NOTICE
June 29,
2011
CSE/Notices/SEBI/2011/005
Trading members are hereby
informed that the Exchange has received a Circular from SEBI vide Ref.
No.CIR/MIRSD/03/2011 dated June 09, 2011 regarding pre-funded
instruments/Electronic Fund Transfers. The contents of the said Circular are
given hereunder for information of the trading members.
Quote : -
CIR/MIRSD/03/2011 June 9, 2011
To
All Recognized Stock Exchanges
Dear Sir/Madam,
Sub: Pre- funded instruments /
Electronic fund transfers
1. SEBI vide Circular No. SEBI / MRD / SE / Cir-33 / 2003 / 27 / 08 dated August 27, 2003, while specifying the mode of receipt and payment of funds, has permitted the stock brokers to accept Demand Drafts from their clients.
2. While receiving funds from the clients through pre-funded instruments, such as, Pay Order, Demand Draft, Banker’s cheque, etc., it is observed that the tock brokers are unable to maintain an audit trail of the funds so received, as the details of the name of the client and bank account-number are not mentioned on such instruments. This may result in flow of third party funds / unidentified money, which is not in accordance with the provisions of the aforesaid circular and also affects the integrity of the securities market.
3. Therefore, with a view to address the aforesaid concerns, it has been decided in consultation with the major stock exchanges and associations of stock brokers, as under:
a. If the aggregate value of pre-funded instruments is ` 50,000/- or more, per day per client, the stock brokers may accept the instruments only if the same are accompanied by the name of the bank account holder and number of the bank account debited for the purpose, duly certified by the issuing bank. The mode of certification may include the following:
i. Certificate from
the issuing bank on its letterhead or on a plain paper with the seal of the
issuing bank.
ii. Certified copy of
the requisition slip (portion which is retained by the bank) to issue the
instrument.
iii. Certified copy
of the passbook/bank statement for the account debited to issue the instrument.
iv. Authentication of
the bank account-number debited and name of the ccount holder by the issuing
bank on the reverse of the instrument.
b. Maintain an audit
trail of the funds received through electronic fund transfers to ensure that
the funds are received from their clients only.
4. Stock Exchanges
are advised to :
a. issue necessary
instructions to bring the provisions of this Circular to the notice of their
constituents and also disseminate the same on their websites;
b. make amendments to
the relevant bye-laws, rules and regulations for the implementation of the
above, as deemed necessary;
c. communicate to SEBI, the status of the
implementation of the provisions of this Circular by June 30, 2011; and
d. develop the monitoring mechanism through
internal audit and inspections.
5. This Circular is 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 and shall come into
effect from the date of this Circular.
6. This circular is
available on SEBI website at www.sebi.gov.in
under the categories “Legal
Framework” and “Circulars”.
Yours faithfully,
V S Sundaresan
Chief General Manager
022-26449200
Unquote:
Trading
Members are requested to take note of the aforesaid guideline of SEBI and
comply accordingly.
MAV Raju
DGM (HR & Admn.)