management along with the Principal Officer and the designated Director reviews the alerts and initiates appropriate measures, as per the policies and CDD measures and may also report to Exchanges, Depositories, SEBI, Any other Regulators or FIU IND as per the PMLA policies lay down by the company.

In order to have in-depth analysis of the above transactional alerts, the following due diligence shall be taken

1. EXCHANGE ALERTS/ Transaction Alerts

1. Unusual trading activity: Client(s)/Group of Client(s) who have been dealing in small quantities/value suddenly significantly increase their activity over a period of time say fortnight/month/quarter and this increases by certain threshold limit of more than 50% as compared to the earlier period of same duration, we have review and conduct a analysis on parameters such as;

1. Whether such volume is justified give the background of the client and his past trading activity.

2. Amount of funds that was brought in by the Client(s)/Group of Client(s) for the purchases made during the period.

3. Whether such inflow of funds is in line with the financial status of the client.

4. Whether the transactions of such Client(s)/Group of Client(s) are contributing to concentration or impacting the price and or volumes.

2. Sudden trading activity in dormant accounts‐An inactive client resumes trading starts/resumes trading and additionally the client start trading in illiquid stocks or low market capitalized scrips or enters into huge transactions not to commensurate with the financial strength of the client, we have to review and examine the following;

1. Reasons for trading in such scrips/contracts.

2. Whether there is any concerted attempt by a Client(s)/Group of Client(s) to impact the prices.

3. Whether there is any concerted attempt by a Client(s)/Group of Client(s) to indulge in movement of profit/loss from one client to another account.

3. Clients/Group of Client(s), deal in common scrips/contracts contributing significant to the volume of the scrip/contract at the Trading Member level and at the stock exchange level. We need to review and examine the following;

1. Reasons for trading in such scrips/contracts.

2. Whether there is any concerted attempt by to impact the prices.

3. Whether there is any concerted attempt to indulge in movement of profit/loss from one client to another.

4. Activity of Client(s)/Group of Client(s) is concentrated in a few illiquid scrips/contracts or there is a sudden activity by Client(s)/Group of Client(s) in illiquid securities/contracts manifested in terms of volume as compared to the volume of the exchange or that of the Trading Member. We need to review and examine the following;

1. Reasons for trading in such scrips/contracts.

2. Whether there is any concerted attempt to impact the prices.

3. Whether there is any concerted attempt to indulge in movement of profit/loss from one client to another.

5. Client(s)/Group of Client(s) dealing in scrip in quantity of one share or trade in minimum lot size. We need to review and examine the following:

1. Reasons for such trading behaviour.

2. Trading pattern and repeated instances.

6. In accordance to the list of illiquid scrips/contracts provided by exchanges, we need to review and examine the following;

1. Whether there trading is sudden trading

2. Whether there is any concerted attempt to impact the prices of such scrips/contracts.

3. Whether there is any concerted attempt to indulge in movement of profit/loss from one client to another.

4. Probable matching of transactions with another client.

5. Apparent loss booking transactions in illiquid contract/securities

6. Whether the transactions of are contributing to concentration or impacting the price.

7. Circular Trading:

1. Continuous trading of client/group of clients in particular scrip over a period of time.

2. Client/group of clients contributing significant volume (broker and exchange level) in a particular scrip – especially illiquid scrip and /or illiquid contracts

3. Possible matching of trades with a specific group of clients (like same trade number on both buy and sell side of a member and/or immediate execution of order in illiquid scrip etc.)

4. Possible reversal of trades with the same group of clients (like same trade number on both buy and sell side of a member and/or immediate execution of order in illiquid scrip)

8. Pump and Dump:

1. Activity concentrated in illiquid scrips/contracts.

2. Sudden activity in illiquid securities/contracts.

3. Percentage of activity to total market in the scrip/contract is high.

4. Trades being executed at prices significantly away from the market and later on squaring off to earn significant profits.

9. Wash Sales or Reversal of Trades:

1. Same Client(s) on both sides of the transaction. (i.e. same trade number on both the buy and sell side with us)

2. Reversal of transactions by same Client(s) or within same Group of Client(s) at significantly different trade prices within a short period of time says 3‐4 days.

3. One client makes significant profit and other suffers a loss or apparent loss booking transactions in illiquid contract/securities including options

10. Front Running:

1. Trading, by Client employees, ahead of large buy/sell transactions and subsequent square off has to be identified and such transactions have to be reviewed for determining front running

2. There is a consistent pattern of Client employees trading ahead of large buy/sell transactions.

11. Concentrated position in the Open Interest/high turnover concentration:

1. Client having significant position in the total open interest of a particular scrip.

2. Client not reducing/closing their positions in spite of the scrip being in ban period.

3. Client activity accounts for a significant percentage of the total trading in the contract/securities at member and exchange level.

4. Monitor the trading pattern of Client(s) who have Open Interest positions/concentration greater than equal to the thresholds prescribed.

12. Order book spoofing i.e. large orders away from market :

1. Consistent placement of large orders significantly away from the market with low trade to order trade ratio or cancelling orders within seconds after placing them thereby creating a false impression of depth in a particular scrip/contract

2. Repeated pattern of placement of large buy orders which are away from the market price and simultaneous placement of sell orders to benefit from price rise or vice‐versa.

2. OFFLINE IN‐HOUSE ALERTS

1. Report on Delivery above Rs.5cr & TO above Rs.25cr – all segments of equities and commodities Placement of large orders with the delivery turnover contributing in value terms above Rs. 5cr and trading turnover in terms of value above Rs.25cr for all segments are generated.

1. In case if the name of any new client appears in this report and / or the name of the client comes again in the report after a period of 15 days to one month, then compliance team informs about the said trade details to the RMS team,

2. Thereafter RMS team does the trade/ledger confirmation with the end client and accordingly updates the compliance team.

2. CASH Excess Volume (more than 5% of market volume) (equity segment) Trades in equity segment contributing to more than 5% of the exchange volume are generated.

1. The records so generated are analysed vis‐a vis exchange volume, repeated days of the trading and price volatility, company financials etc.

2. In case of any repeated days of trading, contributing to significant exchange volumes and or price volatility or concentrated trading among selective group of client is observed, then in such instances after analysis appropriate steps are taken.

3. Illiquid scrip (equity segment) Trades in equity segment for the illiquid scrips (which have been identified as illiquid by exchange) are generated.

1. The records so generated are compared visa vis. exchange volumes, repeated days of trading, price volatility in the scrip.

2. Additionally the financials of the company are also analyzed to ascertain whether the trading volumes and price movements are justified.

3. In case any trading is found to be abnormal, initial alerts are sent to the branches. If repeated, after proper verification and analysis the scrip may also is blocked from further trading.

4. F&O Profit/Loss & Futures Rate Fluctuation (equity derivatives) Trades in equity derivatives for the above referred parameter which are generated in case of clients executing trades at price above 20% of the previous closing price and or incurring huge profits or losses are generated.

1. For the records generated under this alert are evaluated in case of any unusual pattern clarification from the client/or branch is sought.

5. F&O Excess Volume (more than 5% of market volume) (equity and commodity derivatives)Trades in derivatives and commodity derivative are generated in trades are more than 5% of market volumes

1. For the records generated under this alert are evaluated visa‐vis the strike price, maturity date of the contract, type of derivative contract, underlying etc. are analyzed and evaluated.

2. In case if the name of any new client appears in this report and / or the name of the client comes again in the report after a period of 15 days to one month, then compliance team informs about the said trade details to the RMS team.

3. Thereafter RMS team does the trade/ledger confirmation with the end client and accordingly updates the compliance team.

6. Matching of Trades – all segments (equities and commodities)The trades which get matched (applicable for all segments) at member level and or client level are generated under this alert.

1. The records so generated, comparison is done to ascertain whether they have been carried out from the same trading terminal or same location or for group of same family codes.

2. In case of illiquid scrip/contracts or significant volumes or price volatility observed, explanation is sought and or warning is issued to the client.

3. ONLINE IN‐HOUSE ALERTS

The following are the various alerts, wherein the records coming under these alerts are analyzed with the financials of the company, repetitive nature of the instances, volumes and or price volatility. These alerts are observed by the RMS on real time basis and in case of any suspicious nature, appropriate reasons are sought from the branch/franchisee/clients. We have summarized the online alerts which are being monitored as on date:

1. Module of Online Trade Matching Popup: In this module all the trades that get matched can be viewed and thereafter further verification and/or analysis is done.

2. Module of Online Delivery Tracker: This report provide the trades of the clients who take delivery above Rs.5 lacs in value terms or all delivery above 10,000 in quantity terms (this limit is modified on time to time basis.

3. Module on Online Ban Scrip Position Tracker: This report provides the records in case any client takes position in “Ban” security, then we can come to know via this pop up that position is open and may attract penalty in case position is carried further.

4. Module on Unregistered/Inactive Client Trade: This report shows that in case any client is inactive as per our back office software or not registered, in spite of which trade is done the details can be ascertained via trading terminal and can be restricted from further trading and to complete the reactivation/registration process as the case may be.

5. Module on Spurt in volume: This reports provide the records of the trades in which there is any sudden increase in volume in comparison with 2 weeks average exchange volume.

6. Matching of Trades (in commodities): The trades which get matched at member level and or client level are generated under this alert. The records so generated, comparison is done to ascertain whether they have been carried out from the same trading terminal or same location or for group of same family codes.

4. ADDITIONAL MONITORING

1. Not allowing trades of entities which are banned by SEBI/Exchange/other regulators. This database is verified by the KYC team before client account is activated.

2. Trading is allowed to commence only after execution of the client registration form and all the mandatory Unique Client Code (UCC) parameters such as Name, Address, PAN No. etc., have been uploaded by us to the Exchange portal.

3. Likewise, demat account numbers are provided to the demat account holders only after obtaining the Client registration forms and activating the same into the DP system.

4. Clients who have debit balance in their ledgers continuously for a certain period of time or who default in making payment/delivery. This is monitored by our RMS team who dedicated does follow up with the clients/branches/AP and also restricts from further trading.

5. Bulk deals have been disclosed/reported; illiquid scrips/contract or derivatives scrips which are in ban period. Trading activity in such scrips may be analyzed for Client.

We need to correlate the transactional alerts with the information of client(s) available with them. The correlation of alerts with information of Client(s)/Group of Client(s) would help Trading Members to identify, mitigate and manage such transactions as well as minimizing business risk.

Analysis

In order to analyze the trading activity of the Client scrips identified based on above alerts, we can do the following:

1. Shortlist Client for further analysis.

2. Seek explanation from such identified Client

3. Seek documentary evidence such as bank statement/demat transaction statements of last 6 months to 12 months period, to satisfy itself.

4. On the basis of information received from the client and after proper evaluation and analysis, we decide our steps for suspending code and or the scrip from further trading.

Reporting

All action/analysis with respect the alerts generated should be completed within a reasonable time frame The surveillance policy of the Trading Member to be approved by the Board of Directors

A daily reporting of the alerts to the designated director and principal officer / a quarterly MIS to the Board of Directors if there are alerts as to the number of alerts received, disposed off during the quarter and pending at the end of the quarter and the. Reasons for pendency should be discussed and appropriate action taken for disposing of the alerts.

The surveillance process to be conducted under overall supervision of its Compliance Officer/Principal Officer.

Principal Officer under the PMLA directives/ Compliance Officer of the Company and their team would be to be responsible for all surveillance activities carried out for the record maintenance and reporting of such activities under the supervision of the Designated Director.

Internal auditor shall review the surveillance policy, its implementation, effectiveness and review the alerts generated during the period of audit. Internal auditor shall record the observations with respect to the same in their report.

This policy would be made available to the internal auditors and regulators during the course of audits or as and when demanded.

Certain few things we can implement provided the concerned departments monitor and keep track

1. Frequent instances of payment by Client(s)/Group of Client(s) in the form of cash equivalents like Demand Draft, Pay order etc. to be monitored for

2. When home or business telephone number has been disconnected or there is no such number when an attempt is made to contact client or documents sent at its email/home/business address returned undelivered.

3. Having multiple accounts with the Trading Member and using different trading accounts alternatively. 4. Client frequently changing bank/ demat account.

Other Surveillance Actions:

2. Refusal of order for penny stocks / illiquid contracts:

STOCKHOME INDIA LIMITED may refuse or restrict a client in placing the order in certain securities depending on various conditions like volume/value/part of illiquid scrip’s/ Z group of securities although a client may have credit balance or sufficient margin in the trading account. List of such scrip’s will be reviewed on a periodical basis and will be updated on STOCKHOME INDIA LIMITED website. However STOCKHOME INDIA LIMITED under exceptional circumstances may execute clientele order STOCKHOME INDIA LIMITED has the discretion to reject execution of such orders based on its risk perception..

In case of F&O segment, all the far Month Option contracts and third Month Option Contract (Except Nifty) will not have buy and sell limit due to its illiquid nature. However in all above cases if client still wish to trade then the client needs to coordinate with the respective branch and the limit will be set by Head Office after analyzing the requirement.

3. Regulatory conditions under which a client may not be allowed to take further position or STOCKHOME INDIA LIMITED, may close the existing position of the client.

In case overall position is a scrip/derivatives contract has reached the Regulators prescribed exchange limit/ Market wide open interest limit/ client level limit, then client may not be allowed to take further position, till such time Regulators prescribed limit comes down to create a new position.

Further STOCKHOME INDIA LIMITED may close the existing position of a client to the extent of debit balances to release the margin from the exchange. In case if STOCKHOME INDIA LIMITED has sufficient margin cover on behalf of its clients, it may still decide based on the market conditions and risk perception not to allow further position or may close the existing position of a

client.

4. PMLA Guidelines:

Client will be categorized as High, Medium and Law risk customer as per the risk appetite and their current profile as mentioned in Know your client from (KYC). The same will be reviewed at regular intervals.

Exposure to client may also be governed by customer profiling mentioned above as well as clients financial income made available to STOCKHOME INDIA LIMITED from time to time. Client needs to furnish their income details on yearly basis. Following documents will be accepted as an income proof

• Copy of ITR Acknowledgement

• Copy of Annual Accounts

• Copy of Form 16 in case of salary income

• Net Worth Certificate

• Salary Slip

• Bank account statement for last 6 months

• Copy of demat account Holding statement

• Any other relevant documents substantiating ownership of assets.

If there is a major disparity between financial details and trading volumes, client will be asked to furnish suitable explanation and based on the same further trading limits will be sanctioned.

5. Suspension of Clients:

STOCKHOME INDIA LIMITED may withhold the payout of client and suspend his trading account due to any internal surveillance ( if client indulges into manipulative trade practice)/ regulatory orders (debarring orders)/ if the client is dormant (not traded > 6 months).

 Communication

Client can view details of his ledger, margin, shortfall etc. through his secured login on STOCKHOME INDIA LIMITED website. The client has to be aware about his position, outstanding balance and Risk. STOCKHOME INDIA LIMITED is under no legal obligation to send any separate communication but as a customer centric company we may take extra efforts generally to ensure that client is well informed about the Risk and the possible actions, which may follow. The communication would generally be through SMS/Email on registered contact details with STOCKHOME INDIA LIMITED.

Disclaimer:

STOCKHOME INDIA LIMITED management will have a discretion to alter/change any of exposure limit, selling parameter defined in this policy on the basis of prevailing market conditions with or without prior intimation and can use their discretion to grant any kind of exemption/permission in case they deem fit on case to case basis.