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N O T I C E
Dated :August 30, 2017
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CIRCULAR
CIR/MRD/DP/ 86/2017
August 01, 2017
To,
All Stock Exchanges
Dear Sir/Madam,
Sub:
Margin Trading Facility- Clarification
1. SEBI vide circular
CIR/MRD/DP/54/2017 dated June 13, 2017 prescribed comprehensive framework for
permitting stock brokers to provide margin trading facility to their clients.
2. Representations have been
received from the Stock brokers and their Association requesting to enable them
to utilize funds from sources other than Banks and Non-Banking Financial
Company (NBFCs) for extending margin trading facility. Stock brokers have
further represented that currently various sources of borrowing by way of
issuance of Commercial Paper (CP) & unsecured loans from directors &
promoters are available for brokers in the normal course of business. Therefore
Stock brokers have requested that for the purpose of providing Margin Trading
facility also, they may be allowed to borrow funds from these sources.
3. Accordingly, it is clarified
that Stock brokers may borrow funds by way of issuance of CP and by way of
unsecured long term loans from their promoters and directors. The borrowing by
way of issuance of CPs shall be subject to compliance with appropriate RBI
Guidelines. The borrowing by way of unsecured long term loans from the
promoters and directors shall be subject to the appropriate provisions of
Companies Act.
4. A stock broker shall not be
permitted to borrow funds from any other source, except the sources stated at
para 3 above.
5. The conditions stated at para 14
of circular dated June 13, 2017 shall stand modified as above. All other
conditions stated in the circular CIR/MRD/DP/54/2017 dated June 13, 2017 remain
unchanged.
6. The Stock
Exchanges are advised to:-
6.1. take necessary steps and put in place necessary systems for
implementation of this circular.
6.2. make necessary amendments to
the relevant bye-laws, rules and regulations for the implementation of the
above decision.
6.3. bring the provisions of this circular to the notice of the
member brokers of the stock exchange and also disseminate the circular on the
website.
7. This circular
is being issued in exercise of the powers conferred by Section 11 (1) of
Securities and Exchange Board of India Act, 1992 to protect the interest of
investors in securities and to promote the development of, and to regulate the
securities market.
Yours faithfully
Susanta Kumar Das
Deputy General Manager
e-mail: susantad@sebi.gov.in
Trading
Members are requested to take note of the aforesaid guidelines of SEBI and act
accordingly.
M.A.V. Raju
General
Manager