N O T I C E
Dated :June 30, 2017
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CIRCULAR
CIR/HO/MIRSD/MIRSD2/CIR/P/2017/64
June
22, 2017
To,
The Managing Directors of all Recognized Stock
Exchanges and Depositories
Dear Sir/Madam,
Sub:
Clarification to Enhanced Supervision Circular
1. SEBI vide circular no.
SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016, has issued
guidelines covering broad areas for enhanced supervision based on the
recommendation of the committee constituted by SEBI. Following representations
from Exchanges as well as market participants, SEBI vide Circular no
SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/138 dated December 20, 2016 made the aforesaid
Circular effective from April 1, 2017 and accordingly the various timelines
mentioned in the circular for different activities was consequently postponed.
2. SEBI has received further
representations from the market participants regarding certain provisions of
the aforesaid circular. Based on the discussions with different stakeholders,
following clarifications are made:
a. Clause 1.2.2 and 1.2.4 stands
deleted; accordingly naming proprietary bank/demat accounts of the stock broker
as 'Stock Broker- Proprietary Account' is voluntary. It is however clarified
that bank/demat account which do not fall under the Clauses 1.2.1,1.2.3, 1.2.5
, 1.2.6 and 1.2.7 would be deemed to be proprietary.
b. After Clause 2.1, Clause 2.1.1
is inserted as, “Stock Broker which is also Bank, may be required to report to
the Stock Exchanges only those bank accounts that are used for their stock
broking activities”.
c. Clause 2.5 stand modified as
follows: “As per existing norms, a stock broker is entitled to have a lien on
client's securities to the extent of the client's indebtedness to the stock
broker and the stock broker may pledge those securities. Pledge of such
securities is permitted, only if, the same is done through Depository system in
compliance with Regulation 58 of the SEBI (Depositories and Participants)
Regulations,1996. To strengthen the existing
mechanism, the stock brokers shall ensure the following:”
d. Clause 2.6 stands modified as,
"Stock brokers shall not grant further exposure to the clients when debit
balances arise out of client's failure to pay the required amount and such
debit balances continues beyond the fifth trading day, as reckoned from date of
pay-in, except, in accordance with the margin trading facility provided vide
SEBI circular CIR/MRD/DP/54/2017 dated June 13, 2017 or as may be issued from
time to time." This clause would be effective from August 1, 2017.
e.
Clause 3.2 stands clarified that, Stock broker shall upload the data as
envisaged in the Clause 3.2 on monthly basis instead of weekly basis till March
31, 2018. Accordingly, till March 31, 2018, stock broker shall submit the data
as on the last trading day of every month to the Stock Exchanges on or before
the next trading day. Thereafter, the uploading of that data by the stock
broker to the Stock Exchanges shall be on weekly basis i.e. stock brokers shall
submit the data as on last trading day of every week on or before the next
trading day.
f. Further, it is also clarified
that the provisions of this enhanced supervision circular is not applicable to Regional
Commodity Exchanges till further notice.
3. You are advised to take
necessary steps to ensure compliance with the above.
4. The Stock Exchanges/Depositories
are directed to bring the contents of this circular to the notice of the Stock
Brokers/Depository Participants and also disseminate the same on their
websites.
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 markets.
6. This Circular is available on
SEBI website at www.sebi.gov.in under the categories “Legal Framework”.
Yours faithfully,
Debashis
Bandyopadhyay
Genera
Trading
Members are requested to take note of the aforesaid guidelines of SEBI and act
accordingly.
M.A.V. Raju
General
Manager