N O T I C E
Dated : 1st December 2017
Trading Members are hereby informed that the Exchange has received a Circular from SEBI vide Ref. No. CIR/HO/MIRSD/MIRSD2/CIR/P/2017/124, Dated November 30, 2017 regarding Clarification to Circular on Prevention of Unauthorised Trading by Stock Brokers. The contents of the said circular are reproduced hereunder for information of trading members.
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CIRCULAR
CIR/HO/MIRSD/MIRSD2/CIR/P/2017/124 November
30, 2017
To
All Recognized Stock Exchanges
Dear Sir / Madam,
Sub:
Clarification to Circular on Prevention of Unauthorised
Trading by Stock Brokers
1. SEBI vide circular no. CIR/HO/MIRSD/MIRSD2/CIR/P/2017/108
dated September 26, 2017 has inter-alia specified that brokers shall execute
trades of clients only after keeping evidence of the
client placing such order. Further, SEBI has made it mandatory to use telephone
recording system to record client vinstructions and
maintain telephone recordings wherever the order instructions are received from
clients through the telephone.
2.
Subsequently, SEBI has received representations from stock brokers and their
associations expressing operational difficulties caused to stock brokers.
Accordingly, in view of operational difficulties faced by stock brokers, it has
been decided as under.
i. Brokers are required to maintain
the records specified at para III of aforementioned circular for a minimum
period for which the arbitration accepts investor complaints as notified from
time to time, currently three years. However in cases where dispute has been
raised, such records shall be kept till final resolution of the dispute.
ii.
If SEBI desires that specific records be preserved then such records shall be
kept till further intimation by SEBI.
iii. The above mentioned SEBI
circular also prescribes that 'when dispute arises, the burden of proof will be
on the broker to produce the above records for the disputed trades’. However
for exceptional cases such as technical failure etc. where broker fails to
produce order placing
evidences, the broker shall justify
with reasons for the same and depending upon merit of the same, other
appropriate evidences like post trade confirmation by client, receipt/payment
of funds/ securities by client in respect of disputed trade, etc. shall also be
considered.
3.
The Stock Exchanges are directed to:
a.
Bring the provisions of this circular to the notice of the Stock Brokers and
also disseminate the same on their websites.
b.
Make necessary amendments to the relevant bye-laws, rules and regulations for
the implementation of the above directions.
c. Communicate to SEBI, the status
of the implementation of the provisions of this circular in their Monthly
Development Reports.
4. 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,
Debashis
Bandyopadhyay
General Manager
Trading
Members are requested to take note of the aforesaid guidelines of SEBI and act
accordingly.
M.A.V. Raju
General
Manager