Policy for Dealing with Conflict of Interest for Investment / Trading

 

(Trading Policy)

W.e.f.: March 01, 2019                                       Current Version No.: Version 5 

  

Previous Revision Date Previous Version
28-May-18 Version 4
19-Jun-17 Version 3
July, 2015 Version 2
26-Feb-15 Version 1

 

  1. Preamble:
    1. This Document contains the policy, procedures and restrictions to manage and prevent Conflict of Interest in trading / investment by Acuité, its Access Persons and other employees.
    2. Acuité and its Access Persons / Employees should ensure compliance with this Policy and also ensure compliance of:
      • The Securities and Exchange Board of India (Insider Trading) Regulations, 1992;
      • The Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 and
      • Other laws relevant to trading in securities.

  2. Definitions:
    1. Securities
      Securities for the purpose of this Policy shall have the meaning assigned to it under the Securities Contracts (Regulation) Act, 1956. This Policy does not apply to Investments in Government Securities, Mutual Funds, gold, real estate, Government Savings Schemes, investments made through discretionary wealth management service providers, investments which are not in the nature of securities like life insurance policies, provident funds, etc.
    2. Access Persons
      Access Persons means officials of Acuité appointed as Chief Executive or by any other designation (such as Chief Executive Officer / Managing Director / Executive Director / Whole-Time Director/President), all Business Heads in the Credit Rating Division, all employees performing the function of Rating Analysts, all employees providing assistance to the Ratings Operations team, Heads of the Departments or divisions, Compliance team members, and the members of the Rating Committee of Acuité. The Compliance Officer will have the authority to include any other employee / official / consultant as Access Persons, based on the business / regulatory / other requirements.
    3. Immediate Family & Dependents
      Immediate family & dependents shall mean and include spouse, minor children, dependent parents, other dependents and any entity (including Hindu Undivided Family) or trust owned or controlled by the Employees / Access Persons / or their Dependents.

  3. Trading / Investment by Acuité:
    Acuité shall ensure that there is no conflict of interest while making investment in any Securities. Acuité shall not make any investments in Securities issued by companies which have credit ratings outstanding from Acuité. No non-public and/or price - sensitive information about any company from its credit rating division shall be relied upon in its investment decision.
  4. Acuité Trading and Management Portal:
    In view to facilitate the process of seeking approvals for transactions and disclosures under this Policy paperless and seamless, Acuité has developed an in-house trading and management portal called Acuité Trading and Management Portal (hereinafter called the Portal), through which Access Persons / Employees are required to seek prior approval for trading in securities.
  5. Trading / Investment by Access Persons / Employees and their immediate family & dependents:
    1. Disclosures
      • Within seven working days from the date of joining every Employee must submit to the Compliance Officer a Holding Statement of the Securities held by him/her and/or his/her immediate family & dependents, in the format given in the enclosed Annexure A.
      • Thereafter, annually all the employees including the Access Persons should upload / submit his/her Holding Statement of securities (including the holding statements of their immediate family & dependents) as on 31st March every year, within the next 30 days.
      • As regards, the CEO, he/she shall submit the Holding Statement/s, as stated above, to the Board of Directors.
      • On completion of any and every transaction of Securities, all the employees including Access Person shall upload the Transaction Statement on the Portal, within seven working days from the date of transaction for record.

    2. Prior Approval for Transactions
      • Every Access Person is required to seek prior approval of the Compliance Officer for entering into a securities transaction. This includes all transactions of the Access Person and his/her immediate family & dependents, including those through initial public offerings (IPOs). Normally, such prior approvals are to be sought through the Portal. However, in case of approval for transactions in Initial Public Offerings (IPOs) and in certain exceptional cases the Compliance Officer may allow the employee to seek prior written approval by submitting a request in duplicate, in the format given in the enclosed Annexure B.
      • The Compliance Officer shall, obtain prior approval from the CEO for entering into a securities transaction.
      • The Compliance Officer shall approve / reject the request raised by the Access Person through the Portal. However, in case of prior approval sought in writing through submission of Annexure B, the Compliance Officer shall convey the approval / disapproval, by returning to the Access Person, a duly signed duplicate copy of his/her request form.
      • As regards the Compliance Officer, he/she shall obtain prior approval of the CEO by raising a request through the Portal and/or in case of IPOs by submitting a written request in duplicate in the format given in the enclosed Annexure B.
      • The CEO shall approve / reject the request raised by the Compliance Officer through the Portal or convey the approval / disapproval by returning to the Compliance Officer, a duly signed duplicate copy of his/her request form.
      • As regards the CEO, he/she shall obtain prior written approval of the Executive Committee of the Board by submitting a request in duplicate in the format given in the enclosed Annexure B.
      • The Compliance Officer shall convey the approval / disapproval by the Executive Committee by returning to the CEO, a duplicate of his/her request form duly signed by the Compliance Officer, mentioning the date of approval / disapproval by the Executive Committee.
      • On receipt of the approval, the order must be executed within seven working days from the date of approval. If the order is not executed within the above period of seven working days, the Access Person must seek prior approval for the transaction again.
      • If the Access Person does not intend to utilize the approval already given, he/she should in writing, immediately inform the Compliance Officer of his/her decision not to utilize the given approval.
      • Approvals granted herein shall be valid for seven working days from the date of approval but may be withdrawn earlier by the Compliance Officer, if the circumstances so warrant.

    3. Restricted List
      • To prevent trading in the Securities of a client of Acuité based on inside information, Acuité shall put such companies on the Restricted List which will be systematically updated on the Portal and also maintained by the Compliance Officer.
      • When a company is on the Restricted List relevant to a business group, trading in Securities of that company by an Access Person of that business group shall be disallowed.

    4. Other Restrictions
      • An investment has to be held for a minimum period of 30 working days (after purchase before selling) by an Access Person in order to be considered as being held for investment purposes. In the case of IPOs, the holding period shall commence from the date of allotment of the Securities.
      • In personal emergencies, the holding period may be waived by the Compliance Officer in consultation with the Head of Department after receiving the request from the Access Person.
      • Analyst involved in the rating process shall not have ownership of the securities of the company they rate.

    5. Members of the Rating Committee:
      Members of the Rating/ Grading Committee shall upfront disclose in writing their interest, if any, to the Compliance Officer in the Securities being rated/ graded by Acuité. Such member/s shall refrain from participating in such rating/ grading by Acuité.

    6. Compliance, Violation:
      • Compliance of this policy is a condition of continuance of employment with Acuité. Any violation will be viewed seriously by Acuité and shall be the ground for disciplinary action. This may include imposition of a monetary penalty of Rs.500/- for each day of continuing default / non-compliance and / or termination from service with or without notice, as deemed fit by Acuité.
      • Compliance of this Policy by an Employee / Access Person does not absolve him/her from any consequences arising out his/her violation of any regulations of SEBI / RBI.
      • It is the policy of Acuité to proactively cooperate with all Regulators and Law Enforcement Agencies in their investigations / action against any Employee / Access Person of Acuité.

    7. General:
      • If an Employee / Access Person needs any clarification, he/she should seek in writing such clarifications from the Compliance Officer by giving all necessary details.
      • The Management of Acuité reserves all rights to make necessary changes to this Policy and inform such changes in writing by a general circular / e-mail to all the Employees / Access Persons. Such changes shall automatically form part of this Policy and shall be binding on all the Employees / Access Persons.
      • All decisions taken by the Compliance Officer / CEO / Board of Directors shall be final and binding on all the Employees / Access Persons. In this regard, no correspondence shall be entertained. No Employee / Access Person shall challenge, in a Court of Law or otherwise, any decision taken under this Policy.
      • All information provided to Acuité in compliance with this Policy shall be kept confidential and will not be shared, except on a "need-to-know” basis or as required by or under any law.
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Our exciting journey started in 2005 with rating of bank borrowers most of whom were small and medium enterprises. At that time, credit rating was a concept known only to large issuers of capital market instruments. Since then, like a caterpillar transforms itself into a beautiful butterfly, we transformed to rate bonds, bank facilities of large corporates and issuers across industries. Along came many achievements - SEBI Registration in 2011, RBI accreditation in 2012, 50,000 ratings in 2018, 5,000 Bond and Bank Loan Ratings in 2017, launch of India's first Android and iPhone app to disseminate rating, tamper-proof QR-code-enabled rating rationales, and SMERA Terminal to name a few.

Now is the time to re-emphasize our increasing footprint across all segments of ratings through the launch of our new name - 'Acuité'.

The name has changed. The spirit of upholding highest standards of analytical rigour, continuous improvement, excellence in our processes and quest for innovation remains the same. We would like to re-emphasize that we will continue to work hard to provide independent, unbiased and timely opinion of highest standard.

Acuité means 'sharpness and clarity of thought and vision'. Let our research and ratings help you take decisions with confidence.


Sankar Chakraborti
CEO