NOTICE
CSE/Notices/SEBI/2012/N3
May 16, 2012
Re: Comprehensive
Risk Management Framework for the cash market
Members of
the Exchange are hereby informed that the Exchange has received a Circular from
SEBI vide Ref. No MRD/DoP/SE/Cir-10/2008, dated April 17, 2008 regarding the above
mentioned subjects. The contents of the said Circular are reproduced hereunder
for information and necessary action of the Members.
Quote: -
MRD/DoP/SE/Cir-10/2008
April 17, 2008
The Executive Directors/Managing Directors of all
Stock Exchanges
Dear Sir / Madam,
Sub: Comprehensive Risk Management
Framework for the cash market
- Please
refer to our circular Nos. MRD/DoP/SE/Cir-07/2005and MRD/DoP/SE/Cir-06/2008 dated February 23, 2005 and March
19, 2008 on the
comprehensive risk management for the cash market and margining of
institutional trades in the cash market respectively.
- In
continuation of the above, the stock exchanges are advised to implement
the following:-
- As regards
the transactions executed on behalf of institutional clients in the cash
market, it shall be permissible to maintain their entire margin in the
form of approved securities with appropriate haircuts as specified in the
aforesaid SEBI circular dated February 23, 2005.
- Necessary
systems shall be put in place to enable early pay-in of funds. In
cases where early pay-in of funds is made by the members, the outstanding
position to that extent of early pay-in shall not be considered for
computing the margin obligations.
- Necessary
systems shall be put in place so as to enable adjustment of the pay-in
obligations of the members from the cash component of the liquid assets
deposited by them.
- The Stock
Exchanges shall issue the necessary guidelines in this regard and shall
put in place the necessary systems to ensure the operationalization of the
above.
- The Stock
Exchanges are also advised to:
- test the
software and remove any glitches in its operation well before the
commencement date to avoid any problems in the live environment.
- make necessary
amendments to the relevant bye-laws, rules and regulations for the
implementation of the above decision.
- 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.
- communicate to
SEBI, the status of the implementation of the provisions of this circular
in the Monthly Development Report.
- 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,
S V Murali Dhar Rao
Unquote:
Members
are requested to take note of the aforesaid guidelines/circulars of SEBI and
act accordingly.
M.A.V.
Raju
Deputy
General Manager