Due to concerns over inadequate preventions of the likely flow of black money into stocks, SEBI has arranged for brokers to find out the income details like tax returns, salary slips and investor’s bank account statements etc, for every year.

SEBI has asked the brokers to prevent traders and investors not coming up with adequate proof regarding the source of their funding. According to sources, there is a possibility that SEBI may ask for a mechanism to deny access in the market to non-compliant brokers and clients.

Documentary evidence need to be furnished for financial information, like copies of Income Tax Return (ITR) acknowledgement, annual accounts, Form 16 for salary income, net worth certificate, salary slips, bank account statements for six months, demat account holding statements and asset ownership certificates.

Fresh documents need to be updated every year. This step has been taken to check the flow of illicit money.

SEBI had first suggested these steps in December last year, but brokers have been delaying due to the enormity of the exercise. However, now SEBI is taking strict measures ensure these steps are followed immediately.