6th October 2005
Members are
hereby informed that the Exchange has received a circular no. MRD/
DoP/SE / Cir-20/2005 dated September 8, 2005 from SEBI. The said circular,
which is self explanatory, is reproduced below.
General Manager
Market Regulation Department – Policy
Email:-sundaresanvs@sebi.gov.in
MRD/DoP/SE/Cir-20/2005
September 8, 2005
The Executive Directors/Managing Directors/Administrators
Of All Stock Exchanges
Dear
Sir / Madam,
Sub: Electronic issuance of contract
notes – Additional conditions
1.
Please refer to SEBI circulars No.
SEBI/SMD/SE/15/2003/29/04
dated April 29, 2003 and SMDRP/Policy/Cir-56/2000
dated December 15, 2000 on the captioned subject.
2. It
is hereby specified that in addition to the conditions specified in the
aforesaid circulars and the provisions of the Information Technology Act, 2000
(IT Act, 2000), all the members of stock exchanges who are desirous of issuing
Electronic Contract Notes (ECNs) to their clients shall comply with the
following conditions:-
2.1 Issuing ECNs when specifically
consented
The
digitally signed ECNs may be sent only to those clients who have opted to
receive the contract notes in an electronic form, either in the Member – Client
agreement / Tripartite agreement or by a separate
letter. The mode of confirmation shall be as per the agreement entered into
with the clients.
2.2 Where to send ECNs
The
usual mode of delivery of ECNs to the clients shall be through e-mail. For this purpose, the client shall provide
an appropriate e-mail account to the member which shall be made available at
all times for such receipts of ECNs.
2.3 Requirement of digital signature
All
ECNs sent through the e-mail shall be digitally signed, encrypted,
non-tamperable and shall comply with the provisions of the IT Act, 2000. In
case the ECN is sent through e-mail as an attachment, the attached file shall
also be secured with the digital signature, encrypted and non-tamperable.
2.4 Requirements for acknowledgement,
proof of delivery, log report etc.
2.4.1 Acknowledgement
The
acknowledgement of the e-mail shall be retained by the member in a soft and
non-tamperable form.
2.4.2 Proof of
delivery
i.
The proof of delivery i.e., log report generated by
the system at the time of sending the contract notes shall be maintained by the
member for the specified period under the extant regulations of SEBI/stock
exchanges and shall be made available during inspection, audit, etc.
ii.
The member shall clearly
communicate to the client in the agreement executed with the client for this
purpose that non-receipt of bounced mail notification by the member shall
amount to delivery of the contract note at the e-mail ID of the client.
2.4.3 Log
Report for rejected or bounced mails
I.
The log report shall also provide the details of the
contract notes that are not delivered to the client/e-mails rejected or bounced
back.
II. Also, the member shall take all possible steps (including settings of mail servers, etc) to ensure receipt of notification of bounced mails by the member at all times within the stipulated time period under the extant regulations of SEBI/stock exchanges.
2.5
When to issue or send in Physical mode
2.5.1 Issue in
Physical mode
In
the case of those clients who do not opt to receive the contract notes in the
electronic form, the member shall continue to send contract notes in the
physical mode to such clients.
2.5.2 Send in
Physical mode
Wherever
the ECNs have not been delivered to the client or has been rejected (bouncing
of mails) by the e-mail ID of the client, the member shall send a physical
contract note to the client within the stipulated time under the extant
regulations of SEBI/stock exchanges and maintain the proof of delivery of such
physical contract notes.
2.6 General requirements
2.6.1 ECNs
through website
In
addition to the e-mail communication of the ECNs in the manner stated above, in
order to further strengthen the electronic communication channel, the member
shall simultaneously publish the ECN on his designated web-site in a secured
way and enable relevant access to the clients.
2.6.2 Access to the website
In
order to enable clients to access the ECNs posted in the designated website in
a secured way, the member shall allot a unique user name and
password for the purpose, with an
option to the client to access the same and save the contract note
electronically or take a print out of the same.
2.6.3 Preservation/Archive of electronic
documents
The
member shall retain/archive such electronic documents as per the extant
rules/regulations/circulars/guidelines issued by SEBI/Stock Exchanges from time
to time.
3.
The Stock Exchanges are advised to
3.1 make necessary amendments to the
relevant bye-laws, rules and regulations for the implementation of the above decision
immediately.
3.2 bring the provisions of this circular
to the notice of the member brokers/clearing members of the Exchange and also
to disseminate the same on the website.
3.3 communicate to SEBI, the status of the
implementation of the provisions of this circular in Section II, item no. 13 of
the Monthly Development Report.
4. This
circular is being issued in exercise of powers conferred under Section 11 (1)
of the Securities and Exchange Board of India Act, 1992, to protect the interests
of investors in securities and to promote the development of, and to regulate
the securities market.
Yours faithfully,
V S SUNDARESAN
Members are advised to note and comply with the provisions of the aforesaid circular .
(Secretary)