17 January 2008




Members are aware that consequent upon several representations received by the Exchange from the members to accept FDR, Shares and BGs as co-lateral securities for obtaining exposure in trading under the BSE-CSE arrangement, the matter had been examined by the Exchange authorities. As a temporary measure, to facilitate members to trade on BSE platform, members may deposit a bank guarantee as per the format enclosed herewith within an overall limit of Rs.25 lacs per member.


 Members are requested to note the above and take necessary action.










Format of Bank Guarantee towards

Base Minimum Capital and Additional Capital (Liquid Assets)


(To be on Stamp/Franked Paper of Rs.100/- or the value prevailing in the State where executed, whichever is higher)


Letter of Guarantee - Equity Segment


BG No.     :  ____________________.


BG Date   :  ____________________.

From   :






(Bank Name & Address) 


(Hereinafter referred to as "the Bank")



The Calcutta Stock Exchange (CSE) Association Ltd,

7,Lyons Range, Kolkata-700 001.


(Hereinafter referred to as "the Exchange (CSE)")




(i)                  (Delete inapplicable portion  >>>>) Mr./Ms./M/s.____________________________, an individual / a sole proprietary concern / a partnership firm / a body corporate, registered / incorporated under the provisions of the Indian Partnership Act, 1932 / the Companies Act, 1956, having his / her / its Registered Office at   ………….. ….. …… ……. …… ……. …… …… ….. … .. .. .. .. .. .. .. .. .. . …… .. .. ….. .. .. .. .. .. .. .. … … … .. .. .. .. .. .  is a Trading Member  of  the Equity  Segment of the Exchange (CSE) as well as BSE Trading Platform under the BSE & CSE Agreement having Membership No. …………, hereinafter referred to as “the Trading Member” (which expression shall unless repugnant to the context or meaning thereof be deemed to mean and include his / her / its successors, administrators and permitted assignees);of The Calcutta Stock Exchange (CSE) Association Ltd.











:     2    :

                                                                               BG No.     :  ____________________.


BG Date   :  ____________________.


(ii)                Trading Members in the Equity Segment of CSE and /or Trading Member of BSE trading platform under BSE & CSE agreement shall required to keep a certain amount as additional capital (liquid assets) with the Exchange (CSE) for availing of the trading limits and / or adjustment against margins prescribed by the Exchange (CSE) from time to time.


(iii)               Trading Members are also required to pay to the Exchange (CSE), various types of margins (comprising, inter alia, of Value at Risk margin, Extreme Loss margins, mark-to-market margins, Special margins, gross exposure, additional volatility margins, etc.) as & when imposed or any other margins in cash or any other form of collateral based on their exposure and volume of the business done on the Exchange (CSE) that may be prescribed by the SEBI, BSE & CSE from time to time.


(iv)              Trading Members are also required to fulfill their engagements, commitments, and obligations arising out of trading & settlement system of the Exchange (CSE).


(v)                The Exchange (CSE) desires that the maintenance of the additional capital (Liquid Assets) / payment of various margins as also the obligations arising out of clearing and settlement of trades executed on the Exchange (CSE) as well as BSE Trading Platform under the BSE & CSE Agreement may be secured by Trading Members, inter alia, by executing a Bank Guarantee in its favour.


(vi)              At the request of the Trading Member, the Exchange (CSE) has agreed to accept a Bank Guarantee issued in its favour from Scheduled Commercial Banks for an amount of Rs. _____________, (Rupees __________ _________________only) in lieu of equivalent additional capital (liquid assets) requirement, various margin payments as required by the Exchange (CSE) from time to time and to meet his / its obligations and commitments under the trading & settlement system of the Exchange (CSE).


(vii)             The Trading Member has requested the Bank to furnish to the Exchange (CSE) a bank guarantee of Rs. _____________ (Rupees _______________ _____________only).


1.       We, the above-mentioned Bank at the request and desire of the Trading Member do hereby irrevocably and unconditionally guarantee to pay Rs. _____________ (Rupees _______________ _____________) to the Calcutta Stock Exchange (CSE) Association Ltd., as a security for additional capital (liquid assets), various margin requirements and due performance and fulfillment by the Trading Member of his / its engagements, commitments, operations, obligations or liabilities arising out of the trading and settlement system of the Exchange (CSE) as well as BSE Trading Platform under the BSE & CSE Agreement. The Bank agrees and confirms that the said guarantee shall be available as a security for meeting, satisfying, discharging or fulfilling all or any obligations or liabilities of the Trading Member arising out of additional capital (liquid assets), various margin payments and trading and settlement system of the Exchange (CSE) as well as BSE Platform directed and decided by the Exchange (CSE) or such other person or persons or committee or committees appointed by the Governing Board of the Exchange (CSE) or by the Exchange (CSE) from time to time.                                                                                                                          


          : 3 :                                                                  

                                                                                   BG No.     :  ____________________.


BG Date   :  ____________________.


2.       The Bank hereby agrees that if in the opinion of the Exchange (CSE), the Trading Member has been or may become unable to meet, satisfy, discharge or fulfill any obligations, liabilities or commitments or any part thereof to the Exchange (CSE) arising out of the additional capital (liquid assets), various margin payments or its clearing & settlement mechanism / arrangement of the Exchange (CSE) as well as BSE Trading Platform under the BSE & CSE Agreement, then without prejudice to the rights of the Trading  Member under its Rules, Bye-laws and Regulations or otherwise, the Exchange (CSE) may at any time thereafter and without giving any notice to the Trading Member invoke this guarantee to meet the aforesaid obligations, liabilities or commitments of the Trading Member.


3.  The Bank undertakes that on first demand of the Exchange (CSE), it shall, without any demur, protest or contest and without any reference to the Trading Member and notwithstanding any contest by the Trading Member, pay to the Exchange (CSE) a sum not exceeding Rs._________ (Rupees _____________ _____________ ) as may be demanded by the Exchange (CSE) . The decision of the Exchange (CSE) from time to time as to the obligations or liabilities or commitments of the Trading Member and the amount claimed shall be final and binding on the Bank.


4.   This guarantee shall not be prejudiced by the failure of the Trading Member to comply with the Rules, Bye-laws and Regulations of the Exchange (CSE). The Exchange (CSE) shall be at liberty to vary, amend, change or alter any terms or conditions or its Rules, Bye-laws or Regulations relating to Trading Membership of the Exchange (CSE) in general or as applicable to the Trading Member in particular without thereby affecting its rights against the Trading Member or the Bank or any security belonging to the Trading Member now or hereafter held or taken by the Exchange (CSE), at any time. The discretion to make demands under this guarantee shall exclusively be that of the Exchange (CSE) and the Exchange (CSE) is entitled to demand hereunder notwithstanding being in possession of any deposits or other securities of the Trading Member.


5.   The validity of this guarantee shall not be affected in any manner whatsoever if the Exchange (CSE) takes any action against the Trading Member including default, suspension or expulsion of the Trading Member from the Exchange (CSE). Once a Trading Member is suspended or expelled, the Exchange (CSE) should ensure that the Trading Member would not be allowed to do any fresh business through the Exchange (CSE) till the suspension or expulsion is revoked / annulled and any liability subsequent to the default, suspension or expulsion would not be covered by this guarantee.


6.   This guarantee shall not be affected by any change in the constitution of the Exchange (CSE) or the Trading Member or the Bank and it shall remain in force notwithstanding any forbearance or indulgence that may be shown by the Exchange (CSE) to its Trading Members.






:     4     :

                                                                                BG No.     :  ____________________.


BG Date   :  ____________________.


7.   The Bank undertakes to pay to the Exchange (CSE), the amount hereby guaranteed within twenty four hours (excluding any holidays or bank strike) of being served with a written notice to the Branch Manager of the Bank's Branch office address stated hereinabove or to such other address as the Exchange (CSE) may be aware of either by hand delivery or by Registered Post or by Speed Post or by Courier Service, requiring the payment of this amount.


8.   The Bank hereby consents to the Exchange (CSE) for:


(i)                  Making any variance, change or modification of any agreement with the Trading Member and/or others as the Exchange (CSE) thinks fit;

(ii)                Giving time to the Trading Member for payment of any sums due from the Trading Member;

(iii)               Making any compromise with the Trading Member;

(iv)              Releasing or parting with any security; and / or

(v)                Agreeing not to sue the Trading Member.


9.   The Bank irrevocably agrees that this guarantee shall not be avoided, released or prejudicially affected and the Bank shall not be discharged from its liability hereunder to the Exchange (CSE) by reason of the aforesaid or by reason of any act or omission by the Exchange (CSE), the legal consequence whereof may be to discharge the Trading Member and / or the Bank or by any act or omission by the Exchange (CSE) which would, but for this provision, be inconsistent with the Bank's right as a surety. The Bank agrees that this guarantee shall remain valid and enforceable notwithstanding any forbearance or delay in the enforcement of the terms of the contract between the Bank and Trading Member or of the Exchange (CSE)’s Rules, Bye-laws and Regulations. The Bank waives all the rights available to the Bank as surety under Section 133,134,135,139 and 141 of the Indian Contract Act, 1872. The Bank also agrees that the Bank shall not be entitled to the benefit of subrogation to any security held by the Exchange (CSE).


10.  The Bank agrees that in the event of the Exchange (CSE) now or at any time hereafter holding any security, the Bank shall not be entitled to the benefit of such security or to receive such security notwithstanding that the Bank may have made payment under this guarantee.


11.  The Bank undertakes not to revoke this guarantee during its currency except with the previous consent of the Exchange (CSE) in writing and this guarantee shall be continuous and irrevocable.


12. The Bank hereby states that this guarantee is not issued on the basis of any arrangement with or counter guarantee of any other Bank.


13.  Notwithstanding anything mentioned hereinbefore, the aggregate liability of the Bank under this guarantee is restricted to Rs. ____________ (Rupees ___________________________) and it will remain in force for a period of ___ months i.e. upto ______ day of __________ ______.                                                                                                                            …….5

:    5    :


                                                                                 BG No.     :  _____________________.


          BG Date   :  ____________________.



14.  Unless a claim/demand in writing is made against the Bank under this guarantee before the expiry of three months from the aforesaid date, i.e., on or before ______ day of __________ _______, all rights of the Exchange (CSE) under this guarantee shall cease and the Bank shall be relieved and discharged from all liabilities hereunder.



Executed at ______________, this ______ day of ____________, ________.



For _____________________________ (Bank)


____________________________ (Name of the Branch)


Sd. /-


Authorized Signatories


Seal of the Bank.