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1.

INTRODUCTION
Securities and Exchange Board of India (Stock Brokers and Sub Brokers) Regulations, 1992 provides for mechanism
for inspection of member-brokers with a view to ascertain whether the member-brokers registered are carrying on the
business in terms of the provisions of the Regulations and also whether the conduct of the member-brokers is in the
overall interest of the capital market and investors. Stock exchanges, being Self Regulatory Organizations (SRO) would
be primarily responsible for ensuring orderly conduct by its member-brokers and also ensuring that the relevant Rules,
Bye-laws, Regulations and directions are being complied with by its member-brokers.
As per Securities and Exchange Board of India (SEBI) Circular No. SEBI/SMD/DBA-1/CIR-27/2003/25.06.2003 dated
June 25, 2003; every stock exchange is required to inspect the books of accounts and other documents of at least
20% of its active member-brokers every year including the subsidiaries formed by the Regional Stock Exchange, who
have become members of the stock exchanges, are to be inspected every year.
The purpose of the inspection is to ensure that:

Proper books of accounts, records and documents have been maintained by a member-broker in the manner
specified in Rule 15 of the Securities Contracts (Regulation) Rules, 1957 and Regulation 17 (1) of the Securities
and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulation, 1992.

The member-broker has complied with the Rules, Byelaws and Regulations of the Exchange.

The member-broker has complied with the provisions of the Securities Contracts (Regulation) Act, 1956, the
Securities Contracts (Regulation) Rules, 1957, the SEBI Act, 1992 and the Rules and Regulations made thereunder
and SEBI (Stock-Brokers and Sub-Brokers) Rules, 1992.

The member-broker has complied with various notices, circulars, press releases, etc issued by the Ministry of
Finance, SEBI and the Stock Exchange.

The conduct of the member-broker is in the overall interest of the capital market and the member-broker is fair in
dealing with his clients.

2. INSPECTION MECHANISM
The Exchange has set up a separate cell called Inspection cell in the Department of Surveillance & Supervision (DOSS),
which has been entrusted with the responsibility to carry out inspection of the books of accounts, records and other
documents maintained by its member-brokers including their branches.
The Exchange issues letters to the member-brokers selected on the basis of defined criteria informing about the
scheduled date of inspection and advising them to send the Inspection Questionnaire in soft as well as hard copy
form (containing basic information about background and operations of the member) properly filled up alongwith all
the required data and documents before the commencement of inspection.
The Inspecting Team inspects the books and records on a sample basis and prepares inspection report on the
irregularities observed during the course of inspection. Observations/findings of the inspection report are forwarded to
the member-brokers concerned. The member-broker is required to submit his reply on the observations contained in
the Inspection Report, within the stipulated time.
The reply given by the member-broker is then vetted and action against the member-broker for the non-compliances
observed during the inspection, is initiated as per the norms laid down in this regard by the Disciplinary Action Committee
constituted by the Exchange.
The final action initiated is communicated to the member-broker and the member-broker is also advised to take
necessary steps to ensure that such non-compliances do not recur in future.
Further, to ensure compliance by the member-brokers with the recommendations made by the Exchange, the memberbrokers are required to submit a compliance certificate either from their Compliance Officer or from a Chartered
Accountant, within 30 days from the receipt of the final action letter from the Exchange confirming that all the
recommendations made by the Exchange have been implemented by them.

3. MAINTENANCE OF BOOKS OF ACCOUNTS, RECORDS


AND DOCUMENTS
The member-brokers of the Exchange are required to maintain the following books of accounts and records as per
Rule 15 of the Securities Contracts (Regulation) Rules, 1957 and Regulation 17 of the SEBI (Stock Brokers and SubBrokers) Regulations, 1992. These books and records are to be preserved for a minimum period of five years as per
the requirements of Regulation 18 of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992.
It may however, be noted that SEBI has decided that in cases where, copies of documents have been taken by CBI,
Police or any other enforcement agency during the course of any investigation, it is necessary to preserve the original
documents, both in electronic and physical form till the trial is completed. Members may refer to Exchange Notice No.
20050805-20 dated August 5, 2005 & Exchange Notice No. 2005127 18 dated December 27, 2005 in this regard.
For the purpose of Inspection, the member-brokers shall keep the following records/documents, (including those of
branches) ready before the commencement of inspection.
a.

Register of transactions (Sauda Book);

b.

Clients ledger;

c.

General ledger;

d.

Journal;

e.

Cash book;

f.

Bank book;

g.

Register containing particulars of securities received and delivered.

h.

Counterfoils or duplicates of contract notes issued to clients;

i.

Written consent of clients in respect of contracts entered into as principals;

j.

Margin deposit book;

k.

Register of accounts of sub-brokers;

l.

KYC/Member-Client Agreement/Tripartite Agreement between broker, sub-broker and clients.

In addition to the above statutory requirements, member-brokers of the Exchange are inter-alia, required to maintain
the following records/documents:
Sr. No.

Document Required

Hard / Soft
Copy

1.CERTIFICATES & APPROVALS


1.

Members, Sub-brokers and Remisiers Registration


Certificate (ORIGINAL)

Hard

2.

Exchange approval for Own Trading from Multiple locations

Hard

3.

Approval letter from Exchange for advertisement

Hard

4.

Approval letter from Exchange for change in Shareholding


Pattern and change in designated directors.

Hard

5.

Digital Signature Certificate for ECN

Hard

Remarks

Sr. No.

Document Required

Hard / Soft
Copy

DOWNLOADABLES & SYSTEM REQUIREMENTS


6.

Order Book (Order Log)

Soft OR Hard

7.

Margin Deposit Book (DM, DS, DP file)

Soft OR Hard

8.

Daily Margin Statement

Soft OR Hard

9.

Money Statement

Soft OR Hard

10.

Copy of IML undertaking

11.

E-Mail ID for Investor Grievance

12.

Mapping in back-office

13.

RCBDL FILE

Soft

14.

ACBDL FILE (For Auction trades)

Soft

15.

Valan Balance Sheet

Soft

Hard

2. AUTHORITY & UNDERTAKINGS


16.

Acknowledged copy of Board Resolution / Power of Attorney


for Signing Contract Notes

Hard

17.

Acknowledged letter of appointment of Compliance Officer

Hard

18.

Appointment of Principle Officer under PMLA and documented


PMLA Procedures

Hard

19.

Documented Risk Management System

Hard

20.

Documented Internal Control System

Hard

21.

List of subbrokers & remisiers pending registration

Hard

22.

List of Employees

Hard

23.

Brief Note on Funding Arrangement & Insider trading

Hard

3. DOCUMENTS & REGISTERS


24.

Pool A/c and Beneficiary A/c Statements


(Transaction as well as Holding Statements)

Soft AND Hard

25.

Client wise segregation of securities


(If securities are lying in Beneficiary A/c)

Soft

26.

Utilisation of Funds Statement

Hard

27.

Security Register / Ledger

Hard

28.

Copy of statement of accounts for Funds & Proof of


Sending to the clients

Hard

29.

Copy of statement of accounts for Securities & Proof of


Sending to the clients

Hard

Remarks

Sr. No.

Document Required

Hard / Soft
Copy

30.

Copy of STT Statement & Proof of sending to the clients

Hard

31.

Copy of Contract Notes (1st contract note of the Financial Year)

Hard

32.

Lease Agreement/Rent Receipt for Branch Offices

Hard

33.

Proof of Designation of Client Bank A/c

Hard

34.

Investor Grievance Register

35.

Proof of Authorized user for operating BOLT

36.

Organization Chart

Hard

37.

Blank copy of KYC

Hard

38.

Blank copy of contract note

Hard

Remarks

Soft/Hard

4. BOOKS OF ACCOUNTS & VOUCHERS


39.

Trial Balance, Profit & Loss A/c and Balance Sheet

Soft

40.

General Ledger (Including Dividend ledger & Brokerage ledger)

Soft

41.

Client Ledger

Soft

42.

Bank Book & Cash Book

Soft

43.

Bank Reconciliation Statements

44.

Bank Statements

Hard

45.

Contract Notes along with acknowledgement proof

Hard

46.

KYC/Member Client Agreements

Hard

47.

Authority for maintenance of Running Account of clients

Hard

48.

Disclosure of Own Trading to Clients

Hard

49.

Sauda Book

Soft

50.

Bill Summary & Scrip-wise client Summary

Soft

51.

Demat Instruction Slips & Vouchers

Hard

52.

Proof of Statutory Payments (SEBI Fees)

Hard

53.

Sub Brokers Inspection Report

Hard

54.

ECN Log Report

Soft

Soft OR Hard

Members are required to maintain separate set of books for each exchange in which they operate. Further, for a particular
Exchange a separate set of books is required to be maintained for each particular segment of the Exchange in which
the member is operating.

From the above list of books and documents, few terms are explained herein below.
a)

Order Book
SEBI vide Circular no. SMD/POLICY/IECG/1-97 dated February 11, 1997 has provided that the member-brokers
should maintain record of time when a client has placed the order. This information is required to be maintained
by the member-broker in his Order Book. Order book should generally contain the following information:

Identity of the person placing the order

Date and time of order received

Name of the person receiving the order

Name of the client, description and value of the securities to be bought or sold

Terms and conditions of the order stating price/rate limit or price/trade related instructions and time limit (if any)

Details of any modification or cancellation, if any

Reference number of the contract note issued

Serially numbered orders

However, the Exchange may consider accepting Order Log (Ord file) in cases where member-brokers have not
maintained Order Book as prescribed by SEBI.
b)

Broker Query File (BRK file)


This statement is downloaded by the member-broker from the Exchange on a daily basis. This statement shows
the details of all the transactions executed by a member-broker across all his terminals for a particular trading day.
It shows Trade ID, Transaction ID, Time of execution of a transaction, scrip quantity, scrip code, type of transaction
(such as own, client etc), Client ID and the terminal from which the transaction was executed alongwith date.

c)

Register of Transactions (Sauda Book)


All member-brokers are required to maintain a Sauda Book, which contains details of all trades transacted by
them on a day-to-day basis. This is a basic record, which each member-broker is required to maintain regularly
on day-to-day basis. It contains the details regarding the name of the scrip, name of the client on whose behalf the
deals have been done, rate and quantity of scrip bought or sold. These details are maintained date-wise. This
register contains all the transactions, which may be of any of the kind mentioned below:

d)

Member-brokers own business on the Exchange.

Member-brokers business on the Exchange on behalf of clients.

Member-brokers business with the clients on principal-to-principal basis.

Member-brokers business with the members of other Stock Exchanges.

Member-brokers business on behalf of his clients with the members of other Stock Exchanges.

Spot transactions, etc.

Contract Notes / Contract note cum bill


The Contract note is a document through which a contractual obligation is established between a member-broker
and a client. This is the prime document on the basis of which all the disputes between the member-broker and
his clients are settled.

Every member-broker is required to issue contract notes to all his clients for the securities sold and purchased by
him on their behalf within 24 hours of execution of trade and obtain acknowledgement of the clients alongwith the
date of receipt on the duplicates/counterfoils of the contract notes and preserve the same for future reference
(Bye law 247A of the Rules, Bye laws and Regulation of the Exchange and Exchange Notice No.4914/96 dated
August 13, 1996) The member-broker shall maintain a proper record for dispatch of contract notes to the clients if
the same are dispatched through post, courier etc.
Rule 15 of the Securities Contracts (Regulations) Rules, 1957 provides that every member-broker of a recognized
Stock Exchange shall maintain and preserve counterfoils or duplicate of the contract notes issued to the clients for
a period of two years. (Rule 15 of SCR Rules and exchange Notice No. 20050805-20 dated August 5, 2005).
When a member-broker is acting as an agent for his client, he is required to issue contract note in Form A or
contract note cum bill in Form AA. Member-brokers are permitted to issue Contract note cum bill in Form AA to
include the particulars normally provided in the bills, in the contract notes issued by them to their clients, so that
they need not issue separate bills to their clients. Members brokers are advised to ensure that the contract notes
are issued strictly in accordance with the format prescribed either in Form A of Regulation 14.2 of the Rules, ByeLaws and Regulations of the Exchange or as per Form AA as prescribed in the Exchange Notice No. 2006062718 dated June 27, 2006 and Notice no. 20060630-02 June 30, 2006).
When a member-broker is dealing with constituents as Principals, the contract note is required to be issued in
Form B or Contract note cum Bill is required to be issued in Form BB.
Formats of Form AA and Form BB are merely recommendatory in nature and member-brokers are at liberty to
include any other additional matter or information therein as they may desire, without diluting/altering the basic
Form A and Form B of the contract note stipulated in Appendix B to Regulation 14.2 of the Rules, Byelaws and
Regulations of the Exchange.
The member-brokers are required to issue contract notes to clients, which are serially numbered. The serial
number on the contract notes shall be on an annual basis and not on a daily basis. The contract notes issued to
the clients shall be numbered with unique running serial number commencing from one which shall be reset only
at the beginning of every financial year. Financial year for the purpose of resetting the serial number of contract
note is April to March.
The Contract Notes are required to be signed either by the member-broker himself or his constituted attorney.
Further, a copy of Board resolution / Power of Attorney, authorizing the person to sign the contract notes, is
required to be filed with the Exchnage (Bye-law 223 and Rule 213 of the Bue-Laws, Rules & Regulations of the
Exchange and Exchnage notice no. 1024/98 dated March 20, 1998). In case a sole proprietor/partnership firm
wishes to authorise another person to sign the Contract Notes, then the member-broker is required to execute a
power of attorney on a stamp paper of Rs. 100/- authorising another person (s) to sign the contract notes. In case
of corporate member, a board resolution is required to be passed to authorise a person (s) including Directors to
sign the contract notes. The power of attorney / board resolution(s) together with specimen signatures of authorised
signatories are required to be filed with the Membership Department of the Exchange.
The member-brokers are required to quote their Permanent Account Number (PAN) as well as PAN of their clients
on the contract note issued to clients, if the value of the contract exceeds Rs. 1 lakh or more pursuant to Rule
114B of the Income Tax Rules, 1962. (Exchange Notice no. 20020930-4 dated September 30, 2002)
The member-brokers are also required to quote the unique client code allotted to the client on the contract note.
Electronic Contract Note (ECN)
As per SEBI Circular No. MRD/DoP/SE/Cir-20/2005 dated September 8, 2005, digitally signed ECNs are to be
sent only to those clients who have opted to receive the contract notes in an electronic form, either in the Member
Client agreement / Tripartite agreement or by way of a separate letter.

All ECNs sent through e-mail are to be digitally signed, encrypted, non-tamperable and complying with the provisions
of the IT Act, 2000.
Whenever an Electronic Contract Note is sent, acknowledgement of e-mail, proof of delivery i.e., log report generated
by the system at the time of sending the contract notes is to be maintained by the member broker for the specified
period, in a soft and non-tamperable form. Further, a log report to provide the details of contract notes that are not
delivered to the client / rejected or bounced e-mails.
Proper communication is to be made in the agreement executed with the client for issuing Electronic Contract
Notes that non-receipt of bounced mail notification shall amount to delivery of the contract note at the e-mail ID of
the client.
Physical contract note to be sent to the clients, wherever an Electronic Contract Note has not been delivered to
the client or has bounced back from the e-mail ID of the client. Further, proof of delivery of such physical contract
notes is to be maintained by the member.
In addition to the e-mail communication of the ECN to the client, it has to be simultaneously published on the website of the member in a secured way and enable easy access to the clients.
The member-brokers can issue contract notes authenticated by means of digital signatures (Electronic Contract
Notes ECNs) provided that the member-broker has obtained digital signature certificate from certifying authority
under the Information Technology Act, 2000. Members may kindly refer to SEBI Circular Nos. SEBI/SMD/SE/15/
2003/29/04 DTAED April 29, 2003 & SMDRP/Policy/Cir 56/2000 dated December 15, 2000 & Exchange Notice
No. 20050909-13 dated September 9, 2005 stipulating conditions for issue of Electronic Contract Notes by members.
Issue of Contract notes in case of multiple trades for a single order.
In case of multiple trades resulting from single order, at the request of the clients, the member-brokers may issue
contract notes with weighted average price (WAP), as per the following formula:
Total Value of the Shares traded for an order
WAP =
Total Number of Shares traded for an order
The member-broker shall ensure that details of trades such as Order No., Trade No., Trade Time, etc is attached
to the contract note as an Annexure when a consolidated trade is shown in the contract note. The member-broker
shall mention the words as per annexure in the place provided for trade no. and trade time in the format of the
contract note prescribed by the Exchange. (Exchange notice no. 4646/97 dated November 29, 1997).
The Exchange has prescribed new format of contract note. Trading Members are advised to ensure that the
revised format of contract note is strictly implemented latest by October 23, 2006.
A statement indicating Securities Transaction Tax (STT) charged on the transaction should be separately given to
the clients as an annexure to the contract note or it can be sent to the clients on an annual basis. (Exchange
Notice No.2004092713 dated September 27, 2004 and No.20060929-22 dated September 29, 2006).
e)

Margin Deposit Book


The member-brokers are required to maintain a margin deposit book wherein details of all the margins deposited
with the Exchange are to be recorded. Regulation 17 (1) of SEBI (Stock-brokers and Sub-brokers) Regulations,
1992. The Exchange may consider accepting DM/DS downloadable files available with the members in cases
where member-brokers have not maintained separate Margin Deposit Book.

f)

Investor Grievance Register and designated e-mail ID


Members are required to maintain Investor Grievance Register for writing investors grievances (Notice

No.20040306-9 dated March 6, 2004 and Notice No.20070906-10 dated September 06, 2007).
SEBI vide its circular No.MRD/DoP/Dep/SE/Cir-22/06 dated December 18, 2006 advised all the member-brokers
to designate e-mail IDs of their respective grievance redressal division and / or of their compliance officers exclusively
for the purpose of registering complaints by investors and display such e-mail IDs and other relevant details
prominently on their websites and in the various materials / pamphlets / advertisement campaigns initiated by
them for creating investor awareness. (Exchange Notice No.20070131-11 dated January 31, 2007).
g)

Clients Ledger
Every member-broker is required to maintain clients ledger in respect of all the clients registered with him. This
ledger contains the details of the bills raised by the member-broker on the clients and the payment received from
or made to them. Inspection of this ledger can bring out the cases of delay by a member-broker in making payment
to the clients. Receipt/payment from the ledger account may also indicate whether the member-broker is involved
in fund-based activities, which is in violation of the guidelines contained in the circular issued by SEBI.

h)

Securities Ledger
A member-broker is also required to maintain a Register or Ledger Account of securities, client wise and security
wise, giving, inter alia, the following details:

Date of receipt of the security.

Quantity received.

Party from whom received.

Purpose of receipt.

Date of delivery of the security.

Quantity Delivered.

Party to whom delivered.

Purpose of Delivery, and

A Separate register or ledger in respect of its own securities.

Thus, member is required to maintain a register or ledger account of securities, client-wise and security-wise,
giving, inter alia the details of receipt/delivery of securities and a separate register or ledger in respect of own
securities as per Bye-Law 247A(2) and Reg. 17(1) of the SEBI (Stock Brokers & Sub Brokers) Rules, 1992.
The Exchange may consider accepting holding statement of securities as on a particular date acknowledged by
the clients.
i)

Dematerialised Securities
All member-brokers are required to open two separate demat accounts with their Depository Participants (DPs)
for handling the receipt and delivery of own shares and client shares.
One such account is Own Beneficiary Account wherein the demat securities belonging to the member-broker for
his own account are held and the other is Pool Account wherein the demat securities of the clients are temporarily
lodged for transfer to/from the Clients/Clearing House in the Pay-in/Pay-out. In case of sale of securities by
clients, the clients transfer the securities to the member-brokers Pool Account before the pay-in and the memberbroker transfers the same from the Pool Account to the Clearing House on the Pay-in day. In case of purchase of
securities by the clients, the Clearing House transfers the securities to the Pool Accounts of the member-brokers
and the member-brokers then transfers the same to the Demat Account of the individual client. The member-

brokers are required to maintain a proper record of all shares received and delivered from their Pool Account as
well as preserve acknowledged copies of the delivery instructions given to their DP for transferring the securities
from the Pool Account to the Clients account after the Pay-Out.
In case of clients shares lying with the member, they have to be kept in a separate Beneficiary Account and the
member is required to maintain client wise segregation of clients securities lying with the member. (Bye-law 247A
and Exchange Notice No. 4850/97 dated December 10, 1997).
Nevertheless, securities of clients are to be received and delivered from/to the respective beneficiary account of
the client only. (Exchange Notice No. 20030903-5 dated September 3, 2003).
j)

Bank Book and Cash Book.


The member-brokers are required to maintain separate bank accounts for own funds and clients funds (Bye-law
247A of the Rules, Bye-laws and Regulations of the Exchange). Funds received from the clients and payments
made to the clients should be reflected in the Client Bank Account. Client Account should be designated as Client
Bank Account and the word Client should appear in the title of the account. (Bye-law 247A (1) and Exchange
Notice No. 4850/97 dated December 10, 1997).
All fund transactions relating to members own trading and relating to own/office expenses should be routed
through Own Bank Account. Transactions other than those of clients should not be routed through Client Bank
Acount. Further, no overdraft facility should be availed on the Client Bank Account (Bye-law 247A (1) and Exchange
Notice No. 4850/97 dated December 10, 1997).
Members should not accept any cash from clients, whether against obligation or as margin for purchase of securities,
except in case of exceptional circumstances and to the extent not in violation with the Income Tax requirement as
may be in force from time to time. (Exchange Notice No. 20030903-5 dated September 3, 2003 and Exchange
Notice No. 20050324-21 dated March 24, 2005).
Members are to refrain from fund lending and borrowing activities, except those in connection with or incidental to
the securities business. [Rule 8(1)(f) and 8(3)(f) of Securities Contract (Regulations) Rules, 1957and SEBI circular
no.SMD/POLICY/CIR-6/97 dated May 7,1997].

10

4. DEALINGS WITH CLIENTS


l

REGULATION OF CLIENT-BROKER TRANSACTIONS

All transactions relating to clients are to be routed through the client bank account. A member-broker may open a
single client bank account or multiple client bank accounts. Whenever a member-broker trades as a principal, he cannot
use the clients account for payment.
No money shall be withdrawn from clients account other than money in respect of which there is a liability of clients to
the member-broker, provided that the money so drawn should not exceed the total of the money so held for the time
being for each such client.
Member-brokers should not use clients account for making payment for, Office Expenses such as, salary, Telephone
Bills, TDS payments, Purchase of Office Equipment, etc.
It is compulsory for all member- brokers to keep separate accounts for clients securities and to keep such books of
accounts, as may be necessary, to distinguish his securities from those of the clients securities. Such accounts for
clients securities shall, inter-alia, provide for the following:
a. Securities received for sale or kept pending delivery in the market;
b. Securities fully paid for, pending delivery to clients;
c. Securities received for transfer or sent for transfer by the member- broker, in the name of client or his nominee(s);
d. Securities that are fully paid for and are held in custody by the member-broker as security/margin etc. The memberbroker shall obtain proper authorisation from the client for the same.
e. Fully paid for clients securities registered in the name of the member-broker, if any, towards margin requirements
etc.;
Member-broker should ensure payment of money/delivery of securities to the clients within 24 hours of the declaration
of payout by the Exchange in respect of the concerned settlement.
At times payment may be delayed on specific instructions of the client. In such cases, member-broker should obtain
written confirmation from the clients. The member-brokers may be allowed to maintain running account of the clients,
if in respect of such accounts, the member-broker is having general authority from clients to maintain running account
without any obligation to receive payment/ delivery of securities strictly within 24 hours of declaration of pay-out by the
Exchange in respect of the concerned settlement.
The Interest, dividend or any Bonus / Right shares received on the securities of the clients should be passed on to the
clients immediately.
Pursuant to provisions contained in SEBI circular no. SEBI/MRD/SE/Cir-33/2003/27/08 dated August 27, 2003 it is to
be noted that member-brokers should not accept cash from the client whether against obligations or as margin for
purchase of securities and / or give cash to the clients against sale of securities.
All payments should be strictly received / made by the member-brokers from / to the clients strictly by account payee
crossed cheque / demand drafts or by way of direct credit into the bank accounts of the clients concerned through
EFT, or any other mode allowed by RBI.
The member-brokers should accept cheques drawn only by the clients and also issue cheques in favour of the clients
only, for their transactions. However, in exceptional circumstances the member-broker may receive the amount in cash,
to the extent permitted by the Income Tax department / authorities from time to time.

11

Similarly, receipt/delivery of securities in demat mode should also be directly to / from the beneficiary account of
the respective client except delivery of securities to a recognised entity such as approved intermediaries under the
approved scheme of the stock exchange and / or SEBI.
l

REGISTRATION OF CLIENTS.

SEBI, in order to bring uniformity in documentary requirements across different segments and Exchanges and to avoid
duplication and multiplicity of documents, has formulated uniform set of documents to be entered into and maintained
by the member-brokers with their clients and sub-brokers. SEBI vide its circular no.SEBI/MIRSD/DPS-1/Cir-31/2004
dated August 26, 2004 directed that the requirements of SEBI (Stock Brokers and Sub brokers) (Amendment)
Regulations, 2003 relating to change in role of sub brokers and their main brokers, including format of the Model Tripartite
Agreement between broker, sub-broker and clients shall come into effect from December 01, 2004. This was extended
by SEBI upto April 01, 2005 vide its circular no.SEBI/MRD/DOPS/Cir-44/2004 dated December 29, 2004 (Exchange
Notice no.20040827-11 dated August 27, 2004) which are as follows :
(a)

Client Registration Form (KYC) (Uniform across all Segments & all Exchanges)

(b)

Member-Client Agreement (Uniform across all Segments but different agreements for different Exchanges)

(c)

Model Tripartite Agreement (Applicable only in Cash Segment and different agreements for different Exchanges)

(d)

Risk Disclosure Document (Uniform across all Segments & all Exchanges) and

(e)

Broker - Sub broker Agreement

KNOW YOUR CLIENT FORMS (KYC)

SEBI has asked all the member-brokers of the Stock Exchanges to maintain a database of their clients. This concept
is known as KNOW YOUR CLIENT. SEBI has devised model formats for the Client Registration Form, Broker Client
Agreement and Tripartite Agreement between Broker-Sub broker and Clients. Different format has been prescribed for
individuals and non-individuals. The stock exchanges/member broker may incorporate any additional clauses in these
documents provided these are not in conflict with any of the clauses in the model document, as also the Rules,
Regulations, Articles, Byelaws, circulars, directives and guidelines.
SEBI has put onus on the member-brokers to complete all the details pertaining to the clients in Know Your Client
form.
It is reiterated that it shall be the responsibility of the member-broker to satisfactorily identify his clients. For the purpose,
the member-broker may also seek additional information, if any, so as to satisfy himself about the antecedents of the
client. It would be brokers responsibility to provide clients details as and when required.
Further, the requirement of obtaining Client Registration Form may be waived for SEBI registered Foreign Institutional
Investor, Mutual Funds, Venture Capital Funds and Foreign Venture Capital Investors, Scheduled Commercial Banks,
Multilateral and Bilateral Development Financial Institutions, State Industrial Development Corporations, Insurance
Companies registered with the Insurance Regulatory Development Authority (IRDA) and Public Financial Institution as
defined under section 4A of the Companies Act, 1956. Further the member-broker and these clients may at their
discretion, decide about the requirement of entering into broker-client agreement and bringing the contents of Risk
Disclosure Document to the notice of such clients.
The member-broker is required to disclose to his existing clients whether he does proprietary trading. Further, the
broker is also required to disclose this information upfront to his new clients at the time of entering into the Know
Your Client Agreement. In case a broker does not presently trade on proprietary account but chooses to do so at a
later date, he is required to disclose this to his clients before carrying out any proprietary trading. (Exchange Notice
No. 20031125-7 dated November 25, 2003).

12

Member-brokers shall exercise due diligence with regard to trading by the clients vis--vis their income levels and
other parameters / information given in the Client Registration Forms. Member-brokers may seek additional information,
if any, so as to satisfy themselves about the antecedents of their clients.
Member-brokers are advised to exercise due and adequate caution and impress upon their local as well as upcountry
clients as well as sub-brokers to know all their clients thoroughly before executing trades on their behalf. Memberbrokers should also exercise offline surveillance over the transactions routed through their BOLT Terminals by their
clients / sub-brokers to detect the various kinds of abuses or misuse of the systems and take adequate steps to present
their recurrence. This is all the more necessary in view of the countrywide expansion of BOLT network and the increased
volume of business along with risk involved.
Member-brokers are advised to evolve and put in place an appropriate mechanism to assess financial strength,
performance tracking, trading pattern vis--vis their clients position and dealings in respect of all those clients in cash
segment who have value of receivables and deliverables (gross) taking into account two consecutive settlements of
Rs. 25 lacs or more.

Broker Client Agreement


Member-broker shall enter into an agreement with all his clients before accepting orders on behalf of clients. This
agreement has to be on a non-judicial stamp paper of adequate value duly signed by the parties on all pages, and
the clauses in the agreement should be as prescribed by SEBI.
This agreement contains clauses defining the rights and responsibility of client vis--vis broker. The memberbroker can also add further clauses in the model agreement as per their requirement, provided these are not in
conflict with any of the clauses in the model document, as also the Rules, Regulations, Articles, Byelaws, circulars,
directives and guidelines.

Tripartite Agreement between Broker-Sub-Broker and Clients


A sub-broker shall enter into a tripartite agreement with his client and with the main broker specifying the scope of
rights and obligations of the sub-broker, main broker and clients of sub broker.

Risk Disclosure Document


Member-brokers of the Exchange are required to get the Combined Risk Disclosure Document (for Cash and
Derivatives Segment) signed by all their clients (existing as well as new). (Exchange Notice No. 20040827-11
dated August 27, 2004)
Risk Disclosure document is a document detailing the basic risks involved in trading on a stock exchange, the
rights and obligations of the clients, etc. The document makes the investors aware of the fact that things like
investment in equity shares, or other instruments traded on the stock exchange, is generally not an appropriate
avenue for those with limited resources or limited trading experience and low risk tolerance. It asks the investor to
consider whether such trading is suitable for them in the light of their financial condition. Investors are also made
aware of the fact that there can be no guarantee of profits, or no exception from losses. Highlighting these points,
the Exchange has devised a combined Risk Disclosure Document for both Cash and Derivatives Segment for the
purpose of operational convenience to the member-brokers.
SEBI vide circular number SEBI/MIRSD/DPS-I/Cir-31/2004 dated August 26, 2004 has prescribed uniform document
requirement for trading namely, (a) Client Registration Form (b) Member Client Agreements (c) Tripartite agreement
between broker-sub broker and clients wherever applicable and (d) Risk Disclosure documents. Paragraph 3 of
the said circular states that the stock broker may incorporate any additional clauses in these documents provided
these are not in conflict with any of the clauses in the model document, as also the Rules, Regulations, Articles,
Byelaws, Circulars, directives and guidelines. Moreover, the trading member may also seek additional information
so as to satisfy himself about the antecedents of the client.

13

Trading members are required to ensure the following:


(1)

At the time of registering a client, the client shall be informed in writing that only the documents stated above are
mandatory and any additional clause or documentation shall be voluntary and at the discretion of member and
client.

(2)

Additional documents shall state at the beginning in bold that the document is voluntary.

(3)

However, if such documents are required in order to ensure smooth functioning of special facility such as internet
trading offered by the trading member, the client shall be informed in writing clearly that such documents are
voluntary and the client need not execute such documents if he/she does not wish to use that facility.

(4)

Such documents, if any shall also recognize specifically the right of the client to terminate the document. In such
an eventuality, the trading member may terminate the special facility.

(5)

The docket or folder containing draft mandatory documents for signing and the checklist containing mandatory
documents shall not include draft voluntary documentations, if any. Further, these mandatory documents should
relate to only opening the account for stock trading and not for any other additional business/activity like opening
of Bank Account, DP Account etc.

(6)

Ensure that Client Registration details as contained in the Client Registration Form / Know Your Client (KYC) form,
including financial details are complete in all respects, correctly obtained and are reviewed and updated periodically.
Further, ensure to monitor the trading activities of the clients based on his financial details as contained in the
clients KYC. (Exchange Notice No. 20061120-9 dated November 20, 2006).

(7)

No documentation shall give any exclusive right or control to the trading member or third party over the demat
account or ledger account or bank account of the client except to the extent of and restricted to the client (including
family members who have given authorization) obligation to the trading member in respect of the transactions
done or to be done (like upfront margin) by the trading member on behalf of the client on the Exchange. (Exchange
Notice No.20060704-6 dated July 04, 2006).

14

5. MODE OF PAYMENT & DELIVERY


Members should not accept any cash from clients, whether against obligation or as margin for purchase of securities,
except in case of exceptional circumstances and to the extent not in violation of the Income Tax requirement as may
be in force from time to time. In view of the above, when such exceptional circumstances arise the members are
directed to inform the Department of Surveillance & Supervision of the Exchange within 15 days to seek an approval
in this regard on a case-to-case basis (Exchange Notice No. 20030903-5 dated September 3, 2003 and Notice No.
20050324-21 dated March 24, 2005).
All payments should be strictly received / made by the member-brokers from / to the clients strictly by account payee
crossed cheques / demand drafts or by way of direct credit into the bank accounts of the clients concerned through
EFT, or any other mode allowed by RBI.
The member-brokers should accept cheques drawn only by the clients and also issue cheques in favour of the clients
only, for their transactions. Similarly in case of securities, giving taking delivery of securities in demat mode should
also be directly to/from the beneficiary accounts of the respective clients except delivery of securities to a recognised
entity such as approved intermediaries under the approved scheme of the stock exchange and/or SEBI. (SEBI Circular
no. SEBI/MRD/SE/Cir-33/2003/27 /8 dated August 27, 2003). ((Exchange Notice No. 20030903-5 dated September 3,
2003).
The delivery of funds & securities has to be made to the clients within 24 hours of declaration of pay-out unless the
client has requested otherwise. (Bye-Law 247A(2) and Exchange Notice No. 20020917-2 dated September 17, 2002)

15

6. COMPLIANCE OFFICER
Member-brokers are mandatory required to appoint a Compliance Officer as per Regulation 18A of the SEBI (Stock
Brokers and Sub-brokers) Regulations, 1992. The concerned Compliance Officer shall be responsible for monitoring
the compliance by the concerned member-broker in respect of the SEBI Act, 1992, Rules, Regulations, notifications,
guidelines, instructions, etc issued by SEBI / Central Government. Monitoring redressal of the grievances of the investors
is also the responsibility of the Compliance Officer. Member are required to keep the Exchange informed of the
appointment of compliance officer (Exchange notice no. 20021001-5 dated October 01, 2002).
Compliance Officer shall immediately and independently report to SEBI any non-compliance observed by him.

16

7. UNIQUE CLIENT CODE


Securities and Exchange Board of India (SEBI) vide its circular no. SMDRP/Policy/CIR-39/2001 dated July 18, 2001
made it mandatory for all member-brokers to use Unique Client Codes (UCC) for all clients.
For this purpose, member-brokers shall allot a Client Code to each of his clients including the clients of his sub-brokers,
which is Unique. The same code shall not be allotted to any other client in his office or at their branches or to the
clients of sub-brokers and not more than one code should be allotted to any of clients. (Exchange Notice No.93424/
2001 dated July 23, 2001, No. 20040128-3 dated January 28, 2004, No.20060927-21 dated September 27, 2006 and
No.20060928-17 dated September 28, 2006). The Client Code allotted to the clients including the clients of sub-brokers
are required to be registered with the Exchange.
The member-brokers are also required to upload the PAN details of their client to the Exchange as part of the UCC
database and not to execute the trade for the client unless the PAN details of respective clients have been collected,
verified with the Income Tax website and uploaded to the Exchange.(Exchange Notice no.20061229-26 dated December
29, 2006 & 20070220-26 dated February 20, 2007 )
Member shall map the details of Unique Client Code of all their clients with their respective PAN/ Driving License etc.
in their back-office. (Exchange notice no. 20030115-5 dated January 15, 2003). Member-brokers are required to maintain
and preserve for a period of seven years a mapping of client codes used at the time of order entry in the trading.
Further, the Stock Exchange is required to maintain a database of client details submitted by member-brokers. The
Exchange shall maintain historical records of all submissions for a period of seven years.
The Exchange uploads to the members on a daily basis a cumulative file NPddmmyy.xxxx through the All Data Option
of Dload32, containing the client codes where trades have been executed either without registering the Client code or
without uploading the PAN details of the client to the Exchange database. The codes attract a Penalty of Rs.100/- per
code per day till the time these codes are registered / PAN details of these clients are uploaded in the Exchange
Database. (Exchange Notice no. 20070104-12 dated January 04, 2007).
For habitual offenders, who violate the requirement of timely updation of UCC along with PAN details of their clients,
higher penalties are prescribed vide Exchange Notice No. 20080307-7 dated March 07, 2008.
A special facility is provided to the members for modification of client codes of executed trades. This modification can
only be done in the post closing session between 3.40 pm to 4.00 pm. A control has been provided in the Admin
Terminal of the member-brokers facilitating the main member-broker to control the user who can be permitted to perform
this activity.
Member-brokers were advised vide notice no 20030329 1 dated March 29, 2003 to ensure that the correct client
codes are entered while placing the orders and the facility of modification of the client codes should be used sparingly
to rectify bonafide mistakes for genuine errors and to the minimum extent possible. Member-brokers are also advised
not to indulge in modification of client codes through their back office software and not to transfer trades from one
client to another client or from own account to clients account or vice-versa. Rectification, if any should be strictly
carried out during the post closing session only. (Exchange Notice No.20060221-11 dated February 21, 2006).
Members are required to ensure that the Client type is entered correctly at the time of placing the orders on the BOLT
system and in case non-institutional trades are erroneously entered as Institutional trades, the same should be rectified
during the post closing session. Further, where the client type is not rectified, the same has to be immediately reported
to the Exchange for collection of the required margin. (Exchange Notice no. 20050919-25 dated September 19, 2005).

17

8. PERMANENT ACCOUNT NUMBER (PAN)


As per SEBI circular no MRD/DoP/SE/Cir-18/2006 dated September 26, 2006 PAN no. has been made mandatory
w.e.f. January 01, 2007 for dealing in the cash segment. Accordingly, trading members are required to collect copies
of PAN cards from their existing as well as new clients and maintain the same in the record after verifying with the
original.
Trading members can execute transactions in the cash segment on behalf of any entity/person only if the PAN details
of such entity/person has been collected, cross-checked with the details on the website of the Income Tax Department,
and uploaded by them to the Exchange as part of the Unique Client Code (UCC) details of the respective entity/person.
Trading members will to ensure that:
1.

All new UCC registrations are mandatorily accompanied with the PAN details of the client.

2.

Name and PAN details of the clients already uploaded by them in the UCC database of the Exchange is correct
and verified with the details on the website of the Income Tax Department.

Trading members are also requested to ensure that Name and PAN of the client as appearing on the PAN Card is
correctly uploaded by them to the Exchange. Trading members are also required to maintain a photocopy of the PAN
card of the client in their records. (Exchange Notice No.20060908-13 dated September 08, 2006)
SEBI vide circular no MRD/DoP/SE/Cir-05/2007 dated April 27, 2007 has decided that Permanent Account Number
(PAN) would be the sole identification number for all participants transacting in the securities market, rrespective of
the amount of transaction.
Members are also advised to print PAN of the constituents on the contract notes, whenever the value of the contract
exceeds Rs.1 lakh (Exchange Notice no. 20020930-4 dated September 30, 2002)

18

9. TRADING TERMINALS (BOLT / IML)


The Exchange installs trading terminals at the member-brokers or their sub-brokers offices on their request. As per
SEBI Circular No. SMDRP/Policy/CIR-49/2001 dated October 22, 2001, the member-brokers should install trading
terminals only at their registered offices, branch offices and their registered sub-brokers offices. Staff operating the
BOLT TWSs must be on the member-brokers payroll. Remisier is authorized to operate BOLT at member-brokers
office only. (Exchange Notice No.104616/2001 dated November 12, 2001 & Notice No. 20040205-13 dated February
05, 2004).
An office is considered as member-brokers office only if it is rented/owned/licensed by a member-broker of the
Exchange. In fact, member-brokers should have effective control over the functioning of those offices. A memberbroker cannot locate his trading terminal at any other location. It is clarified that the trading terminals cannot be installed
at Remisiers office or clients place.
TWS / IML Registration on BOLT
The Exchange had been permitting addition of new trading terminals and also installation of IML terminals for business
expansion of members and the members availing of IML are required to execute Affidavit-cum-Undertaking regarding
use of the IML software.
Members are required to upload the information for all their TWS / IML along with the details of the approved users
through BOLT TWS no. 1 which allows for addition / updating / deactivation / activation of TWS / IML information on
the BOLT. The approved users i.e. employees of the member, remisiers operating from the members office and subbrokers of the member can only be approved user for operating the trading / IML terminals.
Trading terminals / IML terminals allotted and particulars of which are not uploaded/wrong uploaded as above shall be
treated as unauthorized terminals and renders the concerned members liable for disciplinary action as may deem fit
including withdrawal of IML/additional terminals. (Exchange Notice nos. 20050118-3, 20050808-26, 20050819-9 &
20050819-19 issued on January 18, 2005, August 8, 2005, August 16, 2005 & August 19, 2005 respectively).
In order to ensure compliance with registration of the IML/BOLT terminal location details to the Exchange through the
CR module of the BOLT No.1, penalty norms are prescribed. Penalty of Rs 100/- per day per terminal will be levied till
the time the location ID details are registered with the Exchange. (Exchange Notice No. 20070517-22 dated May 17,
2007).
The Exchange will upload a file name LOC_DTL.xxxx (clg. no.) from April 24, 2006 onwards to all trading members
containing information regarding locations which are not registered or are incorrectly registered and orders are being
punched from that location. This file would contain one record consisting of the fields in respect of the unregistered
location such as, Member ID, Order ID, Scrip Code, Quantity, Buy/Sell, Location ID, Date & Time.
For each office of the trading member and their sub-brokers where BOLT / IML terminal is located, it would be mandatory
for the trading members to have atleast one user who has passed BSEs Certification on Securities Market (BCSM).
Further, for every block of additional five users, the trading member needs to have one BCSM certified user. The last
date for compliance of the above requirement is April 30, 2008 (Exchange Notice No.20070522-25 dated May 22,
2007 and No.20071024-28 dated October 24, 2007).

19

10. PRO-ACCOUNT TRADING


It has been observed that certain member-brokers are putting large number of orders on pro-account from various
locations rather than from one location as specified by them.
With a view to check such misuse of the above facility, the member-brokers are required to comply with the following:
a.

Members are required to place their proprietory transactions under own category.

b.

Facility of placing orders on own account through trading terminals shall be extended only at one location of the
member-brokers as specified / required by the member-brokers

c.

Trading terminals located at places other than the above location shall have a facility to place orders only for and
on behalf of clients by entering client code details as required / specified by the Exchange / SEBI.

d.

In case any member-broker requires the facility of using own account through trading terminals from more than
one location, such member-broker shall be required to submit an undertaking to the stock exchange stating the
reason for using the own account at multiple locations and the Exchange may, on case to case basis after due
diligence, consider extending the facility of allowing use of own account from more than one location. (Exchange
Notice no. 20030909-1 dated Septembar 09,2003).

Further, member-broker is required to disclose to his existing clients whether he does proprietary trading. Further, the
broker is also required to disclose this information upfront to his new clients at the time of entering into the Know
Your Client Agreement. In case a broker does not presently trade on proprietary account but chooses to do so at a
later date, he is required to disclose this to his clients before carrying out any proprietary trading. (Exchange Notice
No. 20031125-7 dated November 25, 2003).

20

11. BROKERAGE
Maximum rate of brokerage that can be charged by a member-broker is provided in the Bye-laws 205, Regulation
14.1 & Notice No. 5116/93 dated November 11, 1993. As per this Regulation, the brokerage charged by a memberbroker shall not exceed Rs. 0.25 per share or 2.5 % of the contract price, whichever is higher.
The maximum brokerage is exclusive of statutory levies but inclusive of the brokerage charged by a sub-broker. In
case member has transacted for the clients of sub broker, the aggregate amount of brokerage charged by trading
member to sub broker and sub broker to his client shall not exceed the maximum scale of brokerage prescribed by
the Exchange & SEBI in this regard. (Exchange Notice No. 20051207-10 dated December 7, 2005).
The brokerage shall be charged separately from the clients and shall be indicated separately from the execution price
of transaction (s) in the contract note (s).
Member-broker shall levy brokerage on all the trades executed on behalf of its constituents except those, which are in
the nature of charity. (Bye-law 205 and 215 of the Rules, Byelaws and Regulations of the Exchange).
Bye Laws 218 (a) & (b) of the Rules, Bye Laws & Regulations of the Exchange has also been amended so that the
sub brokers can also share brokerage with the member, in addition to the persons specified in the said Bye laws and
subject to such terms of brokerage as agreed upon in writing by way of agreement & as per the scale of brokerage
prescribed by the Exchange or SEBI in this regard from time to time.

21

12. STATEMENT OF ACCOUNTS FOR FUNDS / SECURITIES


A large number of disputes arise between the member-brokers / sub-brokers and their clients pertaining to payments
due to/from the clients. This may be due to non-submission of statement of accounts of funds / securities by the memberbrokers to the clients on a regular basis.
In order to avoid such incidences, member-brokers are advised to adopt the following practices in terms of the Exchange
Notice Nos. 20020906-3 dated September 6, 2002, No. 20030114-9 dated January 14, 2003 and No.20080307-8 dated
March 07, 2008 : 1.

Member-broker shall send to their clients, a complete Statement of


Accounts for both funds and securities in
respect of each of their clients at least once in every quarter within a month of the expiry of the said period.

2.

The statement shall also include error reporting clause stating that the client shall report errors, if any, in the
statement within 30 days of receipt thereof to the member-broker.

3.

In respect of institutional clients, the said requirement is applicable in case the member-brokers pay or receive
funds and receive or deliver securities from or to the institutional clients directly and not through custodians.

4.

Member-broker should maintain an acknowledgement/confirmation record of dispatch of Statement of Accounts


to the clients.

In the case of brokers providing Internet Trading facility and providing an access to an on-line accounting viewing and
print-out facility, it would be treated as sufficient compliance, if they send the Statement of Accounts by email or where
a facility has been given to the clients to verify the above statements on the Internet trading terminal itself.

22

13. COLLECTION OF MARGINS FROM CLIENTS


The mandatory requirement of collection of 10% upfront margin from non-institutional clients has been done away
with the implementation of Comprehensive Risk Management framework w.e.f May 30, 2005. However, SEBI has
decided that, the Members should have a prudent system of risk management to protect themselves from client default
and the quantum, form and mode of collection of margins from the clients is left to the discretion of the member broker
w.e.f. May 30, 2005.
As per SEBI Circular No.MRD/SE/CIR-12/2005 dated May 13, 2005 members are therefore required to have a prudent
system of risk management which has to be well documented in writing and be made accessible to the clients and the
Exchange. (Exchange Notice No.20050513-26 dated May 13, 2005).
In order to provide a level playing field to all the investors in the Cash Market as in the case of Derivatives Market,
SEBI has provided that all the Institutional Trades in the Cash Market would be subject to payment of margins as
applicable to transactions of other investors. To begin with, from April 21, 2008, all institutional trades in the cash market
would be margined on a T+1 basis with margin being collected from the custodian upon confirmation of the trade.
Subsequently, the collection of margins would move to an upfront basis. (SEBI Circular No. MRD/DoP/SE/Cir- 06 /
2008 dated March 19, 2008).

23

14. CLIENT MARGIN INFORMATION


(MARGIN REPORTING TO CLIENTS)
Reports are being downloaded to member brokers on a daily basis, which give the client-wise details of VaR, ELM
and Mark To Market margins levied by the Exchange.
As per the directions of SEBI, the member brokers are required to inform their clients about the margins levied on
their traded positions on a day-to-day basis by way of either sending the margin information through email or along
with the physical contract notes. The member brokers are also advised to include the following information in the
statements being provided to their Clients:
1.

Total collateral deposits placed by the client upto day T-1 (with break-up in terms of cash, FDRs, BGs and securities).

2.

Collateral deposits utilised towards margins upto the end of T-1

3.

Collateral deposits placed by the client on day T (with break-up in terms of cash, FDRs, BGs and securities)

4.

Margin adjustments for T day

5.

Collateral status (balance with the member / due from the client) at the end of T day

The member brokers are required to comply with the said requirements with effect from February 18, 2008 (Exchange
Notice No.20080211-19 dated February 11, 2008).

24

15. PRINCIPAL TO PRINCIPAL


TRANSACTIONS
Where a member-broker either buys or sells securities directly from / to his client without entering the client order on
the trading system of the Exchange, then he is said to be entering into transaction on principal-to-principal basis with
his client. Member-brokers are allowed to enter into principalto-principal transactions with their clients, subject to certain
condition.
The following are the requirements regarding transactions on principal-to-principal basis:
1.

Written consent of the client is to be obtained for executing a transaction on principal-to-principal basis, as required
under Section 15 of the Securities Contracts (Regulation) Act, 1956 and Bye-law 199 of the Rules, Byelaws and
Regulations of the Exchange. Such consent from the client is to be obtained within a period of three days of
execution of the transactions. Also separate consent is required to be obtained from a client for each transaction.
One general letter consenting to all the transactions of this nature by a client will not do.

2.

Contract notes issued by the member-brokers to the clients, when dealing with them as principals, are to be
issued in accordance with Form B or BB as prescribed in Regulation 14 of the Rules, Bye-laws and Regulations
of the Exchange.

3.

Such transactions can be entered only as spot delivery contracts and required to be reported to the Exchange on
the same day pursuant to SEBI circular no. SMD/RCG/CIR/(BKG)/293/95 dated March 14, 1995 and Exchange
Notice No.20040306-9 dated March 6, 2004. The Exchange has provided a facility on BOLT to the memberbrokers to report Spot Delivery Bargains using DUS Software.

4.

The transactions done on the spot basis are to be settled on the same day as the date of the contract or on the
next day as provided in section 2 (i) of the Securities Contracts (Regulation) Act, 1956. The Exchange does not
guarantee the settlement of these bargains.

It may be pertinent to mention that when a member-broker is transacting with client on principal-to-principal basis,
much transparency is required. To maintain this transparency, Section 15 of the Securities Contracts (Regulation) Act,
1956 provides that no member-broker of a recognized Stock Exchange shall in respect of any securities enter into any
contract as a principal with any person other than a member-broker of a recognized Stock Exchange unless he has
secured the consent or authority of such person and discloses in the note, memorandum or agreement of sale or
purchase that he is acting as a principal.
The member-brokers are also required vide Rule 15 (2)(c) of Securities Contracts (Regulations) Rules, 1957, to maintain
and preserve the written consent of the client in respect of contracts entered into as principals.
It may be further noted that for Principal-to-Principal transactions, no brokerage is charged to the client.
Principal-to-Principal transactions cannot be entered into in respect of scrip that is delisted or scrip, trading in which is
suspended. Further the price charged for the scrip for which transaction entered into on Principal-to-Principal basis
should be within the range of open and closing price of the scrip on that date.
Cross Deals and Negotiated Deals
A cross deal is a deal between two clients of the same member-broker and negotiated deal is a deal between two
member-brokers the terms of which have been negotiated by member-brokers between themselves.
SEBI vide its Circular no. SMDRP/POLICY/CIR-32/99 dated September 14, 1999 has directed that all negotiated deals
(including cross deals) are not permitted. As per SEBI directive, all negotiated deals will be permitted only if these are
executed on screen in the price and order matching mechanism of the exchange just like any other normal trade.

25

16. MARGIN TRADING


Under SEBI guidelines on Margin Trading and Securities Lending and Borrowing advised vide SEBIs circular No. SEBI/
MRD/SE/SU/Cir-15/04 dated March 19, 2004 and circular No. SEBI/MRD/SE/SU/Cir-16/04 dated March 31, 2004; the
Exchange has decided to permit the members of the Exchange to provide facility of Margin Trading to their clients
within the aforesaid SEBI guidelines.
The modalities with respect to the Margin Trading facility by the members of the Exchange to their clients are given as
under:
Corporate members with a Net-worth of Rs. 3.00 crores are eligible to provide the facility of Margin Trading to their
clients. Such eligible members are required to make a request to the Membership Department seeking Exchanges
permission in this regard.
Margin Trading facility would be only permitted in the eligible securities as notified from time to time.
The members are required to report Margin Trades on the following day through Data Upload System (DUS) provided
by the Exchange.
The members are also required to place suitable internal systems to ensure that they are complying with the various
SEBI stipulations relating to Maximum borrowing, total and single client exposure etc. as per the aforesaid SEBI circular
and various other circular issued in this regard by SEBI from time to time.
Based on the reporting done by the brokers to the Exchange, the Exchange discloses the Margin Trade position across
the market (for all its members) at the end of the day.
The members providing facility of Margin Trading to their clients would be required to submit the following certificates:

Net-worth Certificate: The Net- worth certificate in respect of Margin Trading should be submitted in the prescribed
format as on 30th September and 31st March latest by 31st October and 30th April respectively.

Margin Trading Compliance Certificate: The books of accounts, maintained by the members, with respect to
margin trading facility offered by them are required to be audited. The member would be required to submit an
auditors certificate certifying the extent of compliance with the conditions of Margin Trading facility. The members
are required to submit such certificate for the half- year ending 31st March and 30th September latest by 31st
October and 30th April respectively, to the Department of Surveillance & Supervision.
Members are required to refer to SEBI Circular No. SEBI/MRD/SE/SU/Cir-15/04 dated March 19, 2004 and Circular
No. SEBI/MRD/SE/SU/Cir-16/04 dated March 31, 2004 & Exchange Notice No. 20040402-31 dated April 2, 2004
for further details.

26

17. CLIENT FUNDING


Pursuant to the directives issued by Securities and Exchange Board of India (SEBI) vide its letter dated July 16, 2004
addressed to the Exchange, the members of the Exchange are required to disclose their peak client funding details
during the month to the Exchange in the prescribed format through the DUS system provided by the Exchange. The
said data is displayed on the Exchanges website on a monthly basis.
The disclosure has to be with regards to the extent of client funding by the broker and the number of clients for whom
such funding has been made (for the cash segment only). The client funding for such purposes shall include the margin
and settlement obligations of a client funded by the member/broker.
Member to report client funding details to the Exchange through the DUS software on a monthly basis (Exchange
notice no.20060221-10 dated Feb 21, 2006).
Client funding disclosure to the Exchange should contain the break-up of funding to Institutional / Non-Institutional
clients, towards Settlement / Margin Obligation, Margin Trading etc., the details of which are as under: Item

Description

No. Of Clients for Temporary Funding

The number of clients who have been funded during the reporting month.

Temporary Funding of Margin on behalf


of Clients

The amount funded means and includes members own money put
towards clients margin obligations.

Temporary Funding of Settlement


Obligations of Institutional Clients

The member has to enter the amount funded towards settlement


obligations of the Institutional Clients who have been funded by him
for the reporting month. If this column is not applicable then the member
has to enter 0.

Temporary Funding of Settlement


Obligations of Non-Institutional Clients

The member has to enter the amount funded towards settlement


obligations of the Non-institutional clients who have been funded by
him for the reporting month. If this column is not applicable then the
member has to enter 0.

No. of Clients under Margin Trading

The number of clients who have been funded towards margin trading
during the reporting month.

Funding extended to Clients


under Margin Trading facility

Amount funded by the member to clients under the option of Margin


Trading. If this column is not applicable then the member has to enter
0.

Total Funding

It will be the sum total of Temporary Funding of Margin on behalf of


Clients + Temporary Funding of Settlement Obligations of Institutional
Clients + Temporary Funding of Settlement Obligations of
Non-Institutional Clients + Funding extended to Clients under Margin
Trading facility

Members may refer to Exchange Notice No. 20050824-16 dated August 24, 2005 in this regard. In order to mitigate
the procedural difficulties involved in reporting the funding done by brokers with respect to transactions of small quantities
executed on behalf of large no. of clients, the Securities & Exchange Board of India vide letter no. MRD/Policy/AT/
55628/2005 dated December 13, 2005 has clarified that Member brokers may be advised to exclude the funding done
by them with respect to contracts of value Rs.1 lakh or below, executed by them on behalf of their clients for the
purpose of the aforesaid requirements w.e.f December 2005.members may refer to Exchange Notice No. 200512168 dated December 16, 2005 in this respect.

27

18. SYSTEM AUDIT


In order to ensure the reliability of the IML / Internet Trading Systems used by the Trading Members, the Exchange
has decided to make it obligatory on the part of the Trading Members to get their IML / Internet Trading Systems
audited by Certified Systems Auditor and Submit a report to the Exchange.
Accordingly, the Trading Members who have availed of the IML facility from the Exchange are advised to submit a
Systems Audit Report in the prescribed format every Financial Year.
The Trading Members are required to note the following with regards to the Systems Audit:
1.

The System Audit should be carried out by CISA / ISA / CISSP Certified Systems Auditor and their name &
registration number should be mentioned on the certificate submitted.

2.

The System Audit would have to be carried out for all the branches where IML facility is provided and one consolidated
report should be submitted to the Exchange.

Trading member are also required to submit the following documents / certificates to Exchange.
l

Network Diagram duly certified by the Vendor showing the number and location of nodes.
SSL (Secured Socket Layer) certificate or any other similar mechanism, which adequately protects the confidentiality
of trade data (Exchange Notice No. 20070517-26 dated May 17, 2007).

28

19. TRADING THROUGH ANOTHER MEMBER


During the course of inspections of the books of accounts and other documents of member-brokers, it has been observed
that certain member-brokers are dealing through or with other stock brokers of the same exchange /other exchange
for their proprietary trades as well as trades on behalf of their clients.
Trading through other stockbrokers raises serious issues of regulatory concerns including taking excessive exposure,
executing pro account trading from multiple locations in violation of SEBI circular no. SEBI/MRD/SE/Cir-32/2003/27/
08 dated August 27, 2003, possibility of over leveraging and default, etc.
With a view to address these concerns, SEBI vide its circular no: SEBI/MIRSD/CIR-06/2004 dated January 13, 2004
reviewed the norms relating to trading by member-brokers/sub-brokers. Accordingly, member-brokers are required to
comply with the following:

A sub-broker shall not be affiliated to more than one member-broker of one stock exchange.
Dealing with member of the same Exchange

Member-broker/sub-broker of an exchange cannot deal with another member-broker/sub-broker of the same


exchange either for proprietary trading or for trading on behalf of clients, except with the prior permission of the
exchange. The Exchange while giving such permission, shall consider the reasons stated by the brokers/sub
brokers for dealing with brokers/sub brokers of the same exchange and after carrying out due diligence allow such
brokers/sub brokers to deal with only one stock broker/sub broker of the same exchange. (Exchange Notice no.
20040117-8 dated January 17, 2004).
Dealing with member of another Exchange

For proprietory trading, a stock broker/sub broker of an exchange can deal with only one broker/sub broker of
another exchange after intimating the names of such stock broker/sub broker to his parent stock exchange.

For dealing on behalf of clients, a member-broker of an exchange can deal with only one broker of another
exchange after obtaining necessary registration as a sub-broker.

29

20. SUB-BROKERS
Sub-broker means any person not being a member of a Stock Exchange who acts on behalf of a member-broker as
an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such member-brokers.
All Sub-brokers are required to obtain a Certificate of Registration from SEBI in accordance with SEBI (Stock Brokers
and Sub-Brokers) Rules and Regulations, 1992, without which they are not permitted to deal in securities. SEBI has
directed that no broker shall deal with a person who is acting as a sub-broker unless he is registered with SEBI and it
shall be the responsibility of the member-broker to ensure that his clients are not acting in the capacity of a sub-broker
unless they are registered with SEBI as a sub-broker .
It is in the interest of member-brokers that they should get the books of accounts etc of the sub-brokers affiliated to
them, inspected at periodical intervals.
Member-brokers of a Stock Exchange executing transactions for and on behalf of their clients through the memberbrokers of other Exchanges are to be treated as sub-brokers. These member-brokers are required to obtain a Certificate
of Registration from SEBI to act as a sub-broker under SEBI (Stockbrokers and Sub-Brokers) Rules and Regulations,
1992.
It is mandatory for member-brokers to enter into an agreement with all the sub-brokers in the format prescribed by
SEBI. The agreement lays down the rights and responsibilities of member-brokers as well as sub-brokers.
Securities and Exchange Board of India have issued a notification in the Gazette of India dated the 23rd day of September
2003, amending the Stock brokers and Sub brokers Regulations, 1992, the salient features are produced below:

One sub-broker shall be affiliated to one member-broker of the Exchange. There shall be a privity of contract
between the member-broker and a client introduced to the member-broker by the sub-broker affiliated to such
member-broker.

The sub-broker should have necessary infrastructure like adequate office space, equipment and manpower to
effectively discharge his activities.

No director of a corporate member-broker shall act as a sub-broker to the same corporate member-broker.

A member-broker shall not deal with a person as a sub-broker unless such person has been granted certificate of
registration by the SEBI.

A sub-broker shall not issue confirmation memos but the member-broker shall issue contract note directly to the
client introduced by his sub-broker.

The delivery of securities and the payment of funds relating to the transactions shall be made directly between a
member-broker and the client introduced by the sub-broker affiliated to such member-broker.

A sub-broker shall enter into a tripartite agreement with his client and with the main member-broker specifying the
scope of rights and obligations of the member-broker, sub-broker and such client of the sub-broker.
Cancellation of sub-broker registration
In the event of cancellation of sub-broker registration, the affiliated membr-broker has to inform the investors/
general public about cancellation of registration of his/their sub-brokers and also advise them not to deal with such
sub-brokers. A public advertisement to this effect may be issued in a local newspaper where the sub-brokers
registered office, head office/corporate office is situated and another in English daily newspaper with wide circulation.

30

Books And Documents To Be Maintained By Sub-Brokers


Sub clause (b) under clause (1) of Section 15 of Securities Contract Regulation Act specifies the books and
documents required to be maintained by the sub-broker. The list is as under:

Register of transactions (Sauda book);

Clients ledger;

General ledger;

Journal;

Cash book;

Bank pass book;

Document should include particulars of shares and securities received and delivered to the clients.
Inspection of Sub-Brokers
Every Trading Member is required to carry out the inspection of Books and Accounts of at least 20% of its subbrokers every year .

31

21. REMISIER
A Remisier is a person who is engaged by a member-broker primarily to solicit business in securities on a commission
basis.
The Exchange has revived the institution of Remisiers under its Rules, Byelaws and Regulations. Rules No. 216 to
235 of the Rules, Byelaws and Regulations of the Exchange provide for appointment and regulation of Remisiers. The
Remisiers appointed by the member-brokers are required to be registered with the Exchange.
In this connection, it is clarified that Remisier should not be an employee of any individual member-broker or any
organisation other than the member-broker concerned. A remisier shall not be or act as a sub-broker anywhere so
long as he continues as a remisier.
Remisier is expected to solicit business for a member-broker and get commission thereon. He is not supposed to
issue contract notes, confirmation memos or bills to the clients in his own name.
Remisier can operate the BOLT/IML terminal from the members office. However, he can not operate the terminal
from his residence/office.
Members can start business & pay commission to remisier only after getting them registered with the Exchange.

32

22. DISPLAY OF SEBI REGISTRATION CERTIFICATE AND


NOTICE BOARD
Trading members should place a permanent notice board, as per the prescribed format, at all their offices including
the offices of sub-brokers, or any other offices where the trading terminals are located which should prominently display
the following information: 1. Name of the Trading Member
2. Address & Tel. No. of the main office of the trading member (also Name & Tel. No of the contact person in the main
office)
3. SEBI Registration No. of the trading member
4. BSE Investor Service Tel. No.
Apart from the notice board a list of general Dos and Donts, as per the prescribed format, to be observed by the
investors while investing/trading in the stock markets should be prominently displayed.
Trading Members are also required to ensure that a copy of their SEBI Registration Certificate is prominently displayed
in all their offices.
Trading Members should also ensure that the SEBI Registration Certificate issued to the sub-broker is prominently
displayed at all their sub-brokers offices. (Exchange Notice No.20050902-21 dated September 02, 2005).

33

23. ANTI MONEY LAUNDERING PROVISIONS


Prevention of Money Laundering Act, 2002 (PMLA) has been brought into force w.e.f. July 01, 2005. As per the provisions
of the Act, all the prescribed entities shall have to maintain records pertaining to the transactions of the value and
nature prescribed as under :

All cash transactions of the value of more than Rs.10 lakhs or its equivalent in foreign currency

All series of cash transactions integrally connected to each other which have been valued below Rs.10 laks or its
equivalent in foreign currency where such series of transactions take place within one calender month.

All suspicious transactions whether or not made in cash.

All intermediaries are advised to ensure a proper policy framework as per the guidelines on anti-money laundering
provisions. Members are required to appoint Principle Officer under Prevention of Money Laundering Act 2002. Also,
members are required to have documented procedures to implement the Anti Money Laundering provisions as envisaged
under Prevention of Money Laundering Act, 2002.
The Guidelines on Prevention of Money Laundering Standards, inter-alia require the members to:

Ensure Customer due diligence (As stipulated under Guideline 5 of Part II of the Guidelines on Anti Money
Laundering Provisions).

Monitor and Report Suspicious Transactions to FIU (Financial Intelligence Unit) India. (As specified under Guidelines
2.2 and 9 of Guidelines on Prevention of Money Laundering Provisions) (Exchange Notice No.20060321-15 dated
March 21, 2006 and 20070330-27 dated March 30, 2007).

34

24. SPECIFIC BARGAINS


Member-brokers of the Exchange are not permitted to trade in unlisted securities or in scrips before being listed on
the Exchange. However, in order to facilitate member-brokers to enter into trades on behalf of their client in the scrips
not listed on the Exchange but listed on some other Exchange, as also in the scrips not listed on any Exchange, the
Exchange gives permission to the member-brokers to enter into Specific Bargains.
Member-brokers intending to enter into such trades are required to approach the Clearing and Settlement Dept. with
a request letter alongwith the latest annual report of the Company whose shares are to be traded, the latest quotation
of the scrip in the Exchange where it is listed and traded etc.
The request of the member-broker is scrutinised by the Clearing and Settlement Dept. The Dept checks whether the
scrip was earlier listed/delisted, suspended by the Exchange, the reason for entering in to this deal, the present and
proposed holding of the purchaser in this scrip, price band and the limit of FII holding prescribed by RBI (if the purchaser
is an FII), etc., and then gives its approval on a case to case basis. In case the holding of the proposed purchaser in
the concerned scrip exceeds 5% of the paid up capital of the company after the deal is executed then the buyer would
have to inform the concerned stock exchange and SEBI about the purchase and the total holding in the same. The
nominal charges for granting approval to enter into specific bargains are recovered by the exchange from the memberbrokers by debiting their General Charges Account.

35

25. BULK DEALS


With a view to imparting transparency in bulk deals so as to prevent rumors /speculation about bulk deals causing
volatility in the scrip price, SEBI vide its Circular No. SEBI/MRD/SE/Cir-7/2004 dated January 14, 2004 has decided to
bring about greater disclosure of such bulk deals as mentioned below:
a.

The disclosure shall be made by the member-brokers to the Stock Exchange with respect to all transactions in a
scrip where total quantity of shares bought/sold is more than 0.5% of the number of equity shares of the company
listed on the stock exchange.

b.

The brokers shall disclose to the stock exchange the name of the scrip, name of the client, quantity of shares
bought/sold and the traded price.

c.

The member-brokers shall make the disclosure to the Surveillance Department immediately upon execution of the
trade.
Single Trade: Immediately upon the execution of the order where the traded quantity either buy or sell on account
of any trade is more than 0.5% of the number of equity shares of the company listed on the stock exchange.
Cumulative Trades for the Day: Within one hour from the closure of the trading hours, where the cumulative
quantity traded under any single client code on that day either purchase or sale is more than 0.5% of the number
of equity shares of the company listed on the stock exchange.

d.

The Surveillance Department of the Exchanges shall disseminate to the market participants the aforesaid information
received from the member-brokers on the same day after market hours through its website.

36

26. BLOCK DEALS


In order to facilitate execution of large trades, the stock exchanges are being permitted to provide a separate trading
window. A trade, with a minimum quantity of 5,00,000 shares or minimum value of Rs.5 crore executed through a
single transaction on this separate window of the stock exchange will constitute a block deal.
Trade details of BLOCK DEAL such as Deal date, Scrip code, Scrip Name, Quantity, Buy or Sell, Rate, Client code
and Client name are to be reported by the member to the Exchange through the Data Upload System (DUS). It may
be noted that members are required to upload information of each trade executed in block deal separately.
The details of BLOCK DEAL executed by the member are to be uploaded by the trading member on the same day of
execution of trade through the DUS.
The BLOCK DEAL information uploaded by all the members will be disseminated by the Exchange to the market, on
the same day, after the end of trading hours.
Members are requested to kindly refer to Exchange Notice No. 20051108-29 dated November 8, 2005 & Notice No.
20051108-28 dated November 08, 2005 issued in respect of Block Deals.

37

27. STRAIGHT THROUGH PROCESSING (STP)


Straight Through Processing (STP) is a mechanism that automates the end-to-end processing of transactions of the
financial instruments. It involves use of a single system to process or control all elements of the work-flow of a financial
transaction, including what is commonly known as the Front, Middle & Back-office & General Ledger. In other words,
STP can be defined as electronically capturing & processing transactions in one pass, from the point of first deal to
final settlement.
Usage of STP enables orders to be processed, confirmed, cleared & settled in a shorter time period, more cost-effectively
& with fewer errors.
Members may refer to Exchange Notice No. 20040420-12 dated April 20, 2004 wherein members have been advised
that all institutional trades executed on the Stock exchanges would be mandatory processed through the STP system
w.e.f. July 1, 2004. Members may also refer to Exchange Notice No. 20040705-10 dated July 5, 2004 issued in respect
of STP & use of Exchange allotted Unique Client Codes. In case of Institutional Clients it is mandatory for the member
brokers use Straight Through Processing (STP) for settlement of those trades.

38

28. TRANSACTIONS IN SCRIPS WHERE FII LIMIT HAVE


BEEN REACHED
Reserve Bank of India monitors the limits for FII holdings in individual Indian Companies. The FIIs are, however,
allowed to sell the securities of the companies purchased by them where the prescribed ceilings of FII investments
have been reached, by entering into sale transactions on BOLT system.
Trades on the BOLT system in such cases can be executed only on behalf of FIIs, Mutual Funds registered with SEBI,
Banks and Domestic Financial Institutions.
SALE Orders in this Segment can be entered only on behalf of the FII clients while the BUY Orders can be on behalf
of any FIIs/SEBI registered Mutual Funds/Banks/or Domestic Financial Institutions. The Buy/Sell orders in this segment
are matched as per the order matching mechanism of the normal segment. In order to facilitate execution of these
deals on-line on the BOLT System, the Exchange has devised a new segment where scrips are identified by codes
falling in 6 lakh series. For example, for entering into trades in RIL, the scrip code is 600325
Circuit filters applicable for the respective scrips in the Rolling Settlement are also be applicable in this segment. The
settlement cycle for these trades is the same as that of the Rolling Settlement and trades in this segment can be
settled only in the demat mode. Delivery obligation originating from these sale transactions can be met by delivery of
shares standing in the names of FII only.
Non-compliance of this condition can result in imposition of financial penalties including reversal of such transactions.
The trades executed on the system of the Exchange are covered under the Trade Guarantee Fund of the Exchange.
Transaction charges are applicable to such transactions as if they were normal transactions on BOLT system.
These transactions are, however, excluded from payment of margins, but the member-brokers are required to mark
these trades as FI trades at the time of order entry itself. These trades are also excluded from computation of intraday turnover or gross exposure limits of the member-brokers as applicable to trade on behalf of domestic financial
institutions, FIIs, banks and Mutual Funds registered with SEBI.

39

29. ADVERTISEMENT
Member-brokers of the Exchange are permitted to issue advertisement to advertise their products and services offered
to their clients.
Advertisements so issued shall be in conformity with Regulation 17 and Bye- Law-358 of the Rules Bye- Laws and
Regulations of the Exchange and as per the Code of Conduct specified in Schedule II of Regulation 7and 15 of SEBI
(Stock Brokers and Sub-brokers) Regulations, 1992 respectively.
Member-brokers are required to comply with the following:
1.

The content of the advertisements, brochures, etc. should be related only to the nature of services that stockbroker
can offer in respect of sales and purchase of shares and securities. The advertisement should not contain
recommendations regarding purchase or sale of share or security of any particular company.

2.

The advertisement can be published by a member-broker individually or jointly with other member-brokers so as
to enable small brokers to pool their resources for publicity.

3.

The advertisement should mention the name/title as recorded for the membership of the Stock Exchange alongwith
the code number allotted by the Securities and Exchange Board of India. It can also include the names of the subbrokers affiliated with the broker. The member-broker should also designate and authorise and name the authorised
person in the publication to ensure the correctness of the information given in the advertisement and prior approval
of the Stock Exchange should have been obtained in respect of such authorized person. The authorised person
will be specifically responsible when two or more member-brokers jointly advertise for brokerage business.

4.

(a)

The member-brokers should ensure that any information given in the advertisement must be correct and
accurate and contain matters of objectivity ascertainable facts, which should be capable of substantiation.

(b)

It should not have any adverse reference direct or indirect regarding the reputation of the other memberbrokers of the Stock Exchange and also of the Stock Exchange.

(c)

The advertisement should not contain anything which is otherwise prohibited for publication under the
relevant Act, unwarranted, misleading information or make any promises.

5.

The Advertisement should not include publicity for any party other than the member-broker himself and it should
not contain any reference to any person, firm or institution.

6.

The member-broker should not allow his or his firms name to be advertised by others or allow his or his firms
name to be published in the advertisement of others.

7.

The member broker should submit a copy of the advertisement to the Membership Department of the Exchange
authorities as soon as it is published. The Exchange Authorities will have the cease and desist powers in this
behalf.

8.

If a member-broker violates any of the above Regulations for the advertisement, he is liable to be penalized for the
same by the Stock Exchange authorities and/or SEBI.

9.

If the Stock Exchange authorities levy any penalty or take any disciplinary action against the member-broker, e.g.,
by way of suspension or declaring him as defaulter etc., it should be immediately made public by the Stock
Exchange authorities, and the concerned member-broker should not advertise during the period of suspension.

40

30. INVOLVEMENT IN OTHER BUSINESS / ANY OTHER


CAPACITY
As per the Securities Contracts (Regulation) Rules, 1957 a member of a stock exchange should not be engaged as a
principal or employee in any business other than that of securities except as a broker or agent not involving any personal
financial liability.
Similarly a designated director should not be involved in any other business or render professional services in any
capacity or work as an employee. In case of corporate member, a designated director should not be a member in his
individual capacity of other stock exchange (s). In case a member is a partnership firm, no person shall at the same
time be a partner in more than one partnership firm.

41

31. AUDITED ACCOUNTS AND NETWORTH CERTIFICATE


Under Rule 12 of the Securities Contract (Regulation) Rules 1957, the member-brokers are required to have their
accounts audited by a qualified Chartered Accountant and submit an audit report to the Exchange. The format of the
report to be submitted by the auditor has been prescribed in the circular No F.1/5/SE/83 dated May 31, 1984 issued
by the Ministry of Finance, Government of India.
The audit of accounts of the member-brokers should be completed within 6 months from the close of the financial
year. The member-brokers are required to submit the audited accounts alongwith the Audit Report to the Exchange
within 30 days of its receipt. All active members including representative members are required to submit the Audit
Report. An active member of the Stock Exchange refers to a member-broker who has done business in securities
even for a single day in the accounting year.
All the active member-brokers are also required to submit a Networth certificate from their Chartered Accountant on a
half yearly basis as on March 31 and September 30. The Exchange has prescribed that at the time of admission the
minimum net-worth for Corporate as well as Individual members as Rs. 50 lakhs and on becoming member this minimum
net-worth should be maintained by them at all times. In case of members other than corporate members, they are
required to maintain a minimum Networth of Rs. 30 lakhs. In case of Composite Corporate Members, the minimum
net-worth for each additional component membership is required to be 50% of the original amount.
The member-brokers are required to submit the Audit Report, audited accounts and the Networth certificate as on
March 31 to the membership Department of the Exchange. The due date for submission of the Audit Report, Audited
Accounts and Networth Certificate as on March 31 is September 30 every year.
The member-brokers observing an accounting period other than the financial year are also required to submit the
audited accounts and Networth certificate as on March 31. The Audit Report/Networth Certificate is required to be
submitted in original, it should be on the letterhead of the Chartered Accountant, signed by the Chartered Accountant
and should bear the seal of the firm.
Networth Certificate for the half year ending September 30 is required to be submitted by December 31. Networth
Certificate as on March 31 is required to be submitted on the basis of audited accounts while that for the half year
ended September 30; the same may be submitted on the basis of unaudited accounts.

42

32. COMPLIANCE WITH REGULATORY DIRECTIVES


Directives are issued by SEBI and stock exchanges from time to time for member-brokers to follow, which inter-alia
includes margin requirements, smoothly functioning of pay in/ payout trading restrictions, base minimum capital etc.
Submission of audit reports alongwith the annual accounts to the stock exchange and payments of turnover fees to
SEBI are the other requirements. In view of above, member-brokers are advised to ensure compliance of the following:
i.

The member-broker is not involved in any other type of business other than the securities business.

ii.

The Member-broker should not have entered into transactions during period of his suspension or other sanctions.

iii.

The member-broker has not transacted with suspended/defaulter members or any other members.

iv.

The member-broker does not have any dealings with unregistered sub-brokers.

v.

The member-broker has informed the stock exchange of his defaulting client and defaulting sub brokers to other
brokers where same sub broker is registered.

vi.

In line with SEBI Circular No. SMD/DBA II/CIR- 31 /2001. dated May 31, 2001, a member-broker has informed the
investors/general public about cancellation of registration of his/their sub brokers and also advised them not to
deal with such cancelled sub brokers.

vii.

If a member-broker has undertaken underwriting, whether the SEBI (Underwriters) Regulations, 1993 have been
complied with by the member-broker.

viii.

If any issue has devolved on the member-broker, details of amount devolved and settlement thereof.

ix.

In case of any change in the status and constitution of the stock broker, whether the stock broker has obtained
prior approval of SEBI to continue to buy, sell or deal in securities in line with Rule 4 (c) of SEBI (Stock Brokers and
Sub Brokers) Rules, 1992.

x.

All organisation associated with the securities markets including intermediaries as mentioned in Section 12 of the
Act are required to frame a Code of internal procedures and conduct as near to the Model Code specified in
Schedule I of SEBI (Prohibition of Insider Trading) Regulations, 1992.

xi.

No Member-broker shall, for the purpose of creating or inducing a false market in security,

Enter any order or orders for the purchase of such security with knowledge that an order or orders of substantially
the same size, and at substantially the same price, for the sale of any such security, has been or will be entered by
or for the same or different parties, or

Enter any order or orders for the sale of such security with the knowledge that an order or orders of substantially
the same size, and at substantially the same price for the purchase of such security has been or will be entered by
or for the same or different parties.

43

33. CODE OF CONDUCT FOR MEMBERS


Member-broker shall at all times abide by the Code of Conduct as specified under Regulation 7 of Schedule II of the
SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 which is as under:
A. GENERAL
(1)

Integrity: A stockbroker shall maintain high standards of integrity, promptitude and fairness in the conduct of all
his business.

(2)

Exercise Of Due Skill And Care: A stockbroker shall act with due skill, care and diligence in the conduct of all his
business.
(3) Manipulation: A stock-broker shall not indulge in manipulative, fraudulent or deceptive transactions or schemes
or spread rumours with a view to distorting market equilibrium or making personal gains.

(4)

Malpractices: A stock-broker shall not create false market either singly or in consent with others or indulge in any
act detrimental to the investors interest or which leads to interference with the fair and smooth functioning of the
market. A stockbroker shall not involve himself in excessive speculative business in the market beyond reasonable
levels not commensurate with his financial soundness.

(5)

Compliance with Statutory Requirements: A stock-broker shall abide by all the provisions of the Act and the
rules, regulations issued by the Government, SEBI the Board and the stock exchange from time to time as may be
applicable to him.

B. DUTY TO THE INVESTOR


(1)

Execution Of Orders: A stock-broker, in his dealings with the clients and the general investing public, shall
faithfully execute the orders for buying and selling of securities at the best available market price and not refuse to
deal with a Small Investor merely on the ground of the volume of business involved. A stock-broker shall promptly
inform his client about the execution or non-execution of an order, and make prompt payment in respect of securities
sold and arrange for prompt delivery of securities purchased by clients.

(2)

Issue Of Contract Note: A stockbroker shall issue without delay to his client a contract note for all transactions in
the form format specified by the stock exchange.

(3)

Breach Of Trust: A stock-broker shall not disclose or discuss with any other person or make improper use of the
details of personal investments and other information of a confidential nature of the client which he comes to know
in his business relationship.

(4) Business And Commission:

(5)

(a)

A stockbroker shall not encourage sales or purchases of securities with the sole object of generating brokerage
or commission.

(b)

A stock-broker shall not furnish false or misleading quotations or give any other false or misleading advice or
information to the clients with a view of inducing him to do business in particular securities and enabling himself
to earn brokerage or commission thereby.
Business of Defaulting Clients: A stock-broker shall not deal or transact business knowingly, directly or indirectly
or execute an order for a client who has failed to carry out his commitments in relation to securities with another
stock-broker.

44

(6)

Fairness to Clients: A stock-broker, when dealing with a client, shall disclose whether he is acting as a principal
or as an agent and shall ensure at the same time that no conflict of interest arises between him and the client. In
the event of a conflict of interest, he shall inform the client accordingly and shall not seek to gain a direct or indirect
personal advantage from the situation and shall not consider clients interest inferior to his own.

(7)

Investment Advice: A stock-broker shall not make a recommendation to any client who might be expected to rely
thereon to acquire, dispose of, retain any securities unless he has reasonable grounds for believing that the
recommendation is suitable for such a client upon the basis of the facts, if disclosed by such a client as to his own
security holdings, financial situation and objectives of such investment. The stockbroker should seek such information
from clients, wherever he feels it is appropriate to do so.

(7A)

Investment Advice in publicly accessible media :

(a) A stock broker or any of his employees shall not render, directly or indirectly, any investment advice about any
security in the publicly accessible media, whether real - time or non real-time, unless a disclosure of his interest
including the interest of his dependent family members and the employer including their long or short position in
the said security has been made, while rendering such advice.
(b) In case, an employee of the stockbroker is rendering such advice, he shall also disclose the interest of his dependent
family members and the employer including their long or short position in the said security, while rendering such
advice.
(8)

Competence of Stock Broker: A stockbroker should have adequately trained staff and arrangements to render
fair, prompt and competent services to his clients.

C. STOCK-BROKERS VIS-A-VIS OTHER STOCK-BROKERS


(1)

Conduct of Dealings: A stock-broker shall co-operate with the other contracting party in comparing unmatched
transactions. A stockbroker shall not knowingly and willfully deliver documents, which constitute bad delivery and
shall co-operate with other contracting party for prompt replacement of documents that are declared as bad
delivery.

(2)

Protection of Clients Interests: A stock-broker shall extend fullest co-operation to other stock-brokers in protecting
the interests of his clients regarding their rights to dividends, bonus shares, right shares and any other right
related to such securities.

(3)

Advertisement and Publicity: A stockbroker shall not advertise his business publicly unless permitted by the
stock exchange.

(4)

Inducement of Clients: A stockbroker shall not resort to unfair means of inducing clients from other stock- brokers.

(5)

False or Misleading Returns: A stock-broker shall not neglect or fail or refuse to submit the required returns and
not make any false or misleading statement on any returns required to be submitted to the Board and the stock
exchange.

45

34. PENALTY NORMS


The Exchange has reviewed and rationalised the existing norms for imposing late fees, fines and penalties for the
Cash segment. The revised norms have been approved by the Disciplinary Action Committee (DAC) of the Exchange
in its meeting held on February 27, 2008.
The consolidated list of revised norms shall be applied for the violations observed during the course of inspection or
otherwise to be conducted w.e.f. April 01, 2008. The actions including fines for violations are only indicative. In case of
a large number of instances of violation involving large amount of funds / large quantity of securities or instances of
repetitive nature, the DAC may take such strict action as it may deem fit including levy of higher fines / suspension /
expulsion. (Exchange Notice No.20080307-8 dated March 07, 2008).
List of indicative penalty in respect of violations observed during inspections or otherwise in Cash segment, Derivative
and Debt segment
No.

Details of contravention

Penalty (Fine in Rupees)

I - Dealings with Clients


1

Client Registration
(a) Documents not executed

Rs.10,000/- per client

(b) Inclusion of contravening clauses / Omission of material details Rs.10,000/-

(c) Otherwise not in the prescribed format

Advice

Non-maintenance of Books of Accounts,Records & Documents


including non maintenance of Client-wise Accounts for Funds /
Securities.

Rs. 50,000/-

Mis-utilisation of clients funds or securities


3

Bank and Demat Account Operations


(a) Separate Clients Bank or Demat Account not maintained
for clients transactions

Rs.10,000/-

(b) Payin / Payout not received from /


delivered to respective clients accounts

In excess of 2% of number of
instances, fine of Rs. 10,000/Otherwise, Advice

(c) Non-segregation of Own and Clients Funds or Securities

In excess of 2% of number of
instances, fine of Rs.10,000/Otherwise, Advice

(d) Delay in release of payout of Funds / Securities to clients

In excess of 2% of number of
instances, fine of Rs.10,000/Otherwise, Advice

(e) Delayed / Non payment of Dividend


(Delay in Excess of 90 days)

0.5 % of the amount (Rs.10,000/if amount is not known)

Excess Brokerage charged

TM to be advised to refund the


excess brokerage charged to the
constituents and fine of Rs.5,000/or Excess Brokerage whichver is
higher.
If not charged at all - advice

46

No.

Details of contravention

Penalty (Fine in Rupees)

Use of Multiple Codes for client or own trades

Advice

Contract Note related contraventions


(a) Non issue / delay in issue/ issued with material discrepancies Rs.10,000/or contract notes not signed by Authorised Signatory or Duplicates
or Copies / Proof of dispatch of contract notes not maintained
Non-compliances related to Spot Transaction
(b) Otherwise not as prescribed

Advice

Non-compliances related to STP system


7

Quarterly Statement of Accounts for funds or securities not sent

In excess of 2% of number of
clients, fine o Rs10,000/Other discrepancies Advice

Cash dealings with clients

Fine of 0.1% of the value in excess


of Rs 10 lakhs.
Otherwise - Advice

Non-disclosure of trading on own account to clients

Advice

Exclusive Email-ID for investorscomplaints not created or


not displayed
10

Transfer of Trades / Errors at the time of order entry

11

Margin Trading related contraventions

In excess of 2% of number of orders


executed, fine of 0.1% of he value of
trades transferred

(a) Agreement not executed with clients

Rs. 5,000/- per client

(b) Margin Trading facility in scrips other than permitted

Rs. 10,000/-

(c) Short collection of margin in excess of 20%

Rs. 10,000/-

(d) Other procedural contraventions

Rs. 10,000/-

II - Dealings with Intermediaries


1

Dealing with Unregistered Intermediaries

Rs.1,00,000/- per Unregistered


Intermediary.
Further, member is to be advised
to ensure that the entities stop dealing
as unregistered intermediaries and be
directed to withdraw the terminal(s), if
any, Unregistere allotted to such
entities, immediately.
In addition to monetary fine,
suspension of the trading membership
may also be considered depending
upon the gravity of the violation,
incases where stances of ealings with
more
than
5
Unregistered
ntermediaries are observed.

Doing business for / through other TMs or sub-brokers of


other TMs without for prior approval of the Exchange.

Rs.10,000/- for dealing with member


of the same Exchange
With brokers / Sub-brokers of other
Exchanges - Advice

47

No.
3

Details of contravention

Penalty (Fine in Rupees)

Inspection of active Sub-Brokers / Branches not done

Advice

Sharing of Brokerage / Commission, except as permitted


under the Bye-Laws of the Exchange.
Non-compliances by Subsidiaries of Regional Exchanges.
III - Trading System & Office Management
1

Operation of Trading Terminals by persons other than an


Approved User / Person

Advice

Allowing Trading Terminals to be operated by persons without


BCFM Certification

Advice

(a) Unauthorised extension of BOLT or IML Terminal /


Commencement of Internet trading without prior approval

Rs.50,000 per terminal.


If trading terminals are observed to be
used for carrying out illegal trading
activity, suspension of the trading
membership may also be considered
depending on the gravity of the
violation.

(b) Errors in upload of Terminal details to the Exchange

In excess of 5 terminals, fine of


Rs 5,000/- per terminal

Non-display of Notice Board or SEBI Registration Certificate

Rs.10,000/-

Non-appointment of Compliance Officer

Rs.10,000/-

Execution of trades on own account from locations other than


those permitted

Rs.10,000/-

Evasion of margin by entering wrong client code

0.3% of the value of trades or


Rs.25,000/- whichever is higher.

Not following the advertisement code of the Exchange

Rs.5,000/-

Non-compliance with PMLA requirements

Rs.10,000/-

10

Books of Accounts, Registers, Records & Documents not in


prescribed format / not maintained properly or not submitted
for inspection

Advice

11

Post Compliance Inspection


(a) Submitting wrong Compliance Certificate

Rs.15,000/-

(b) Repeated violations observed in both, last normal inspection


and post compliance inspection and where member was warned.

Fines prescribed for violations


observed in routine inspection.

(c) Repeated violations observed in both, last routine inspection


and post compliance inspection and where penalty was levied

Twice the amount of penalty levied in


routine inspection.

IV - Margin reporting requirement (Derivative segment)


1

% of factual wrong reporting of margin collection from constituents to total margin reported as collected
Upto 5%

Warning

> 5% and upto 10%

0.5% of wrongly reported amount

> 10% and upto 25%

2% of the wrongly reported amount

> 25% and upto 50%

2% of the wrongly reported amount


and suspension from trading for 1 day

48

No.

Details of contravention

Penalty (Fine in Rupees)

> 50%

2% of the wrongly reported amount


and suspension from trading
for 5 days

% of (margin available but not properly accounted for / received from third parties) to total margin reported
as collected
Upto 5%

Advice

> 5% and upto 10%

0.5% of the wrongly reported amount,


subject to maximum of Rs 25,000/-

> 10% and upto 25%

0.75% of the wrongly reported


amount, subject to maximum of
Rs 50,000/-

> 25% and upto 50%

1% of the wrongly reported amount,


subject to aximum of Rs 75,000/-

> 50%

1.25% of the wrongly reported


amount, subject to maximum of
Rs 1,00,000/-

Note :- All the requisite records, if available/maintained by the trading members in electronic form, shall be considered
as compliance.

49

INDEX RULES/BYE-LAWS/REGULATIONS/NOTICES
Sr. Particulars
No.

Rule/Bye-law/ Regulation/ Notice No.

Page No.

Contract Note:
1

Issue of contract notes.

Contract Note format prescribed by the Exchange.

Bye-law - 219

55

Exchange Notice No.5166/93 dated November 11, 1993.

56

Exchange Notice No.1515/99 dated May 7, 1999

57 - 63

Exchange Notice No. 20021109-9 dated November 9, 2002.

64 - 69

Contract Note Format

Exchange Notice No. 20060627 -18 dated June 27, 2006

70

Contract Note Format

Exchange Notice No. 20060630 -2 dated June 30, 2006

71

Electronic Contract Notes Additional Conditions

Exchange Notice No. 20050909-13 dated September 9, 2005

72 - 74

Signature on Contract Notes & numbering of


Contract Notes

Exchange Notice Nos. 4914/96 dated August 13, 1996 and


Exchange Notice No.5419/96 dated September 14, 1996.

75 - 76

Board Resolution / Power of Attorney for signing of


Contract Notes to be submitted to the Exchange

Exchange Notice No.1024/98 dated March 20, 1998.

77

Issue of contract notes within 24 hours


Acknowledgement on contract notes
Proof of delivery in case of despatch
through courier or post

Bye-law - 247 A
Exchange Notice No. 4914/96 dated August 13, 1996

78 - 79
75

Duplicates of the contract notes issued to be


maintained.
Counter foils to be maintained with adequate details.

Exchange Notice No. 4850/97 dated December 10, 1997.

80 - 81

10

Details of the trade to be attached in case of issue of


consolidated contract notes.

Exchange Notice No.4646/97 dated November 29, 1997

82 - 83

11

Provision for printing of PAN of the member and / or


PAN of the constituents, wherever the value of
contract exceeds Rs. 1 lakh.

Exchange Notice No. 20020930-4 dated Sept 30, 2002.

84

12

Compulsory PAN in Derivatives

Exchange Notice No.20050926-11 dated September 26, 2005

85

13

Brokerage to be charged.

Regulation 14

14

Commission terms for remisiers & sharing of Brokerage Exchange Notice No. 20051207-10 dated December 07, 2005

86 - 87
88

Off Market Transactions


15

Contract notes to be issued for trades not executed


through the BOLT.

Exchange Notice No. 24512/99 dated Sept. 2, 1999.

89

16

Issue of contract note for transactions in securities


not listed/permitted on the Exchange.

Bye - law - 26.

90

17

Written consent to be taken from the client


for entering into a principal to principal transactions.

Bye - law - 199


Exchange Notice No. 4914/96 dated August 13, 1996.

90

18

Contract notes to be issued in Form B


for entering into principal to principal transactions.

Exchange Notice No. 4914/96 dated August 13, 1996

75

19

Transactions done on a spot basis is to be reported to


the Exchange.

SEBI Circular No. SMD/RCG/CIR/(BKG)/293/95


dated March 14, 1995.

91

50

Sr. Particulars
No.

Rule/Bye-law/ Regulation/ Notice No.

20

SEBI Circular No. SMD/RCG/CIR/(BKG)/293/95


dated March 14, 1995

Transactions done on a spot basis is to be reported to


the Exchange within the prescribed time limit.

Exchange Notice No. 20040306-9 dated March 6, 2004.


21

Transactions done on a spot basis to be settled


within the prescribed time limit.

Page No.
91
92 - 97

Section 2(i) of the SCRA, 1956

98

Reg. 17(1) of the SEBI (Stock Brokers and Sub Brokers)


Rules, 1992

99

Rule 15 of SC (R ) Rules,1957

100

Books of Accounts
22

23

Books of accounts to be maintained.

Maintenance of books of accounts, records and


documents

Exchange Notice No.20050805-20 dated August 5,2005 &


Exchange Notice No. 20051227-18 dated December 27, 2005

101 - 104

Client Monies
24

Clients funds to be routed through designated


Client Account.

Bye-law - 247A

78 - 79

Segregation of own and client transactions


in separate bank accounts

Exchange Notice No. 7031/94 dated December 6, 1994

105

Client Account not to be used for non-specified


purposes.

Exchange Notice No.4850/97 dated December 10, 1997

80 - 81

Client account not to be used for own / misuse


of funds / unathorised transfer of funds from one
clients account to another clients account.

Exchange Notice No. 20020917-2 dated September 17, 2002.

106

Exchange Notice No. 20020917-2 dated September 17, 2002

106

Exchange Notice No. 20030903-5 dated September 3, 2003

107

Exchange Notice No.20050324-21 dated March 24, 2005

108

Payments of funds to clients


Payment of dividend / reconciliation of dividend
account
25

Transaction with Clients in Cash


(Mode of Payment)

Clients Securities
26

Securities due to the clients transferred to the


members beneficiary account.

Bye - law - 247A

78 - 79

Securities due to one client transferred to another


client OR Securities due to the clients used for
meeting the pay-in obligation of the member/other
client.

Exchange Notice Nos. 7031/94 dated December 6, 1994

105

Delay in delivery of securities to clients.

Exchange Notice No.4850/97 dated December 10, 1997

80 - 81

Exchange Notice No. 20020917-2 dated September 17, 2002.

106

27

Deliver / Receive securities other than from respective


Clients Beneficiary Account or under approved
scheme.

Exchange Notice No. 20030903-5 dated September 3, 2003.

107

28

Half yearly statement of accounts for funds /


securities to be sent to the clients

Exchange Notice No. 20020906-3 dated Sept 6, 2002.

109

Exchange Notice No. 20030114-9 dated January 14, 2003

110

51

Sr. Particulars
No.

Rule/Bye-law/ Regulation/ Notice No.

Page No.

Exchange Notice No. 20040827-11 dated August 27, 2004

111 - 136

Client Registration
29

Client Registration Forms and Client database


(Uniform Documentary Requirements for trading)

Member Client Agreement Format


Uniform Risk Disclosure Document
Model Tripartite Agreement
Broker sub-broker Agreement

30

Updatation of Financial Details of the client

Exchange Notice No. 20061120- 9 dated November 20, 2006

137

31

KYC Segregation of Mandatory & Voluntary Documents Exchange Notice No. 20060704 -6 dated July 04, 2006

138

32

Disclosure of Proprietary Trading

Exchange Notice No. 200311257 dated November 25, 2003

139

Exchange Notice No. 2628/97 dated June 9, 1997

140

Dealing with Intermediaries


33

Registration of Remisiers

34

Sharing Commission/brokerage only after


Bye - law - 218(a)
registering such persons as remisiers with the Exchange.
Rule 216 Rule 235

141

141 - 147

Exchange Notice No. 2628/97 dated June 9, 1997.

140

Exchange Notice No. 20031006 21 dated October 6, 2003

148

35

Registration of sub-brokers

Exchange Notice No.62311/2000 dated September 14, 2000.

149

36

Members of other Exchanges routing orders of their clients


through BOLT, to be registered as Sub-brokers
with SEBI.

Exchange Notice No.54809/2000 dated July 1, 2000

150

37

Affiliation of sub-brokers with members.

Exchange Notice No. 20030228-3 dated February 28, 2003.

151

Submission of Audit Report, Audited Accounts & Networth Certificate


38

Maintenance of Minimum Networth requirement.

Exchange Notice No. 20030905-1dated September 5, 2003.

152

39

Submission of Audit Report, Annual Accounts and


Networth Certificate.

Exchange Notice No. 20040524-10 dated May 24, 2004.

153 - 160

Exchange Notice Nos. 93424/2001dated July 23, 2001

161 - 162

Unique Client Code


40

41

Entering correct/unique client codes while placing the


orders in the system and mapping the client code
with PAN/ Passport etc. in the back office and entering
the client details on BOLT
Penalty structure for modification of client codes.

Exchange Notice No. 200401283 dated January 28, 2004

163

Exchange Notice No. 20040407-13 dated April 7, 2004

164

Exchange Notice No. 20041015-6 dated October 15, 2004

165

42

Revision of penalty structure for modification of


client codes in the post-closing session

Exchange Notice No. 20060221-11 dated February 21, 2006

166 - 167

43

PAN Made compulsory

Exchange Notice No. 20060927 -21dated September 27, 2006

168 - 169

44

Penalty for non-registeration of UCC along with PAN


details

Exchange Notice No. 20061229 -26 dated December 29, 2006

170

45

Penalty for habitual offenders, who violate the requirement of timely updation of UCC along with PAN details

Exchange Notice No. 20080307-7 dated March 07, 2008

171

52

Sr. Particulars
No.

Rule/Bye-law/ Regulation/ Notice No.

Page No.

Other Irregularities
46

Done business on behalf of suspended / defaulter /


expelled members without obtaining prior
permission of the Exchange.

Bye- Law 358 (vi)

172

47

Incomplete / Non-maintenance of registers


(Register of Securities/ Register of Transactions /
Register of Complaints / Dividend ledger /
Margin Deposit Book)

Exchange Notice No. 4850/97 dated December 10, 1997

48

Involved in Fund-based activities.

Rule 8(1)(f) and Rule 8(3)(f) of SC(R) Rules, 1957.

173

SEBI Circular No. SMD/POLICY/ CIR-6/97 dated May 7, 1997

174

80 - 81

49

Member / Partners / Designated Directors involved


in business other than securities business.

Rule 8(1)(f) of the SC (R) Rules, 1957.

50

Appointment of Compliance Officer.

Exchange Notice No. 20021001-5 dated October 1, 2002.

175-176

51

Advertisement Code.

Exchange Notice No. 104615/2001 dated November 12, 2001.

177- 179

Regulation 17 and Bye-law 358 (xi)


52

Review of norms relating to trading by members/


sub-brokers.

Exchange Notice No. 20040117-8 dated January 17, 2004.

53

Display of Notice Board ( Compliance


Requirements for Trading Members)

Exchange Notice No. 20050902-21dated September 2, 2005

181 - 182

54

Email ID for investors grievances

Exchange Notice No. 20070131 -11 dated January 31, 2007

183

55

PMLA requirements

Exchange Notice No. 20060321 -15 dated March 21, 2006

184 - 186

Exchange Notice No. 20070330 -27 dated March 30, 2007

187

Exchange Notice No. 20080211- 19 dated February 11, 2008

188

56

Client Margin Reporting

180

Trading Terminals
57

Installation of BOLT Terminals other than at members


registered offices, branch offices and registered
sub-brokers office.

Exchange Notice No. 104616/2001 dated November 12, 2001.

189

58

Pro-account trading terminal

Exchange Notice No. 20030909-1 dated September 9, 2003.

190

59

BOLT Terminal operation by Remisier

Exchange Notice No. 20040205-13 dated February 5, 2004.

191

60

Registering / Uploadingof IML/TWS location

Exchange Notice No.20050808-26 dated August 8, 2005

192 - 193

Information

Exchange Notice No. 20050930-13 dated September 30, 2005

194 -195

61

TWS/IML Registration on BOLT & FAQs on the same

Exchange Notice No.20051004-13 dated October 4, 2005

196

Exchange Notice No. 20050823-20 dated August 23, 2005

197 - 198

Bulk Deals
62

63

Bulk Deal Disclosures

Bulk Deal reporting through DUS Software

Exchange Notice No.20040216-10 dated Feb 16, 2004

199

Exchange Notice No.20040311-7 dated March 11, 2004

200

Exchange Notice No.20040722- 11 dated July 22, 2004

201 - 205

Block Deals
64

Modalities for Block deal

Exchange Notice No. 20051108-28 dated November 8, 2005

206 - 209

65

Disclosure of Trade details of Block Deals

Exchange Notice No. 20051108-29 dated November 8, 2005

210 - 213

53

Sr. Particulars
No.

Rule/Bye-law/ Regulation/ Notice No.

Page No.

Exchange Notice No. 20040402-31 dated April 2, 2004

214 - 216

SEBI Circular No. SEBI/MRD/ SE/SU/


Cir-16/04 dated March 31,2004

217 - 224

Margin Trading
66

Margin Trading

Client Funding
67

68

Information regarding Client Funding by Members

Penalty Norms for not uploading client funding details

Exchange Notice No. 20041029-13 dated October 29, 2004

225

Exchange Notice No. 20050824-16 dated August 24, 2005

226 - 227

Exchange Notice No. 20051216-8 dated December 16, 2005

228

Exchange Notice No.20060221-10 dated February 21, 2006

229

Securities Transaction Tax ( STT )


69

Securities Transaction Tax (STT)

Exchange Notice No.20040927-13 dated September 27, 2004

230 - 254

Exchange Notice No. 20041005-7 dated Oct 5, 2004

255

Exchange Notice No.20050520-14 dated May 20, 2005

256

Straight Through Processing ( STP )


70

Mandatory use of STP system for all Institutional


trades executed on the Stock exchanges

Exchange Notice No.20040420-12


dated April 20, 2004

257 - 258

71

STP & use of exchange allotted


Unique Client Codes

Exchange Notice No.20040705-10


dated July 5, 2004

259 - 263

Exchange Notice No. 20031112 5 dated November 12, 2003

264 - 269

Exchange Notice No.20041019-4 dated October 19, 2004

270 - 271

Exchange Notice No.20051102-5 dated November 2, 2005

272 - 282

Penalty Norms
72

Penalty Norms - Cash Segment

73

Penalty Norms for inspection of trading members

Exchange Notice No. 20080307-8 dated March 07, 2008

74

Penalty norms for inspection of books of accounts


& other documents

Exchange Notice No.20060221-12 dated February 21, 2006

284 - 288

75

Introduction of norms for imposition of late fees / fines /


and penalties WDM / RDM / Corporate Debt Segment

Exchange Notice No.20051102-6 dated November 02, 2005

285 - 289

76

Penalty Structure for non-registration


of client codes by the stipulated time

Exchange Notice No.20060331-6 dated March 31, 2006

290 - 291

54

283

Contract Notes
Bye-Law 219
219. (a)

Members shall issue without delay to non-members contract notes in the form prescribed under the relevant
regulations in respect of all bargains made for and on their behalf as agents and when dealing as Principals.

(b)

The contract notes rendered by members to non-members shall state that the contract is subject to the
Rules, Bye-laws, Regulations and usages of the Exchange and subject to arbitration as provided in the
Rules, Bye-laws and Regulations of the Exchange and subject to the jurisdiction of the courts in Bombay.
The contract notes shall not contain any provision inconsistent with the Rules, Bye-laws and Regulations of
the Exchange. The names of the partners or the sole proprietor of the firm shall be printed on the contract
notes. The contract notes shall also be in such form as will provide that the words member(s) of the Stock
Exchange, Bombay shall immediately follow the signature.

Amended by Governing Board Resolution dated 21.1.93 and approved by SEBI on 15.2.93.

55

Notice no

: 5116/93

Notice date : November 11, 1993

Contents:
It has been brought to our notice that some members of the Stock Exchanges are found wanting in the observance of
the following requirements. It is also noticed that when detected, members take the plea of ignorance or market practice
to justify their failure. Members are hereby warned to be careful in future in the observance of the following:
Contract Notes :
(a)

Contract notes should invariably be issued to the clients.

(b)

Such contract notes must conform to statutory format.\

(c)

Brokerage should be shown separately in the contract notes.\

(d)

In case of contracts entered into by members on a principal-to-principal basis with their clients, contract notes
should be issued in Form B and written permission, in respect of each such transaction , should be taken from
clients and preserved by the member.

(e)

Contract notes should be signed by authorised persons.

Service to Investors :
(a)

Brokers should pass on to the clients the correct rate at which the transactions were executed.

(b)

Brokerage should be charged within the limit permitted under the Regulations.

(c)

There should be no unjustified delays between pay-outs and the transmission of shares/monies. If there is a
delay, record of reasons for such delay should be available.

Regulatory Aspects :
(a)

Members should maintain all required books of accounts and other documents.

(b)

There should be compliance with trading restrictions imposed by the Stock Exchange.

(c)

There should be no trading in unlisted securities and in securities prior to their admission to dealings by the
Exchange.

All members may, therefore, note that in case such irregularities as stated above are found during the inspection of
their books of accounts and other documents, they will be liable for disciplinary action including suspension under the
Rules, Bye-laws and Regulations of the Exchange.

Secretary

56

Notice no
Notice date
Subject

:
:
:

1515/99
May 7, 1999
Amendments to the Contract Note.
Contents :

Sub : Amendments to the Contract Note


1.

The members are issuing Contract Notes to their constituents in Form-A or Form-B for the transactions entered
into on their behalf or with them respectively. On the reverse of the Contract Note, important Bye-laws relating to
arbitration, etc., which can be resorted to in the event of any dispute between the contracting parties, are printed.
The Arbitration and Conciliation Act, 1996 has since come into effect with effect from January 25, 1996.
Consequently, the relevant provisions regarding arbitration, etc., contained in the Bye-laws of the Exchange have
been amended after obtaining approval from SEBI and have come into force with effect from August 29, 1998.
The Income-tax Rules, 1962 have also been amended requiring the members to quote PAN No./GIR.No. of the
constituents in all documents pertaining to transactions of a value exceeding Rs.10 lakhs for sale or purchase of
securities.

2.

The sub-brokers appointed by a member are allowed to issue Confirmation Memo to their constituents in respect
of the transactions entered into by them on their behalf. Some of the members have represented to the Exchange
that there is a need to prescribe the format of this Confirmation Memo. Hence, it has become necessary to
incorporate the above changes in the Contract Note and also to devise a format of the Confirmation Memo to be
issued by sub-brokers to their constituents.

3.

The members are hereby informed that, the Governing Board of the Exchange in its meeting held on April 29,
1999, has approved the relevant amendments to the Contract Note to be issued by the members to their constituents
and also the format of the Confirmation Memo to be issued by the sub-brokers to their constituents by adding new
Regulation 14.3 after Regulation 14.2 of the Rules, Bye-laws and Regulations of the Exchange.

4.

The revised formats of the Contract Note in Form A and Form B (Regulation 14.2) and Confirmation Memo Form
C (Regulation 14.3) duly approved by the Governing Board are enclosed as Annexure I, II & III respectively. Also
enclosed are the relevant clauses under the Bye-laws of the Exchange, which are required to be printed on the
reverse of both the Contract Note and Confirmation Memo (Annexure IV). The members are requested to arrange
to take immediate steps to get the Contract Notes printed in the revised formats together with the relevant clauses
on the reverse and also issue Contract Notes to their constituents in the revised formats with the above amendments.
They are also advised to immediately inform their registered sub brokers to issue Confirmation Memo to their
constituents in Form C with the relevant clauses printed on the reverse.

5.

The members are further advised to ensure strict adherence to the revise format of Contract Note and also issue
of Confirmation Memo by their sub-brokers to their constituents. The members may please note that non-issuance
of the Contract Note in the prescribed format, may attract a fine of Rs.10,000/- and such other action as may be
decided by the Exchange.

6.

In case members require any clarification, they may please contact any of the following officials :
Sr. No.

Name

Intercom No.

1.

Shri C.K. Patil

8465

2.

Shri Arun P. Dhanawde

8070

3.

Shri Sydney Miranda

8168

S.T. Gerela
Gen.Manager (Inspection & Surveillance)
Encl: Annexure I IV

57

58

Trd No.

Trd.
Time

Qty.

Kind of
Security

Purch.
Rate

Securities BOUGHT for you for


Deliver /Clearing

Broke
rage

Rate
Plus
Broker
age

(if a contract of a value exceeding Rs.1 lakh)

Qty.

Kind
of
Security

Securities SOLD for you for


Delivery/Clearing
Sale
Rate

Brok
erage

done

Rate
Minus
Broker
age

Stamp as required under Article


43 (f) of Schedule I to the
Bombay Stamp Act, 1958
I/We have
where necessary

Form A

This Contract is made subject to the Rules, Bye-laws and Regulations and usages of The Stock Exchange, Mumbai.
Brokerage has been charged as stated above at rates not exceeding the official scale of brokerage.
This contract is subject to the jurisdiction of the Courts in Mumbai.
In the event of any claim (whether admitted or not) difference or dispute arising between you and me/us out of these transactions the matter shall be referred to arbitration
in Mumbai as provided in the Rules, Bye-laws and Regulations of The Stock Exchange, Mumbai.
5. This contract constitutes and shall be deemed to constitute as provided overleaf an agreement between you and me/us that all claims (whether admitted or not), differences
and disputes in respect of any dealings, transactions and contracts of a date prior or subsequent to the date of this contract (including any question whether such dealings,
transactions or contracts have been entered into or not) shall be submitted to and decided by arbitration in Mumbai as provided in the Rules, Bye-laws and Regulations of
The Stock Exchange, Mumbai.
6. The provisions printed overleaf form a part of the contract.
Yours faithfully,
Mumbai,
Dated
Member(s) of the Stock Exchange, Mumbai
Income Tax PAN/GIR No. of Member:
(if a contract of a value exceeding Rs. 1 lakh)

1.
2.
3.
4.

Ord No.

Name of Member/Firm
Name(s) of Proprietor/Partners (if any)
To
Income Tax PAN/GIR No. of Constituent:
Sir(s),
today the following transactions against your order:

APPENDIX - B TO REGULATION 14
Contract Note - Form A (Regulation 14.2)
No.
Subject To Mumbai Jurisdiction
Contract Note issued by Members acting for constituents as Brokers and Agents

Relevant clauses under the Bye-laws of the Exchange, which are required to be printed on the reverse of the
Contract Note & Confirmation Memo:
Reference to Arbitration
248. (a)
All claims ( whether admitted or not ) difference and disputes between a member and a nonmember or non-members (the terms non-member and non-members shall include a remisier, authorised clerk,
a sub-broker who is registered with SEBI as affiliated with that member or employee or any other person with
whom the member shares brokerage) arising out of or in relation to dealings, transactions and contracts made
subject to the Rules, Bye-laws and Regulations of the Exchange or with reference to anything incidental thereto or
in pursuance thereof or relating to their construction, fulfillment or validity or in relation to the rights, obligations
and liabilities of remisiers, authorised clerks, sub-brokers, constituents, employees or any other persons with
whom the member shares brokerage in relation to such dealings, transactions and contracts shall be referred to
and decided by arbitration as provided in the Rules, Bye-laws and Regulations of the Exchange.
Contract Constitutes Arbitration Agreement
(b)
An acceptance whether express or implied of a contract subject to arbitration as provided in sub-clause (a)
and with this provision for arbitration incorporated therein shall constitute and shall be deemed to constitute an
agreement between the member and the non-member or non-members concerned that all claims (whether admitted
or not), differences and disputes of the nature referred to in sub-clause (a) in respect of all dealings, transactions
and contracts of a date prior or subsequent to the date of contract shall be submitted to and decided by arbitration
as provided in the Rules, Bye-laws and Regulations of the Exchange and that in respect thereof any question
whether such dealings, transactions and contracts have been entered into or not shall also be submitted to and
decided by arbitration as provided in the Rules, Bye-laws and Regulations of the Exchange.
(a)
If any claim (whether admitted or not), difference or dispute arises between a sub-broker who is registered
with SEBI as affiliated with a member and his constituent arising out of or in relation to dealings, transactions and
contracts between the constituent and the sub-broker made subject to the Rules, Bye-laws and Regulations of the
Exchange or with reference to anything incidental thereto or in pursuance thereof or relating to their construction
fulfillment or validity or in relation to the rights, obligations and liabilities of the constituent, the sub-broker or the
member in connection therewith, then such claim, difference or dispute shall be brought to the notice of the
member by the constituent in writing within six months from the date of the claim, difference or dispute arising and
the same shall as far as possible be settled with the help of the member failing which it shall be brought to the
notice of the Exchange for resolution. If a claim, dispute or difference persists, the same shall be referred to and
decided by arbitration as provided in the Rules, Bye-laws and Regulations.
Appointment of Arbitrators
249. (i) (a) All claims, differences and disputes which are required to be referred to arbitration under these Byelaws and Regulations shall be referred to arbitration of a sole arbitrator or of three arbitrators to be appointed by
the Executive Director or by the parties from the Panel of Arbitrators constituted by the Governing Board, in the
manner provided in these Bye - laws and Regulations. The Executive Director shall appoint a sole arbitrator and
preferably appoint a non-member as sole arbitrator.
(b) In an arbitral tribunal of three arbitrators, each party shall appoint one arbitrator and the third Arbitrator will be
appointed by Executive Director. Those proposed arbitrators shall be from the panel of arbitrators constituted by
the Governing Board. If any of the parties fail to appoint arbitrator within 10 days of the day he is asked to appoint
arbitrator the Executive Director shall appoint such arbitrators in the manner provided in these Bye - laws and the
request of the non - member for appointment of non - member arbitrator from the Panel of arbitrators prepared by
the Governing Board shall be conceded to. All the Bye - laws providing arbitration by a single arbitrator shall apply
mutatis-mutandis to arbitration by three members.

59

Executive Director - authority to designate


249

A. The Executive Director of The Exchange for the purpose of Arbitration Bye - laws shall also include any official
of the Exchange not below the rank of General Manager designated by the Executive Director from time to time for
the specific function entrusted to him under these Bye - laws.
Appointment of Arbitrator by the Executive Director

250. (1) On payment in advance of the minimum fees of an arbitrator prescribed under these Bye-laws and Regulations
by any party to a claim, difference or dispute, the Executive Director shall appoint an arbitrator ;
(a) if the parties have failed to agree as to the person to be appointed as the arbitrator.
(b) if the arbitrator dies or fails, refuses or neglects to act or becomes incapable of acting as an arbitrator before an
award is made by him.
(2) An arbitrator to be appointed under clause (1) shall be from the panel of arbitrators prepared by the Governing
Board as per bye-law 262 (b) and shall be a non member in case one of the parties desires the appointment of a
non member as arbitrator.
(3) While appointing arbitrator it shall be ensured that the arbitrator is independent and impartial not interested in any
of the parties or the claim dispute or difference referred to in arbitration.
Award Binding on Parties and their Representatives
257. The parties to the reference shall in all things abide by and forthwith carry into effect the award of the arbitrators
which shall be final and binding on the parties and their respective representatives notwithstanding the death of or
legal disability occurring to any party before or after the making of the award and such death or legal disability
shall not operate as a revocation of the reference or award.
Enforcement of the Award
259. (i) A party to a reference who is dissatisfied with an award of an arbitrator(s) may appeal to an Appeal
Bench against such award within 15 days of receipt of the award.
(ii) When the time for preferring an appeal has expired and no appeal has been preferred or the appeal has been
preferred and the award has been passed in the appeal, and when the time for making an application to set aside
the award under Section 34 of the Arbitration and Conciliation Act, 1996 has expired, or such application having
been made, it has been refused, the final award shall be enforceable in the same manner as if it were a decree of
the Court.
Operation of Contracts
274. All dealings, transactions and contracts which are subject to the Rules, Bye-laws and Regulations of the Exchange
and every arbitration agreement to which the Rules, Bye-laws and Regulations of the Exchange apply shall be
deemed in all respects to be subject to the Rules, Bye-laws and Regulations of the Exchange and shall be
deemed to be and shall take effect as wholly made, entered into and to be performed in the city of Bombay and the
parties to such dealings, transactions, contracts and agreements shall be deemed to have submitted to the
jurisdiction of the Courts in Bombay for the purpose of giving effect to the provisions of the Rules, Bye-laws and
Regulations of the Exchange.
Appeal against Arbitral Award

274A.3. A party dissatisfied with an Award may appeal to the Appeal Bench against such Award within 15 days of the
receipt of such award.

60

Notices and Communications How to be Served


275. Notices and communications to a member or a non-member shall be served in any one or more or all of the
following ways and any such notice or communication under (i) to (vi) below shall be served at his ordinary
business address and/or at his ordinary place of residence and/or at his last known address:
(i)

by delivering it by hand;

(ii)

by sending it by registered post;

(iii)

by sending it under certificate of posting;

(iv)

by sending it by express delivery post;

(v)

by sending it by telegram;

(vi)

by affixing it on the door at the last known business or residential address;

(vii)

by its oral communication to the party in the presence of a third person;

(viii) by advertising it at least once in any daily newspaper published in Mumbai;


(ix)

by a notice posted on the notice board of the Exchange if no address be known.

61

62

Kind of Security

Rate

Delivery/Clearing
Quantity

Kind of Security

Securities BOUGHT FROM you for

Rate

Delivery/Clearing

Stamp as required under


Article 5(b) or 5(c) of
Schedule I to the Bombay
Stamp Act, 1958 where necessary

Form B

1. This Contract is made subject to the Rules, Bye-laws and Regulations and usages of The Stock Exchange, Mumbai.
2. This contract is subject to the jurisdiction of the Courts in Mumbai.
3. In the event of any claim (whether admitted or not) difference or dispute arising between you and me/us out of these transactions the matter shall be referred to
arbitration in Mumbai as provided in the Rules, Bye-laws and Regulations of The Stock Exchange, Mumbai.
4. This contract constitutes and shall be deemed to constitute as provided overleaf an agreement between you and me/us that all claims (whether admitted or not),
differences and disputes in respect of any dealings, transactions and contracts of a date prior or subsequent to the date of this contract (including any question whether
such dealings, transactions or contracts have been entered into or not) shall be submitted to and decided by arbitration in Mumbai as provided in the Rules, Bye-laws
and Regulations of The Stock Exchange, Mumbai.
5. The provisions printed overleaf form a part of the contract.
Yours faithfully,
Mumbai,
Dated:
Member(s) of the Stock Exchange, Mumbai
Income Tax PAN/
GIR No. of Member:
(if a contract of a value exceeding Rs. 1 lakh)

Quantity

Securities SOLD to you for

Name of Member/Firm
Name(s) of Proprietor/Partners (if any)
To
Income Tax PAN/GIR No. Of Constituent:
(if a contract of a value exceeding Rs. 1 lakh)
Sir(s),
I/We have this day entered into the following transactions with you as PRINCIPAL(S) TO PRINCIPAL(S):

APPENDIX - B TO REGULATION 14
Contract Note - Form B (Regulation 14.2) No.
Contract Note - Form B (Regulation 14.2)
Subject To Mumbai Jurisdiction
Contract Note issued by Members dealing with constituents as Principals

63

Trade
No.*

Trade
Time*

Qty.

Name
of
Security

Purchase
Rate

Brokerage
for
afiliated
member

Brokerage
for
the
Sub-broker

Rate
Plus
Brokerage

Qty.

Name
of
Security

Purchase
Rate

Securities SOLD for you for


Delivery/Clearing

Brokerage
for
afiliated
member

Brokerage
for
the
Sub-broker

No.

Form - C

Rate
Plus
Brokerage

Place:
Date:

Sub-broker Tax PAN/GIR No. of Sub-broker :


(if a contract of a value exceeding Rs. 1 lakh)

This Confirmation Memo is subject to the Rules, Bye-laws and Regulations and usage of The Stock Exchange, Mumbai.
Brokerage has been charged as stated above at rates not exceeding the official scale of brokerage and indicated separately.
This contract is subject to the jurisdiction of the Courts in Mumbai.
In the event of any claim (whether admitted or not) difference or dispute arising between you and me/us out of these transactions, the matter shall be brought to the notice
of the Member within 6 months from the date of dispute and same shall as far as possible be settled with the help of member broker failing which it shall be brought to the
notice of the Exchange officials for resolution. If the dispute persists, the same shall be referred to arbitration in Mumbai as provided in the Rules, Bye-laws and Regulations
of The Stock Exchange, Mumbai.
5. This confirmation Memo constitutes and shall be deemed to constitute as provided overleaf an agreement between you and me/us that all claims (whether admitted or not),
differences and disputes in respect of any dealings, transactions and contracts of a date prior or subsequent to the date of this contract (including any question whether
such dealings, transactions or contracts have been entered into or not) shall be submitted to and decided by arbitration in Mumbai as provided in the Rules, Bye-laws and
Regulations of The Stock Exchange, Mumbai.
6. The provisions printed overleaf form a part of the Confirmation Memo.
Yours faithfully,

1.
2.
3.
4.

* as per the Contract Note issued by the Member

Order
No.*

Securities BOUGHT for you for


Delivery/Clearing

Member Clearing No. :


SEBI Regn. No.:
Address:
Ref. No. of consolidated Contract Note of Member:
To
Name of the Client/Constituent or Code No:
Order No.:
Income Tax PAN/GIR No. of Client:
(if a contract of a value exceeding Rs.1 lakh)
Sir(s),
I/We have done today the following transactions on your account and against your order:

(Stock-broker of The Stock Exchange, Mumbai)

NAME OF THE SUB-BROKER


SEBI REGN. No.
NAME OF THE AFFILIATING MEMBER :

APPENDIX - B TO REGULATION 14
Confirmation Memo - Form - C (Regulation 14.3)
Confirmation Memo issued by Sub-brokers acting for clients/constituents as Sub-brokers
SUBJECT TO EXCLUSIVE JURISDICTION OF THE COURTS AT MUMBAI

Notice no.

20021109-9

Notice date

Saturday, November 09, 2002

Subject

ISSUANCE OF CONTRACT NOTE CUM BILL

Segment Name

Equity
Contents :
Sub: Issuance of Contract Note cum Bill

All the members of the Exchange are required to issue contract notes to their constituents within 24 hours of the
execution of the contract in the formats prescribed in Appendix B to Regulation 14 of the Rules, Bye-laws and
Regulations of the Exchange. The Contract notes issued by the members to their constituents when acting for them
as agents are required to be in Form A, and in Form B when dealing with them as principals.
The Exchange had received representations from many members stating that with the introduction of Rolling Settlements,
issue of separate bills to their clients had become cumbersome. They requested the Exchange to permit them to
include the particulars normally provided in the bills, in the contract notes issued by them to their clients, so that they
need not issue separate bills to their clients.
The Governing Board in its meeting held on October 24, 2002 considered the matter and approved alternate formats
of contract notes, which could be used by the members as contract note cum bill. The suggested alternate formats of
the contract notes, Form AA (alternate for existing Form A) and Form BB (alternate for existing Form B) are enclosed
as Annexure I & II respectively.
Members may however note that the formats of Form AA and Form BB are merely recommendatory in nature and
members are at liberty to include any other additional matter or information therein as they may desire, without diluting/
altering the basic Form A and Form B of the contract note stipulated in Appendix B to Regulation 14.2. There are no
changes in the clauses printed on the reverse of the contract notes and, for the benefit of the members, the same are
enclosed as Annexure-III,
The Governing Board further, decided to add Regulation 14.2.1 to the Rules, Bye-laws and Regulations of the Exchange,
which reads as under:
14.2.1 Members shall, while issuing contract notes in accordance with Regulation 14.2 to their constituents
when acting for them as agents and when dealing with them as principals, be entitled to and may add
such relevant details as they so deem fit to make it a contract note cum bill. Provided, however, that the
content of the contract note as so prescribed by the Governing Board from time to time shall not be
diluted.
In case members require any further clarifications, they may contact the concerned Account Managers of the Membership
Services Department.
Sunil Vichare
General Manager - Membership Services

64

65

Trade
No.*

Trade
Time*

Qty.

Kind of
Security

Purchase
Rate

Brokerage

Rate Plus
Brokerage
Amount

Qty.

Kind of
Security

Sale
Rate

Securities SOLD for you for


Delivery/Clearing

To
Sir(s),

Brokerage

Rate Minus
Brokerage

Amount

Stamp as required under Article


43 (f) of Schedule I to the
Bombay Stamp Act, 1958
where necessary

No.

Form - AA

NET AMOUNT DUE FROM YOU/TO US :


1. This Contract is made subject to the Rules, Bye-laws and Regulations and usages of The Stock Exchange, Mumbai.
2. Brokerage has been charged as stated above at rates not exceeding the official scale of brokerage.
3. This contract is subject to the jurisdiction of the Courts in Mumbai.
4. In the event of any claim (whether admitted or not) difference or dispute arising between you and me/us out of these transactions the matter shall be referred to arbitration
in Mumbai as provided in the Rules, Bye-laws and Regulations of The Stock Exchange, Mumbai.
5. This contract constitutes and shall be deemed to constitute as provided overleaf an agreement between you and me/us that all claims (whether admitted or not),
differences and disputes in respect of any dealings, transactions and contracts of a date prior or subsequent to the date of this contract (including any question whether
such dealings, transactions or contracts have been entered into or not) shall be submitted to and decided by arbitration in Mumbai as provided in the Rules, Bye-laws and
Regulations of The Stock Exchange, Mumbai.
6. The provisions printed overleaf form a part of the contract.
Yours faithfully,
Mumbai,
Dated:
Member(s) of the Stock Exchange, Mumbai
IncomeTax PAN/GIR No. of Member:
(if a contract of a value exceeding Rs. 1 lakh)

Add/less other charges/levies

Order
No.*

Securities BOUGHT for you for


Delivery/Clearing

(if a contract of a value exceeding Rs.1 lakh)

I/We have done today the following transactions against your order:

Name of Member/Firm
Name(s) of Proprietor/Partners (if any)
Income Tax PAN/GIR No. of Constituent:

APPENDIX - B TO REGULATION 14
Contract Note - Form AA (Regulation 14.2.1)
Contract Note issued by Members acting for constituents as Brokers and Agents
SUBJECT TO EXCLUSIVE JURISDICTION OF THE COURTS AT MUMBAI

66

Quantity

Kind of Security

Securities SOLD for you for


Rate

Amount

Delivery/Clearing

Quantity

Kind of Security

Securities BOUGHT for you for

Rate

Amount

Delivery/Clearing

Stamp as required under


Article 5(b) or 5(c) of
Schedule I to the Bombay
Stamp Act, 1958 where necessary

Mumbai,
Dated:

Member(s) of the Stock Exchange, Mumbai


IncomeTax PAN/GIR No. of Member:
(if a contract of a value exceeding Rs. 1 lakh)

Yours faithfully,

NET AMOUNT DUE FROM YOU/TO US :


This Contract is made subject to the Rules, Bye-laws and Regulations and usages of The Stock Exchange, Mumbai.
1. This contract is subject to the jurisdiction of the Courts in Mumbai.
2. In the event of any claim (whether admitted or not) difference or dispute arising between you and me/us out of these transactions the matter shall be referred to arbitration
in Mumbai as provided in the Rules, Bye-laws and Regulations of The Stock Exchange, Mumbai.
3. This contract constitutes and shall be deemed to constitute as provided overleaf an agreement between you and me/us that all claims (whether admitted or not),
differences and disputes in respect of any dealings, transactions and contracts of a date prior or subsequent to the date of this contract (including any question whether
such dealings, transactions or contracts have been entered into or not) shall be submitted to and decided by arbitration in Mumbai as provided in the Rules, Bye-laws and
Regulations of The Stock Exchange, Mumbai.
4. The provisions printed overleaf form a part of the contract.
5. The provisions printed overleaf form a part of the contract.

* Add/less other charges/levies

Name of Member/Firm
Name(s) of Proprietor/Partners (if any)
To
Income Tax PAN/GIR No. Of Constituent:
(if a contract of a value exceeding Rs. 1 lakh)
Sir(s),
I/We have this day entered into the following transactions with you as PRINCIPAL(S) TO PRINCIPAL(S):

APPENDIX - B TO REGULATION 14
Contract Note - Form BB (Regulation 14.2.1)
SUBJECT TO MUMBAI JURISDICTION
Contract Note issued by Members dealing with constituents as Principals

Reference to Arbitration
248. (a)
All claims (whether admitted or not) difference and disputes between a member and a non-member or nonmembers (the terms non-member and non-members shall include a remisier, authorised clerk, a sub-broker
who is registered with SEBI as affiliated with that member or employee or any other person with whom the
member shares brokerage) arising out of or in relation to dealings, transactions and contracts made subject to the
Rules, Bye-laws and Regulations of the Exchange or with reference to anything incidental thereto or in pursuance
thereof or relating to their construction, fulfillment or validity or in relation to the rights, obligations and liabilities of
remisiers, authorised clerks, sub-brokers, constituents, employees or any other persons with whom the member
shares brokerage in relation to such dealings, transactions and contracts shall be referred to and decided by
arbitration as provided in the Rules, Bye-laws and Regulations of the Exchange.
Contract Constitutes Arbitration Agreement
(b) An acceptance whether express or implied of a contract subject to arbitration as provided in sub-clause (a) and
with this provision for arbitration incorporated therein shall constitute and shall be deemed to constitute an agreement
between the member and the non-member or non-members concerned that all claims (whether admitted or not),
differences and disputes of the nature referred to in sub-clause (a) in respect of all dealings, transactions and
contracts of a date prior or subsequent to the date of contract shall be submitted to and decided by arbitration as
provided in the Rules, Bye-laws and Regulations of the Exchange and that in respect thereof any question whether
such dealings, transactions and contracts have been entered into or not shall also be submitted to and decided by
arbitration as provided in the Rules, Bye-laws and Regulations of the Exchange.
(c) If any claim (whether admitted or not), difference or dispute arises between a sub-broker who is registered with
SEBI as affiliated with a member and his constituent arising out of or in relation to dealings, transactions and
contracts between the constituent and the sub-broker made subject to the Rules, Bye-laws and Regulations of the
Exchange or with reference to anything incidental thereto or in pursuance thereof or relating to their construction
fulfillment or validity or in relation to the rights, obligations and liabilities of the constituent, the sub-broker or the
member in connection therewith, then such claim, difference or dispute shall be brought to the notice of the
member by the constituent in writing within six months from the date of the claim, difference or dispute arising and
the same shall as far as possible be settled with the help of the member failing which it shall be brought to the
notice of the Exchange for resolution If a claim, dispute or difference persists, the same shall be referred to and
decided by arbitration as provided in the Rules, Bye-laws and Regulations.
Appointment of Arbitrators
249.(i)(a)All claims, differences and disputes which are required to be referred to arbitration under these Bye-laws and
Regulations shall be referred to arbitration of a sole arbitrator or of three arbitrators to be appointed by the Executive
Director or by the parties from the Panel of Arbitrators constituted by the Governing Board, in the manner provided
in these Bye - laws and Regulations. The Executive Director shall appoint a sole arbitrator and preferably appoint
a non-member as sole arbitrator.
(b)In an arbitral tribunal of three arbitrators, each party shall appoint one arbitrator and the third Arbitrator will be
appointed by Executive Director. Those proposed arbitrators shall be from the panel of arbitrators constituted by
the Governing Board. If any of the parties fail to appoint arbitrator within 10 days of the day he is asked to appoint
arbitrator the Executive Director shall appoint such arbitrators in the manner provided in these Bye - laws and the
request of the non - member for appointment of non - member arbitrator from the Panel of arbitrators prepared by
the Governing Board shall be conceded to. All the Bye - laws providing arbitration by a single arbitrator shall apply
mutatis-mutandis to arbitration by three members.

67

Executive Director - authority to designate


249 A.The Executive Director of The Exchange for the purpose of Arbitration Bye - laws shall also include any official of
the Exchange not below the rank of General Manager designated by the Executive Director from time to time for
the specific function entrusted to him under these Bye - laws.
Appointment of Arbitrator by the Executive Director
250. (1)

On payment in advance of the minimum fees of an arbitrator prescribed under these Bye-laws and
Regulations by any party to a claim, difference or dispute, the Executive Director shall appoint an arbitrator;
(a)

if the parties have failed to agree as to the person to be appointed as the arbitrator.

(b)

if the arbitrator dies or fails, refuses or neglects to act or becomes incapable of acting as an arbitrator
before an award is made by him.

(2)

An arbitrator to be appointed under clause (1) shall be from the panel of arbitrators prepared by the Governing
Board as per bye-law 262 (b) and shall be a non member in case one of the parties desires the appointment
of a non member as arbitrator.

(3)

While appointing arbitrator it shall be ensured that the arbitrator is independent and impartial not interested
in any of the parties or the claim dispute or difference referred to inarbitration.
Award Binding on Parties and their Representatives

257. The parties to the reference shall in all things abide by and forthwith carry into effect the award of the arbitrators
which shall be final and binding on the parties and their respective representatives notwithstanding the death of or
legal disability occurring to any party before or after the making of the award and such death or legal disability
shall not operate as a revocation of the reference or award.
Enforcement of the Award
259. (i)

A party to a reference who is dis-satisfied with an award of an arbitrator(s) may appeal to an Appeal Bench
against such award within 15 days of receipt of the award.

(ii)

When the time for preferring an appeal has expired and no appeal has been preferred or the appeal has
been preferred and the award has been passed in the appeal, and when the time for making an application
to set aside the award under Section 34 of the Arbitration and Conciliation Act, 1996 has expired, or such
application having been made, it has been refused, the final award shall be enforceable in the same manner
as if it were a decree of the Court.
Operation of Contracts

274. All dealings, transactions and contracts which are subject to the Rules, Bye-laws and Regulations of the Exchange
and every arbitration agreement to which the Rules, Bye-laws and Regulations of the Exchange apply shall be
deemed in all respects to be subject to the Rules, Bye-laws and Regulations of the Exchange and shall be
deemed to be and shall take effect as wholly made, entered into and to be performed in the city of Bombay and the
parties to such dealings, transactions, contracts and agreements shall be deemed to have submitted to the
jurisdiction of the Courts in Bombay for the purpose of giving effect to the provisions of the Rules, Bye-laws and
Regulations of the Exchange.
Appeal against Arbitral Award
274A.3. A party dissatisfied with an Award may appeal to the Appeal Bench against such Award within 15 days of the
receipt of such award.

68

Notices and Communications how to be served


275. Notices and communications to a member or a non-member shall be served in any one or more or all of the
following ways and any such notice or communication under (i) to (vi) below shall be served at his ordinary
business address and/or at his ordinary place of residence and/or at his last known address:
(i)

by delivering it by hand;

(ii)

by sending it by registered post;

(iii)

by sending it under certificate of posting;

(iv)

by sending it by express delivery post;

(v)

by sending it by telegram;

(vi)

by affixing it on the door at the last known business or residential address;

(vii)

by its oral communication to the party in the presence of a third person;

(viii) by advertising it at least once in any daily newspaper published in Mumbai;


(ix)

by a notice posted on the notice board of the Exchange if no address be known.

69

Notice No.
Notice date
Subject
Segment Name

:
:
:
:

20060627-18
Tuesday, June 27, 2006
Amendment to Regulation 14 & Format of Contract Notes.
General
CONTENTS :

Attention of Trading Members is invited to the following revision carried out in the formats of contract Notes, as approved
by the Governing Board at it's meeting, held on June 3,2006.
Format

Particulars

Form A

Format of Contract Notes Issued by Members acting as Agents on Behalf of the Clients (Annexure - I)

Form B

Format of Contract Notes Issued by Members acting as Principals (Annexure - II)

Form AA

Alternative Format to Form A (Annexure - III)


Arbitration Clauses to be printed on the reverse of the Contract notes are enclosed as Annexure - IV.

The revised format of Contract Notes inter-alia makes it mandatory for the trading members to print order time in the
contract notes (Form A/ Form AA). It is clarified that order time to be printed on the contract note shall be the original /
modified order placement time as the case may be for the trades executed.
Trading Members may kindly note that Form AA is recommendatory in nature and the members may include any other
additional matter or information, as they may desire. Further, the columns for Securities Transaction Tax (STT) and
Service Tax (ST) are optional. However, trading members shall continue to give total STT and ST amount on the contract
note and statement of STT as per annexure prescribed vide the Exchange's Notice No. 20040927-13 dated Sept
27,2004.
In addition to the above the Board of Directors had deleted Regulation 14.3 to the Rules, Bye-laws and Regulations of
the Exchange and Form C prescribed in Appendix B to Regulation 14.
The Trading Members are advised to ensure compliance with the requirement of revised format of Contract Notes
latest by August 1, 2006.
In case trading members require any further clarifications, they may contact any of the following officials: Name of the Official

Extension No.

Mr. Yogesh Bambardekar

8286

Mr. Nitesh Agarwal

8354

Mr. Mukesh Kuwad

8497

Ms. Parul Kothari

8196

P. K. Ramesh
Dy. General Manager
Surveillance & Supervision

Pankaj Gupta
Asst. General Manager
Surveillance & Supervision

70

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20060630-2
Friday, June 30, 2006
Revised Format of Contract Notes
General

CONTENTS :
TO ALL TRADING MEMBERS,
Attention of the Trading Members is drawn to Exchange notice no. 20060627 - 18 dated June 27,2006 regarding revised
Format of Contract Notes. The exchange is receiving large number of queries regarding merging of common fields in
the Contract Notes.
In this regard it is clarified that Form AA is recommendatory in nature and the Trading Member may include any other
additional matter or information, as they may desire. They may also merge the common columns for both buy and sell
transactions, clearly identifying a transaction as buy/sell. Accordingly after merging, the columns may be printed
sequentially as follow: (i) Order No. (ii) Order Time (iii) Trade No. (iv) Trade Time (v) Security (vi) Buy/Sell (vii) Quantity
(viii) Gross Rate Per Security (viii) Total (ix) Brokerage (x) Service Tax (optional)(xi) Security Transaction Tax (Optional).
In case trading members require any further clarifications, they may contact any of the following officials: -

Name of the Official

Extension No.

Ms. Parul Kothari

8196

Mr. Nitesh Agarwal

8354

Mr. Ashwin Dattani

8157

P. K. Ramesh
Dy. General Manager
Surveillance & Supervision

Pankaj Gupta
Asst. General Manager
Surveillance & Supervision

71

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20050909-13
Friday, September 09, 2005
Electronic issuance of contract notes-Additional conditions.
General

Trading Members of the Exchange are hereby informed that SEBI has issued circular No. MRD/DoP/SE/Cir-20/2005
dated September 8, 2005 regarding the additional conditions to be complied for issuing Electronic Contract Notes.
A copy of the above-mentioned SEBI circular, which is self-explanatory, is enclosed herewith for your ready reference.
The SEBI circular is also available on the SEBI website http://www.sebi.gov.in/ .
Members are required to comply with the provisions of the above-mentioned SEBI circular.

P.K.Ramesh
Dy. General Manager
Surveillance and Supervision

Sandeep Gupta
Deputy Manager
Surveillance & Supervision

72

General Manager
Market Regulation Department Policy
Email:-sundaresanvs@sebi.gov.in
MRD/DoP/SE/Cir-20/2005
September 8, 2005
The Executive Directors/Managing Directors/Administrators
Of All Stock Exchanges
Dear Sir / Madam,
Sub: Electronic issuance of contract notes Additional conditions
1.

Please refer to SEBI circulars No. SEBI/SMD/SE/15/2003/29/04 dated April 29, 2003 and SMDRP/Policy/Cir-56/
2000 dated December 15, 2000 on the captioned subject.

2.

It is hereby specified that in addition to the conditions specified in the aforesaid circulars and the provisions of the
Information Technology Act, 2000 (IT Act, 2000), all the members of stock exchanges who are desirous of issuing
Electronic Contract Notes (ECNs) to their clients shall comply with the following conditions :2.1

Issuing ECNs when specifically consented


The digitally signed ECNs may be sent only to those clients who have opted to receive the contract notes in
an electronic form, either in the Member Client agreement / Tripartite agreement or by a separate letter.
The mode of confirmation shall be as per the agreement entered into with the clients.

2.2

Where to send ECNs


The usual mode of delivery of ECNs to the clients shall be through e-mail. For this purpose, the client shall
provide an appropriate e-mail account to the member which shall be made available at all times for such
receipts of ECNs.

2.3

Requirement of digital signature


All ECNs sent through the e-mail shall be digitally signed, encrypted, non-tamperable and shall comply with
the provisions of the IT Act, 2000. In case the ECN is sent through e-mail as an attachment, the attached file
shall also be secured with the digital signature, encrypted and non-tamperable.

2.4

Requirements for acknowledgement, proof of delivery, log report etc.


2.4.1 Acknowledgement
The acknowledgement of the e-mail shall be retained by the member in a soft and non-tamperable form.
2.4.2 Proof of delivery

2.4.3

i.

The proof of delivery i.e., log report generated by the system at the time of sending the contract
notes shall be maintained by the member for the specified period under the extant regulations
of SEBI/stock exchanges and shall be made available during inspection, audit, etc.

ii.

The member shall clearly communicate to the client in the agreement executed with the client
for this purpose that non-receipt of bounced mail notification by the member shall amount to
delivery of the contract note at the e-mail ID of the client.

Log Report for rejected or bounced mails


i.

The log report shall also provide the details of the contract notes that are not delivered to the
client/e-mails rejected or bounced back.

73

ii.

2.5

Also, the member shall take all possible steps (including settings of mail servers, etc) to ensure
receipt of notification of bounced mails by the member at all times within the stipulated time
period under the extant regulations of SEBI/stock exchanges.

When to issue or send in Physical mode


2.5.1 Issue in Physical mode
In the case of those clients who do not opt to receive the contract notes in the electronic form, the
member shall continue to send contract notes in the physical mode to such clients.
2.5.2 Send in Physical mode
Wherever the ECNs have not been delivered to the client or has been rejected (bouncing of mails) by
the e-mail ID of the client, the member shall send a physical contract note to the client within the
stipulated time under the extant regulations of SEBI/stock exchanges and maintain the proof of delivery
of such physical contract notes.

2.6

General requirements
2.6.1 ECNs through website
In addition to the e-mail communication of the ECNs in the manner stated above, in order to further
strengthen the electronic communication channel, the member shall simultaneously publish the ECN
on his designated web-site in a secured way and enable relevant access to the clients.
2.6.2

Access to the website


In order to enable clients to access the ECNs posted in the designated website in a secured way, the
member shall allot a unique user name and password for the purpose, with an option to the client to
access the same and save the contract note electronically or take a print out of the same.

2.6.3

Preservation/Archive of electronic documents


The member shall retain/archive such electronic documents as per the extant rules/regulations/
circulars/guidelines issued by SEBI/Stock Exchanges from time to time.

3.

4.

The Stock Exchanges are advised to


3.1

make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of
the above decision immediately.

3.2

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.

3.3

communicate to SEBI, the status of the implementation of the provisions of this circular in Section II, item
no. 13 of 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,

V S SUNDARESAN

74

Notice no
Notice date

:
:

4914/96
August 13, 1996
NOTICE

The Securities and Exchange Board of India has brought to our notice, certain common irregularities/deficiencies
observed while inspecting the books of accounts of the members. For the benefit of the members, the irregularities/
deficiencies observed by SEBI are listed below. This is not an exhaustive list of irregularities/violations. However, it
may help the members in avoiding occurrence of such instances:
1.

Relating to Contract Notes:


a.

Not having pre-printed serial numbers

b.

Not issuing contracts in Form B while acting as principal

c.

Not affixing Brokers note stamps

d.

Not having SEBI registration number.

e.

Signed by unauthorized persons or not signed.

f.

Not maintaining copies of contract notes.

g.

Maintaining counterfoil of contract notes without adequate details.

h.

Despatching contractnotes after 24 hours.

2.

Not obtaining clients consent while acting as principal.

3.

Dealing with unregistered sub-brokers.

4.

a.

Not having separate bank account for clients funds.

b.

Having separate bank account for clients funds but not segregating clients funds from his own funds.

5.

Non maintenance or improper maintenance of books of accounts which are required to be maintained as per
Rule 15 of the Securities Contracts (Regulations) Rules, 1957 and Regulation 17 of SEBI (Stock Brokers and
Sub-Brokers) Rules, 1992:
a.

Hard copy of client account not available.

b.

Books are available but the details of which are inadequate to correlate or trace the transactions.

6.

Non payment of Registration Fee or making part payment of fee.

7.

Not reporting off-the-floor transactions (e.g.)


a.

The transactions with members of other exchanges.

b.

Principal-to-Principal transactions with clients.

c.

Transactions done after the trading hours.

8.

Belated payments & deliveries and delayed rectification of Bad Deliveries.

9.

Violation of trading restrictions imposed by the Stock Exchange.


Members are advised that a serious view will be taken if such deficiencies are observed during the course of
the inspections of their books of accounts by the Exchange/SEBI.

R. Vaidyanath

Dy.General Manager
Inspection Dept.

75

Notice no
Notice date

:
:

5419/96
September 14, 1996
NOTICE

1.

Please refer to Exchange Notice No.4914/96 dated August 13, 1996 wherein cetain common irregularities /
deficiencies observed by SEBI while inspecting the books of accounts of the members of the Exchanges were
brought to the notie of the members for their guidance and compliance.

2.

One of the irregularities pointed out therein was that the Contract notes issued by the members do not have preprinted serial numbers.

3.

In this connection, a large number of members has represented to the Exchange that they print Contract Notes on
a continuous stationery. Besides , the Contract Notes issued by them to the Institutions and other constituents
bear different running numbers and fresh set of computer generated running numbers are given to the Contract
Notes on a daily basis. Consequently, it would be difficult for them to use Contract Notes with pre-printed serial
numbers.

4.

The matter was considered by the Governing Board of the Exchange at its meeting held on September 2, 1996
and it was decided that the Contract Notes issued by members should contain all the details as mentioned in the
Form A / Form B prescribed under Appendix 3 to Regulation 14 of the Rules, Bye-laws and Regulations of the
Exchange, but in view of the position stated in paragraph 3 above, it is not necessary for the members to have preprinted serial numbers on the Contract Notes. It should, however, be ensured that the Contract Notes bear
computerized / manual running serial numbers.

5.

It may also be noted that if a back dated Contract Note is issued for a transaction which was not reported to the
Exchange on the relevant day, it may invite penal action against the member.

6.

In case, members require any further clarification in this regard, they may please contact any of the following
persons :Sr.No.

Name

Intercom No.

1.

Shri R. Vaidyanath

8069

2.

Shri Arun P. Dhanawde

8070

3.

Shri Sydney Miranda

8165

S.T. Gerela
General Manager (Inspection)

76

Notice no
Notice date

:
:

1024/98
March 20, 1998
NOTICE

1.

The members are aware that in terms of Bye-law 223 of the Rules, Bye-laws and Regulations of the Exchange,
the Contract Notes are required to be signed by the member or by his partner or constituted attorney. Further in
terms of Rule-213 of the Rules, Bye-laws and Regulations of the Exchange any power of attorney granted by
members and any substitution thereunder must be registered and a copy thereof is required to be filed with the
Exchange. However, in case of corporate membership, the company has to pass a Board Resolution authorizing
certain officials to sign the Contract Notes and a certified copy thereof is required to be filed with the Exchange.

2.

Several individual members as well as partnership firms of the Exchange have since corporatised their memberships.
Such corporate members are advised to pass a necessary Board Resolution authorizing certain officials including
directors to sign the Contract Notes and file a certified copy of the same with the Legal & Membership Department
of the Exchange on the 25th floor at the earliest, if this has not been done earlier. A copy of the same is also
required to be provided to the Inspection Department by the members as and when called for.

3.

In case members require any clarification, they may please contact any of the following person :
Sr.No.

Name

Intercom No.

1.

Smt. Smita P. Dave

8073

2.

Smt. Meera V. Kittur

8168

S.T. Gerela
General Manager (Inspection & Surveillance)

77

REGULATION OF TRANSACTIONS BETWEEN


CLIENTS AND BROKERS
Bye-Law
247A. Notwithstanding anything to the contrary contained in these Bye-laws, the following shall regulate the transactions
between Clients and Brokers :
(1)
It shall be compulsory for all Member brokers to keep the money of the clients in a separate account and their
own money in a separate account. No payment for transactions in which the Member broker is taking a position as a
principal will be allowed to be made from the clients account. The above principles and the circumstances under which
transfer from clients account to Member brokers account would be allowed are enumerated below.
A)

Member Broker to keep Accounts.


Every member broker shall keep such books of accounts, as will be necessary, to show and distinguish in connection
withhis business as a member -

B)

(i)

Moneys received from or on account of and moneys paid to or on account of each of his clients and,]

(ii)

the moneys received and the moneys paid on Members own account.

Obligation to pay money into clients accounts


Every member broker who holds or receives money on account of a client shall forthwith pay such money to
current or deposit account at bank to be kept in the name of the member in the title of which the word clients
shall appear (hereinafter referred to as clients account. Member broker may keep one consolidated clients
accounts for all the clients or accounts in the name of each client, as he thinks fit; provided that when a Member
broker receives a cheque or draft representing in part money belonging to the client and in part money due to the
Member, he shall pay the whole of such cheque or draft into the clients account and effect subsequent transfer as
laid down in para D (ii).

C)

What moneys to be paid into clients account


No money shall be paid into clients account other than-

D)

i)

money held or received on account of clients;

ii)

such money belonging to the member as may be necessary for the purpose of opening or maintaining the
account;

iii)

money for replacement of any sum which may by mistake or accident have been drawn from the account in
contravention of para D given below;

iv)

a cheque or draft received by the Member representing in part money belonging to the client and in part
money due to the Member.

What moneys to be withdrawn from clients account


No money shall be drawn from clients account other than
i)

money properly required for payment to or on behalf of clients or for or towards payment of a debt due to
the member from clients or money drawn on clients authority, or money in respect of which there is aliability
of clients to the Member, provided that money so drawn shall not in any case exceed the total of the money
so held for the time being for such each client,

ii)

such money belonging to the Member as may have been paid into the client account under para 1C(ii) or
1C(iv) given above;

78

E)

iii)

money which may by mistake or accident have been paid into such account in contravention of para C
above.

(1)

Right to lien, set-off etc., not affected


Nothing in this para 1 shall deprive a Member broker of any recourse of right, whether by way of lien, set-off,
counter-claim charge or otherwise against moneys standing to the credit of clients account.

(2)

It shall be compulsory for all Member brokers to keep separate accounts for clients securities and to keep
such books of accounts as may be necessary, to distinguish such securities from his/their own securities.
Such accounts for clients securities shall, inter-alia, provide for the following :(a)

Securities received for sale or kept pending delivery in the market;

(b)

Securities fully paid for, pending delivery to client;

(c)

Securities received for transfer or sent for transfer by the Members, in the name of client or his
nominee(s);

(d)

Securities that are fully paid for and are held in custody by the Member as security/margin etc. Proper
authorization from client for the same shall be obtained by Member;

(e)

Fully paid for clients securities registered in the name of Member, if any, towards margin requirements
etc.;

(f)

Securities given on Vyaj-badla. Members shall obtain authorization from clients for the same.

(3)

Member Brokers shall make payment to their clients or deliver the securities purchased within two working
days of pay-out unless the client has requested otherwise. Stock Exchange shall issue a Press Release
immediately after the pay-out.

(4)

Member brokers shall issue the contract note for purchase/sale of securities to a client within 24 hours of
the execution of the contract.

(5)

In case of purchases on behalf of client, Member brokers shall be at a liberty to close out the transactions
by selling the securities, in case the clients fails to make the full payment to the Member Broker for the
execution of the contract within two days of contract note having been delivered for cash shares and seven
days for specified shares or before pay-in day (as fixed by Stock Exchange for the concerned settlement
period), whichever is earlier; unless the client already has an equivalent
credit with the Member. The loss incurred in this regard, if any, will be met from the margin money of that
client.

(6)

In case of sales on behalf of clients, Member brokers shall be at liberty to close out the contract by effecting
purchases if the client fails to deliver the securities sold with valid transfer documents within 48 hours of the
contract note having been delivered or before delivery day (as fixed by Stock Exchange authorities for the
concerned settlement period), whichever is earlier. Loss on the transaction, if any, will be deductible from
the margin money of that client.

79

Notice No.
Notice date

:
:

4850/97
December 10, 1997
NOTICE

Re : Bye-law 247A of the Rules, Bye-laws and Regulations of the Exchange.


1.

The salient features of Bye-law 247A relating to regulation of transactions between clients and members were
explained to the members vide Exchange Notice No.7031/94 dated December 6, 1994.

2.

The members were further advised vide Notice No.7112/94 dated December 1, 1994 to submit a compliance
report to the Exchange indicating they have opened separate bank account for clients monies and a separate
account in their books for receipt and delivery of securities from/to clients.

3.

In this connection, it is observed that during the inspection of books of the members, that some of the members
have failed to comply with the provisions of the above Bye-law. Some of the irregularities observed in this regard
are given below:
a. Not opened separate bank account (s) for clients monies
b. Opened Separate Bank Account for clients monies but the same is not being operated.
c. Transfer of funds from the clients account to members own account for purposes other than permitted.
d. Utilising monies in the clients account for making payment for transaction done on the members own account.
e. Utilising the clients account for payment of office expenses, general charges, etc.
f. Making payment relating to capital expenditure from the clients account.
g. Having overdraft facilities in the clients account.
h. Making payments to the Exchange towards the base minimum capital and additional capital from the clients
account.
i. Financial accommodation/loans to other members from the clients account.
j. Not maintaining hard copies of inward/outward register for clients securities.
k. Not maintaining proper settlement-wise records of shares received delivered from/to clients, e.g. name, distinctive
number of shares, date receipt and delivery etc.
l. Maintaining only covering letters for securities received delivered from clients.

4.

In this connection, the members are advised that in terms of Bye-law 247A they are required to issue Contract
Notes, in Form A or B as applicable, to the clients within 24 hours of the execution of the transaction. They are
also required to make payment to their clients for securities sold by them or deliver the securities purchased by
them within two working days of declaration of the payout by the Exchange for the relevant settlement unless the
clients have requested otherwise.

5.

The members are further advised that in case the transactions with the client are on principal to principal basis,
then the Contracts Notes in Form B should be issued and written consent from the client should be obtained in
each such individual case.

6.

The members may further note that they are permitted to transfer the brokerage earned on the deals executed on
behalf of their clients to their own account if the proceeds of sale/purchase have been credited in the clients
account. The members are permitted to close-out any transaction if a client fails to make full payment of purchases
or fails to deliver the securities sold, within 48 hours of the delivering of the Contract Note for the same.

80

7. Further, as per Rule 15(g) of the Securities Contracts (Regulation) Rules, 1957, the members are required to maintain
documents, register showing full particulars of shares and securities received and delivered for a period of 5
years.
8.

The members are advised to ensure strict compliance with the provisions of Bye-Law 247A of the Rules, Bye-laws
and Regulations of the Exchange as explained above, while dealing with clients funds & securities.

9.

A serious view may be taken if such irregularities are detected in future during inspection of books of the members.

10.

In case members require any clarification, they may please contact the following persons
Sr.No.

Name

Intercom No.

1.

Rajesh Gandhi

8281

2.

Raghurama K.

8073

S.T. Gerela
Gen.Manager (Inspection & Surveillance)

81

Notice no
Notice date

:
:

4646/97
November 29, 1997
NOTICE

RE : WAREHOUSING OF TRADES BY INSTITUTIONAL CLIENTS


In terms of Bye-law 247A of the Rules, Bye-laws and Regulations of the Exchange the members are required to issue
Contract Notes to clients for purchase/sale of securities within 24 hours of the execution of transactions.
The Securities and Exchange Board of India (SEBI) had received requests from market participants to permit
warehousing of trades, i.e. execution of firm client order for a large quantity in parts during the same trading cycle
(Settlement) and issue of a single Contract Note at the end of the trading cycle (settlement) at the weighted average
price.
The matter was examined by SEBI and it has since been decided to permit the members of the Exchanges to warehouse
Institutional transactions, subject to the following conditions:
1.

Warehousing would be permitted only in cases of Institutional (Fiis/IFIs/MFs/SCBs) Orders. Thus, any transactions,
done either on own account or on behalf of a non-institutional client, would not be permitted to be warehoused.

2.

Further, even in cases of Institutional orders, warehousing would be permitted where a registered Custodian is
involved in the delivery/receipt of securities.

3.

Warehousing would be permitted for both Purchase and Sale orders through the Normal Book (General Segment)
and it would not be permitted for transactions entered/executed through Negotiated Deal, All or None deal or
any other segment.

4.

The trading system software of the Exchange would provide a unique order number for identifying warehousing
orders at the time of order entry itself.

5.

The executed Warehousing transaction(s) would be parked in a separate Client Warehousing Account opened
for this purpose by the members till they are contracted out.

6.

Daily Margin would be charged by the Exchange on all Warehousing trades at the normal rates.

7.

Members would have to issue a Confirmation Note/Slip at the end of each trading day to the Institutional client for
the partial order executed. Such confirmation Note/Slip is required to be issued within 24 hours of the execution
of partial order. All such Confirmation Notes/Slips so issued would bear the same client code, i.e. code of the
Institutional client placing the order, as also necessary details such as Warehousing Order No., Quantity, Rate and
Date & Time of execution.

8.

The Contract Note should be issued by the members within 24 hours of completion of the order at the weighted
average price. The details of all the trades executed for arriving at this weighted average price should be mentioned
in the Contract Note or as an Annexure to the Contract Note. The Contract Note should bear the same client
code as that on the Confirmation Notes/Slips issued earlier.

9.

The order could be executed over a number of days within the same trading cycle. The carry forward of unexecuted
/ pending portion of the order to the next trading cycle would not be permitted. This would be applicable even in
cases of scrips which are in No Delivery period.

10.

All the warehousing transactions contracted out to Institutional clients should result in payment and deliveries.
Warehoused transactions which do not result in issue of Contract Notes to the Institutional Client would be treated
as transactions on members own account.

11.

The members should maintain adequate records to establish a clear audit trail to trace compliance of the procedures
for execution of Institutional orders through warehousing.

82

12.

The Exchange is making suitable changes in the software to ensure compliance with conditions stipulated by
SEBI. The date of implementation of the above provisions will be intimated to the members in due course.

13.

In case members require any further clarification, they may please contact the following persons.

Sr.No.

Name

Intercom No.

1.

Shri Khushro Bulsara

8241

2.

Shri Neeraj Agarwal

8268

S.T. Gerela
Gen.Manager (Inspection & Surveillance)

83

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20020930-4
Monday, September 30, 2002
Quoting of PAN on Contract Note
General
Contents :

The members of the Exchange are presently required to quote their PAN as well as the PAN of their constituents on
the contract note issued to clients, if the value of the contract exceeds Rs. 10 lakhs or more.
In this connection, the attention of the members of the Exchange is drawn to the amended Rule 114B of the Income
Tax Rules, 1962, whereby the minimum amount for quoting PAN while entering into a contract for trading in securities,
has been reduced from Rs.10 lakhs to Rs.1 lakh.
The members are advised to please take note of the above and comply with the same.In case members require any
clarification, they may please contact Mr. K.J. Roy - Dy. Manager, Inspection Dept. on intercom No 8166.

S. S. Vyas
General Manager (Inspection)

84

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20050926-11
Monday, September 26, 2005
Compulsory PAN in respect of trades executed in the Derivatives segment
General

As per Notification No. 181/2005 (F.No. 142/13/2005-TPL-III), dated July 1, 2005 issued by the Income Tax Department,
it is necessary for the Stock Exchange to ensure that the particulars of the clients in the Derivatives segment, including
the Permanent Account Number (PAN), are duly maintained by it in order to be notified as a recognized stock
exchange for the purpose of clause (d) of proviso to clause (v) of section 43 of the Income Tax Act, 1961.
It is therefore decided to require all the members in the Derivatives Segment to mandatorily collect PAN of all their
clients and upload the same as part of unique client code details uploaded to the Exchange, with effect from December
1, 2005.
All members shall collect copies of the PAN Card issued to their clients by the Income Tax Department after due
verification and preserve the same in their records. Further, they shall also ensure that these PAN details of their clients
as they appear on the PAN card are correctly uploaded to the Exchange through the Unique Client Code (UCC)
registration module of BSEwebx in respect of all their existing clients on or before November 30, 2005.
In respect of all their new clients, all members shall obtain copies of PAN cards issued by the Income Tax Department,
maintain the same in their records after verifying with the original and upload the details to the Exchange through the
Unique Client Code (UCC) registration module of BSEwebx with effect from December 1, 2005.
In view of the above requirements, the members shall not place any order on behalf of any client in the Derivatives
segment of the Exchange unless the member has collected the above details and uploaded the same to the Exchange.
Members may kindly note that failure to adhere to the above requirements would be viewed seriously and suitable
disciplinary action, including withdrawal of trading facility in the Derivatives segment may be taken.
Members may contact Mr. Mukesh Kuwad on Extn. 8497 (Tel. No. 22721233/34) for any clarifications in this regard .
For queries relating to client registration, members may contact Mr. Mohanan K. (Extn. 8416 ). Members may also
seek assistance from their respective Relationship Managers in the Membership Services and Development Department
in this regard.

P.K. Ramesh
Dy. General Manager
Surveillance & Supervision

Mukesh Kuwad
Dy. Manager
Surveillance & Supervision

85

REGULATION 14
(Bye-laws 205, 220, 221(a) and 222)
BROKERAGE AND CONTRACT NOTES
BROKERAGE
14.1 Brokerage shall be charged by members at rates not exceeding the scale prescribed in Appendix A to this Regulation
or such other scale as theGoverning Board may from time to time prescribe in modification or substitution thereof.
CONTRACT NOTES
14.2 Contract Notes issued by members to constituents when acting for them as agents and when dealing with them as
principals shall be in 1 { accordance with }
Form A and Form B respectively prescribed in Appendix B to this Regulation or in such other form or forms as the
Governing Board may from time to time prescribe in addition thereto or in modification or in substitution thereof.
214.3 Confirmation Notes issued by SEBI Registered Sub-brokers to their Clients/Constituents when acting for them as
Agents shall be in accordance with Form C prescribed in Appendix B to this Regulation or in such other form as
the Governing Board may from time to time prescribe in addition thereto or in modification or in substitution
thereof.
1 Added by Governing Board Resolution dated 3.9.57 (w.e.f.31.8.57)
2 Inserted by Governing Board Resolution dated 29.4.99

86

(APPENDIX A TO REGULATION 14)


(Regulation 14.1)
Official Scale of Brokerage
Brokerage Rs.
on Face Value
i)
a)
b)
ii)

Securities of the Government of India and


State Government of face value
under Rs. 10,00,000/Rs. 10,00,000/- or over

0.50%
0.25%

Loans and Debentures of Port Trusts,


Municipal Corporations and similar other bodies

0.50%

iii) Shares and/or Debentures of Joint


Stock Companies
share/ Debenture or 2.5%
of the contract price per
Share/Debenture
Whichever is higher

0.25 per

iv) 2 Deleted
v)

The scale prescribed in (i) to (iv) above is exclusive of service charges and does not apply to underwriting
or the placing of new issues.

1. Last amended vide Governing Board Resolution dated 8.4.93


2. Deleted by Governing Board Resolution dated 8.3.97

87

Notice no
Notice date
Subject

:
:
:

Segment Name

20051207-10
Wednesday, December 07, 2005
Gazette Notification on Amendment to Rule 217 & Bye Laws 218(a) and (b) of Rules,
Bye Laws & Regulation of the Exchange regarding Commission terms
General

Sub : Gazette Notification on Amendment to Rule 217 & Bye Laws 218(a) and (b) of Rules, Bye Laws & Regulation
of the Exchange regarding Commission terms for Remisiers & Sharing of Brokerage
Trading Members of the Exchange are hereby informed that Rule 217 of the Rules, Bye Laws & Regulations of the
Exchange has been amended so as to allow the member to remunerate the remisier with such brokerage as agreed
upon in writing by way of an agreement.
Bye Laws 218 (a) & (b) of the Rules, Bye Laws & Regulations of the Exchange has also been amended so that the
sub brokers can also share brokerage with the member, in addition to the persons specified in the said Bye laws
and subject to such terms of brokerage as agreed upon in writing by way of agreement & as per the scale of brokerage
prescribed by the Exchange or SEBI in this regard from time to time.
However in case member has transacted for sub broker the aggregate amount of brokerage charge by trading member
to sub broker and sub broker to his client shall not exceed the maximum scale of brokerage prescribed by the Exchange
& SEBI in this regard.
The above said amendments have been approved by the SEBI and the same has been published in the Maharashtra
Gazette dated 28th October, 2005.
Copy of the Gazette Notification indicating the above said amendments is attached to this notice.
Members of the Exchange are requested to take note of the above.

Sunil N. Kapadia
Dy. Gen. Manager
Membership

Mayank Mehta
Asst. Gen. Manager
Membership

88

Notice no : 24512/99
NOTICE
Members of the Exchange are hereby informed that Securities and Exchange Board of India (SEBI) vide its Press
Release No.PR 202/99 dated September 1, 1999 has directed that henceforth all negotiated deals (including as cross
deals) will no longer be permitted in the existing manner. As per the SEBI directive all negotiated deals will be permitted
only if these are executed on screen in the price and order matching mechanism of the Exchange just like any other
normal trade. The aforesaid will be implemented w.e.f. Settlement No.25/1999-2000 of A,B1,B2 & C group securities.
(First Day of Trading : September 6, 1999).
The said press release further states that negotiated deals in respect of listed corporate debt securities (F group) will
not be permitted and all such trades will have to be executed on the price and order matching mechanism of the
exchange as in the case of equities. This would be implemented w.e.f. Settlement No.25/1999-2000 of F group
securities (First Day of Trading : September 9, 1999). The decision does not apply to government debt securities and
money market instruments as these are under the regulatory jurisdiction of RBI.
In case of any queries/clarifications, members may contact the under mentioned officials.

Sr.No.

Name

Intercom No.

1.

Ms. S. Sudha Manager,MOD

8233

2.

Ms. Netra Sahani Dy.Manager,MOD

8304

Thursday,
September 2, 1999.

A.N.Joshi
Executive Director.

89

Bye-law
Specific Bargains
26.

The Governing Board or the President may permit specific bargains to be made in the case of securities of public
Companies or corporate bodies not admitted to dealings on the Exchange.

Bye-law
Member as Principal
199. When executing an order a member may buy or sell securities for his own account as a principal provided he has
obtained the consent or authority of his constituent thereto if such constituent be a person other than a member of
a Stock Exchange recognised under the Securities Contracts (Regulation) Act 1956 and provided that the price is
fair and justified by the condition of the market:
Provided further that where the member has secured the consent or authority of such constituent otherwise than
in writing he shall secure written confirmation by such constituent of such consent or authority within three days
from the date of the contract:
Provided further that no such written consent or authority of such constituent shall be necessary for closing-out
any outstanding contract entered into by such constituent in accordance with the provisions of these Bye-laws and
Regulations.

90

SEBI Circular
DIVISION CHIEF

SMD/RCG/CIR/(BKG)/293/95
March 14, 1995

To,
The Presidents/Executive Director
of all the Stock Exchanges.
Dear Sir,
Reporting of spot and off-the-floor transactions.
The issue of reporting spot transactions and off the floor transactions has been taken up with the exchanges on several
occasions.
It has been observed that even though this is a requirement under the exchange regulations, it is not being observed
in actual practice.
The exchange is, therefore, directed to take steps to ensure that:1. Brokers are required to report all transactions done on a spot basis on the same day.
2 Brokers are required to report on the same day all transactions adjusted in their books -whether between
two clients or whether between a client and the broker as a principal.
The exchange is advised to inform us about the steps taken in this regard not later than April 10, 1995. The exchanges
must also send a report to SEBI indicating the trading floor volumes and off-exchanges volumes separately.

Yours faithfully,

sd/R.C. GUPTA

91

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20040306-9
Saturday, March 06, 2004
Automated Reporting of Spot Deals
General
Contents :

Sub : Automated Reporting of Spot Deals


In terms of the provisions of the Bye Law 48 of the Rules, Bye-laws & Regulations of the Exchange the members of
the Exchange are allowed to enter into Spot Delivery Bargains. However, till date the facility of reporting, execution
and settlement of these Spot Delivery Bargains was not available on BOLT system of the Exchange. The members
have been reporting such deals after execution by way of a letter to the Exchange.
The Exchange has now provided a facility on BOLT to the members to report on-line Spot Delivery Bargains for Cash
and Debt segment. W.e.f. March 8, 2004 members can use DUS Software (available for downloading through DLOAD32)
to report these transactions (The operational instructions for using the software are enclosed as Annexure I).
Members may please note that the settlement of these Spot Delivery Bargains would continue to be done outside the
Exchange on off- market basis within the prescribed time limit. The settlement of these bargains are not guaranteed
by the Exchange.
The members would be required to settle such deals as per the provision of Section 2( i ) of the Securities Contracts
(Regulation) Act, 1956 and confirm about the same to the Exchange through the above facility. If the members do not
report settlement of the Spot Delivery Bargains on the BOLT System within the prescribed time limit, then the provisions
mentioned at Point 15 to 19 of the Exchange Notice No. 20031112-5 dated November 12, 2003 would be invoked.
The members should comply with the requirements mentioned in point 15 to 19 of the Exchange Notice No.200311125 dated November 12, 2003 while entering into Spot Delivery Bargains.
The members may please note that they would be allowed to enter into these bargains only in the scrips listed & not
Suspended on the Exchange. As such, the scrips not listed on the Exchange would continue to attract the provisions
of the specific bargains etc, through the existing procedures for the same. In case of any query / clarification, members
may please contact any of the under mentioned officials :

Sr.
No.

Name

Intercom
No.

1.

Mr. K. Mohanan Operating Instructions for Software

8416

2.

Mr. Hrishikesh Sukhtankar - Operating Instructions for Software

8081

3.

Mr. Prakash Bhatt Cash Segment

8466

4.

Mr. Ajay M. Kanavi Debt Segment 8586

S.J. Kapur
General Manager Clearing & Settlement.
Encl: As above

92

Annexure I
OPERATIONAL INSTRUCTION FOR SPOT TRANSACTIONS SCREEN FROM DUS.
This DUS software is available to the members through DLOAD32. The member can use this software to report the
SPOT transaction done by him. Operational procedures are as mentioned below
Login Screen

The member will have to login to the DUS software thru this screen.Drive : This is the drive where the DUS software
has been installed on the PC. It can be C drive or D drive or E driveetc.
Broker Code

Same login as BDCUPLOAD login eg B9999 (where9999 is the member number)

Password

Password Same as settlement download password.

After providing the broker code and password the username is validated. If valid user then the menu is displayed.

93

Menu

As shown in the screen above the member has to select the Spot Deal Entry option from the Clearing and
Settlement option under Department menu.
After selecting this Spot Deal Entry option the Spot Deal entry screen is displayed.

94

Spot Deal Entry

This is the spot deal entry screen. The entry of each field is explained below.
Data Item

Description

Remarks

Member No.

This field is only display field. The value in this


field is picked up from the broker code which is
entered in the login screen

Segment Type

Either Cash or Debt

Scrip Code

To be selected from the drop down menu provided The member has to select from the drop down
in the software.
menu of scrip code. These scrip codes are the
ones, which are valid on bolt. The member has t
o download the scripmaster everyday to have the
complete and correct scrip master

Scrip Name

This is a display only field. The moment the


scrip code is selected the corresponding scrip
name that is reflected on BOLT is displayed.

Since the spot deals in both the segment have


to be reported, the member has a choice to
select between Cash segment and Debt
segment, whichever deal he is reporting.

95

Bargain
Execution Date
Client Code

The date on which the trade is executed

Client Name

Name the client

Client Address

Address of the client

Transaction
Type

Whether it is a purchase transaction or


a Sale transaction

Security Type

Whether Equity or Debenture

Quantity
Contract Price

Quantity of the trade


The rate at which the trade is executed

Contract
Number

The contract number of the deal

Reporting
Status

Whether the member is reporting a


trade , or a settlement of the trade
or both in single screen

Deal Date

Date on which the deal is done

The name of the client on whos behalf


the trade is done

Settlement Date Date on which the trade is settled.

Navigation
Add New Records

After entering the entire information for a trade then the user has to click the save record button.

After saving the record the screen will again be in an insert mode where the user can enter a new record.

Modify Records

To modify any records using the navigation buttons. <First>,<Prev>,<Next>,<Last> Navigate to the record that needs
modifications

Modify the contents of the record

Click on the <Save Modification> button to save the modifications.

Delete Records

To delete a particular record navigate using the <First>,<Prev>,<Next>,<Last> to the record that need to be deleted.

Click on the delete button to delete the record.

A message will be displayed indicating that the record has been successfully deleted.

Uploading the Records

After the entry of all the trades and settlement is done

Click on the Upload button.

All the records that were entered will be copied into a file called SPddmmyy.txt

This file will be uploaded to BSE

96

Guidelines
Reporting only Trade :
The member can report only trade on a particular day and settlement of that trade of the following day. To report only
trade the member has to be sure that the reporting status is set to trade. The member will be prompted to enter all
the information except the date of settlement.
Reporting only Settlement :
It may so happen that the member wants to report the settlement of the trade, which he has already reported before.
In this case the member will have to enter all the information pertaining to that trade and then enter the settlement
date of the trade. Here the member has to be sure that the reporting status that is selected is settlement.
Reporting both Trade and Settlement :
If the member wants to report both trade and settlement on the same day, then the reporting status that he selects will
be both. In this case the member can enter the trade details as well as the settlement date to denote that he is settling
the trade on the same day.
Assumptions :

The contract number for reporting both the trade and settlement will be the same

The data will be valid for a particular day.

Everyday the records will be reset.

Through out the day the member can upload the file as many times as you want but only the last file will be considered
as valid.

Location of the file


Daily the file will be created and stored in path \ dus \ <SPddmmyy.txt>
This file will be a pipe delimited text file.
This file can be viewed in any text editor
The order of fields in the file is as follows.
1

Segment Type

Member No

Scrip Code

Bargain Execution date

Client Code

Client Name

Client Address

Transaction Type

Type of Security

10

Reporting Status

11

Quantity

12

Contract No.

13

Contract Price

14

Deal Date

15

Settlement Date

97

Section 2 (i) of SCRA, 1956


[(i) spot delivery contract means a contract which provides for,(a) actual delivery of securities and the payment of a price therefor either on the same day as the date of the contract
or on the next day, the actual period taken for the despatch of the securities or the remittance of money therefor
through the post being excluded from the computation of the period aforesaid if the parties to the contract do not
reside in the same town or locality;
(b) transfer of the securities by the depository from the account of a beneficial owner to the account of another
beneficial owner when such securities are dealt with by a depository;]7
Regulation 17(1) of SEBI (Stock Brokers & Sub Brokers) Rules, 1992.

98

CHAPTER IV
GENERAL OBLIGATIONS AND RESPONSIBILITIES
To maintain proper books of accounts, records etc.
17 (1) Every stock-broker shall keep and maintain the following books of accounts, records and documents namely; -.
(a)

Register of transactions (Sauda Book);

(b)

Clients ledger;

(c)

General ledger;

(d)

Journals;

(e)

Cash book;

(f)

Bank pass book;

(g)

Documents register should include particulars of shares and securities received and delivered;

(h)

Members contract books showing details of all contracts entered into by him with other members of the
same exchange or counterfoils or duplicates of memos of confirmation issued to such other member;

(i)

Counterfoils or duplicates of contract notes issued to clients;

(j)

Written consent of clients in respect of contracts entered into as principals;

(k)

Margin deposit book;

(l)

Registers of accounts of sub- brokers;

(m)

an agreement with a sub- broker specifying the scope of authority and responsibilities of the Stock-Broker
and such sub- broker.

(2)

Every stock-broker shall intimate to the Board the place where the books of accounts, records and documents are
maintained.

(3)

Without prejudice to sub- regulation (1), every stock- broker shall, after the close of each accounting period furnish
to the Board if so required as soon as possible but not later than six months from the close of the said period a
copy of the audited balance sheet and profit and loss account, as at the end of the said accounting period:
Provided that, if it is not possible to furnish the above documents within the time specified, the stock-broker shall
keep the Board informed of the same together with the reasons for the delay and the period of time by which such
documents would be furnished.

99

Rule 15 of SC (R ) Rules, 1957


15.

Books of account and other documents to be maintained and preserved by every member of a recognised stock
exchange

(1)

Every member of a recognised stock exchange shall maintain and preserve the following books of account and
documents for a period of five years:

(2)

(a)

Register of transactions (Sauda book).

(b)

Clients ledger.

(c)

General ledger.

(d)

Journals.

(e)

Cash book.

(f)

Bank pass-book.

(g)

Documents register showing full particulars of shares and securities received and delivered.

Every member of a recognised stock exchange shall maintain and preserve the following documents for a period
of two years:
(a)

Members contract books showing details of all contracts entered into by him with other members of the
same exchange or counter-foils or duplicates of memos of confirmation issued to such other members.

(b)

Counter-foils or duplicates of contract notes issued to clients.

(c)

Written consent of clients in respect of contracts entered into as principals.

100

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20050805-20
Friday, August 05, 2005
Maintenance of books of accounts and other documents
General

Members of the Exchange are hereby informed that SEBI has issued circular No. SEBI/MRD/SE/Cir-15/2005 dated
August 4, 2005 regarding the maintenance of books of accounts and other documents.
A copy of the above-mentioned SEBI circular, which is self-explanatory, is enclosed herewith for your ready reference.
The SEBI circular is also available on the SEBI website www.sebi.gov.in.
Members are required to comply with the provisions of the above-mentioned SEBI circular.
P.K.Ramesh
Dy. General Manager
Surveillance and Supervision

Kritika Daga
Asst.General Manager
Surveillance & Supervision

GENERAL MANAGER
Market Regulation Department
Division of Policy
SEBI/MRD/SE/Cir-15/2005
August 4, 2005
The Executive Directors / Managing Director /
Administrators of All Stock Exchanges
Dear Sir / Madam,
Sub: Maintenance of books of accounts and other documents
1.

In terms of Rules 14 and 15 of Securities Contracts (Regulation) Rules, 1957 (hereinafter referred to as SCRR,
1957), every recognized stock exchange and its members are required to maintain and preserve the specified
books of account and documents for a period ranging from two years to five years. Further, as per regulation 18 of
SEBI (Stock Brokers & Sub-brokers) Regulations, 1992 (hereinafter referred to as Stock Broker Regulations),
every stock broker shall preserve the specified books of account and other records for a minimum period of five
years.

2.

It is noticed that enforcement agencies like CBI, Police, Crime Branch etc. have been collecting copies of the
various records/documents during the course of their investigation. These original documents both in physical
form and electronic form would be required by such enforcement agencies during trial of the case also.

3.

In view of the above, not withstanding anything contained in SCRR, 1957 and the Stock Broker Regulations, you
are advised to preserve the originals of the documents, both in electronic and physical form, copies of which have
been taken by CBI, Police or any other enforcement agency during the course of any investigation till the trial is
completed.

4.

All the Stock Exchanges are advised to:a)

implement the above with immediate effect by making necessary amendments to the bye-laws and Listing
Agreement, as applicable ;

b)

to bring the provisions of this circular to the notice of their members of the exchange and also to put up the
same on the website; and

101

c)

5.

communicate to SEBI the status of the implementation of the provisions of this circular and the action taken
in this regard in Section II, item no. 13 of the Monthly Development Report for the month of August 2005.

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,

V S SUNDARESAN

102

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20051227-18
Tuesday, December 27, 2005
Maintenance of Books of Accounts and other documents
General

Maintenance of Books of Accounts and other documents.


Attention of the Trading Members of the Exchange is drawn to our Notice No. 20050805-20 dated August 05, 2005
regarding Maintenance of Books of Accounts and other documents, wherein the members were advised to comply
with the provisions of SEBI circular no. SEBI/MRD/SE/Cir-15/2005 dated August 4, 2005.
Securities and Exchange Board of India vide circular no SEBI/MRD/SE/Cir-23/05 dated December 22, 2005 has issued
a Corrigendum to their above circular partially modifying point 3 of their earlier circular.
A copy of the above circular dated December 22, 2005 is enclosed herewith for your ready reference. The SEBI circular
is also available on the SEBI website www.sebi.gov.in.
Trading members are required to comply with the provisions of the above-mentioned SEBI circulars.

P. K. Ramesh
Dy. General Manager
Surveillance & Supervision

Pankaj Gupta
Asst. General Manager
Surveillance & Supervision

103

GENERAL MANAGER
Market Regulation Department
SEBI/MRD/SE/Cir- 23 /05
December 22, 2005
The Executive Directors / Managing Director / CEO
Administrators of All Stock Exchanges
Dear Sir / Madam,
Sub : Corrigendum to Circular No. SEBI/MRD/SE/Cir-15/2005 dated August 04, 2005
1.

Please refer to our above said circular regarding maintenance of books of accounts and other documents by the
stock exchanges and its members when enforcement agencies like CBI, Police, Crime Branch etc. collect the
copies of the records/documents during the course of their investigation.

2.

In partial modification, the earlier point 3 which stated as :In view of the above, not withstanding anything contained in SCRR, 1957 and the Stock Broker Regulations, you
are advised to preserve the originals of the documents, both in electronic and physical form, copies of which have
been taken by CBI, Police or any other enforcement agency during the course of any investigation till the trial is
completed.
may please be replaced by :In view of the above, you are advised to preserve the originals of the documents, both in electronic and physical
form, copies of which have been taken by CBI, Police or any other enforcement agency during the course of any
investigation till the trial is completed.

3.
4.

It may be noted that the other provisions of the said circular would remain unchanged.
All the Stock Exchanges are advised to:a) implement the above with immediate effect by making necessary amendments to the bye-laws and Listing
Agreement, as applicable ;
b) to bring the provisions of this circular to the notice of their members of the exchange and also to put up the same
on the website; and
c) communicate to SEBI the status of the implementation of the provisions of this circular and the action taken in this
regard in Section II, item no. 13 of the Monthly Development Report for the month of January 2006.

5.

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,
V S SUNDARESAN

104

Notice no

7031/94

Notice date

Tuesday, December 6, 1994


NOTICE

1.

The Securities and Exchange Board of India (SEBI) has, in exercise of the powers conferred by section 10(1) of
the Securities Contracts (Regulation) Act, 1956, amended the Bye-laws of The Stock Exchange, Bombay by
inserting Bye-law 247A regarding the regulation of transactions between clients and brokers. A copy of the text of
the new Bye-law 247A is enclosed for the information of the members. We have been informed that Notification
in this connection has been published in the Official Gazette of the Government of India. Accordingly, in terms of
section 10(2) of the Securities Contracts (Regulation) Act, 1956, the new Bye-law has come into effect. Members
are, therefore, advised to keep the provision of the new Bye-law 247A in view while conducting their business.

2.

The Salient feature of the new Bye-law 247A are:


a. segregation of clients monies from the brokers own money by operating separate accounts for this purpose.
b. Segregation of clients securities from the brokers own securities and maintenance of separate accounts for this
purpose.
c. Payment of money to clients or delivery of securities to clients within two working days of the pay out.
d. Issuance of the contract note within 24 hours of the execution of the contract.

3.

The new Bye-law also contains provisions by which the broker can close out transactions of the client who fails to
make full payment to the broker or to deliver securities sold within 48 hours of the delivery of the contract note.

4.

For better understanding of all these requirements, the member brokers are requested to refer to the enclosed
copy of the new Bye-law.

5.

Inspections carried out by the Inspection Department of the Exchange will henceforth include inspection of the
implementation of Bye-law 247A also, wherever required.

A. N. KOLHATKAR
EXECUTIVE DIRECTOR.

105

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20020917-2
Tuesday, September 17, 2002
Payment of monies and delivery of securities by the members to Clients
General
Contents :

Sub : Payment of monies and delivery of securities by the members to clients


1.

As per Bye-law 247 A of the Rules, Bye-law and Regulations of the Exchange, the members are required to make
payments for securities sold and/ or deliver securities purchased to their clients within two working days of declaration
of the pay-out of the settlement by the Exchange unless a client has requested otherwise.

2.

It is observed that the above provisions were incorporated in the Bye-laws of the Exchange when the transactions
were settled by delivery of securities in physical form which required counting, examination, sorting and addressing
the issue related to settlement objections etc. The Exchange has since introduced T+3 settlement cycle, where
over 99% of the trades are settled in demat mode. The Exchange has also provided a facility to the members of
direct credit of pay-out securities to the beneficiary accounts of their clients on the Pay-out day itself.

3.

In view of the above, and as an investor friendly measure, the Governing Board of the Exchange at its meeting
held on September 13, 2002 has decided that members would henceforth be required to make payment and/ or
deliver securities to their clients within one working day (excluding Saturday, Sunday and Bank holidays) after the
Pay-out of the settlement, unless a client has requested otherwise. This will come into effect from pay-out of
Settlement No.DR-124/02-03, which is scheduled on September 23, 2002.

4.

This measure, it is expected, will benefit the investors and enhance the utilization of funds and securities by them.

5.

The members are requested to please take note of the above and ensure strict compliance with the same. The
failure to adhere to the above decision will invite penal action indicated vide items Nos.11 & 12 of Section I of
Notice No. 130706/2002 dated July 31, 2002.6. In case members require any further clarification, they may please
contact any of the following officials:

Sr. No.

Name

Intercom No.

Shri Prakash Bhat

8466

Shri Ashwin Dattani

8157

S.T. Gerela
Chief Executive Officer- Clearing & Settlement

106

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20030903-5
Wednesday, September 03, 2003
Mode of payment and delivery
General
CONTENTS :

Sub: Mode of payment and delivery


SEBI has issued a circular no. SEBI/MRD/SE/Cir- 33/2003/27/08 dated August 27, 2003 (copy enclosed herewith)
regarding cash transactions between stock brokers and their constituents, the relevant contents of which are given
below.
Quote
1.

Please refer to SEBI circular No.SMD/SED/CIR/93/23321 and letter No. SMD-1/23341 dated November 18, 1993
regarding regulation of transactions between clients and brokers.

2.

It is reiterated that brokers and sub-brokers should not accept cash from the client whether against obligations or
as margin for purchase of securities and / or give cash against sale of securities to the clients.

3.

All payments shall be received / made by the brokers from / to the clients strictly by account payee crossed
cheques / demand drafts or by way of direct credit into the bank account through EFT, or any other mode allowed
by RBI. The brokers shall accept cheques drawn only by the clients and also issue cheques in favour of the clients
only, for their transactions. However, in exceptional circumstances the broker or sub-broker may receive the
amount in cash, to the extent not in violation of the Income Tax requirement as may be in force from time to time.

4.

Similarly in the case of securities also giving / taking delivery of securities in demat mode should be directly to /
from the beneficiary accounts of the clients except delivery of securities to a recognized entity under the approved
scheme of the stock exchange and / or SEBI.

5.

This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange
Board of India Act, 1992, read with Section 10 of the Securities Contracts (Regulation) Act 1956, to protect the
interests of investors in securities and to promote the development of, and to regulate the securities market.

Unquote
Members are advised to take note of the above and also to bring the contents of this Circular to the notice of their
registered sub-brokers and constituents, and to ensure strict adherence to the same. Members are also informed that
any violation of the same will also be construed as violation of the Rules, Byelaws and Regulations of the Exchange,
thereby entailing appropriate disciplinary action by the Exchange.
For any clarification in the matter, members may contact any of the following officials
Sr.No.

Name

Intercom No.

1.

Shri Ranjan Prabhu

8214

2.

Ms. Smita P. Dave

8073

All the members are requested to co-operate and ensure compliance.


Kevin Desouza,
Chief General Manager,
Inspection & Membership

Mayank Mehta,
Asst. General Manager
Inspection

107

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20050324-21
Thursday, March 24, 2005
Mode of payment and delivery
General

This is in continuation of our Notice No. 20030903-5 dated September 3, 2003.


In this regard it is reiterated that SEBI vide its Circular No. SEBI/MRD/SE/Cir-33/2003/27/08 dated August 27, 2003
SEBI has directed that brokers and sub-brokers should not accept cash from the clients whether against obligations
or as margin for purchase of securities and / or give cash against sale of securities to the clients.
However, in the said circular it has also been stated that in exceptional circumstances the brokers or sub-broker may
receive the amount in cash to the extent not in violation of the Income Tax requirements in force.
In view of the above, when such exceptional circumstances arise the members are directed to inform the Department
of Surveillance & Supervision of the Exchange within 15 days to seek an approval in this regard on a case to case
basis.
For any clarification in this matter, members may contact the following personnel of the Surveillance & Supervision
Department .

Name

Extn. Nos.

Sanjay Pai

8356

Sandeep Gupta

8153

All the members are requested to co-operate and ensure compliance in this respect.

P.K. Ramesh
Dy. General Manager
Surveillance & Supervision

Kritika Daga
Asst. General Manager
Surveillance & Supervision

108

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20020906-3
Friday, September 06, 2002
Statement of Accounts of funds/securities
Equity
Contents :

To,
All Members of the Exchange
Sub : Statement of accounts of funds / securities.
It has been observed by the Exchange, that a large number of disputes arise between the members / subbrokers and their clients due to non-communication of statement of accounts of funds / securities by the
members / sub-brokers on a regular basis.
In order to avoid such incidences, members / sub-brokers are advised to follow the following practices :1.

Every member shall send to their clients a complete Statement of Accounts for both funds and securities in
respect of each of its clients at least once in every six months within a month of the expiry of the said period. The
statement shall also state that the client shall report errors, if any, in the statement within 30 days of receipt
thereof, to the member / sub-broker.

2.

It would be treated as sufficient compliance if the members take confirmation from their clients at least once in six
months to the effect that no securities and / or funds are due from the member to the client.

3.

In case of those members who offer trading facility to their clients through internet and provide an access to an online accounting viewing and print-out facility, it would be treated as sufficient compliance, if they send the Statement
of Accounts by email to such clients.

4.

In respect of institutional clients, the said requirement is applicable in case the members pay or receive funds and
receive or deliver securities from or to the institutional clients directly and not through custodians.

The members are also advised to send the statement of accounts for the financial year 2001-02 and quarter ended
June 2002, to their clients latest by 30th September 2002.
For any further clarification, you may kindly contact your Account Manager on the hotline or on Tel No. (022) 272 2624
in Membership Services Department, 1st Floor, Rotunda Building.
Sunil Vichare
General Manager
Membership Services Department

109

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20030114-9
Tuesday, January 14, 2003
Furnishing of Statements of accounts of funds / securities to clients
General
CONTENTS :

The members were advised vide Notice No 20020906-3 dated September 6, 2002 that they would be required to send
to each of their clients a complete Statement of Accounts for both funds and securities, at least once in every six
months within one month of the expiry of the said period. This statement was also required to advise the clients to
report errors, if any, in the statement, to the member within 30 days of receipt thereof. The members were further
advised to take confirmation from their clients at least once in six months to the effect that no securities/funds are due
to them from the member.
In this connection, it has now been decided that, it would be treated as sufficient compliance of the requirements of
the above Notice, if the members send the complete Statement of Accounts for both funds and securities, to each of
their clients, at least once in every six months, within one month of the expiry of the said period and advising the
clients to report errors, if any, in the statement, to the member within 30 days of receipt thereof.
In case members require any further clarifications, they may please contact the concerned Account Managers of the
Membership Services Department.

Sunil Vichare
General Manager
Membership Services

110

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20040827-11
Friday, August 27, 2004
Uniform Documentary Requirements for trading.
General
CONTENTS :

Sub : Uniform Documentary Requirements for trading.


Members of the Exchange are hereby informed that the Securities and Exchange Board of India (SEBI) vide its Circular
no.SEBI/MIRSD/DPS-1/Cir-31/2004 dated August 26, 2004 (copy enclosed) has informed that in order to bring about
uniformity in documentary requirements across different segments and Exchanges and also to avoid duplication and
multiplicity of documents, SEBI in consultation with Stock Exchanges (BSE and NSE) has formulated uniform set of
documents which are listed below :
1.

Client Registration Form (Uniform across all the segments and exchanges where the broker is trading on different
segments and exchanges) Annexure 1.

2.

Member Clients Agreements. (Uniform across all the segments of an exchange. However a separate agreement
in the same format would be required for each of the exchanges where the broker is trading on different exchanges)
Annexure - 2.

3.

Model Tripartite Agreement between Broker-Sub broker and Clients (Applicable only in cash segment and a
separate agreement in the same format would be required for each of the exchanges)Annexure-3.\

4.

Uniform Risk Disclosure Documents. (Uniform across all the segments and exchanges) Annexure - 4.

5.

Broker Sub broker agreement Annexure 5.

SEBI in its above mentioned circular has stated that the documents prescribed above are model formats. The stock
exchanges/stock broker may incorporate any additional clauses in these documents provided these are not in conflict
with any of the clauses in the model document, as also the Rules, Regulations, Articles, Byelaws, circulars, directives
and guidelines.
Further, the requirement of obtaining Client Registration Form may be waived for SEBI registered Foreign Institution
Investor, Mutual Funds, Venture Capital Funds and Foreign Venture Capital Investors, Scheduled Commercial Banks,
Multilateral and Bilateral Development Financial Institutions, State Industrial Development Corporations, Insurance
Companies registered with the Insurance Regulatory Development Authority (IRDA) and Public Financial Institution as
defined under section 4A of the Companies Act, 1956. Further the stock broker and these clients may at their discretion,
decide about the requirement of entering into broker-client agreement and bringing the contents of Risk Disclosure
Document to the notice of such clients.
The members are required to comply with the requirements mentioned in the said SEBI circular with immediate effect
except the requirement relating to Tripartite Agreement between Broker-Sub broker and clients of sub-broker which
will come into effect from December 1, 2004.
The members are requested to note the same.
Kevin Desouza
Chief General Manager
Membership & Inspection

Mayank J. Mehta
AGM - Inspection

111

Annexure I
1.

The following format has to be obtained from all clients (other than institutional clients)

2.

Separate form to be obtained in respect of all clients including PMS clients

3.

All columns are to be filled in by the clients and copies of relevant supporting documents need to be attached by
the clients
FORMAT FOR INDIVIDUAL CLIENT REGISTRATION FORM

(This information is the sole property of the trading member brokerage house and would not be disclosed to anyone
unless required by law or except with the express permission of clients)
To,
Trading Members
Name, Address, Telephone No.
SEBI Registration No.

Clearing Members
Name, Address, Telephone NO.
SEBI Registration No.
(Applicable for derivatives segment)

Client Information
Photograph
please sign on the
photograph

1.

Name of the client


(Surname)

2.

Unique Identification Number (where obtained)

3.

Sex

4.
5.
6.

Date of Birth dd/mm/yyyy


Marital Status :
Residene Address :

Male

(Name)

(Middle Name)

Female

City :
Pin Code :
State :
Country :
Nationality :
Telephone Number (Res.)

Fax No.

Residential Status : Indian NRI Others

112

7. Bank and Depository Account Details


Bank Name (through which transactions will generally be routed)
Branch
Address
Account No.
Account Type : Saving / Current NRI Others :
(Copy of a canceled Cheque leaf/pas book/bank statement containing name of the constituent should be submitted)
Depository Participant Nmae (through which transactions will generally be rotted
Address
BO Account Number
8. Occupation Details
Occupation : Employed

Self Employed

Business

Proffessional
(Tick whichever is applicable)

House wife

Others

9.

If Employed
Name of Employer :
Office Address

City

Pin Code

State

Country

Telephone Number (Office) :


Fax No. Telex No. :
10. If Self Employed / Business / Professional Others
Name of the establishment
Office Address :

Pin Code :
City :

State :

Country :
Telephone Number (Office)
Fax No. / Telex No.
11. Financial details of the constituent :
Income Range (Per Annum) : (Tick where applicables)
Below Rs.1,00,000
Rs. 1,00,000 To Rs.5,00,000

113

Rs. 5,00,000 To Rs.10,00,000


Rs. 10,00,000 To Rs.25,00,000
Above Rs.25,00,000
12. Investment/Trading Experience
No. Prior Experience
Years in Stocks
Years in Derivatives
Years in Other investment related fields
13. Trading Preference
A. Stock Exchanges on which you wish to trade (if the member is registered for such Exchanges) :
(Please tick in the relevant Box)
1.
2.
3.
B.

Market segments you wish to trade (if the member is registered for such segment)

1.

Capital Market Cash Segment

2.

Derivatives Market

3.

Debt Market

14. Whether registered with any other broker-member (if registered with multiple members, provide details of all)
Name of Broker :
Name of Exchange :
Client Code No.:
15. Details of any action taken by SEBI Stock exchange any other authority for violation of securities laws other economic
offences
16. References
Introduction : Introduced by another constituent/director or employee of trading member any other person (please specify)
Name of the Introducer :
(Surname)

(Name)

Signature
MAPIN UID No. of introducer, if any
Name and designation of the employee who interviewed the client :
(Name)

(Designation)

Signature of the employee :

114

(Middle Name)

17. Declaration
I hereby declare that the details furnished above are true and correct to the bestof my knowledge and belief and I
undertake to inform you of any changes therein immediately. In case any of the above information is found to be false
or untrue or misleading or misrepresenting I am aware that I may be held liable for it.
(Signature of the individual constituent)
Place :
Date :
DOCUMENTARY REQUIREMENTS
Copies of the following documents may be obtained after due verification with the originals thereof
For Proof of Identity (any one of the following)
MAPIN UID Card

Pan No.

Passport

Voter ID

Driving license

Photo Identity card issued by Employer registered under MAPIN

For Proof of Address (any one of the following) :


Passport

Voter ID

Driving License

Bank Passbook

Rent Agreement

Ration Card

Flat Maintenance Bill

Telephone Bill

Electricity Bill

Certificate issued by employer registered under MAPIN

Insurance Policy

For Office Purposes :


Unique Constituent Code :
(To be Inserted By The Brokerage Firm)
Original documents
Verified By

Authorised By :

115

The following format has to be obtained from all constituents (other than institutional clients)
1.

Separate form to be obtained in respect of all clients including PMS clients

2.

All columns are to be filled in by the clients and copies of relevant supporting documents need to be attached by
the constituents.
FORMAT OF THE CLIENT REGISTRATION FORM FOR CORPORATES, FIRMS AND OTHERS

(This information is the sole property of the trading member brokerage house and would not be disclosed toanyone
unless required by law or in case of express permission of clients)

To
TRADING MEMBERS
Name, Address, Telephone No.
SEBI Registration No.
1.

Name of the Company / Firm

2.

Unique Identification Number (where obtained)

3.

Registered Office Address :

CLEARING MEMBERS
Name, Address, Telephone No.
SEBI Registration No.
(Applicable for derivatives segment)

City :

Pin Code

State :
Phone Numbers
4.

Fax Numbers

Address for correspondence :

City :

Pin Code

State :
Phone Numbers

Fax Numbers

5.

Date of incorporation / formation :

6.
7.
8.
9.
10.

Date of commencement of business :


Nature of Business :
Registration number (with ROC, SEBI or any government authority)
Details of PAN Account Number
Name of Promoters / Partners / Karta and residential address
1.
2.
3.
4.
5.

116

11. Names of whole time directors and residential address


1.
2.
3.
4.
5.
12.

Names and Designation of persons authorized to deal in securities on behalf of the company firm others and their
residential address
1.
2.
3.
4.
5.

13 .

Details of any action taken by SEBI / Stock exchange / any otherauthority against the constituent or its Partners /
promoters / whole time directors / authorized persons in charge of dealing in securities forviolation of securities
laws other economic offenes.

Bank and Depository Account Details


14.

Bank Name (through whciuh transactions will generally be routed)


Baranch :
Address :
Account No.

Account Type

(Copy of a canceled Cheque leaf/pass book/bank sttement containing name of the constituent should be submitted.)
15. Depository Participant Name (through which transactions will be routed)
Address :
BO Account Number :
16. Investment / Trading Experience
No Prior Experience
Years in Stocks
Years in Derivatives
Years in Other investment related fields
17. Trading Preference :
A.

Stock Exchanges on which you wish to trade (if the member is registerd for such Exchanges) :
(Please tick in the relevant boxes)
1.
2.
3.

B.

Market segments you wish to trade (if the member is registered for such segment)
(Please tick in the relevant boxes)
1. Capital Market / Cash Segment

117

2. Derivatives Market
3. Debt Market
18. Whether registerd with any other broker-member (if registered with multiple members, provide details of all)
Name Broker :
Name of Exchange :
Client code no.(as given by the broker)
19. References
Introduction : Introduced by another constituent / director or employee of trading member / any other prson (pleae
specify)
Name of the Introducer :
(Surname)

(Name)

(Middle Name)

Signature :
MAPIN UID No. of introducer, if any :
Name and designation of the employee who interviewed the client
Name
Signature of the employee

Designation

20. Declaration
I/We hereby declare that the details furnished above are true and correct to the best of my our knowledge and belief
and I/We undertake to inform you of any changes therein immediately. In case any of the above information is found
to be false or untrue or misleading or misrepresenting I am / We are aware that I / We may be held liable for it
Authorised Signatory (with company seal)
Name :
Place :
Date :
DOCUMENTARY REQUIREMENTS
Copies of the following documents may be obtained after due verification with the originals thereof
1.

Copies of the balance sheet for the last 2 financial years (copies of annual balance sheet to be submitted every
year)

2.

Copy of latest share holding pattern including list of all those holding more than 5% in the share capital of the
company, duty certified by the company secretary. Wholetime director MD. (copy of updated shareholding pattern
to be submitted every year)

3.

Copies of the Memorandum and Articles of Association in case of a company body incorporate partnership deed
in case of a partership firm.

4.

Copy of the Resolution of board of directors approving participation in equity derivatives debt trading and naming
authorized persons for dealing in securities.

5.

Photographs of Partners/Whole time directors, individual promoters holding 5% or more either directly or indirectly,
in the shareholding of the company and of persons authorized to deal in securities.

118

Annexure 2

Model Agreement between Stock Broker and Client


This agreement is made and executed at

this

day of

20

between:

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, being a
member of the
Stock Exchange (hereinafter called the Exchange), and having his/her/its registered
office at
(hereinafter called the stock broker) which expression shall, unless repugnant to the context
or meaning thereof, be deemed to mean and include himself in the capacity of a trading member while trading in the
derivatives segment, his/her heirs, executors, administrators and legal representatives/the partners for the time being
of the said firm, the survivor or survivors of them and their respective heirs, executors, administrators and legal
representatives/its successors, as the case may be, of the One Part;
And
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 residence/registered office
at (hereinafter called the client) which expression shall, unless repugnant to the context
or meaning thereof, be deemed to mean and include his/her heirs, executors, administrators and legal representatives/
the partners for the time being of the said firm, the survivor or survivors of them and their respective heirs, executors,
administrators and legal representatives/itssuccessors, as the case may be, of the Other Part;
Whereas the stock broker is registered as the stock broker of the Exchange with SEBI registration number
in the Capital Market / Cash Segment and SEBI registration number in the Futures and OptionsSegment.
Whereas the client is desirous of investing/trading in those securitiescontracts/other instruments admitted to dealings
on the Exchange asdefined in the Rules, Byelaws and Regulations of the Exchange and circulars issued thereunder
from time to time.
Whereas the client has satisfied itself of the capacity of the stock broker to deal in securities and/or deal in derivatives
contracts and wishes to execute its orders through the stock broker and the client shall from time to time continue to
satisfy itself of such capability of the stock broker beforeexecuting orders through the stock broker.
Whereas the stock broker has satisfied and shall continuously satisfy itself about the genuineness and financial
soundness of the client andinvestment objectives relevant to the services to be provided; and Whereas the stock broker
has taken steps and shall take steps to make the client aware of the precise nature of the Stock brokers liability for
business to beconducted, including any limitations, the liability and the capacity in which the stock broker acts.
WHEREAS the stock broker and the client agree to be bound by all the Rules, Byelaws and Regulations of the Exchange
and circulars issued thereudner and Rules and Regulations of SEBI and relevant notifications of Government authorities
as may be in force from time to time.
Now, therefore, in consideration of the mutual understanding as set forth in this agreement, the parties thereto have
agreed to the following terms and conditions:
1.

The client agrees to immediately notify the stock broker in writing if there is any change in the information in the
client registration form provided by the client to the stock broker at the time of opening of the account or at any
time thereafter.

2.

The stock broker declares that it has brought the contents of the risk disclosure document to the notice of client
and made him aware of the significance of the said document. The client agrees that:

119

a.

He has read and understood the risks involved in trading on a stock exchange.

b.

He shall be wholly responsible for all his investment decisions and trades.

c.

The failure of the client to understand the risk involved shall not render a contract as void or voidable and
the client shall be and shall continue to be responsible for all the risks and consequences for entering into
trades in the segments in which the client chose to trade.

d.

He is liable to pay applicable initial margins, withholding margins, special margins or such other margins as
are considered necessary by the stock broker or the Exchange or as may be directed by SEBI from time to
time as applicable to the segment(s) in which the client trades. The stock broker is permitted in its sole and
absolute discretion to collect additional margins (even though not required by the Exchange, Clearing House/
Clearing Corporation or SEBI) and the client shall be obliged to pay such margins within the stipulated time.

e.

Payment of margins by the client does not necessarily imply complete satisfaction of all dues. In spite of
consistently having paid margins, the client may, on the closing of its trade, be obliged to pay (or entitled to
receive) such further sums as the contract may dictate/require.

3.

The Client agrees to pay to the stock broker brokerage and statutory levies as are prevailing from time to time and
as they apply to the Clients account, transactions and to the services that stock broker renders to the Client. The
stock broker agrees that it shall not charge brokerage more than the maximum brokerage permissible as per the
rules, regulations and bye-laws of the relevant stock exchange/SEBI.

4.

The client agrees to abide by the exposure limits, if any, set by the stock broker or by the Exchange or Clearing
Corporation or SEBI from time to time.

5.

Without prejudice to the stock broker's other rights (including the right to refer a matter to arbitration), the stock
broker shall be entitled to liquidate/close out all or any of the client's positions for non-payment of margins or other
amounts, outstanding debts, etc. and adjust the proceeds of such liquidation / close out, if any, against the client's
liabilities/ obligations. Any and all losses and financial charges on account of such liquidation/closing-out shall be
charged to and borne by the client.

6.

The stock broker agrees that the money/securities deposited by the client shall be kept in a separate account,
distinct from his/its own account or account of any other client and shall not be used by the stock broker for
himself/itself or for any other client or for any purpose other than the purposes mentioned in SEBI Rules and
Regulations circulars/ guidelines/Exchanges Rules/Regulations/Bye-laws and circulars.

7.

The client agrees to immediately furnish information to the stock broker in writing, if any winding up petition or
insolvency petition has been filed or any winding up or insolvency order or decree or award is passed against him
or if any litigation which may have material bearing on his capacity has been filed against him.

8.

The stock broker agrees to inform the client and keep him apprised abouttrading/settlement cycles, delivery/
payment schedules, any changes therein from time to time, and it shall be the responsibility in turn of the client to
comply with such schedules/procedures of the relevant stock exchange.

9.

In the event of death or insolvency of the client or his/its otherwise becoming incapable of receiving and paying for
or delivering or transferring securities which the client has ordered to be bought or sold, stock broker may close
out the transaction of the client and claim losses, if any, against the estate of the client. The client or his successors,
heirs and assigns shall be entitled to any surplus which may result there from.

10.

The stock broker agrees that it shall co-operate in redressing grievances of theclient in respect of transactions
routed through it and in removing objections for bad delivery of shares, rectification of bad delivery, etc. in respect
of shares and securities delivered/to be delivered or received/to be received by the client.

120

11.

The stock broker shall continue to be responsible for replacing bad deliveries of the client in accordance with
applicable "Good & bad delivery norms" even after termination of the agreement and shall be entitled to recover
any loss incurred by him in such connection from the client.

12.

The stock broker shall ensure due protection to the client regarding clients rights to dividends, rights or bonus
shares, etc. in respect of transactions routed through it and it shall not do anything which is likely to harm the
interest of the client with whom and for whom it may have had transactions in securities.

13.

The client and the stock broker agree to refer any claims and/or disputes to arbitration as per the Rules, Byelaws
and Regulations of the Exchange and circulars issued thereunder as may be in force from time to time.

14.

The stock broker hereby agrees that he shall ensure faster settlement of any arbitration proceedings arising out of
the transactions entered into between him and the client and that he shall be liable to implement the arbitration
awards made in such proceedings.

15.

Information about default in payment/delivery and related aspects by a client shall be brought to the notice of the
relevant stock Exchange(s). In case where defaulting client is a corporate entity/partnership/ proprietary firm or
any other artificial legal entity, then the name(s) of director(s)/ promoter(s)/Partner(s)/proprietor as the case may
be, shall also be communicated to the relevant stock exchange(s).

16.

The stock broker and the client agree to reconcile their accounts at the end of each quarter with reference to all
the settlements where payouts have been declared during the quarter.

17.

The stock broker and the client agree to abide by any award passed by the Ombudsman under the SEBI
(Ombudsman) Regulations, 2003.

18.

The stock broker and the client declare and agree that the transactions executed on the Exchange are subject to
Rules, Byelaws and Regulations and circulars issued thereunder of the Exchange and all parties to such trade
shall have submitted to the jurisdiction of such court as may be specified by the Byelaws and Regulations of the
Exchange for the purpose of giving effect to the provisions of the Rules, Byelaws and Regulations of the Exchange
and the circulars issued thereunder.

19.

The instructions issued by an authorized representative, if any, of the client shall be binding on the client in
accordance with the letter authorizing the said representative to deal on behalf of the said client.

20.

Where the Exchange cancels trade(s) suo moto all such trades including the trade/s done on behalf of the client
shall ipso facto stand cancelled.

21.

This agreement shall forthwith terminate; if the stock broker for any reason ceases to be a member of the stock
exchange including cessation of membership by reason of the stock broker's default, death, resignation or expulsion
or if the certificate issued by the Board is cancelled.

22.

The stock broker and the client shall be entitled to terminate this agreement without giving any reasons to the
other party, after giving notice in writing of not less than one month to the other parties. Notwithstanding any such
termination, all rights, liabilities and obligations of the parties arising out of or in respect of transactions entered
into prior to the termination of this agreement shall continue to subsist and vest in /be binding on the respective
parties or his / its respective heirs, executors, administrators, legal representatives or successors, as the case
may be.

23.

In addition to the specific rights set out in this Agreement, the stock broker andthe client shall be entitled to
exercise any other rights which the stock broker or the client may have under the Rules, Bye-laws and Regulations
of the Exchange and circulars issued thereunder or Rules and Regulations of SEBI.

24.

Words and expressions which are used in this Agreement, but which are not defined herein shall, unless the

121

context otherwise requires, have the same meaning as assigned thereto in the Rules, Byelaws and Regulations of
the Exchange and circulars issued thereunder.
25.

The provisions of this agreement shall always be subject to Government notifications, any rules, regulations,
guidelines and circulars issued by SEBI and Rules, Regulations and Bye laws of the relevant stock exchange that
may be in force from time to time.

26.

The stock broker hereby undertakes to maintain the details of the client as mentioned in the client registration form
or any other information pertaining to the client in confidence and that it shall not disclose the same to any person/
authority except as required under any law/regulatory requirements; Provided however that the stock
broker may so disclose information about its his client to any person or authority with the express permission of
the client.

This agreement can be altered, amended and /or modified by the parties mutually in writing without derogating from
the contents of this Agreement. Provided however, if the rights and obligations of the parties hereto are
altered by virtue of change in Rules and regulations of SEBI or Bye-laws, Rules and Regulations of the relevant stock
Exchange, such changes shall be deemed to have been incorporated herein in modification of the rights and obligations
of the parties mentioned in this agreement.
IN WITNESS THEREOF the parties to the Agreement have caused these presents to be executed as of the day and
year first above written.

The clients Signature/ :


Authorised Signatory

The stock brokers


Signature/Authorised Signatory:

Signed by :

Signed by:

Title :

Title:

Name of the client :

Name of the stock broker :

Witness :

Witness :

1.

1.

2.

2.

Note : All references to the specific quantity/rate/fee mentioned in this agreement are subject to change from time to
time, as so agreed to in writing between the parties.

122

Annexure 3
MODEL TRIPARTITE AGREEMENT BETWEEN STOCK BROKER, SUBBROKER AND CLIENT
This Agreement (hereinafter referred to as Agreement) is entered into on this ____ day of ___________ 20__, by
and between ________________ (name of the stock broker) (hereinafter referred to as the stock broker), a
..(type of entity) and having his/its office/registered office at .(address), which expression
shall, unless repugnant to the context or meaning thereof, be deemed to mean and include his/her heirs, executors,
administrators and legal representatives/the partners for the time being of the said entity, the survivor or survivors of
them and their respective heirs, executors, administrators and legal representatives/its successors, as the case may
be, of the One Part;
AND
_____________ (name of the sub-broker) (hereinafter referred to as the subbroker), a (type of
entity) and having his/its office/registered office at (address), which expression shall, unless repugnant
to the context or meaning thereof, be deemed to mean and include his/her heirs, executors, administrators and legal
representatives/the partners for the time being of the said entity, the survivor or survivors of them and their respective
heirs, executors, administrators and legal representatives/its successors, as the case may be, of the Second Part;
AND
________________________ (name of the client of the sub-broker) (hereinafter referred to as the client), an individual/
a . (type of entity) and having his/its residence/office/ at (address) which expression shall,
unless repugnant to the context or meaning thereof, be deemed to mean and include his/her heirs, executors,
administrators and legal representatives/the partners for the time being of the said entity, the survivor or survivors of
them and their respective heirs, executors, administrators and legal representatives/its successors, as the case may
be, of the Third Part;
WHEREAS
1.

The stock broker states that it is engaged, in the business of stock broking and is a Member
of________________________ (Name of stock exchange/s), (hereinafter referred to as the stock exchange)
with SEBI registration Number(s) ____________________________

2.

The sub-broker states that :


a)

The sub broker is recognized by __________________ {Name of the stock exchange(s)} as a sub-broker
affiliated to the stock broker of the stock exchange with sub-broker SEBI registration Number (s)

b)

The sub-broker is not affiliated to any other member of the same stock exchange,

c)

The sub-broker has the necessary infrastructure like adequate office space, equipment and manpower to
effectively discharge his/its activities.

3.

The Client is registered with the sub-broker as a client for purpose of availing broking services through the subbroker affiliated to the stock broker and is desirous of investing/trading in those securities/contracts/other instruments
admitted to dealings on the Exchange as defined in the Rules, Byelaws and Regulations of the Exchange and
circulars issued thereunder from time to time. A copy of the Client Registration form is annexed hereto.

4.

Whereas the stock broker has satisfied and shall continuously satisfy itself about the genuineness and financial
soundness of the client and investment objectives relevant to the services to be provided; and

5.

Whereas the stock broker has taken steps and shall take steps to make the client aware of the precise nature of
the Stock brokers/ sub brokers liability for business to be conducted, including any limitations, the liability and the

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capacity in which the stock broker/ sub broker acts.


NOW THIS AGREEMENT WITNESSETH AND IT IS HEREBY AGREED BY AND BETWEEN STOCK BROKER, SUBBROKER AND CLIENT AS UNDER:
1.

The stock broker and sub broker hereby acknowledge and confirm that the sub-broker is affiliated to the stock
broker and that the sub-broker shall within the scope of the authority given under these presents, be entitled to act
as a sub-broker within the meaning and subject to SEBI (Stock Brokers and Sub-Brokers) Rules, 1992 and SEBI
(Stock Brokers and Sub-Brokers) Regulations 1992 (hereinafter referred to as the said Rules and Regulations
respectively) as amended from time to time, for assisting the client in buying, selling or dealing in securities
through the stock broker.

2.

The stock broker, the sub-broker and the client agree that they shall abide by all the statutory responsibilities and
obligations imposed on them by the rules, regulations and / or any other rules or regulations applicable to the
stock brokers, the sub-brokers and the clients in general either framed by SEBI or by the relevant stock exchange/
clearing corporation and/or any Government Circulars.

3.

The stock broker and the sub broker declare that they have brought the contents of the risk disclosure document
to the notice of client and made him aware of the significance of the said document. The client agrees that:
a. He has read and understood the risks involved in trading on a stock exchange.
b. He shall be wholly responsible for all his investment decisions and trades.
c. The failure of the client to understand the risk involved shall not render a contract as void or voidable and the
client shall be and shall continue to be responsible for all the risks and consequences for entering into
trades in the segments in which the client chose to trade.
d. He is liable to pay applicable initial margins, withholding margins, special margins or such other margins as are
considered necessary by the stock broker or the Exchange or as may be directed by SEBI from time to time as
applicable to the segment(s) in which the client trades. The stock broker is permitted in its sole and absolute
discretion to collect additional margins (even though not required by the Exchange, Clearing House/Clearing
Corporation or SEBI) and the client shall be obliged to pay such margins within the stipulated time.
e. Payment of margins by the client does not necessarily imply complete satisfaction of all dues.In spite of
consistently having paid margins, the client may, on the closing of its trade, be obliged to pay (or entitled to
receive) such further sums as the contract may dictate/require.

4.

The Client agrees to pay to the stock broker brokerage and statutory levies as are prevailing from time to time and
as they apply to the Clients account, transactions and to the services that stock broker \ the sub-broker renders to
the Client. The stock broker agrees that it shall not charge brokerage more than the maximum brokerage permissible
as per the rules, regulations and byelaws of the relevant stock exchange/SEBI.

5.

The stock broker and the sub broker agree that they shall co-operate and help each other in redressing grievances
of the client in respect of transactions routed through them and in removing objections for bad delivery of shares,
rectification of bad delivery, etc. in respect of shares and securities delivered/to be delivered or received/to be
received by the clients of subbroker from the member and vice-versa.

6.

The stock broker shall continue to be responsible for replacing bad deliveries of the client in accordance with
applicable Good & bad delivery norms even after termination of the agreement and shall be entitled to recover
any loss incurred by him in such connection from the client.

7.

The stock broker agrees that the money/securities deposited by the client shall be kept in a separate account,
distinct from his/its own account or account of any other client and shall not be used by the stock broker for
himself/itself or for any other client or for any purpose other than the purposes mentioned in SEBI Rules and

124

Regulations circulars/guidelines/Exchanges Rules/Regulations/Bye-laws and circulars.


8.

The stock broker and the sub-broker agree that each of them shall ensure due protection to the client regarding
clients rights to dividends, rights or bonus shares, etc. in respect of transactions routed through them and they
hall not jointly or severally do anything which is likely to harm the interest of the client with whom and for whom
hey may have had transactions in securities.

9.

The stock broker agrees to inform the sub-broker/client and keep them apprised about trading/settlement cycles,
delivery/payment schedules, any changes therein from time to time, and it shall be the responsibility in turn of the
ub-broker/client to comply with such schedules/procedures of the relevant stock exchange.

10.

The sub broker will provide assistance to stock broker and client to reconcile their accounts at the end of each
quarter with reference to all the settlements where payouts have been declared during the quarter.

11.

The stock broker shall issue, individually for each client of his sub broker, contract notes in the format prescribed
by the relevant stock exchange. The sub-broker shall render necessary assistance to his client in obtaining the
contract note from the stock broker.

12.

The stock broker, the sub-broker and the client agree to abide by any award passed by the Ombudsman under the
SEBI (Ombudsman) Regulations, 2003.

13.

The client and the stock broker agree to refer any claims and/or disputes to arbitration as per the Rules, Byelaws
and Regulations of the Exchange and circulars issued thereunder as may be in force from time to time.

14.

The stock broker and the sub-broker hereby agree that they will assist and cooperate with each other in ensuring
faster settlement of any arbitration proceedings arising out of the transactions entered into between them vis--vis
the client and they shall be jointly or severally liable to implement the arbitration awards made in such proceedings.
In case of an award against a sub broker, if the sub broker fails to implement the award, the stock broker shall be
liable to implement the same and would be entitled to recover the same from the sub broker.

15.

The stock broker and the sub-broker hereby agree that all transactions in securities on behalf of the clients of the
sub-broker shall be settled by delivery and/or payment, between the stock broker and the client in accordance
with the provisions of rules, bye-laws and regulations of the relevant stock exchange on which the transactions
took place and subject to the procedures for settlement of transactions laid down by the relevant stock exchange
from time to time.

16.

Information about default in payment/delivery and related aspects by a client, including that of a sub broker as a
client shall be brought to the notice of the relevant stock Exchange(s) by the stock broker. In case where defaulting
sub broker/client is a corporate entity/partnership/proprietary firm or any other artificial legal entity, then the name(s)
of director(s)/promoter(s)/Partner(s)/proprietor as the case may be, shall also be communicated to the relevant
stock exchange(s) by the stock broker.

17.

The stock broker, the sub-broker or the client shall be entitled to terminate this agreement without giving any
reasons to the other party, after giving notice in writing of not less than one month to the other parties at their
respective addresses mentioned below. Notwithstanding any such termination, all rights, liabilities and obligations
of the parties arising out of or in respect of transactions entered into prior to the termination of this agreement shall
continue to subsist and vest in /be binding on the respective parties or his / its respective heirs, executors,
administrators, legal representatives or successors, as the case may be.

18.

In the event of sub broker terminating this agreement and/or\ termination of the agreement with the sub broker by
the stock broker, for any reason whatsoever, the client shall be informed of such termination and the client shall be
deemed to be the direct client of the stock broker and all clauses in the agreement governing the client and stock
broker shall continue to be in force as it is, unless the client intimates to the stock broker his/its intention to
terminate the agreement by giving a notice in writing of not less than one month.

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19.

This agreement shall forthwith terminate;


(i)

if the stock broker for any reason ceases to be a member of the stockexchange including cessation of
membership by reason of the stock brokers default, death, resignation or expulsion or if the certificate
issued by the Board is cancelled;

(ii)

upon the demise/insolvency of the sub-broker or the cancellation of his/its registration with the Board or /
withdrawal of recognition of the sub-broker by the stock exchange. Provided however, in such an event, the
client shall be informed of such termination and the client shall be deemed to be the direct client of the stock
broker and all clauses in the agreement governing the client and stock broker shall continue to be in force
as it is, unless the client intimate to the stock broker or the stock broker intimates to the client his/its
intention to terminate the agreement by giving one month notice in writing.

20.

The provisions of this agreement shall always be subject to Government notifications, any rules, regulations,
guidelines and circulars issued by SEBI and Rules, Regulations and Bye laws of the relevant stock exchange that
may be in force from time to time.

21.

In the event of death or insolvency of the client or his/its otherwise becoming incapable of receiving and paying for
or delivering or transferring securities which the client has ordered to be bought or sold, stock broker may close
out the transaction of the client and claim losses, if any, against the estate of the client. The client or his successors,
heirs and assigns shall be entitled to any surplus which may result therefrom.

22.

Without prejudice to the stock brokers other rights (including the right to refer a matter to arbitration), the stock
broker shall be entitled to liquidate/close out all or any of the clients positions for non-payment of margins or other
amounts, outstanding debts, etc. and adjust the proceeds of such liquidation / close out, if any, against the clients
liabilities/ obligations. Any and all losses and financial charges on account of such liquidation/closing-out shall be
charged to and borne by the client.

23.

The stock broker and the client declare and agree that the transactions executed on the Exchange are subject to
Rules, Byelaws and Regulations and circulars issued thereunder of the Exchange and all parties to such trade
shall have submitted to the jurisdiction of such court as may be specified by the Byelaws and Regulations of the
Exchange for the purpose of giving effect to the provisions of the Rules, Byelaws and Regulations of the Exchange
and the circulars issued thereunder.

24.

Where the Exchange cancels trade(s) suo moto all such trades including the trade/s done on behalf of the client
shall ipso facto stand cancelled, member shall be entitled to cancel the respective contract(s) with client(s)

25.

The instructions issued by an authorized representative, if any, of the client shall be binding on the client in
accordance with the letter authorizing the said representative to deal on behalf of the said client.

26.

The client agrees to immediately notify the stock broker/sub broker in writing if there is any change in the information
in the client registration form provided by the client to the stock broker/sub broker at the time of opening of the
account or at any time thereafter.

27.

The client agrees to abide by the exposure limits, if any, set by the stock broker or by the Exchange or Clearing
Corporation or SEBI from time to time.

28.

In addition to the specific rights set out in this Agreement, the stock broker, the sub-broker and the client shall be
entitled to exercise any other rights which the stock broker, sub broker or the client may have under the Rules,
Bye-laws and Regulations of the Exchange and circulars issued thereunder or Rules and Regulations of SEBI.

29.

The stock broker and the sub-broker hereby undertake to maintain the details of the client as mentioned in the
client registration form or any other information pertaining to the client in confidence and that they shall not
disclose the same to any person/authority except as required under any law/regulatory requirements: Provided

126

however that the stock broker or subbroker may so disclose information about his client to any person or authority
with the express permission of the client.
30.

The client agrees to immediately furnish information to the stock broker in writing, if any winding up petition or
insolvency petition has been filed or any winding up or insolvency order or decree or award is passed against him
or if any litigation which may have material bearing on his capacity has been filed against him.

31.

Words and expressions which are used in this Agreement, but which are not defined herein shall, unless the
context otherwise requires, have the same meaning as assigned thereto in the Rules, Byelaws and Regulations of
the Exchange and circulars issued thereunder.

This agreement can be altered, amended and / or modified by the parties mutually in writing without derogating from
the contents of this Agreement. Provided however, if the rights and obligations of the parties hereto are altered by
virtue of change in Rules and regulations of SEBI or Bye-laws, Rules and Regulations of the relevant stock Exchange,
such changes shall be deemed to have been incorporated herein in modification of the rights and obligations of the
parties mentioned in this agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands and signatures on the day, month and year first
above written Signed for and on behalf of the member, the sub-broker and the client
Member
(Full name details of
membership of the
stock exchange and
address)

Sub-broker
Full name and details of
recognition of the stock
exchange and address

Client
Full details and
address

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Annexure 4
COMBINED RISK DISCLOSURE DOCUMENT FOR CAPITAL MARKET/CASH SEGMENT AND FUTURES &
OPTIONS SEGMENT (TO BE GIVEN BY THE BROKER TO THE CLIENT)
This document is issued by the member of the National Stock Exchange of India (hereinafter referred to as NSE) /
The Stock Exchange, Mumbai (hereinafter referred to as BSE) which has been formulated by the Exchanges in
coordination with the Securities and Exchange Board of India (hereinafter referred to as SEBI) and contains important
information on trading in Equities and F&O Segments of NSE / BSE. All prospective constituents should read this
document before trading on Capital Market/Cash Segment or F&O segment of the Exchanges.
NSE/BSE/SEBI does neither singly or jointly and expressly nor impliedly guarantee nor make any representation
concerning the completeness, the adequacy or accuracy of this disclosure document nor has NSE/BSE/SEBI endorsed
or passed any merits of participating in the trading segments. This brief statement does not disclose all the risks and
other significant aspects of trading.
In the light of the risks involved, you should undertake transactions only if you understand the nature of the contractual
relationship into which you are entering and the extent of your exposure to risk.
You must know and appreciate that investment in Equity shares, derivative or other instruments traded on the Stock
Exchange(s), which have varying element of risk, is generally not an appropriate avenue for someone of limited
resources/limited investment and/or trading experience and low risk tolerance. You should therefore carefully consider
whether such trading is suitable for you in the light of your financial condition. In case you trade on NSE/BSE and
suffer adverse consequences or loss, you shall be solely responsible for the same and NSE/BSE, its Clearing
Corporation/Clearing House and/or SEBI shall not be responsible, in any manner whatsoever, for the same and it will
not be open for you to take a plea that no adequate disclosure regarding the risks involved was made or that you
were not explained the full risk involved by the concerned member. The constituent shall be solely responsible for the
consequences and no contract can be rescinded on that account. You must acknowledge and accept that there can
be no guarantee of profits or no exception from losses while executing orders for purchase and/or sale of a security or
derivative being traded on NSE/BSE.
It must be clearly understood by you that your dealings on NSE/BSE through a member shall be subject to your fulfilling
certain formalities set out by the member, which may interalia include your filling the know your client form, client
registration form, execution of an agreement, etc., and are subject to the Rules,
Byelaws and Regulations of NSE/BSE and its Clearing Corporation, guidelines prescribed by SEBI and in force from
time to time and Circulars as may be issued by NSE/BSE or its Clearing Corporation/Clearing House and in force
from time to time.
NSE/BSE does not provide or purport to provide any advice and shall not be liable to any person who enters into any
business relationship with any trading member and/or sub-broker of NSE/BSE and/or any third party based on any
information contained in this document. Any information contained in this document must not be construed as business
advice/investment advice. No consideration to trade should be made without thoroughly understanding and reviewing
the risks involved in such trading. If you are unsure, you must seek professional advice on the same.
In considering whether to trade or authorize someone to trade for you, you should be aware of or must get acquainted
with the following:1.

BASIC RISKS INVOVLED IN TRADING ON THE STOCK EXCHANGE (EQUITY AND OTHER INSTRUMENTS)

1.1

Risk of Higher Volatility:


Volatility refers to the dynamic changes in price that securities undergo when trading activity continues on the
Stock Exchange. Generally, higher the volatility of a security/contract, greater is its price swings. There may be
normally greater volatility in thinly traded securities/contracts than in active securities/contracts. As a result of
volatility, your order may only be partially executed or not executed at all, or the price at which your order got

128

executed may be substantially different from the last traded price or change substantially thereafter, resulting in
notional or real losses.
1.2

Risk of Lower Liquidity:


Liquidity refers to the ability of market participants to buy and/or sell securities / contracts expeditiously at a
competitive price and with minimal price difference. Generally, it is assumed that more the numbers of orders
available in a market, greater is the liquidity. Liquidity is important because with greater liquidity, it is easier for
investors to buy and/or sell securities / contracts swiftly and with minimal price difference, and as a result, investors
are more likely to pay or receive a competitive price for securities / contracts purchased or sold. There may be a
risk of lower liquidity in some securities / contracts as compared to active securities / contracts. As a result, your
order may only be partially executed, or may be executed with relatively greater price difference or may not be
executed at all.

1.2.1 Buying/selling without intention of giving and/or taking delivery of a security, as part of a day trading strategy, may
also result into losses, because in such a situation, stocks may have to be sold/purchased at a low/high prices,
compared to the expected price levels, so as not to have any obligation to deliver/receive a security.
1.3

Risk of Wider Spreads:


Spread refers to the difference in best buy price and best sell price. It represents the differential between the price
of buying a security and immediately selling it or vice versa. Lower liquidity and higher volatility may result in wider
than normal spreads for less liquid or illiquid securities / contracts. This in turn will hamper better price formation.

1.4

Risk-reducing orders:
Most Exchanges have a facility for investors to place limit orders, stop loss orders etc. The placing of such
orders (e.g., stop loss orders, or limit orders) which are intended to limit losses to certain amounts may not be
effective many a time because rapid movement in market conditions may make it impossible to execute such
orders.

1.4.1 A market order will be executed promptly, subject to availability of orders on opposite side, without regard to
price and that, while the customer may receive a prompt execution of a market order, the execution may be at
available prices of outstanding orders, which satisfy the order quantity, on price time priority. It may be understood
that these prices may be significantly different from the last traded price or the best price in that security.
1.4.2 A limit order will be executed only at the limit price specified for the order or a better price. However, while the
customer receives price protection, there is a possibility that the order may not be executed at all.
1.4.3 A stop loss order is generally placed away from the current price of a stock / contract, and such order gets
activated if and when the stock / contract reaches, or trades through, the stop price. Sell stop orders are entered
ordinarily below the current price, and buy stop orders are entered ordinarily above the current price. When the
stock reaches the pre-determined price, or trades through such price, the stop loss order converts to a market/
limit order and is executed at the limit or better. There is no assurance therefore that the limit order will be
executable since a stock / contract might penetrate the pre-determined price, in which case, the risk of such order
not getting executed arises, just as with a regular limit order.
1.5

Risk of News Announcements:


Issuers make news announcements that may impact the price of the securities / contracts. These announcements
may occur during trading, and when combined with lower liquidity and higher volatility, may suddenly cause an
unexpected positive or negative movement in the price of the security / contract.

1.6

Risk of Rumours:
Rumours about companies at times float in the market through word of mouth, newspapers, websites or news
agencies, etc. The investors should be wary of and should desist from acting on rumours.

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1.7

System Risk:
High volume trading will frequently occur at the market opening and before market close. Such high volumes may
also occur at any point in the day. These may cause delays in order execution or confirmation.

1.7.1 During periods of volatility, on account of market participants continuously modifying their order quantity or prices
or placing fresh orders, there may be delays in order execution and its confirmations.
1.7.2 Under certain market conditions, it may be difficult or impossible to liquidate a position in the market at a reasonable
price or at all, when there are no outstanding orders either on the buy side or the sell side, or if trading is halted in
a security due to any action on account of unusual trading activity or stock hitting circuit filters or for any other
reason.
1.8

System/Network Congestion:
Trading on NSE/BSE is in electronic mode, based on satellite/leased line based communications, combination of
technologies and computer systems to place and route orders. Thus, there exists a possibility of communication
failure or system problems or slow or delayed response from system or trading halt, or any such other problem/
glitch whereby not being able to establish access to the trading system/network, which may be beyond the control
of and may result in delay in processing or not processing buy or sell orders either in part or in full. You are
cautioned to note that although these problems may be temporary in nature, but when you have outstanding open
positions or unexecuted orders, these represent a risk because of your obligations to settle all executed transactions.

2.

As far as Futures and Options segment is concerned, please note and get yourself acquainted with the following
additional features:-

2.1

Effect of Leverage or Gearing


The amount of margin is small relative to the value of the derivatives contract so the transactions are leveraged
or geared. Derivatives trading, which is conducted with a relatively small amount of margin, provides the possibility
of great profit or loss in comparison with the principal investment amount. But transactions in derivatives carry a
high degree of risk.
You should therefore completely understand the following statements before actually trading in derivatives trading
and also trade with caution while taking into account ones circumstances, financial resources, etc. If the prices
move against you, you may lose a part of or whole margin equivalent to the principal investment amount in a
relatively short period of time. Moreover, the loss may exceed the original margin amount.
A. Futures trading involves daily settlement of all positions. Every day the open positions are marked to market
based on the closing level of the index. If the index has moved against you, you will be required to deposit the
amount of loss (notional) resulting from such movement. This margin will have to be paid within a stipulated time
frame, generally before commencement of trading next day.
B. If you fail to deposit the additional margin by the deadline or if an outstanding debt occurs in your account, the
broker/member may liquidate a part of or the whole position or substitute securities. In this case, you will be liable
for any losses incurred due to such close-outs.
C. Under certain market conditions, an investor may find it difficult or impossible to execute transactions. For example,
this situation can occur due to factors such as illiquidity i.e. when there are insufficient bids or offers or suspension
of trading due to price limit or circuit breakers etc.
D. In order to maintain market stability, the following steps may be adopted: changes in the margin rate, increases in
the cash margin rate or others. These new measures may also be applied to the existing open interests. In such
conditions, you will be required to put up additional margins or reduce your positions.
E. You must ask your broker to provide the full details of the derivatives contracts you plan to trade i.e. the contract
specifications and the associated obligations.

130

2.2.

Risk of Option holders

1.

An option holder runs the risk of losing the entire amount paid for the option in a relatively short period of time. This
risk reflects the nature of an option as a wasting asset which becomes worthless when it expires. An option holder
who neither sells his option in the secondary market nor exercises it prior to its expiration will necessarily lose his
entire investment in the option. If the price of the underlying does not change in the anticipated direction before the
option expires to an extent sufficient to cover the cost of the option, the investor may lose all or a significant part
of his investment in the option.

2.

The Exchange may impose exercise restrictions and have absolute authority to restrict the exercise of options at
certain times in specified circumstances.

2.3

Risks of Option Writers

1.

If the price movement of the underlying is not in the anticipated direction, the option writer runs the risks of losing
substantial amount.

2.

The risk of being an option writer may be reduced by the purchase of other options on the same underlying
interest and thereby assuming a spread position or by acquiring other types of hedging positions in the options
markets or other markets. However, even where the writer has assumed a spread or other hedging position, the
risks may still be significant. A spread position is not necessarily less risky than a simple long or short position.

3.

Transactions that involve buying and writing multiple options in combination, or buying or writing options in
combination with buying or selling short the underlying interests, present additional risks to investors. Combination
transactions, such as option spreads, are more complex than buying or writing a single option. And it should be
further noted that, as in any area of investing, a complexity not well understood is, in itself, a risk factor. While this
is not to suggest that combination strategies should not be considered, it is advisable, as is the case with all
investments in options, to consult with someone who is experienced and knowledgeable with respect to the risks
and potential rewards of combination transactions under various market circumstances.

3.

GENERAL

3.1

Commission and other charges


Before you begin to trade, you should obtain a clear explanation of all commission, fees and other charges for
which you will be liable. These charges will affect your net profit (if any) or increase your loss.

3.2

Deposited cash and property


You should familiarise yourself with the protections accorded to the money or other property you deposit particularly
in the event of a firm insolvency or bankruptcy. The extent to which you may recover your money or property may
be governed by specific legislation or local rules. In some jurisdictions, property which has been specifically
identifiable as your own will be pro-rated in the same manner as cash for purposes of distribution in the event of
a shortfall. In case of any dispute with the member, the same shall be subject to arbitration as per the byelaws/
regulations of the Exchange.

3.3

For rights and obligations of the clients, please refer to Annexure-1 enclosed with this document.

3.4

The term constituent shall mean and include a client, a customer or an investor, who deals with a member for the
purpose of acquiring and/or selling of securities through the mechanism provided by NSE/BSE.

3.5

The term member shall mean and include a trading member, a broker or a stock broker, who has been admitted
as such by NSE/BSE and who holds a registration certificate as a stock broker from SEBI.
I hereby acknowledge that I have received and understood this risk disclosure statement and Annexure-1 containing
my rights and obligations.
Customer Signature (If Partner, Corporate, or other Signatory, then attest with company seal.)

131

ANNEXURE-1
INVESTORS RIGHTS AND OBLIGATIONS :
1.1

You should familiarise yourself with the protection accorded to the money or other property you may deposit with
your member, particularly in the event of a default in the stock market or the broking firms insolvency or bankruptcy.

1.1.1 Please ensure that you have a documentary proof of your having made deposit of such money or property with the
member, stating towards which account such money or property deposited.
1.1.2 Further, it may be noted that the extent to which you may recover such money or property may be governed by the
Bye-laws and Regulations of NSE/BSE and the scheme of the Investors Protection Fund in force from time to
time.
1.1.3 Any dispute with the member with respect to deposits, margin money, etc., and producing an appropriate proof
thereof, shall be subject to arbitration as per the Rules, Byelaws/Regulations of NSE/BSE or its Clearing Corporation
/ Clearing House.
1.2

Before you begin to trade, you should obtain a clear idea from your member of all brokerage, commissions, fees
and other charges which will be levied on you for trading. These charges will affect your net cash inflow or outflow.

1.3

You should exercise due diligence and comply with the following requirements of the NSE/BSE and/or SEBI:

1.3.1 Please deal only with and through SEBI registered members of the Stock Exchange and are enabled to trade on
the Exchange. All SEBI registered members are given a registration no., which may be verified from SEBI. The
details of all members of NSE/BSE and whether they are enabled to trade may be verified from NSE/BSE website
(www.nseindia.com / www.bseindia.com).
1.3.2 Demand any such information, details and documents from the member, for the purpose of verification, as you may
find it necessary to satisfy yourself about his credentials.
1.3.3 Furnish all such details in full as are required by the member as required in Know Your Client form, which may
also include details of PAN or Passport or Driving Licence or Voters Id, or Ration Card, bank account and depository
account, or any such details made mandatory by SEBI/NSE at any time, as is available with the investor.
1.3.4 Execute a broker-client agreement in the form prescribed by SEBI and/or the Relevant Authority of NSE or its
Clearing Corporation / Clearing House from time to time, because this may be useful as a proof of your dealing
arrangements with the member.
1.3.5 Give any order for buy or sell of a security in writing or in such form or manner, as may be mutually agreed. Giving
instructions in writing ensures that you have proof of your intent, in case of disputes with the member.
1.3.6 Ensure that a contract note is issued to you by the member which contains minute records of every transaction.
Verify that the contract note contains details of order no., trade number, trade time, trade price, trade quantity,
name of security, client code allotted to you and showing the brokerage separately. Contract notes are required to
be given/sent by the member to the investors latest on the next working day of the trade. Contract note can be
issued by the member either in electronic form using digital signature as required, or in hard copy. In case you do
not receive a contract note on the next working day or at a mutually agreed time, please get in touch with the
Investors Grievance Cell of NSE/BSE, without delaying.
1.3.7 Facility of Trade Verification is available on NSE/BSE website (www.nseindia.com / www.bseindia.com), where
details of trade as mentioned in the contract note may be verified from the trade date upto five trading days.
Where trade details on the website, do not tally with the details mentioned in the contract note, immediately get in
touch with the Investors Grievance Cell of NSE/BSE.

132

1.3.8 Ensure that payment/delivery of securities against settlement is given to the concerned member within one working
day prior to the date of pay-in announced by NSE/BSE or its Clearing Corporation / Clearing House. Payments
should be made only by account payee cheque in favour of the firm/company of the trading member and a receipt
or acknowledgement towards what such payment is made be obtained from the member. Delivery of securities is
made to the pool account of the member rather than to the beneficiary account of the member.
1.3.9 In case pay-out of money and/or securities is not received on the next working day after date of pay-out announced
by NSE/BSE or its Clearing Corporation / Clearing House, please follow-up with the concerned member for its
release. In case pay-out is not released as above from the member within five working days, ensure that you
lodge a complaint immediately with the Investors Grievance Cell of NSE/BSE.
1.3.10 Every member is required to send a complete Statement of Accounts, for both funds and securities settlement to
each of its constituents, at such periodicity as may be prescribed by time to time. You should report errors, if any,
in the Statement immediately, but not later than 30 calendar days of receipt thereof, to the member. In case the
error is not rectified or there is a dispute, ensure that you refer such matter to the Investors Grievance Cell of NSE/
BSE, without delaying.
1.3.11 In case of a complaint against a member/registered sub-broker, you should address the complaint to the Office as
may be specified by NSE/BSE from time to time.
1.4

In case where a member surrenders his membership, NSE/BSE gives a public notice inviting claims, if any, from
investors. In case of a claim, relating to transactions executed on the trading system of NSE/BSE, ensure that
you lodge a claim with NSE/BSE/NSCCL/Clearing House within the stipulated period and with the supporting
documents.

1.5

In case where a member is expelled from trading membership or declared a defaulter, NSE/BSE gives a public
notice inviting claims, if any, from investors. In case of a claim, relating to transactions executed on the trading
system of NSE/BSE, ensure that you lodge a claim with NSE/BSE within the stipulated period and with the
supporting documents.

1.6

Claims against a defaulter/expelled member found to be valid as prescribed in the relevant Rules/Bye-laws and
the scheme under the Investors Protection Fund (IPF) may be payable first out of the amount vested in the
Committee for Settlement of Claims against Defaulters, on pro-rata basis if the amount is inadequate. The balance
amount of claims, if any, to a maximum amount of Rs.10 lakhs per investor claim, per defaulter/expelled member
may be payable subject to such claims being found payable under the scheme of the IPF.

Notes :
1.

The term constituent shall mean and include a client, a customer or an investor, who deals with a trading member
of NSE/BSE for the purpose of acquiring and / or selling of securities through the mechanism provided by NSE/
BSE.

2.

The term member shall mean and include a member or a broker or a stock broker, who has been admitted as
such by NSE/BSE and who holds a registration certificate as a stock broker from SEBI.

3.

NSE/BSE may be substituted with names of the relevant exchanges, wherever applicable.

133

ANNEXURE 5
MODEL STOCK BROKER AND SUB-BROKER AGREEMENT
This Agreement entered into this
day of
200
at
between
, Member of the
Stock Exchange, ordinarily carrying on business in sale and purchase of shares and securities in the
name and style of
from
(hereinafter referred to as the stock broker) and
having his/its office/registered office at
(address), which expression shall, unless repugnant to
the context or meaning thereof, be deemed to mean and include his/her heirs, executors, administrators and legal
representatives/the partners for the time being of the said entity, the survivor or survivors of them and their respective
heirs, executors, administrators and legal representatives/its successors, as the case may be, of the One Part;
And
an entity desiring to start business as a sub broker in shares and securities in the name and style of
(hereinafter referred to as the subbroker.) and having his/its office/registered office at
(address), which expression shall, unless repugnant to the context or meaning thereof, be
deemed to mean and include his/her heirs, executors, administrators and legal representatives/the partners for the
time being of the said entity, the survivor or survivors of them and their respective heirs, executors, administrators and
legal representatives/its successors, as the case may be, of the Other Part;
WHEREAS the said stock broker is a member of
Stock Exchange {(hereinafter referred to as the
said exchange} and also holds a certificate of registration granted under Rule 4 of the Securities and Exchange Board
of India (Stock Brokers and Sub-Brokers) Rules, 1992 (hereinafter referred to as the said Rules) & the Securities and
Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as the said
Regulations); bearing SEBI Registration Number.
AND
WHEREAS the sub-broker is desirous of affiliating to the stock broker and is hereby eligible for making an application
for seeking recognition of the stock exchange and for grant of a certificate of registration under rule 5 of the said
rules;
WHEREAS in terms of item (C) (4) the Code of Conduct for sub brokers prescribed under of Schedule II read with
regulation 15 (1) (c) and regulation 17(1) (m) of the Securities and Exchange Board of India (Stock Brokers and Subbrokers) Regulations, 1992, the stock broker and the sub-broker are required to enter into an agreement with each
other specifying the scope of their authority & responsibility, in relation to the business of dealing in securities between
them; AND
WHEREAS the sub-broker has declared:
(a)

that he/it is presently affiliated as a sub broker with the stock broker(s) of the following stock exchanges other than
the said exchange:
Name of the
affiliated stock
broker

SEBI Registration
number of the stock
broker

Name of the
stock exchange

SEBI Registration
number of the sub
broker

and the broker(s) mentioned under column (1) of the above table has/have given No Objection Certificate(s)(NOC)
to the present Sub-broker to get affiliated to the stock broker & seek recognition with the said exchange and
registration with SEBI.
(b)

that he is not affiliated to any other stock broker of the said exchange; and

134

(c)

that he/it has direct/indirect interest in the stock brokers/ sub brokers of stock exchange detailed hereunder:
Name & SEBI Reg.
No. of Broker(s)
directly or indirectly
related to the
subbroker

Name & SEBI Reg.


No. of sub broker(s)
directly or indirectly
related to the sub
broker

Name & SEBI


Reg. No. of
broker(s) with
whom the sub
broker mentioned
at column (2) is
affiliated

Name of
the stock
exchange

Nature of
interest (i.e. as
director or
shareholder)
Also state % of
shareholding

Note 1: A Sub-broker is deemed to have direct/indirect interest in other Sub-broker (Stock Broker) for purposes of this
clause, in the following circumstances:
(i)

Where he is an individual, he or any of his relatives being a Sub-broker (Stock Broker), he or any of his relative
being partner in a Sub-Broking firm (Stock Broking Firm), he or any of his relative being a director in a Sub-broking
Company (Stock Broking Company) or he or any of his relatives clubbed together holding substantial equity in any
Sub-broking Company.

(ii)

Where it is Partnership Firm/Company, the relative(s) of partners/directors in the Firm/Company being a Subbroker (Stock Broker) or being partner(s)/director(s) in a Sub-broking Firm/Company (Stock Broking Firm/Company)
or the same set of shareholders holding substantial equity in other Sub-broking(Stock Broking) entity.

Note 2 : Relative for the above purpose shall mean husband, wife, brother, unmarried sister or any linear ascendant or
descendent of an individual.
NOW THEREFORE this agreement witnesseth as follows:
1.

The stock broker and the sub broker hereby acknowledge and confirm that the subbroker is affiliated to the stock
broker and that the sub-broker shall within the scope of the authority given under these presents, be entitled to act
as a sub-broker within the meaning and subject to SEBI (Stock Brokers & Sub-Brokers) Rules, 1992 and SEBI
(Stock Brokers & Sub-Brokers) Regulations 1992 (the said Rules and Regulations respectively) as amended
from time to time, for assisting the client in buying, selling or dealing in securities through the stock broker.

2.

The stock broker and the sub broker agree that irrespective of the date of agreement, the sub broker will commence
business only after receipt of registration certificate from SEBI, continue business during currency of the certificate
and will stop business as a sub broker from the date of termination of the agreement.

3.

The stock broker agrees that he/it shall not, except with the previous consent of the sub-broker, commit on the
latters behalf transactions in securities in excess of the amount mutually agreed upon in writing from time to time.
The sub broker also agrees that he/it shall not commit transactions in securities through the stock broker in excess
of the amount mutually agreed upon in writing from time to time.

4.

The stock broker agrees that he/it shall not resort to unfair means of weaning away the clients of the sub broker.

5.

The stock broker and the sub broker agree to share the brokerage/commission between them in terms of their
mutual understanding. Provided however, the brokerage/commission payable to the sub-broker shall not exceed
one and one half percent of the value of transactions carried out by the sub broker for clients.

6.

The stock broker agrees to maintain a separate record including accounts in respect of the dealings in securities
entered into on behalf of the individual clients dealing, with bifurcation showing the details by each of the sub
brokers.

135

7.

If any dispute arises between the stock broker and the sub-broker, the same shall as far as possible be settled
with the help of the officials of the said exchange and if no such settlement is possible the parties hereby agree to
refer such dispute to arbitration in accordance with the Rules, Bye-laws and Regulations of the said exchange.
The stock broker and the sub-broker hereby agree that they shall cooperate with the said exchange officials and
provide all relevant documents in their possession or control so as to expedite the settlement or adjudication
through arbitration process.

8.

The sub-broker shall inform the stock broker of any proposed material change in its status and constitution, before
seeking prior approval for the same from SEBI.

9.

The stock broker and the sub-broker shall be entitled to terminate this agreement without giving any reasons to
the other party after giving notice in writing of not less than one month to the other party at its respective address
mentioned below.
Provided however that, in the event of the sub broker terminating the agreement and/or termination of the sub
broker by the stock broker, for any reason whatsoever, all his clients shall be deemed to be the direct clients of the
stock broker and all clauses in the tripartite agreement between the stock broker, the sub broker and client governing
the client and stock broker shall continue to be in force as it is, unless any client intimates to the stock broker or the
stock broker intimates to the client his/its intention to terminate the agreement by giving a notice in writing of not
less than one month.

10.

Where the stock broker has terminated his/its agreement with the sub broker, the stock broker shall inform the
relevant stock exchange (s).

11.

This agreement shall forthwith stand terminated;

(i)

if the stock broker for any reason ceases to be a member of the stock exchange including by cessation of membership
by reason of the stock brokers, death, resignation, expulsion or having being declared a defaulter or if the certificate
issued by the Board is cancelled;

(ii)

upon the demise/insolvency of the sub-broker or the cancellation of his/its registration with the Board or /withdrawal
of recognition of the sub-broker by the stock exchange.

12.

On termination of the agreement by the stock broker, it shall be the duty of the stock broker to collect and forward
the registration certificate of the sub-broker to SEBI through the stock exchange along with all the fees in arrears
in respect of the subbrokers registration as required under Part II of schedule III of SEBI (Stock Broker and Subbroker) Regulations 1992 and the sub-broker agrees to co-operate with the stock broker in carrying out the said
duty.

13.

In the event of surrender of the sub broker registration, the affiliating broker shall ensure that investors/general
public are informed about surrender of registration of the sub broker. A public advertisement to that effect shall be
required to be issued by the stock broker in a local newspaper where the sub brokers Registered office, Head
Office/Corporate office is situated and another in English daily news paper with wide circulation

IN WITNESS WHEREOF, the parties hereto have set their hands and signatures on the day, month and year first
above written
Signed for and on behalf of Signed for and on behalf of
Stock Broker :

Sub-Broker :

By :

By :

Signature :

Signature :

Title :

Title :

Witness :

Witness :

136

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20061120-9
Monday, November 20, 2006
Client Registration Form / Know Your Client Form
General
CONTENTS :

Attention of the trading members is drawn to SEBI circular number SEBI/MIRSD/DPS-1/Cir-31/2004 dated 26th August
2004, Exchange Notice No. 20040827-11 dated August 27, 2004, Exchange Notice No.20060303-20 dated March 3,
2006 and Exchange Notice No.20060704-5 dated July 4, 2006 issued in respect of the above subject.
The trading members were advised to ensure that all client registration details as mentioned in the Client Registration
Form / Know Your Client (KYC) form are complete in all respect and are reviewed and updated periodically. The trading
members were also advised to ensure that Client Registration details including financial details of the clients should
be correctly obtained and updated periodically. Trading members were also advised to monitor the trading activities of
their clients based on the financial details as contained in the client's KYC.
It has been observed that client registration details including financial details, mentioned in the KYC's are incomplete/
incorrect/not updated. The trading members are therefore, once again reminded to ensure that Client Registration
details including financial details of the clients should be complete in all respect, and updated periodically.
Further, trading members are requested to note that a penalty of Rs. 2,500/- per client shall be levied for Client
Registration forms obtained without material information and a penalty of Rs. 10,000/- shall be levied for Client
Registration Forms not complete/ not supported by documents in case of multiple instances as per the Exchange Notice
No. 20060602-7 dated June 2, 2006.

P. K. Ramesh
General Manager
Surveillance and Supervision

Yogesh Bambardekar
Manager
Surveillance and Supervision

137

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20060704-6
Tuesday, July 04, 2006
Uniform Client Registration Documents
General
CONTENTS :

As the trading members are aware, SEBI vide circular number SEBI/MIRSD/DPS-I/Cir-31/2004 dated August 26, 2004
has prescribed uniform document requirement for trading. As required by SEBI, the circular along with its annexures
pertaining to clients containing the model formats of uniform set of documents namely (a) Client Registration Form (b)
Member Client Agreements (c) Tripartite agreement between broker-sub broker and clients wherever applicable and
(d) Risk Disclosure documents was forwarded by the Exchange for compliance by the trading members.
Attention of the trading members is drawn specifically to paragraph 3 of the said circular which states that the stock
broker may incorporate any additional clauses in these documents provided these are not in conflict with any of the
clauses in the model document, as also the Rules, Regulations, Articles, Byelaws, Circulars, directives and guidelines.
Moreover, the trading member may also seek additional information so as to satisfy himself about the antecedents of
the client.
As a matter of abundant caution, attention of the trading members is once again brought to the above circular. Trading
members are further advised to ensure the following:
(1)

At the time of registering a client, the client shall be informed in writing that only the documents stated above are
mandatory and any additional clause or documentation shall be voluntary and at the discretion of member and client.

(2)

Additional documents shall state at the beginning in bold that the document is voluntary.

(3)

However, if such documents are required in order to ensure smooth functioning of special facility such as internet
trading offered by the trading member, the client shall be informed in writing clearly that such documents are
voluntary and the client need not execute such documents if he/she does not wish to use that facility.

(4)

Such documents, if any shall also recognize specifically the right of the client to terminate the document. In such
an eventuality, the trading member may terminate the special facility.

(5)

The docket or folder containing draft mandatory documents for signing and the checklist containing mandatory
documents shall not include draft voluntary documentations, if any. Further, These mandatory documents should
relate to only opening the account for stock trading and not for any other additional business/activity like opening
of Bank Account, DP Account etc.

(6)

No documentation shall give any exclusive right or control to the trading member or third party over the demat
account or ledger account or bank account of the client except to the extent of and restricted to the client (including
family members who have given authorization) obligation to the trading member in respect of the transactions
done or to be done (like upfront margin) by the trading member on behalf of the client on the Exchange.

In case of any queries/ clarification, trading members may contact the under mentioned officials:
NAME

INTERCOM NO.

Mr. Pankaj Gupta

8120

Mr. Nitesh Agarwal

8354

Ms. Amita Tarwale

8262

Ms. Shaila Valsan

8316

P.K.Ramesh
Dy.General Manager
Surveillance & Supervision

Pankaj Gupta
Asst.General Manager
Surveillance & Supervision

138

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20031125-7
Tuesday, November 25, 2003
Disclosure of Proprietary Trading by Broker to Client
General
CONTENTS :

Members are hereby informed that SEBI, vide letter Ref.SEBI/MRD/SE/Cir-42/2003 dated November 19, 2003, has
directed every broker to disclose to his client whether he does client-based business or proprietary trading as well.The
member shall disclose the aforesaid information to his existing clients within a period of one month from the date of
this circular.Further, the broker shall disclose this information upfront to his new clients at the time of entering into the
Know Your Client Agreement.In case a broker does not presently trade on proprietary account but chooses to do so
at a later date, he shall be required to disclose this to his clients before carrying out any proprietary trading.The above
mentioned SEBI Circular is attached herewith and members are requested to comply with the same.

Kevin Desouza
Chief General Manager
Membership & Inspection

139

Notice no : 2628/97
NOTICE
In the annual meeting of representative of all Stock Exchanges organised by Securities and Exchange Board of India
(SEBI) on 19th March, 1997, it was decided that efforts should be made to revive the institution of remisier under the
Rules and Bye-laws of Stock Exchanges. A remisier is a person who is engaged by the member primarily to solicit
business in securities on commission basis. The relevant Rules of the Exchange (namely, Rule 216 to Rule 235)
regarding appointment and regulation of remisiers are enclosed as Annexure I.
2.

The Governing Board of the Exchange in its meeting held on 26th May, 1997 prescribed the application form to be
filled in by a member desirous of employing a remisier. Copy of the application form is enclosed as Annexure II.
The application form would be available with the membership department of the Exchange. The members may
contact the following persons for application forms and other information.
Name

Intercom No.

1.

Shri Deepak Agarwal

8307

2.

Shri Kamlesh Shah

8018

3.

Shri Zubin Kanga

8024

3.

Members may also note that the following conditions have also been stipulated for remisiers by the Governing
Board :

(i)

A remisier shall pay a one time non-refundable registration fee of Rs.5,000/- at the time of every fresh registration.

(ii)

A remisier shall have a minimum qualification of H.S.C. or old Matriculation. However, the Exchange may, in
exceptional circumstances, waive this requirement based on the market experience of the remisier.

(iii)

A remisier can be registered only with one member. However, there would be no limit on the number of remisiers
to be appointed by a member.

(iv)

A remisier should not be an employee of any individual or any organization.

(v)

A remisier shall not be or act as a sub broker anywhere so long as he continues as a remisier.

(vi)

Any dispute between the member and his remisier relating to or arising out of any transactions done on the
Exchange, will be subject to arbitration as provided in the Rules, Bye-laws and Regulations of the Exchange.

The application duly filled in the prescribed forms may be forwarded to the Exchange along with a cheque for Rs.5,000/
- (Rupees Five Thousand Only) per application, drawn in favour of The Stock Exchange, Mumbai.
Members are also advised to study the letter of date relating to remisier issued by the President of the Exchange.
A. A. Tirodkar
Director Finance & Secretary
Thursday, 9th June, 1997

140

Extract of Bye-Law 218


With whom brokerage may be shared
218 (a) A member may share brokerage as provided in sub-clause (b) with a remisier, authorised clerk or employee in
his own exclusive employment. He may similarly share brokerage with any other person introducing a constituent
provided such person
(i)

is not one for whom members are forbidden to do business under the Rukes, Bye-Laws and Regulations
of the Exchange;

(ii)

is not a remisier, authorised clerk or employee in the employment of another member;

(iii)

does not advertise in the public press or in any other manner that he is acting as a broker;

(iv)

does not act as broker within a distance of fifty miles of the city of Bombay;

(v)

does not pass contracts in his own name or issue price lists or pamphlets or circulars in respect of
business in securities if working within a distance of fifty miles of the city of Bombay;

(vi)

does not issue price lists or pamphlets or circulars in respect of business in securities to other than its
own constituents if acting as a broker beyond the distance of fifty miles from the city of Bombay.

Percentage share of Brokerage


(b) A member may pay his remisier or authorised clerk, any other employee or any other person sharing brokerage as
provided in sub-clause(a), a share not exceeding 50 per cent of the brokerage charged to the constituent introduced
by him.
RULES
REMISIERS
Remisier
216. A person who is engaged by a member primarily to solicit commission business in securities shall be called a
remisier.
Commission Terms
217. A member shall be entitled to employ remisiers for the purpose of his Stock Exchange business and to remunerate
them with a share not exceeding fifty per cent of the brokerage charged to the principals they introduce.
Permission Necessary
218.

No member shall employ any remisier without first having such appointment approved by the Governing Board.
Ex-members as Remisiers

219.

A member may with the special consent of the Governing Board employ as his remisier a person who has
ceased to be a member under the Rules, Bye-laws and Regulations of the Exchange.
Remisier Not to be Anothers Employee

220.

A remisier may be an individual or firm but must not be in the employ of any individual or firm.
Remisier to Act for one Member only

221.

No person shall be registered as a remisier to more than one member.


Application

222. (a) A member desirous of employing a remisier shall apply for the permission of the Governing Board in such form

141

as the Governing Board may from time to time prescribe. Such form shall be signed both by the member and
the proposed remisier.
Discharge Certificate
(b)

An application by a member to employ a remisier who previously had been acting as a remisier or authorised
clerk with another member must be accompanied by a discharge certificate from the former employer or
employers. Such discharge certificate shall be in such form as the Governing Board may from time to time
prescribe and it shall show whether the remisier or authorised clerk left his former employer or employers
clear of all debts and outstanding liabilities and whether his conduct while in that employment was satisfactory.
Absence of Discharge Certificate

(c)

When a discharge certificate is not attached to an application as required under sub-clause (b) the proposed
remisier shall submit an explanation therefor and the Governing Board or the President shall then decide
whether and on what conditions the requirements relating to the discharge certificate shall be waived and if
there be any dispute between the proposed remisier and his former employer the Governing Board or the
President may refer it to the Arbitration Committee for its adjudication or may require that the dispute be
decided by arbitration in accordance with the Bye-laws and Regulations of the Exchange relating to arbitration
other than between members.
Remisier Not to Engage in Forward Business

223. The Governing Board may refuse permission to a person desirous of working as a remisier unless he gives an
undertaking that forthwith on registration as remisier he will cease to engage himself as principal or employee in
and not be directly or indirectly connected with any other kind of forward business.
Approval or Rejection of Application
224. The Governing Board in its discretion may approve or reject any application for appointment of a remisier.
Withdrawal of Permission
225. The Governing Board in its discretion may at any time terminate the approval of a remisier whereupon the member
shall discontinue the employment of the remisier concerned.
Termination
226. Each member shall give prompt notice to the Exchange of the termination of the employment of a remisier.
Register of Remisiers
227. (a)

A register of remisiers shall be maintained by the Exchange in which shall be entered the names of all
remisiers together with the dates of their appointment and discharge and the names of the members employing
them.
Inspection of Register

(b)

The register shall not be open to inspection generally but only to the President or to the Governing Board
sitting as such.

Registration and Removal


(c)

The Governing Board shall have full power to refuse registration or to remove the name of any remisier
from the register without assigning any reason.
Admission to the Floor

228. (a)

A remisier may be allowed admission to the floor of the Exchange on 1 { such terms and conditions } as the
Governing Board may from time to time prescribe.

142

Admission during Good Behaviour


(b)

A remisier shall be admitted to the floor of the Exchange only during good behaviour and shall be bound to
observe the Rules, Bye-laws and Regulations of the Exchange.
Grant, Refusal or Suspension of Admission

(c)

The Governing Board may in its absolute discretion refuse admission to the floor of the Exchange to the
remisier of any member and may at any time suspend the admission of such remisier without assigning any
reason whatsoever.
Remisier Not to Make Bargains

229. When on the floor of the Exchange a remisier shall not make bargains in his own name or on behalf of his
employer or any other member. A remisier acting in violation of this provision shall be immediately suspended or
expelled by the Governing Board or the President.
Remisier Not to Sign Contract Notes
230. A remisier shall give the names of his constituents in whose names contract notes are to be rendered by the
member for whom the remisier acts. The remisier shall not sign contract notes in his own or any other name nor
shall he sign on behalf of his employer unless appointed by such employer as his constituted attorney for that
purpose.
Remisier Not to Advertise
231. A remisier shall not advertised or issue price lists or circulars to other than his own constituents.
Remisiers Personal Business
232. A remisier may not act as a remisier for his personal business. No allowance shall be made for the brokerage upon
business for his own personal account.
Sub-Agent
233. If a remisier in whatever circumstances directly or indirectly divides or shares his brokerage with his constituent or
sub-agent his name shall be forthwith removed from the register.
1 Substitute by Governing Board Resolution dated the 19-11-68 and approved by Govt. on 24-12-68 Rule The
Stock Exchange, Mumbai 84
Remisier Not to Share Brokerage with Constituents
234. Members shall be held responsible that remisiers make no allowance or return of brokerage directly or indirectly
to the constituents they introduce or to any other person or agent.
Security
235. (a)

When the employing member so requires a remisier shall on registration provide security for the sum of
atleast Rs. 5,000 and shall maintain such security with the Exchange at all times during the period he
continues to be a remisier with such member.
Provisions as to Security

(b)

The provisions in these Rules relating to security provided by a member shall apply mutatis mutandis to
security provided by a remisier under subclause (a)
Lien on Security

(c)

The member for whom a remisier is working shall have a first charge on the security for the due fulfillment
of his engagements, obligations or liabilities arising out of or incidental to any bargains, dealings, transactions
and contracts made with him or on his behalf or with or on behalf of his constituents subject to the Rules,

143

Bye-laws and Regulations of the Exchange or anything done in pursuance thereof.


Return of Security
(d)

On the termination of his employment or in the event of hisdeath all security not applied under the Rules,
Bye-laws and Regulations of the Exchange shall at the cost of the remisier be repaid and transferred to him
or as he shall direct or in the absence of such direction to his legal representatives.
Letter of Declaration

e)

A remisier providing security under the provisions of these Rules shall sign a Letter of Declaration in the
form prescribed in Appendix F to these rules or in such other form as the Governing Board may from time to
time prescribe.

144

FORM A
Form for Approval of Appointment of Remisier
(To be filled in by the Member)
Name of the Member :
Address

Clearing No.

Date

The Secretary,
The Stock Exchange,
Mumbai.
Sir,
I/We hereby appoint Mr./Ms./M/s
as my/our Remisier.
I/We declare that all particulars and information given in the enclosed form duly filled in by my/our the abovementioned
remisier are true and correct.
Yours faithfully,

Signature & Rubber Stamp of Member

145

FORM B
Form for Appromval of Appointment of Remisier
( To be filled in by the Remisier who is an Individual)

1.

Name :

2.

Trade Name :

3.

Address, Telephone / Fax Numbers :

Please attach
latest
photograph &
sign on the
photograph

(a) Residence :
(b) Office :
4.

Date of Birth :

5.

Sex : Male / Female :

6.

Educational Qualification :

7.

Present Occupation :

8.

Residential Status : Resident Indian/ Non-Resident Indian/Others

9.

Particulars of the Bank Account (Any one)

r
r
r
r

Name of the Bank


Branch (Address & Tel. No.)
Bank Account Number
Date of opening of account

10. Income Tax No. (PAN/GIR) :


11. A certified copy of any one of the following proof of identity should
be submitted:

r
r
r
r
r
12.

Passport
Driving Licence
Ration Card
Voters Identity Card
Copy of Income Tax return
State any other relevant information ,which in your opinion, should be disclosed to the Exchange :

I, hereby further declare that


13. * I am/was a Remisier of
discharge certificate .

and I send herewith his/her/their clearance/

14.

I shall not issue contracts nor bills nor any confirmation memo for shares and securities in my own name.

15.

I have read the present Rules, Bye-laws and Regulations of the Exchange and undertake to abide by them and
any modification/ amendment thereof.

16.

I undertake that if any claim or dispute arises between us in respect of any transactions, contracts, etc. entered
into, with or through him/ on account of my clients or in relation to any Stock Exchange matter during my continuance
as a Remisier of

146

I shall be bound to refer it to Arbitration as per the Rules, ByeLaws and Regulations and conventions of the
Exchange which are applicable to Remisier that any decision in such Arbitration shall be final and binging on me.
17.

During my continuance as a Remisier of


(name of member)
I shall not work as an employee / sub-broker / remisier of any member,

individual, firm or organisation.

The information furnished above is true to the best of my knowledge and belief, and I undertake to inform you of any
change therein immediately in writing.

Signature of Remisier

* Please strike off if not applicable

147

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20031006-21
Monday, October 06, 2003
Waiver of Remisier Registration Fees.
General
CONTENTS :

6th October, 2003.

NOTICE
Members are hereby informed that the one time non-refundable remisier registration fee of Rs. 5000 has been waived
with immediate effect. Many members have represented to the Exchange that registration fee for remisiers should be
waived to ensure more enrolment of new remisers and possible expansion of business. In view of the above , the
Governing Board in its meeting held on September 8, 2003 has decided to waive the one-time non-refundable registration
fee of Rs.5,000 charged by the Exchange in respect of the new applications for Registration of Remisiers.The members
can avail of this opportunity by registering more remisiers for augmenting their business. Remisier Application Form is
available at BSE Publication Counter. (Ground Floor, P.J Tower) or the same can be download from our website
www.bseindia.com/about/downloads.asp. The member may contact the following persons for any information on remisier
registration.

Name

Intercom

Jaideep Vaidya

8145

Rakesh Parekh

8307

Kevin Desouza
Chief General Manager : Membership & Inspection.

148

Notice No.: 62311/2000


Dated
: 14 September, 2000
NOTICE
Sub : Registration of Sub-Brokers.
Attention of members is drawn to Notice no.54809/2000 dated July 1, 2000, wherein members were advised to deal
only with Sub-Brokers who are registered with SEBI.
2.

It may be noted that Securities & Exchange Board of India (SEBI) has stipulated that no person/entity who may be
acting as a Sub-Broker shall buy, sell or deal in securities unless he is registered with SEBI as a Sub-Broker. SEBI
has further advised that Members of Stock Exchanges who are executing transactions of their clients through
members of other Exchanges are to be treated as a Sub-Broker and accordingly these members should hold a
separate registration as Sub-Brokers. SEBI has put the onus on Members to ensure that their clients are not
acting in the capacity of Sub-Brokers without complying with the said requirement.

3.

It has been observed during the periodical inspections of books of accounts and other documents of the members
that some members deal with Sub-Brokers who are not registered with SEBI and/or deal with persons/entities
who are registered as clients with the members but appear to be acting as Sub-Brokers.

4.

In this connection, it has been decided to carry out inspection of the members books and other documents to
ascertain compliance of the above requirement. It may be noted that apart from levying fine of Rs.25,000/- for
every unregistered Sub-Broker dealt with by the Member (as decided by the Disciplinary Action Committee),
further disciplinary action may be initiated against such members.

5.

Members are once again advised to deal only with Sub-Brokers who are registered with SEBI and to ensure that
their clients are not acting in the capacity of a Sub-Broker.

6.

In case members require any clarifications, they may please contact any of the following officials:

Sr.No.

Name

Intercom No.

1.

Shri Rajesh Gandhi

8281

2.

Shri Tushar Sodha

8139

P.S. Reddy

149

Notice No. : 54809/2000


Date
: 1st July, 2000
Sub: Members of Stock Exchanges acting as sub-brokers
Members are aware that SEBI has directed that no member of a Stock Exchange shall deal with a person who is acting
as a sub-broker unless he has obtained Certificate of Registration from SEBI to act as a sub-broker under SEBI (Stock
Brokers and Sub-Brokers) Rules & Regulations, 1992. SEBI has put the onus on the member to ensure that his clients
are not acting in the capacity of a sub broker without registration.
2.

With the expansion of BOLT TWSs to centers outside Mumbai, many members of the Exchange have allotted their
BOLT TWSs to members of other Exchanges.

3.

SEBI has clarified that members of Exchanges executing transactions of other clients through the members of
other Exchanges are to be treated as sub brokers. Accordingly, members of Stock Exchanges who also act as
sub-brokers should hold a separate registration with SEBI as a sub broker.

4.

Members are therefore advised that if they have allotted their BOLT TWSs to members of other Exchanges, they
are required to get the members of other Exchanges registered with SEBI as their sub-brokers immediately.

5.

In case members require any clarification, they may please contact any of the following officials:

Sr.No.

Name

Intercom No.

1.

Shri Rajesh Gandhi

8281

2.

Shri Amit Garg

8589

P.S. Reddy

150

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20030228-3
Friday, February 28, 2003
Affiliation of sub-brokers with members
Equity
CONTENTS :

The members are aware that all sub-brokers are required to obtain certificate of registration from Securities and
Exchange Board of India (SEBI) in accordance with SEBI (Stock Brokers & Sub-brokers) Rules and Regulations 1992
without which they are not permitted to buy, sell or deal in securities. The registered sub-broker can deal in securities
only through the member who had recommended his application for registration. A
sub-broker may be affiliated with more than one member provided, he obtains separate registration in each case, from
SEBI.
At present, there are no restrictions on the number of members with whom one sub broker may affiliate, and therefore,
many sub brokers have obtained registration by affiliating themselves with multiple members of this Exchange. This
has in many cases, affected the quality of service provided by the sub-brokers to their clients, and in case of disputes,
there are complications for the concerned members with whom such sub brokers are affiliated.The Governing Board
of the Exchange in its meeting held on January 25, 2003 considered the matter and decided that henceforth, one subbroker can be affiliated with only one member of the Exchange.
In view of the above, the members having sub-brokers who are affiliated with multiple members of this Exchange, are
requested to direct their sub-brokers to select, within a period of 6 months from the date of this Notice, one member
with whom they wish to continue to remain affiliated and should immediately initiate the procedure for cancellation of
registration in respect of all other members of the Exchange.In case of cancellation of the broker - sub broker agreement/
s (except one with whom the sub broker would continue to remain affiliated), the member would be required to intimate
the Membership Department of the Exchange, alongwith a letter from the concerned sub broker and enclose the original
SEBI registration certificate issued to such sub broker.
Further, a copy of the advertisements issued in this regard (original or certified) in a local newspaper where the sub
brokers Registered office/Head office /Corporate office is situated and another in English daily newspaper with wide
circulation should also be enclosed. (Members may refer to Exchange Notice No 93413/2001 dated July 23, 2001 for
further details ).
For cancellation of sub broker registration, members are requested to ensure that their sub brokers have paid the
annual fees to SEBI, till date. Further, subsidiaries of Regional Stock Exchanges, who are members of the Exchange,
should ensure that their sub brokers have paid the requisite turnover based fees to SEBI, prior to forwarding the
applications for cancellation of registration of such sub brokers to the Membership Department. It may however be
noted that a sub-broker of a member of this Exchange can continue to be affiliated with members of any other Stock
Exchange.
In case members require any further clarification in this regard they may please contact their Account Managers or
the Membership Department on Board Nos 22721233 / 34 Extn No 8024 / 8277
Sunil Vichare
General Manager - Membership Services

151

Notice no.
Notice date
Subject
Segment Name

:
:
:
:

20030905-1
Friday, September 05, 2003
Minimum Networth Requirement
Equity
CONTENTS :

The Governing Board at its meeting held on August 19, 2003 has directed that all the active members of the Exchange
should have adequate Networth on a continual basis. Accordingly, if the Networth of any active member turns negative
at any point of time, the BOLT TWS of such members may be deactivated until he regains a positive Networth.
Attention of members is also drawn to Exchange Notice No. 20030430 7 dated April 30, 2003 wherein, members
were requested to comply with the requirement of maintaining minimum Networth of Rs. 30 lakhs in case of individual
members, Rs. 50 lakhs in case of corporate members and Rs. 50 lakhs + 50% for each additional membership right
held in case of composite corporate members, by March 31, 2004.
Members are once again requested to ensure that adequate Networth is maintained on a continual basis and also
ensure compliance with stipulated minimum Networth requirement by March 31, 2004.
In case members require any clarification, they may please contact any of the following officials :
Sr. No.

Name

Intercom No.

1.

Mr. Atul Bapna

8595

2.

Mr. Ranjan Prabhu

8214

3.

Mr. Tushar Sodha

8139

Kevin Desouza
Chief General Manager Inspection & Membership

152

Notice no.
Notice date
Subject

: 20040524-10
: Monday, May 24, 2004
: Submission of Audit Report, Annual Accounts and Networth Certificate as on March 31,
2004 for Cash and Derivative Segment
Segment Name : General
CONTENTS :
The Governing Board at its meeting held on 20th March, 2004 decided that the Networth Certificate as on 31st March
should be submitted by 30th September failing which fines will be imposed in terms of the Exchange Notice No. 200311125 dated November 12, 2003 for a period of six months i.e. till 31st March of the next year. The BOLT Terminals of the
defaulting members will be deactivated w.e.f 1st April of the next year.
Pursuant to the above, all active members including Representative members of Cash segment and Limited Trading
members of the Derivative segment of the Exchange are advised to submit the Audit Report, Annual Accounts for the
F.Y. 2003-2004 as well as Networth Certificate as on March 31, 2004 (on the basis of audited accounts) to the
Inspection Department on or before September 30, 2004, failing which the action will be taken as mentioned
above.
Further in connection to submission, it is clarified as under:
1.

Audit Report should strictly be in the format enclosed as Annexure - 1

2.

Formula for calculation of Networth has been revised. Accordingly, members may please note that the Networth
Certificate should be strictly in the format prescribed vide Exchange Notice No.20040308-10 dated March 8, 2004
enclosed as per Annexure - 2

3.

Members who are Clearing Members of the Derivative Segment of the Exchange (including trading cum clearing
member) are required to submit the Networth Certificate as per the format enclosed as Annexure 3.

4.

Members observing the accounting period other than financial year ending March 31, are also required to submit
Audit report, Audited accounts for the financial year ending March 31, 2004 and Networth Certificate as on March
31, 2004.

5.

Audit Report / Networth Certificate should be in Original, on the letter head of the Chartered Accountant and
should also contain the Membership No. & seal of the Chartered Accountant.

6.

Members who have traded even for a single day during the financial year 2003-2004 are also required to submit
the Audit Report, Audited Accounts and Networth Certificate.

7.

Members are required to submit only one set of Audit Report, Audited Accounts and Networth Certificate for Cash
and Derivative segments of the Exchange.

8.

The members may note that the Audit Report, Annual Accounts and Networth Certificate should be submitted
alongwith a covering letter to the Inspection Department on the 1st floor of Rotunda Building on or before September
30, 2004. Any of the above documents submitted separately would not be accepted.

9.

The members may please note that submission of incorrect, unaudited or documents not being in the prescribed
format will be treated as non submission of the same.

In case members require any clarification, they may please contact any of the following officials;
Sr. No.

Name

Intercom No.

1.

Mrs. Shaila Valsan

8316

2.

Mr. Ranjan B. Prabhu

8214

153

For further clarification on Networth formula and format of the Networth Certificate Members may contact the following
official from the Membership Dept.
Sr. No.

Name

Intercom No.

1.

Mr.Atul Bapna

8595

Kevin Desouza
Chief General Manager
Inspection & Membership

Mayank Mehta
Asst. General Manager
Inspection

154

Annexure 1
(Format of the Audit Report to be submitted in original and on the letterhead of the Chartered Accountant)
We have audited the attached Balance Sheet of M/s.
Profit & Loss Account for the year ended on that

as at
date annexed thereto and report that:

and the

a)

We have obtained all the information and explanations which to the best of our knowledge and belief were
necessary for the purpose of our audit.

b)

In our opinion, proper books of account and records as specified in Rule 15 of the Securities Contracts
(Regulation) Rules, 1957 have been kept so far as appears from our examination of such books.

c)

The member has complied with the requirements of the Exchange, so far as they relate to maintenance of
accounts and was regular in submitting the required accounting information to the Exchange.

d)

The Balance Sheet and the Profit & Loss Account referred to in this report are in agreement with the books
of accounts.

e)

In our opinion and to the best of our information and according to the explanations given to us, the said
Balance Sheet and the Profit & Loss A/c read together with the notes thereon give a true and fair view
, and in so far as
insofar as it relates to the Balance Sheet, of the state of affairs of M/s
it relates to the profit and loss account, of the profit/loss of M/s
for the year ended on
that date.

For (Name of Accounting Firm)

Name of Partner / Proprietor


Signature & Seal of Chartered Accountant
Membership Number :

Place :
Date :

155

Annexure 2
(In Original & on the letterhead of the Chartered Accountant)
CERTIFICATE
This is to certify that the networth of M/s.
(Clg. no.
), member of BSE as on
as per statement of computation of networth of evendate annexed to this report is Rs.
/(Rupees
Only).
It is further certified that the computation of networth, based on my / our scrutiny of the books of accounts, records
and documents maintained by the member and produced before me / us for verification, is true and correct to the best
of my / our knowledge and as per information provided to my / our satisfaction.
For (Name of Accounting Firm)

Name of Partner / Proprietor


Signature & Seal of Chartered Accountants
Membership Number :

Place :
Date :

156

Annexure 2
(For members other than Clearing members of Derivatives segment)
Name of the Member
Clearing No.
Statement of Networth as on
1

Particulars
Listed (Quoted) Investments

Rs.

Rs.

Rs.

Market Value of listed (quoted) securities (other than Government)


in the name of member (forming part of the Balance Sheet)

Margin of 30% on Market Value of listed (quoted) securities


(other than Government) i.e. 30% of 2

Net Value of listed (quoted) Investments (other than Government) i.e. 2-3

Market Value of listed (quoted) securities (Government) in the name of


member (forming part of the Balance Sheet)

Margin of 10% on Market value of listed (quoted) securities (Government)


i.e. 10% of 5

Net Value of listed (quoted) Investments (Government) i.e. 5-6

Unlisted (unquoted) Investments

Book value of Unlisted (unquoted) Securities

10

Margin of 50% on Book Value of Unlisted (unquoted) Securities


i.e. 50% of 9

11

Net value of Unlisted (unquoted) Investments i.e. 9-10

12

Other Investments at cost, if any

13

Total Net Investments (4+7+11+12)

14

Fixed Assets (used for the purpose of business) including land & building

15

Receivables which are less than 3 months old

16

Loans, Advances and Deposits

17

Loans and advances excluding loans and advances given


to associates and related entities

18

Deposits excluding non-refundable deposits

19

Cash & Bank Balance

20

Other Assets, if any, (specify), which are used for the purpose
of business

21

Total Assets (13+14+15+17+18+19+20)

22

Current Liabilities

23

Long Term Liabilities

24

Total Liabilities (22+23)

25

Net Worth (21 24)

157

Annexure 2
NOTE
1

For computation of loans and advances and sundry debtors (arising from securities operations and others) as a
component of current assets, all advances / loans and sundry debtors other than those arising out of securities
dealing have to be excluded. Only such loans, advances and sundry debtors arising due to the securities dealings
are to be included as current assets for the purpose of networth computation.

Details of items comprising investments, current assets, current liabilities and long term liabilities should be given
separately.

The following non-allowable assets should not be included in any head, while computing the networth:(a)

Pre-paid Expenses

(b)

Losses/ Accumulated losses

(c)

Miscellaneous Expenditure

(d)

Deferred Expenditure

(e)

Bad deliveries

(f)

Intangible assets

(g)

Doubtful debts / advances not provided for

(h)

Non-refundable deposit

(i)

Loans and advances given to related entities.

(j)

Advances against capital expenditure.

(k)

Value of the Exchange card

158

Annexure 3
(In Original & on the letterhead of the Chartered Accountant)
CERTIFICATE
This is to certify that the networth of M/s.
(Clg. no.
), member of BSE
as on
, as per statement of computation of networth of even date annexed to this report is Rs.
/- (Rupees
Only).
It is further certified that the computation of networth, based on my / our scrutiny of the books of accounts, records
and documents maintained by the member and produced before me / us for verification, is true and correct to the best
of my / our knowledge and as per information provided to my / our satisfaction.
For (Name of Accounting Firm)
Name of Partner / Proprietor
Signature & Seal of Chartered Accountants
Membership Number:
Place :
Date :

159

Annexure 3
Clearing Members of the Derivatives Segment (including Trading cum Clearing members).
CAPITAL + FREE RESERVES
Less: non-allowable assets
(a)

Fixed assets

(b)

Pledged Securities

(c)

Members card

(d)

Non-allowable securities (unlisted securities)

(e)

Bad deliveries

(f)

Doubtful debts and advances*

(g

Prepaid expenses, losses

(h)

Intangible assets

(i)

30% of marketable securities

* Explanation Includes debts/advances overdue for more than three months or given to associates.
Clarification:
I]

Point no. (b) Pledged securities


Pledged securities are required to be deducted at book value.

II]

Point No. (i) 30% of marketable securities


(1)

Marketable securities are to be valued at Book value or Market value, whichever is lower. The haircut of
30% shall be applicable on the Book value or the market value, whichever is lower. Considering this, the
point (i) is reproduced as below:
30% (of Book value or Market Value, whichever is lower) of marketable securities

(2)

Pledged securities are not to be considered at point no. (i)

(3)

Securities held as stock-in-trade, are not to be considered at point no. (i)

(4)

Investment in Mutual fund, though not listed on any Exchange, may be considered as marketable securities
and must treated as per point no. (i)

160

Notice no.
Notice date
Subject

:
:
:

93424/2001
Monday, July 23, 2001
UNIQUE CLIENT CODE
CONTENTS :

Sub: - Unique client code


The members are aware that the Exchange vide Notice Nos. 90210 & 93117/2001 dated June 21 & July 20, 2001
respectively, informed that as per the SEBI directive, w.e.f. August 1, 2001, all the orders entered on BOLT valued at
Rs. one lakh or more would be validated against the client codes and the PAN /Passport No/Driving license No/Voter
card No. The Exchange has made necessary provisions on BOLT for the members to register the clients/clients of
sub-brokers.
In this regard, SEBI vide their circular dated SMDRP/Policy/CIR-39/2001 dated July 18, 2001 (copy enclosed) has
further clarified as under :It would be mandatory for all members and their sub-brokers to use unique client codes for all clients. The members
would be required to collect and maintain in their back office the Permanent Account Number (PAN) allotted by Income
Tax Department for all their clients as well as the clients of their sub-brokers for this purpose. Where an individual
client does not have PAN, such client would be required to give a declaration to that effect to the concerned Member.
In the event the PAN is not available, such client would be required to furnish to the member, the passport number
and place & date of issue. Where the client does not have a PAN or a passport, such client should furnish the driving
license number and the place & date of issue. If none of these are available, the client shall give his Voter ID number.
In the case of FIIs, (where FII, itself is the investing entity) and their sub-accounts, SEBI registration number for FIIs
and sub-account shall be used until the PAN is allotted.
For tax paying body corporates, the unique registration number issued by the relevant regulatory authority shall be
used till the time the PAN is allotted. The Regulatory authorities may be Department of Company Affairs, Securities
and Exchange Board of India, Reserve Bank of India, Insurance Regulatory Development Authority, etc
For non-tax paying entities other than mutual funds, such as societies, charitable trusts etc., the unique registration
no. allotted by the relevant regulating authority to these entities shall be used until the PAN is allotted.
For mutual funds, SEBI would be issuing an ID no. for schemes both past one and the new ones. This number would
be used in the schemes along with the mutual funds.
The members would be required to verify all the documents in respect of the unique code and retain a copy of the
document.
The members would also be required to furnish the above particulars of their clients to the Stock Exchanges/Clearing
Corporations and the same would be updated every quarter.
The Exchange would also maintain a database of client details submitted by members. Historical records of all quarterly
submissions would be maintained for a period of seven years by the Exchange.
The members would be required to include a new clause no. 7 as given below in the format of the Member-Client
Agreement prescribed vide our earlier Notice No 1798/97 dated April 24, 1997,
The member hereby undertakes to maintain, the details of the client as mentioned in the client registration form or
any other information pertaining to the client, in confidence and that he shall not disclose the same to any person /
entity except as required under the law, with prior intimation to SEBI.
The members would be required to maintain and preserve for a period of seven years a mapping of client IDs used at

161

the time of order entry in the trading system with those unique client IDs along with client name, address and other
particulars given in the Know Your Client form.
The above requirement shall be applicable w.e.f. August 01,2001, for clients having order value of Rs.1 lakh or more.
The members are advised to make note of the same and comply with the above requirements. Those members who
fail to input the unique client details as stated above, in the BOLT, may not be able to input orders valued at Rs. 1 lakh
or more.
In case members require any clarification, they may please contact any of the following officials.
S.No

Name

Dept.

Intercom No.

1.

Shri Amit Garg

Inspection

8589

2.

Shri Narsinh Prabhu

Inspection

8166

3.

Shri Sugan A. Natarajan

ISD

8116

P.S. Reddy
Gen. Manager Inspection & Surveillance.
Encl. as above

162

Notice no.
Notice date
Subject
Segment Name

:
:
:
:

20040128-3
Wednesday, January 28, 2004
Mandatory Registration with BSEwebx for registration of UCC using new UCC software.
General
CONTENTS :

Members of the Exchange are aware that Securities and Exchange Board of India (SEBI) has made it mandatory for
all brokers to use Unique Client Codes (UCC) for all clients in the Cash & Derivatives segments, vide its Circular
No. SMDRP/Policy/CIR-39/2001 dated July 18, 2001 & Circular No. SMDRP/DC/CIR-10/01 dated Nov 2, 2001
respectively. As per SEBI directions, the Stock Exchanges are also required to maintain the details of the clients of the
members.
Pursuant to the above, the Exchange has issued notices from time to time to ensure compliance of SEBI requirements
in regard to registration of Unique Client Codes alongwith accompanying necessary details like PAN, Passport Details,
etc.
In order to have effective implementation of provisions contained in SEBI circulars, the Exchange is pleased to announce
the launch of its new UCC software covering Cash & Derivatives segments. The new UCC software will allow members
to register the mandatory /non-mandatory details pertaining to clients on the system.
It is mandatory that members register themselves with BSEwebx for downloading the new UCC software. Registration
of Members with BSEwebx for the new UCC software will begin from Jan 29, 2004. The registration form is available
in the folder BSEwebx\Regkit. If a member is already registered with BSEwebx, he needs to fill in the form
BSEwebxmember.doc and the undertaking Undertaking2.doc. If a member is not registered with BSEwebx, he needs
to fill in the form newmember.doc and the undertaking Undertaking1.doc.
Kindly fill the registration form and submit it to Mr. Bharat Dave, ISD Projects (Extn. No. 8150, 2nd Floor, Rotunda
Building) between Jan 29, 2004 to Feb 7, 2004. There are currently no charges for signing up and using BSEwebx.
Members are also requested to avail of the other functionality including Internet Trading and Digital Contract Notes
system in BSEwebx, which is available free of cost.
The new software is to be used from Feb 9, 2004 for UCC registrations & the existing software would be discontinued
for fresh registrations/updations from the said date.
Another notice pertaining to the new UCC software & related matters would be issued by next week.
Members may contact the following for any assistance/clarification :

NAME

DEPARTMENT

ACTIVITY

EXTN. NO.

Mr. Bharat Dave

Information Srvices Department

Registration with BSE webx

8150

Mr. Mukesh Kuwad

Inspection

UCC Related Issues

8497

MR. Mandar Patkar

Surveilance

--

Kevin Desouza
Chief General Manager
(Inspection & Membership)

Mayank J. Mehta
Asst. General Manager
(Inspection)

163

5093

Notice no.
Notice date
Subject

: 20040407-13
: Wednesday, April 07, 2004
: Revised Penalty structure with effect from
April 1,2004 for modification of client codes in
Post Closing Session.
Segment Name : General
CONTENTS :
Attention of the members is drawn to the Exchange Notice No.20030329-1 dated March 29, 2003 whereby the members
were advised to utilize the facility of modification in client codes to the minimum extent possible & ensure that correct
client codes are entered while placing orders. Members attention is also drawn to Exchange Notice No. 20030409-3
dated April 9, 2003 wherein members were informed the penalty structure for misutilisation of the facility of modification
of client codes in the post closing session. In the said notice, it was mentioned that penalty leviable would be computed
on the basis of number of instances of client code modification per 1000 of trades on a daily basis.
Pursuant to the recommendations made by the Disciplinary Action Committee at its meeting held on March 31, 2004,
the Governing Board at its meeting held on April 2, 2004 decided to impose penalty on the basis of percentage of
client codes modified to total orders on a daily basis. The Governing Board decided to revise the penalty structure
w.e.f. April 1, 2004 as under :
Percentage (%) of client code modified tototal orders on a daily basis

Fine

Less than or equal to 1%

Nil

Greater than 1% but less than or equal to 5%

Fine of Rs.500/- lump sum

Greater than 5% but less than or equal to 10%

Fine of Rs.1000/- lump sum

Greater than 10% matter to be referred to

Fine of Rs.10,000/- and the


DAC for further action

The Governing Board also decided that the penalty would be levied on weekly basis w.e.f. April 1, 2004.
The Exchange will make necessary arrangements for downloading to the members details regarding modification in
client codes carried out & the penalty leviable thereon.
The members are further informed that the fines payable for modifications of client codes for the period may 2003 to
March 2004 will be individually intimated to them shortly.
For any clarification in the matter, the members may contact the following officials on Tel. Nos. - 22721233 / 34:
NAME

INTERCOM NO.

MUKESH KUWAD

8497

SANJAY PARDIWALLA (FOR SYSTEM


RELATED QUERIES ONLY)

8252

Kevin Desouza
Chief General Manager
(Inspection & Membership)

Mayank J. Mehta
Asst. General Manager
(Inspection Department)

164

Notice no
Notice date

: 20041015-6
: Friday, October 15, 2004

Subject

: Revised Penalty structure with effect from October 1, 2004 for modificationof client codes
in the Post Closing Session.
Segment Name: Equity
The Governing Board at its meeting held on October 07, 2004 decided to revise the penalty structure for modification
of client codes in the Post Closing Session w.e.f. October 1, 2004 as under:
Revised Penalty Structure
Modifications upto 5 numbers (non-institutional only) per member per day (no cumulative benefit available), irrespective
of total number of orders executed will be exempted. Thereafter, the penalty is to be calculated on a daily basis as
follows :
Percentage (%) of *client code modified to **total orders on a
daily basis after deducting a maximum of 5 non-institutional
modifications.

Fine

Less than or equal to 1%

Nil

Greater than 1% but less than or equal to 5%

Fine of Rs.500/- lump sum per day.

Greater than 5% but less than or equal to 10%

Fine of Rs.1000/- lump sum per day.

Greater than 10%

Fine of Rs.10,000/- per day and the matter


to be referred to DAC for further action.

*Client code modified means Total client codes modified less Institutional codes modified.
** Total orders means Total orders executed less Institutional orders executed.
The Exchange is making necessary changes to the software to compute penalty as per the revised structure. The
daily & monthly penalty reports as per the revised structure would be downloaded to the members once the necessary
changes are made. Till such time, the current reports would continue to be downloaded.
For any clarification in the matter, the members may contact the following officials on Tel. Nos. - 22721233 / 34:
NAME

INTERCOM NO.

MUKESH KUWAD

8497

SANJAY PARDIWALLA (FOR SYSTEM RELATED QUERIES ONLY)

8252

Devika Shah
General Manager
Membership & Inspection

Mayank J. Mehta
Asst. General Manager
Inspection

165

Notice No
Notice Date
Subject

: 20060221-11
: Tuesday, February 21, 2006
: Revision of Penalty structure for modification of Client Codes in the Post Closing Session
Cash Segment
Segment Name : General
Attention of the Trading Members of the Exchange is drawn to our previous Notice No. 20041015-6 dated October 15,
2004 wherein the revised penalty structure for modification of client codes in the post closing session was notified to
the members.
It has been decided to modify the aforesaid penalty norms as under :Percentage (%) of 1client code modified
to 2total or ders on a daily basis after
deducting a maximum of 5 non-institutional
modifications

Existing Fine
Rs.

Revised Fine
Rs.

Less than or equal to 1%


Greater than 1% but less than or equal to 5%

Nil
Fine of Rs.500/- lump sum per day

Nil
Fine of Rs.500/- per day

Greater than 5% but less than or equal to 10%

Fine of Rs.1000/- lump sum per day.

Fine of Rs.1000/- per day.

Greater than 10%

Fine of Rs.10,000/- per day


and the matter to be referred to
DAC forfurther action.

Fine of Rs.10,000/- per day.

Notes :
1

Client code modified means Total client codes modified less Institutional client codes modified.

Total orders means Total orders executed less Institutional orders executed.
In order to identify habitual offenders and deter them, it has been decided that the Exchange would consider the
immediately preceding past four months track record of the member, including the relevant month for which
penalties are to be computed. Accordingly, violations which have occurred in the immediately preceding four
months, would be considered while calculating the penalties for the relevant month.
For habitual offenders, higher penalties would be levied after considering the violations that have occurred in the
immediately preceding four months including the month for which penalties are levied. For habitual offenders, the
following would be the penalty structure Percentage of Client
Code Modifications

No. Of Instances of Modifications

Fines

Greater than 5% but less than or equal


to 10%

More than 10 instances in the


past 4 months.

Fine of 2 times of Rs. 1000/the regular penalty from the


11th instance onwards.

Greater than 10%

More than 5 instances


during past 4 months.

Fine of 2 time the regular


penalty of Rs.10,000/- from
the 6th instance onward.

166

The revised penalty structure for habitual offenders would be made effective for computing penalties from the month
of April 2006 & thereafter. Till then, the existing penalty structure for modification of client codes would continue. Members
may thus, note that for computing the penalty for the month of April 2006, the relevant data would be pertaining to the
months of January 2006, February 2006, March 2006 & April 2006.
Members are advised to take note of the above revised penalty structure. They may contact any of the following officials
in case of any further clarificationsNAME

INTERCOM NO.

Ms. Parul Kothari

8196

Mr. Mukesh Kuwad

8497

Ms. Amita Tarwale

8262

Sanjiv Kapur
General Manager
Surveillance & Supervision

Pankaj Gupta
Asst. General Manager
Surveillance & Supervision

167

Notice no
Notice date
Subject

:
:
:

Segment Name

20060927-21
Wednesday, September 27, 2006
Mandatory Requirement of Permanent Account Number (PAN) for transactions in Cash
Segment - Issues & Clarifications
General

CONTENTS :
To
All Trading Members,
Attention of the trading members is drawn to SEBI Circular No. MRD/DoP/SE/Cir-8/2006 dated July 13, 2006 and
Exchange Notice No. 20060713-19 dated July 13, 2006 on the captioned subject wherein PAN was mandatory for
Cash Segment with effect from October 1, 2006.
In the light of the practical difficulties expressed by various market participants in adhering to the deadline of September
30, 2006, SEBI vide Circular No. MRD/DoP/Dep/SE/Cir-13/06 dated September 26, 2006 has extended the date of
implementation of the requirement of mandatory PAN for Cash Segment to December 31, 2006 as a one time measure.
Further, the clarifications as contained in Paras 4.2 to 4.9 of SEBI Circular No. MRD/DoP/Dep/Cir-09/06 dated July
20, 2006 have also been made applicable to trading in the cash market. A copy of the said circulars is enclosed herewith
for reference of the trading members.
In order to enable the trading members to comply with the above requirements, Exchange has been downloading the
details of Unique Client Code (UCC) where PAN is not uploaded from time to time. A latest list of UCC's registered
with the Exchange, where PAN of the clients are not available has been downloaded with the name
UCCWITHOUTPAN5.XXXX, where XXXX is clearing number of the trading member.
Further, the Exchange, is now also downloading a file named NPddmmyy on a daily basis which contains the details
of client codes where trades have been executed during the day, however, the PAN details of such clients are not
uploaded to the Exchange or the Client code itself is not registered in the UCC database. The above files are available
in the ALLDATA option of Dload32.
Trading members are once again advised to strictly comply with the following by December 31, 2006 taking into
consideration the clarifications offered by SEBI, vide their circular dated September 26, 2006.
1.

Collect copies of PAN cards issued to their existing as well as new clients by the Income Tax Department and
maintain the same in their record after verifying with the original.

2.

Cross-check the aforesaid details collected from their clients with the details on the website of the Income Tax
Department i.e. http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp.

3.

Upload the PAN so collected and verified to the Exchange as part of the Unique Client Code details.

Trading Members should note that the aforesaid requirement is to be complied with for all their clients irrespective of
whether client is presently registered in the UCC database or not, to enable these clients to trade after December 31,
2006.
Further, trading members may note that with effect from January 1, 2007 they should place orders in the cash market
on behalf of their clients only if the PAN details of such clients has been collected, cross checked with the details on
the website of the Income Tax Department and uploaded to the Exchange as part of the Unique Client Code details of
the respective clients.

168

For any further assistance / clarification in the matter, trading members may contact any of the following Exchange
officials on 022 - 22721233 / 22721234 -

Sr.

Name

Extension No.

1.

Nitesh Agarwal

8354

2.

Yogesh Bambardekar

8286

3.

K. Mohanan (For Technical Queries)

8416

Pankaj Gupta
Asst. General Manager
Surveillance & Supervision

Yogesh Bambardekar
Manager
Surveillance & Supervision

169

Notice no
Notice date
Subject

:
:
:

Segment Name

20061229-26
Friday, December 29, 2006
Penalty Norms for Non-registration of Client codes / Execution of trades without uploading
PAN details of clients in Cash segment.
General

CONTENTS :
Attention of the Trading Members is drawn to SEBI circular no MRD/DoP/SE/Cir-18/2006 dated September 26, 2006
wherein SEBI has made PAN mandatory for dealing in the cash segment.
Accordingly, the trading members are required to collect copies of PAN cards issued to their existing as well as new
clients by the Income Tax Department and maintain the same in the record after verifying with the original. The Trading
Members are also required to upload the PAN details of their client to the Exchange as part of the UCC database and
not to execute the trade for the client unless the PAN details of respective clients have been collected, verified with
the Income Tax website and uploaded to the Exchange.
In order to ensure that the requirement of mandatory PAN is effectively implemented by the Trading Members, the
Exchange has introduced the following penalty scheme for non-registration of client codes / execution of trades without
uploading PAN details of the clients to the Exchange.
Penalty of Rs.100/- per client code per day will be levied till the time the client code is registered along with PAN
details.
Further, in case of a wrongly punched code the penalty would be charged till the time trading member submits a letter
on the letter head to the Department of Surveillance and Supervision (DOSS) informing the details of correct code in
the following formatDate of Trade Wrongly punched Client Code Correct Client Code
Reason of not rectifying the Code in post
closing session Date of registration correct Client Code with PAN details in UCC database
Further, a penalty of Rs. 100 /- Per wrong PAN uploaded to the Exchange in the UCC database in respect of clients
where trades have been executed after January 1, 2007 would be charged.
The above penalty Scheme would be implemented for trades executed from January 2, 2007 onwards.
For any further clarification in this matter, the Trading Members may contact the following officials on 022-22721233/
34: -

Sr.

Name of the Official

Extension No.

Ms.Yugandhara Patil

8214

Mr.Vinit Kabani

8262

P. K. Ramesh
General Manager
(Surveillance & Supervision)

Pankaj M Gupta
Asst. General Manager
(Surveillance & Supervision)

170

Notice no
Notice date
Subject

:
:
:

Segment Name

20080307-7
Friday, March 07, 2008
Revision of penalty structure for non-registration of client codes along with PAN details
in the UCC database of the exchange.
General

CONTENTS :
Attention of Trading Members is drawn to the Exchange Notice No.20061229-26 dated December 29, 2006 wherein
penalty structure for execution of trades without registering the client code along with PAN details of clients in the
UCC database of the Exchange was notified to the members.
For habitual offenders, who violate the requirement of timely updation of UCC along with PAN details of their clients,
higher penalties would be levied as under:

NO. OF DAYS
FROM THE
1ST TRADE DATE

PENALTY

1 to 15

Rs. 100 per day per client code from 1st trade date till the date of registration or 15th
day of 1st trade date, whichever is earlier.

16 to 30

Rs. 125 per day per client code from 16th day of the 1st trade date till the date of
registration or 30th day of 1st trade date, whichever is earlier.

More than 30

Rs. 150 per day per client code from 31st day of the 1st trade date till the date of
registration.

The revised penalty structure for habitual offenders would be made effective from April 01, 2008.
In case the Trading Members require any clarification, they may please contact any of the following officials of the
Exchange:

NAME

INTERCOM NO.

Mr. Vinit Kabani

8262

Mr. Chirag Udani

8724

P. K. Ramesh
General Manager
Surveillance & Supervision

Mitesh Thakkar
Manager
Surveillance & Supervision

171

Extract of Bye-law 358 (vi)


Business for a With Suspended, Expelled and Defaulter Members
A member shall be deemed guilty or unprofessional conduct for any of the following or similar acts or omissions namely(vi) if without the special permission of the Governing Board he shares brokerage with or carries on business or makes
any bargain for or with any member who has been suspended, expelled or declared a defaulter.

172

Rule 8(1)(f) of SC(R ) Rules, 1957


The rules relating to admission of members of a stock exchange seeking recognition shall inter alia provide that:
(1)

No person shall be eligible to be elected as a member if (f)

he is engaged as principal or employee in any business other than that of securities except as a broker or
agent not involving any personal financial liability unless he undertakes on admission to severe his connection
with such business:

Provided that the Central Government may, for reasons sufficient in the opinion of the said government, permit a
recognised stock exchange to suspend the enforcement of this clause for a specified period on condition that the
applicant is not associated with or is a member of or subscriber to or shareholder or debenture holder in or connected
through a partner or employee with any other organisation, institution, association, company or corporation in India
where forward business of any kind whether in goods or commodities or otherwise is carried on or is not engaged as
a principal or employee in any such business;
Rule 8 (3)(f) of SC (R) Rules, 1957.
(3)

No person who is a member at the time of application for recognition or subsequently admitted as a member
shall continue as such if (f)

he engages either as principal or employee in any business other than that of securities except as a
broker or agent not involving any personal financial liability, provided that -

(i)

the governing body may, for reasons, to be recorded in writing, permit a member to engage himself
as principal or employee in any such business, if the member in question ceases to carry on business
on the stock exchange either as an individual or as a partner in a firm,

(ii)

in the case of those members who were under the rules in force at the time of such application
permitted to engage in any such business and were actually so engaged on the date of such application,
a period of three years from the date of the grant of recognition shall be allowed for severing their
connection with any such business,

(iii)

nothing herein shall affect members of a recognised stock exchange, permitted under the proviso to
clause (f) of sub-rule (1) to suspend the enforcement of the aforesaid clause, for so long as such
suspension is effective, except that no member of such exchange shall engage in forward business
of any kind whether in goods or commodities or otherwise and, if actually so engaged on the date of
such application, he shall severe his connection with any such business within a period of three years
from the date of the grant of recognition.

173

SECURITIES AND EXCHANGE BOARD OF INDIA


SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021
SMD/POLICY/CIR-6//97
May 07, 1997.
To ExecutiveDirectors / Presidents /
Managing Directors of all Stock Exchanges.
Dear Sir,
Based on the suggestions/representations received from various Stock Exchanges, SEBI has examined the applicability
of Rule 8(1)(f) and 8(3)(f) of the Securities Contract (Regulation) Rules, 1957, relating to Fund Based Activities of
Brokers. It has been opined that borrowing and lending of funds, by a trading member, in connection with or incidental
to or consequential upon the securities business, would not be disqualified under Rule 8(1)(f) and 8(3)(f).
Yours sincerely,

M.D. PATEL
EXECUTIVE DIRECTOR
SECONDARY MARKET DEPARTMENT
cc :

a]

Chairmans Secretariat.

b]

All Executive Directors, Division Chiefs and Regional Managers of SEBI.

c]

All SEBI Nominee Directors on the Board of Exchanges.

d]

All Division Chiefs requested to circulate to all their officers.

174

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20021001-5
Tuesday, October 01, 2002
APPOINTMENT OF COMPLIANCE OFFICER
Equity
CONTENTS :

1st October, 2002


Sub : APPOINTMENT OF COMPLIANCE OFFICER
Members of the Exchange were informed vide notice no 126611/2002 dated 20th June, 2002 that appointment of a
Compliance Officer is mandatory as per Regulation 18A of the SEBI (Stock Brokers and Sub-brokers) Regulations,
1992. The concerned Compliance Officer will be responsible for monitoring the compliance by the concerned member
in respect of the SEBI Act, 1992, Rules, Regulations, notifications, guidelines, instructions, etc issued by SEBI / Central
Government. Monitoring investors grievances redressal and independently reporting to the Board any non-compliance
observed by him is also the responsibility of the Compliance officer.
Members were also requested to fill in the attached form and keep the Exchange informed of the appointment of a
Compliance officer.
It is observed that many members have not yet submitted the requisite details, In view of the above, those members
who have not yet submitted the details regarding Compliance Officer are requested to fill in the attached form and
submit it to the Exchange on or before 14th October, 2002.
It is necessary that the Exchange is also informed of change, if any, in the compliance officer by duly filling in a new
form.
Sunil Vichare
GM - Membership Services

175

New Form Format for Appointment of Compliance Officer


ON MEMBERS LETTERHEAD
The Deputy General Manager
Membership Department
BSE, 25th Floor
PJ Towers, Dalal Street
Mumbai-40001
Sub : Appointment of Compliance Officer
Dear Sir/ Madam
I/We have appointed Shri./Ms.
as our Compliance officer in keeping with the Regulation 18A of the
SEBI (Stock Brokers and Sub-brokers) Regulations, 1992.
$We wish to inform you that Shri./Ms.
is a new appointment with effect from / is a replacement in place
of Shri./Ms.
who has ceased to be our compliance officer with effect from
Information on the Compliance Officer is as below :

Name of the new


compliance officer
pointed

Qualification

Hotline No. Tele. No Office Address

Name of
Father/

Residential
Relative

Previous Employment
Name of the
organisation

I/We hereby undertake that we will keep the Exchange informed of any future change in the compliance officer.
Yours faithfully

Counter signed by

For
(name of the member)

Signature of Member/ Director

Signature of the Compliance Officer

$ Strike off what is not applicable to you

176

Notice no : 104615/2001
Notice date : Monday, November 12, 2001
Subject
: ADVERTISEMENT BY BROKERS/SUB-BROKERS
CONTENTS :
Sub : Advertisement by brokers/sub-brokers
Members may kindly note that the BSE has been vetting advertisements pertaining to their firms after ensuring that
the said advertisements are in conformity with regulation 17 and Bye-Law-358 of the Rules Bye- Laws and Regulations
of the Exchange as well as per Clauses C(4) and C(5) of the Code of Conduct specified in Schedule II of Regulation
7 and clauses C(5) and C(6) of the Code of Conduct specified in Schedule II of Regulation 15 of SEBI (Stock Brokers
& Sub-brokers) Regulations, 1992 respectively which are summarised as under :
Clause C (4) of the Code of Conduct for Stock Brokers, specified in Schedule II of Regulation 7 of SEBI (Stock Brokers
and Sub-brokers) Regulations, 1992 states that a stock-broker shall not advertise his business publicly unless permitted
by the stock exchange.
Clause C (5) of the Code of Conduct for Stock Brokers, specified in Schedule II of Regulation 7 of SEBI (Stock Brokers
and Sub-brokers) Regulations, 1992 states that a stock-broker shall not resort to unfair means of inducing clients from
other stock brokers.
Clause C (5) of the Code of Conduct for Sub-brokers, specified in Schedule II of Regulation 15 of SEBI (Stock Brokers
and Sub-brokers) Regulations, 1992 states that a sub-broker shall not advertise his business publicly unless permitted
by the stock exchange.
Clause C (6) of the Code of Conduct for Sub-brokers, specified in Schedule II of Regulation 15 of SEBI (Stock Brokers
and Sub-brokers) Regulations, 1992 states that a sub-broker shall not resort to unfair means of inducing clients from
other brokers.
Please find enclosed herewith copy of circular no. SMDRP/POLICY/CIR-49/2001 dated October 22, 2001, issued by
SEBI, on the above matter, the contents of which are self-explanatory.
We are also enclosing extracts of Regulation 17 and Bye- law 358, of Rules, Bye-laws and Regulations of the Exchange,
for your ready reference.
All are requested to conform to the attached Circular of SEBI failing which the Exchange will be constrained to take
necessary actions against erring members as per the Rules, Bye- Laws and Regulations of the Exchange.
Hema Srinivasan
DGM Membership

177

REGULATION 17 of the Regulations of the Exchange.


GUIDELINES FOR ADVERTISEMENTS BY MEMBERS
17.1 The content of the advertisements, brochures, etc. should be related only to the nature of services that stockbroker
can offer in respect of sales and purchase of shares and securities only. The advertisement should not contain
recommendations regarding purchase or sale of any particular share or security of any company and, or, any
recommendation regarding any company.
17.2 The advertisement can be published by a member-broker individually or jointly with other member-brokers so as
to enable small brokers to pool their resources for publicity.
17.3 The advertisement should mention the name/title as recorded for the membership of the Stock Exchange alongwith
the code number allotted by the Securities and Exchange Board of India. It can also include the names of the subbrokers affiliated with the broker. The broker should also designate and authorise and name the authorised person
in the publication to ensure the correctness of the information given in the advertisement and prior approval of the
Stock Exchange should have been obtained in respect of such authorized person. The authorised person will be
specifically responsible when two or more brokers jointly advertise for brokerage business.
17.4 (a)

The members should ensure that any information given in the advertisement must be correct and accurate
and contain matters of objectivity ascertainable facts which should be capable of substantiation.

(b)

It should not have any adverse reference direct or indirect regarding the reputation of the other members of
the Stock Exchange and also of the Stock Exchange.

(c)

The advertisement should not contain anything which is otherwise prohibited for publication under the
relevant Act, unwarranted, misleading information or make any promises. 2{}

17.5 The Advertisement should not include publicity for any party other than the member himself and it should not
contain any reference to any person, firm or institution except as provided for in Regulations 17.2 and 17.3.
17.6 The member-broker should not allow his or his firms name to be advertised by others or allow his or his firms
name to be published in the advertisement of others, except as provided for in Regulations 17.2 and 17.3.
17.7 The member broker should submit a copy of the advertisement to the Stock Exchange authorities and Securities
and Exchange Board of India as soon as it is published. The Exchange Authorities will have the cease and desist
powers in this behalf.
17.8 If a member-broker violates any of the above Regulations for the advertisement, he is liable to be penalised for
the same by the Stock Exchange authorities and/or SEBI.
17.9 If the Stock Exchange authorities levy any penalty or take any disciplinary action against the member-broker, e.g.
by way of suspension or declaring him as defaulter etc., it should be immediately made public by the Stock
Exchange authorities, and the concerned member-broker should not advertise during the period of suspension.
1 Inserted by Governing Board Resolution dated 15.2.93
2 Amended by Governing Board Resolution dated 2.3.2000 and approved by SEBI on 3.5.2000
Extract of Bye-law 358 (xi)
Advertisement
(xi)

if he advertises for business purposes or issues regularly circulars or business communications to persons other
than his own constituents, members of the Exchange, banks and Joint Stock Companies or publishes
pamphlets, circulars or any other literature or report or information relating to the stock markets in the public prints
with his name attached unless such advertisements, circulars or other business communications,

178

pamphlets, circulars or other literature or report or information relating to the stock markets and the material
contained therein are in accordance with the provisions and guidelines as laid down in the relative Regulation2 or
such other guidelines as Governing Board may from time to time prescribe in addition thereto or in modification or
substitution thereof.

179

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20040117-8
Saturday, January 17, 2004
Review of norms relating to trading by members/ sub-brokers
General
CONTENTS :

Members of the Exchange are hereby informed that the Securities and Exchange Board of India, vide letter Ref. No.SEBI/
MIRSD/Cir-06/2004 dated January 13, 2004 has reviewed the norms relating to trading by members / sub-brokers.
The contents of the circular are reproduced below :
1.

During the course of inspections carried out by SEBI of the books of accounts and other documents of members/
sub-brokers, it has been observed that certain members/sub-brokers are dealing through a large number of other
stock brokers/sub-brokers of the same exchange/other exchange for their proprietary trades as well as trades on
behalf of clients.

2.

Trading through large number of brokers/sub-brokers raises serious issues of regulatory concerns including taking
excessive exposure, executing pro account trading from multiple locations in violation of SEBI circular no. SEBI/
MRD/SE/Cir-32/2003/27/08 dated August 27, 2003, possibility of over leveraging and default etc.

3.

With a view to address these concerns, stock exchanges are directed to ensure the following :3.1

A Stock broker/sub-broker of an exchange cannot deal with brokers/sub-brokers of the same exchange
either for proprietary trading or for trading on behalf of clients, except with the prior permission of the
exchange. The stock exchanges while giving such permission, shall consider the reasons stated by the
brokers/sub-brokers for dealing with brokers/sub-brokers of the same exchange and after carrying out due
diligence allow such brokers/sub-brokers to deal with only one stock broker/sub-broker of the same exchange.

3.2

A stock broker/sub-broker of an exchange can deal with only one broker/sub-broker of another exchange
for proprietary trading after intimating the names of such stock broker/sub-broker to his parent stock exchange.

3.3

As per Regulation 15(1) (e) of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 a sub-broker
shall not be affiliated to more than one stock broker of one stock exchange. It is reiterated that a stock
broker of an exchange can deal with only one broker of another exchange on behalf of clients after obtaining
necessary registration as a sub-broker.

4.

Stock Exchanges are directed to implement the above requirement with immediate effect and take necessary
disciplinary action wherever violation of the above provisions are observed.

5.

The undersigned has been authorized to direct the exchanges to


5.1

make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the
above decision immediately.

5.2

bring the provisions of this circular to the notice of the member brokers/sub-brokers affiliated to the members
of the exchange and also to disseminate the same on the web-site.

5.3

communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly
Development Report for the month of January 2004.6. This circular is being issued in exercise of powers
conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with Section
10 of the Securities Contracts (Regulation) Act 1956, to protect the interests of investors in securities and to
promote the development of, and to regulate the securities market.

Yours faithfully,
Usha Narayanan
Members are requested to take note of the above.
Kevin Desouza
CGM Membership & Inspection

180

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20050902-21
Friday, September 02, 2005
Compliance Requirements for Trading Members
General

Trading Members of the Exchange are hereby informed that compliance with respect to the following should be duly
ensured.
1.

Trading Members should ensure that there are no unauthorised extensions of their trading terminals. In case of
any unauthorised extension of terminals, concerned trading members will be fully responsible and shall be held
liable for strict disciplinary action including de-activation of terminals.

2.

Trading members should place a permanent notice board which is prominently displayed at all their offices including
the offices of sub-brokers, or any other offices where the trading terminals are located by September 30, 2005
urging the investors to follow certain Dos and Donts while investing/trading in the stock markets: The format of
the notice board along with the list of general Dos and Donts are given in Annexure I. The size and font of the
contents of the notice board should be such as would make the subject matter legible and easily readable to
everybody.

3.

Trading Members are also required to ensure that the copy of their SEBI Registration Certificate is prominently
displayed in all their offices by September 30, 2005.

4.

Trading Members shall also ensure that the SEBI Registration Certificate issued to the sub-broker is prominently
displayed at all their sub-brokers offices by September 30, 2005.

If notice board and copies of the SEBI Registration Certificates are not found as mentioned above, suitable disciplinary
action will be taken against the concerned trading members.
Trading Members are further advised to bring the contents of this circular to the notice of all their employees, subbrokers, remisiers, clients etc., and educate them to not to allow or indulge in any activities which are not in conformity
with the Rules, Byelaws, Regulations of the Exchange and the various circulars issued by the Exchange and SEBI
from time to time.
For further clarifications, if any, trading members may contact any of the following officials :
Sr. No.

Name of the Official

Intercom No.

Ashwin Dattani

8157

Shaila Valsan

8316

Sanjay Pai

8356

P. K. Ramesh
Deputy General Manager
Surveillance and Supervision

Kritika Daga
Assistant General Manager
Surveillance & Supervision

181

Annexure 1
Bombay Stock Exchange Limited

The edge is efficiency

1.

Name of the Trading Member of BSE (SEBI Registration No.)

2.

Address & Tel. No. of the Main office of the trading member
(Also Name & Tel. No of the contact person in the main office

3.

SEBI Registration No. of the trading member

4.

BSE Investor Service Cell Tel. No.

022 - 22721233/34

DOS
a.
Always deal with market intermediaries registered with SEBI/Exchanges.
b.

Give clear and unambiguous instructions to your broker/agent/depository participant.

c.

Always insist on contract notes for all the transactions from the main broker (name to be specified) within 24 hours
of the trade execution. In case of doubt of the transactions, verify the genuineness of the same on the Exchange
website www.bseindia.com.

d.

Always settle the dues through the normal banking channels with the market intermediaries.

e.

Always make payment directly to the main broker (name to be specified).

f.

Always give delivery of shares directly to the main broker (name to be specified).

g.

Adopt trading/investment strategies commensurate with your Risk bearing capacity as all investments carry risk,
the degree of which varies according to the investment strategy adopted.

h.

Always sign a Member-Client Agreement or the tripartite agreement with the trading member & SEBI registered
sub-broker of the trading member of BSE as the case may be.

i.

Please carry out due-diligence before registering as client with any Intermediary. Also, carefully read and understand
the contents stated in the Risk Disclosure Document, which forms the part of client registration for dealing through
intermediaries in the Stock Market.

DONTS
a.

Dont deal with unregistered brokers/sub-brokers, intermediaries.

b.

Dont leave the custody of your Demat Transaction slip book in the hands of any Intermediary.

c.

Dont fall prey to promises of guaranteed returns.

d.

Dont blindly imitate investment decisions of others who may have profited from their investment decisions.

182

Notice no
Notice date
Subject

:
:
:

Segment Name

20070131-11
Wednesday, January 31, 2007
SEBI Circular No./MRD/DoP/Dep/SE/Cir-22/06 dated 18th December, 2006 ( for registered
brokers and sub-brokers)
General

CONTENTS :

Subject : SEBI Circular No./MRD/DoP/Dep/SE/Cir-22/06 dated 18th December, 2006 ( for registered brokers and subbrokers).

Exclusive e-mail ID for redressal of Investor Complaints.


Segment Name: General
Trading members of the Exchange are hereby informed that Securities and Exchange Board of India ( SEBI ), in exercise
of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992, advised to all registered
brokers and registered sub-brokers, vide its captioned Circular to designate e-mail IDs of their respective grievance
redressal division and / or of their compliance officers exclusively for the purpose of registering complaints by investors
and display such e-mail IDs and other relevant details prominently on their websites and in the various materials /
pamphlets / advertisement campaigns initiated by them for creating investor awareness.
Trading Members of the Exchange are requested to comply with the provisions of the above mentioned SEBI Circular.

Arun K. Dolas
Dy. Gen. Manager
Department of Investor Services.

183

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20060321-15
Tuesday, March 21, 2006
Guidelines on Anti Money Laundering Standards
General
CONTENTS :

Attention of the trading members is drawn to Exchange Notice No. 20060120-6 dated January 20, 2006 whereby
Guidelines on Anti Money Laundering Standards as advised by SEBI vide circular number ISD/CIR/RR/AML/1/06 dated
January 18, 2006 were circulated to the members for necessary action.
SEBI vide circular no. ISD/CIR/RR/AML/2/06 dated March 20, 2006 has advised the reporting requirements and the
obligations cast on the intermediaries under the Prevention of Money Laundering Act, 2002 and the rules notified there
under.
A copy of the aforesaid SEBI circular dated March 20, 2006 is enclosed herewith. SEBI circular is also available on
the SEBI website www.sebi.gov.in.
All Trading Members and the Sub-Brokers are advised to take note of the above SEBI circular.
Sanjiv Kapur
P. K. Ramesh
General Manager
Dy. General Manager
Surveillance and Supervision
Surveillance and Supervision
_______________________________________________________________________________________________________
CHIEF GENERAL MANAGER
INTEGRATED SURVEILLANCE DEPARTMENT
EMAIL - ravi@sebi.gov.in
TEL : 022 22835701
Fax : 022 22870966
ISD/CIR/RR/AML/2/06
March 20, 2006
To all Intermediaries registered with SEBI under Section 12 of the SEBI Act.
(Through the stock exchanges for stock brokers, sub brokers and depositories for depository participants)
Dear Sir / Madam,
Sub: - Prevention of Money Laundering Act, 2002, Obligations of intermediaries in terms of
Rules notified thereunder
1.

Please refer to our circular no. ISD/CIR/RR/AML/1/06 dated January 18, 2006 laying down broad guidelines on
Anti Money Laundering Standards. As per the circular, all the intermediaries registered with SEBI under Section
12 of the SEBI Act were advised to ensure that a proper policy framework on anti-money laundering measures is
put into place within one month from the date of the circular. The intermediaries were also advised to designate an
officer as 'Principal Officer' and intimate their details to the Financial Intelligence Unit, India on an immediate
basis.

2.

It is brought to the attention of all the intermediaries that the Government of India, Ministry of Finance, Department
of Revenue has issued notifications dated July 1, 2005 and December 13, 2005 in the Gazette of India, notifying
the Rules under the Prevention of Money Laundering Act (PMLA), 2002. In terms of the Rules, the provisions of
PMLA, 2002 came into effect form July 1, 2005. Section 12 of the PMLA, 2002 casts certain obligations on the

184

intermediaries in regard to preservation and reporting of certain transactions. Intermediaries are therefore, advised
to go through the provisions of PMLA, 2002 and the Rules notified there under and take all steps considered
necessary to ensure compliance with the requirements of section 12 of the Act ibid.
3.

Maintenance of records of transactions


All the intermediaries shall put in place a system of maintaining proper record of transactions prescribed under
Rule 3, as mentioned below:

4.

(i)

all cash transactions of the value of more than rupees ten lakh or its equivalent in foreign currency;

(ii)

all series of cash transactions integrally connected to each other which have been valued below rupees ten
lakh or its equivalent in foreign currency where such series of transactions have taken place within a month
and the aggregate value of such transactions exceeds rupees ten lakh;

(iii)

all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine
and where any forgery of a valuable security has taken place;

(iv)

all suspicious transactions whether or not made in cash and by way of as mentioned in the Rules.

Information to be maintained
Intermediaries are required to maintain and preserve the following information in respect of transactions referred
to in Rule 3:

5.

(i)

the nature of the transactions;

(ii)

the amount of the transaction and the currency in which it was denominated;

(iii)

the date on which the transaction was conducted; and

(iv)

the parties to the transaction.

Maintenance and Preservation of records


Intermediaries should take appropriate steps to evolve an internal mechanism for proper maintenance and
preservation of such records and information in a manner that allows easy and quick retrieval of data as and when
requested by the competent authorities. Further, the records mentioned in Rule 3 have to be maintained and
preserved for a period of ten years from the date of cessation of the transactions between the client and intermediary.
Intermediaries should formulate and implement the client identification program containing the requirements as
laid down in Rule 9 and such other additional requirements that it considers appropriate. The records of the
identity of clients have to be maintained and preserved for a period of ten years from the date of cessation of
the transactions between the client and intermediary.

6.

Reporting to Financial Intelligence Unit-India


In terms of the PMLA rules, intermediaries are required to report information relating to cash and suspicious
transactions to the Director, Financial Intelligence Unit-India (FIU-IND) at the following address:

Director, FIU-IND,
Financial Intelligence Unit-India,
6th Floor, Hotel Samrat,
Chanakyapuri,
New Delhi-110021.

185

Intermediaries should carefully go through all the reporting requirements and formats enclosed with this circular.
These requirements and formats are divided into two parts- Manual Formats and Electronic Formats. Details of
these formats are given in the documents (Cash Transaction Report- version 1.0 and Suspicious Transactions
Report version 1.0) which are also enclosed with this circular. These documents contain detailed guidelines on the
compilation and manner/procedure of submission of the manual/electronic reports to FIU-IND. The related hardware
and technical requirement for preparing reports in manual/electronic format, the related data files and data structures
thereof are also detailed in these documents. Intermediaries, which are not in a position to immediately file electronic
reports, may file manual reports to FIU-IND as per the formats prescribed. While detailed instructions for filing all
types of reports are given in the instructions part of the related formats, intermediaries should adhere to the
following:
(a)

The cash transaction report (CTR) (wherever applicable) for each month should be submitted to FIU-IND
by 15th of the succeeding month.

(b)

The Suspicious Transaction Report (STR) should be submitted within 7 days of arriving at a conclusion that
any transaction, whether cash or non-cash, or a series of transactions integrally connected are of suspicious
nature. The Principal Officer should record his reasons for treating any transaction or a series of transactions
as suspicious. It should be ensured that there is no undue delay in arriving at such a conclusion.

(c)

The Principal Officer will be responsible for timely submission of CTR and STR to FIU-IND;

(d)

Utmost confidentiality should be maintained in filing of CTR and STR to FIU-IND. The reports may be
transmitted by speed/registered post/fax at the notified address.

7.

Intermediaries should not put any restrictions on operations in the accounts where an STR has been made.
Further, it should be ensured that there is no tipping off to the client at any level.

8.

Reporting of 'Principal Officer' details to FIU -India


It has been brought to the notice of SEBI by FIU-IND that a large number of entities have not submitted details of
their 'Principal Officer' to FIU-IND as required by the SEBI circular no. ISD/CIR/RR/AML/1/06 dated January 18,
2006. All the Intermediaries, which have yet not reported these details to FIU-IND are directed to do so forthwith.

9.

This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange
Board of India Act, 1992, and Rule 7 of Prevention of Money-laundering (Maintenance of Records of the Nature
and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and
Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions
and Intermediaries) Rules, 2005 to protect the interests of investors in securities and to promote the development
of, and to regulate the securities market.

Yours faithfully,
R RAVICHANDRAN

186

Notice no
Notice date
Subject

:
:
:

Segment Name

20070330-27
Friday, March 30, 2007
Client Registration Form/ Know Your Client (KYC) requirements & Compliance with
Guidelines on Anti Money Laundering Standards
General

CONTENTS :
Attention of the Trading Members is drawn to the Exchange Notice no. 20040827-11 dated August 27, 2004 and Notice
no. 20061120-9 dated November 20, 2006 wherein Trading Members were advised to ensure that the Client Registration
Form / Know Your Client (KYC) forms are complete in all respects and are reviewed and updated periodically. The
Trading Members were also advised to ensure that Client Registration details including financial details of the clients
are correctly obtained and updated periodically and is used to monitor the trading activities of their clients.
It has been observed during the course of routine investigations that:
l

Some KYC forms are incomplete

In a few cases, prima facie, trading activity of the client is disproportionate to the financial status disclosed in the
KYC forms and supporting documents

Updated annual financial statements are not obtained and complete documentation is not being maintained for
non - individual clients

Attention of the Trading Members is also drawn to Exchange Notice no. 20060120-6 dated January 20, 2006 and
Notice no. 20060321-15 dated March 21, 2006 wherein Guidelines on Anti Money Laundering Standards issued by
SEBI vide their Circular no. ISD/CIR/RR/AML/1/06 dated January 18, 2006 and Circular no. ISD/CIR/RR/AML/2/06
dated March 20, 2006, were communicated to the Trading Members.
The Guidelines on Anti Money Laundering Standards, inter-alia require the Trading Members to:
l

Ensure Customer due diligence (As stipulated under Guideline 5 of Part II of the Guidelines on Anti Money
Laundering Provisions).

Monitor and Report Suspicious Transactions to FIU (Financial Intelligence Unit) India. (As specified under Guidelines
2.2 and 9 of Guidelines on Anti Money Laundering Provisions in the formats as communicated to the Trading
Members vide Exchange Notice no. 20060321-15 dated March 21, 2006).

The Trading Members are therefore, once again advised to ensure strict compliance with the requirements of the KYC
norms and the PMLA (Prevention of Money Laundering Act ,2002) Guidelines, including reporting of any suspicious
transactions to the FIU.

Kritika Daga
Dy. General Manager
(Surveillance and Supervision)

Pankaj Gupta
Asst. General Manager
(Surveillance and Supervision)

187

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20080211-19
Monday, February 11, 2008
Client Margin Information
General

CONTENTS :
To
Member brokers
The member brokers of the Exchange are hereby informed that at present reports are being downloaded to member
brokers on a daily basis, which give the client-wise details of VaR, ELM and Mark To Market margins levied by the
Exchange.
As per the directions of SEBI, the member brokers are now advised to inform their clients about the margins levied on
their traded positions on a day-to-day basis by way of either sending the margin information through email or along
with the physical contract notes. The member brokers are also advised to include the following information in the
statements being provided to their Clients:
l

Total collateral deposits placed by the client upto day T-1 (with break-up in terms of cash, FDRs, BGs and securities)

Collateral deposits utilised towards margins upto the end of T-1

Collateral deposits placed by the client on day T (with break-up in terms of cash, FDRs, BGs and securities)

Margin adjustments for T day

Collateral status (balance with the member / due from the client) at the end of T day

The member brokers are required to comply with the said requirements with effect from February 18, 2008.
For any clarifications member brokers may contact the following Exchange officials:
Mr.Mitesh Thakkar and Mr. Nitesh Agarwal
Phone Nos.- 22721233/34 Ext - 8879/8354

P K Ramesh
General Manager
Surveillance and Supervision

Yogesh Bambardekar
Manager
Surveillance and Supervision

188

Notice no
: 104616/2001
Notice date : Monday, November 12, 2001
Subject
: SEBI CIRCULAR ON TRADING TERMINALS
CONTENTS :
SEBI Circular on Trading Terminals
Members of the Exchange, whilst applying for Trading terminals through VSAT/ WAN/ LAN/ Lease Line, etc. undertake
to abide by all the terms and conditions stated in the application form provided to them by BSE. One of the important
conditions, enumerated in the application form, is that the Trading terminals will be installed at members office and an
office will be considered a members office only if it is rented/ owned /licensed by a BSE member. Further, the staff
operating BOLT terminal in the members offices must be on a members payroll.
In fact members should have effective control over the functioning of those offices. Please refer to Exchange Notice
No.56712/2000 dated 20th July, 2000 on the above subject.
SEBIs recent circular, bearing No.SMDRP/Policy/CIR-49/2001 dated October 22, 2001 (enclosed) is on the above
matter.As per the said SEBI circular, the members should install trading terminals only at members registered offices,
branch offices and their registered sub-brokers offices and they should not allow the trading terminals to be misutilised
for unregistered sub-broking activities. The members are therefore advised that the trading terminals, if any, granted
earlier in places other than the above mentioned places, should be withdrawn immediately and members must ensure
that such errors do not occur in future.
All are requested to conform to the attached Circular of SEBI failing which the Exchange will be constrained to take
necessary actions against the erring members.
Hema Srinivasan
DGM - Membership

189

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20030909-1
Tuesday, September 09, 2003
Pro-account trading terminal
General
CONTENTS :

The Exchange has been advised by SEBI vide circular no. SEBI/MRD/SE/Cir-32/2003/27/08 dated August 27, 200
regarding proprietary trading terminals.
1.

During the course of inspections carried out by SEBI and stock exchanges of the books of accounts and other
documents of members, it has been observed that certain members are putting large number of orders on proaccount from various locations rather than using pro-account / own Account at the terminals located at the corporate
office from where the owner / directors normally function. It has further been observed that these trades executed
from various locations under pro-account / own account are, many a time, transferred subsequently to the respective
clients in the back office of the members. This practice is in clear violation of the requirement of putting the orders
of clients under the appropriate client code through trading terminals.

2.

With a view to check such misuse of the above facility, if any, the following has been decided:a) Facility of placing orders on own account through trading terminals shall be extended only at one location of
the members as specified / required by the members
b) Trading terminals located at places other than the above location shall have a facility to place orders only for
and on behalf of a client by entering client code details as required / specified by the Exchange / SEBI.
c) In case any member requires the facility of using own account through trading terminals from more than one
location, such member shall be required to submit an undertaking to the stock exchange stating the reason for
using the own account at multiple locations and the Exchange may, on case to case basis after due diligence,
consider extending the facility of allowing use of own account from more than one location.

The above requirements comes into immediate effect. The members are requested to indicate to the Exchange, the
IDs of the trading terminals which will be used to place orders on Own Account within 5 days but not later than
September 13, 2003.
For any clarification in the matter, members may contact any of the following officials.

Sr.No.

Name

Intercom No.

1.

Mr. Ranjan Prabhu

8214

2.

Mr. Bharat Dave

8150

All the members are requested to co-operate and ensure compliance.

Kevin Desouza
Chief General Manager
Inspection & Membership

Mayank Mehta
Asst. General Manager
Membership

190

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20040205-13
Thursday, February 05, 2004
Operate of Bolt terminals by Remisier
General
CONTENTS :
NOTICE

Members of the Exchange may kindly note that the Governing Board has authorised Remisiers to operate BOLT
terminals at members office only. However it is clarified that at present, BOLT terminals cannot be installed at Remisiers
Office in view of SEBI circular no SMDRP/Policy/Cir-49/2001 dated October, 22, 2001 which states that BOLT terminals
should be installed at Members Offices or their associated Sub-Brokers offices only.
In case members require any further clarifications, they may please contact the following officials of the Membership
Department.
Name

Extension

Rakesh Parekh

8307

Joy Benson

8277

Kevin Desouza
CGM - Membership and Inspection

191

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20050808-26
Monday, August 08, 2005
Uploading IML/TWS Location Information
General

Sub : Uploading IML/TWS Location Information


1.

The Exchange had been permitting addition of new trading terminals and also installation of IML terminals for
business expansion of members. The Exchange vide its Notices (1) No.20030827-25 dated August 27, 2003, (2)
No.20041210-13 dated December 10, 2004 and (3) No.20050118-3 dated January 18, 2005 required the members
to execute Affidavit-cum-Undertaking regarding use of the IML software.

2.

The persons who operate the trading / IML terminals of the members are known as approved users and all
information regarding such approved users should be duly submitted to the Exchange. Approved user refers to
employees of the member, sub-brokers of the member and remisiers operating from the members office. No
other person can be approved user for operating the trading / IML terminals.

3.

Members are also required to note that the trading / IML terminals should be located only at their Head office,
Registered offices, branches or at the offices of their registered sub-brokers.

4.

Members may please note that the BOLT TWS Version No. 35 has a facility to upload the TWS / IML Id details to
the Exchange. Accordingly, members are requested to upload the details of TWS / IML ids, being allotted to the
members. Please note that the details submitted will be audited by the Department of Surveillance and Supervision
of the Exchange, hence, members should ensure that the details submitted are correct and complete.

5.

Member must provide the information for all his TWS / IML Ids. The information related to IML Ids must include the
details of all the users/traders using that particular IML Id e.g. if IML ID 201 is used by 5 users/traders then the
details of all these 5 users/traders must be submitted. Members are requested to get the advice from their respective
IML vendors for providing this information. Members are also advised to use this facility for any changes / addition
/ de-activation of the TWS / IML Ids in future and ensure up-to-date information provided to the Exchange.

6.

The data relating to the existing trading / IML terminals must be submitted to the Exchange through BOLT TWS as
described here under on or before August 16, 2005.

(i)

Please note that only TWS no. 1 is allowed to use this facility of addition/updation/deactivation/activation of
TWS / IML information on the BOLT.

(ii)

For uploading the details of your TWS / IML Ids, members are advised to use CR Icon (Shift + F4) of BOLT
TWS.

(iii)

Members are requested to refer to Annexure I for providing field wise information.

(iv)

Apart from manually entering the information, system provides a facility of Batch Upload for submitting the
multiple entries. Please refer Annexure II for file format of batch entry.

(v)

Refer Annexure III for vendor code information.

Members may note that any trading terminals / IML terminals allotted and particulars of which are not made
available/updated as above shall be treated as unauthorized terminals. Non-reporting/wrong reporting shall be
considered as a violation and render the concerned members liable for disciplinary action as may be deemed fit
including withdrawal of IML/additional terminals.

For further clarifications, members may contact any of the following officials:

192

Sr. No.

Name

Department

Sandeep Gupta

Surveillance & Supervision

8153

Dilip Oak (For technical queries only)

Operations & Trading

8314

P. K. Ramesh
Deputy General Manager
Surveillance and Supervision

Intercom No.

Kritika Daga
Assistant General Manager
Surveillance & Supervision

193

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20050930-13
Friday, September 30, 2005
Uploading IML/TWS Location Information
General

The Exchange had issued Notice No. 20050808-26 dated August 08, 2005, Notice No.20050816-9 dated August 16,
2005, Notice No.20050819-19 dated August 19, 2005 and Notice No.20050823-20 dated August 23, 2005 through
which all the trading members were advised to upload the details regarding the location of TWS/IML terminals operated
by them.
An analysis of the data uploaded by the trading members has revealed that some of the trading members have uploaded
excess/short or inaccurate information about the trading terminals. Trading members of the exchange are hereby required
to verify the data uploaded / registered by them and ensure correctness of the same by October 17, 2005. Trading
members are required to take particular note of the following while uploading / registering the TWS / IML information.
1.

Ensure that all the TWS ids i.e. BOLT ids which are displayed in your Admin terminal (TWS No. 0) are registered
/ uploaded through TWS No. 1 as TWS entry only and not as IML entry. The information uploaded / registered
should cover all TWS ids allotted by the Exchange whether active or not.

2.

Trading members are required to upload / register all the IML ids allotted by the Exchange and also the extensions
given through these IML ids. The data uploaded related to IML extensions i.e. Branch code, Dealer code etc. will
be required by your IML vendor for tagging the location id details along with the orders entered into the trading
terminals. Hence, trading members are requested to correct the data and download the same for providing it to
the respective IML vendor. For further clarifications in this regard, please contact your IML vendor.

3.

It has been observed that some of the trading members have registered TWS ids as IML ids and vice-versa by
selecting incorrect user type. Trading members are required to ensure that every entry is marked correctly and the
data uploaded by them is correct in all respects.

4.

Trading members who have entered incorrect data into the system, are required to correct the data as under:
a. Download the information submitted and save / print it.
b. Verify the data and select the incorrect entries uploaded in the system through your TWS no. 1
c. Mark all the incorrect entries as inactive by selecting the option No on the second page of the software
under the key Active Terminal : Yes or No
d. Re-submit the correct entries with proper user type i.e. TWS or IML. Also ensure that the new data, which
is uploaded in the system, is correct in all respects.

5.

It is also observed that some of the trading members have still not registered / uploaded the TWS and IML ids
information. Such members are advised to immediately register / upload the required information; failing which,
the Exchange will take a serious view of the matter.
Trading members are once again informed that the persons who operate the trading / IML terminals of the members
are known as approved users and all information regarding such approved users should be duly submitted to the
Exchange. Approved user refers to employees of the member, sub-brokers of the member and remisiers operating
from the members office. No other person can be approved user for operating the trading / IML terminals. Also,
trading members should note that trading / IML terminals should be located only at their Head office, Registered
offices, branches or at the offices of their registered sub-brokers.
Trading members must note that registering / uploading the details of trading terminals is a regulatory requirement
and hence strict disciplinary action will be taken against the trading members if they fail to upload the data or
upload incorrect data.

194

Please contact Help Desk for clarification, if any. Also members may contact on 22721233 (Extension 8190, 8776, 8252)
Help Desk Nos.
Ethernet users Lease line users Vsat users -

Extension 5000 (Hunting)


(022) 2272 2575 (Hunting)
Toll free hunting 1600 22 6661
(Outside Mumbai only),
022 2272 3213 (Cities with no toll free service)

P. K. Ramesh
Deputy General Manager
Surveillance and Supervision

Dilip Oak
Deputy General Manager
Operations and Trading

195

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20051004-13
Tuesday, October 04, 2005
Uploading IML/TWS Location Information
General

The Exchange had issued Notice No. 20050808-26 dated August 08, 2005, Notice No.20050816-9 dated August 16,
2005, Notice No.20050819-19 dated August 19, 2005 and Notice No.20050823-20 dated August 23, 2005 through
which all the trading members were advised to upload the details regarding the location of TWS/IML terminals operated
by them.
An analysis of the data uploaded by the trading members has revealed that some of the trading members have uploaded
Nature of Office as other i.e. other than at the registered / head offices, branch offices and sub-brokers offices. In
this connection, attention of the trading members is once again invited to the Exchange Notice No. 104616/2001 dated
November 12, 2001 and Notice No. 20021217-18 dated December 17, 2002 wherein all the trading members were
advised to install the trading terminals only at the members registered offices, branch offices and their registered subbrokers offices.
Trading members are therefore required to take utmost care while uploading the details into the system, as the Exchange
shall use the data for verification at the time of inspection / any other regulatory compliance. The Exchange shall take
a serious view of the matter if any non-compliance is observed in this regard.
Trading members must note that registering / uploading the details of trading terminals is a regulatory requirement
and hence strict disciplinary action will be taken against the trading members if they fail to upload the data or upload
incorrect data.

P. K. Ramesh
Deputy General Manager
Surveillance and Supervision

Sandeep Gupta
Deputy Manager
Surveillance and Supervision

196

Notice No
Date
Subject

: 20050823-20
: 23/08/2005
: TWS/IML Registration on BOLT and FAQs on the
same
Dept Name
: Inspection
Segment Name : General

This is further to our Notice No. 20050818-26 dated August 8, 2005, Notice No. 20050816-9 dated August 16, 2005
and Notice No.20050819-19 dated August 19, 2005 regarding uploading of information relating to location of IML/TWS
terminals.
In view of the requests received from members the last date for submitting the details to the Exchange through BOLT
TWS has now been extended to Tuesday, August 30, 2005.
We are also attaching herewith a list of FAQs, which will help the members in uploading the details on the BOLT.
Please contact Help Desk for clarification, if any. Also members may contact on 22721233 (Extension 8190, 8776,
8252)
Help Desk Nos.
Ethernet users - Extension 5000 (Hunting)
Lease line users - (022) 2272 2575 (Hunting)
Vsat users
- Toll free hunting 1600 22 6661 (Outside Mumbai only),
022 2272 3213 (Cities with no toll free service)

P. K. Ramesh
DGM
Surveillance and Supervision

Kritika Daga
AGM
Surveillance & Supervision

Encl: a.a

197

Frequently Asked Questions


1.

User id Pin Code:is the pincode of the branch in case of IML or TWS location through which the orders are
routed to the Exchange.

2.

TWS/IML ID: For TWS id, BOLT no. has to be entered and for IML id, branch code has to be entered which is
allotted by the vendor.

3.

User Id: For TWS, user id will be the same as TWS id. For IML, user id will be the dealer code allotted by the IML
vendor.

4.

Prog Trd: If program-trading software is used then 1 has to be entered, and 0 if program-trading software is not
used. Program trading is not yet operational in BSE, hence 0 option to be selected by all the members.

5.

Vendor Code: Refer Annexure III of the Notice No. 20050808-26.

6.

Regd. Office Address: It is the trading terminal location address.

7.

Pin code: It is the pin code of the location where the trading terminal is actually location and from where the login
is done by the user.

8.

Mapin ID: Optional

9.

SEBI Reg. No.: Optional

10.

Date of Activation: Optional

11.

Date of Deactivation: Optional

12.

Date of Birth: It is the birthdate of the approved user.(yyyy-mm-dd)

13.

Residence Address: It is the address of the approved user.

14.

Relation with approved user using TWS/IML: For employees of the sub-brokers, members should select subbroker. For employees of remisiers, members should select authorised person. For directors of the corporate
entity and proprietor and partners, members should select employees.

15.

For every terminal there has to be an approved user.

16.

Authorised person - is a term used here only for referring to a remisier.

17.

First Name / Middle Name / Last Name- has to be of the individual user operating the terminal. In case of nonindividual sub-broker, the name of the entity must be included in the address field.

18.

Mode of Connectivity for Ethernet connection within the stock exchange buildings select LAN option and for
leased lines/MLDN connections select dial up and if VSAT user select VSAT option.

19.

For viewing the records uploaded, members can use the download button provided to them at the top of both
the screens by entering the start and end TWS/IML id. The same can be stored by right clicking on the TWS / IML
user registration window Title bar, user will get the option Save Reg.Users, by this the records will be saved in
*.urg file

20.

As TWS no. 0 is not a trading terminal uploading the data for the same is optional. However, members who want
to upload the same may do so by entering TWS id as 0 and user id as 1.

198

Notice no
:
Notice date
:
Subject
:
Segment Name :

20040216-10
Monday, February 16, 2004
Disclosure of trade details of bulk deals
Equity
CONTENTS :

SEBI vide its circular No. SEBI/MRD/SE/Cir-7/2004 dated January 14, 2004 has decided that members of the Exchange
shall make disclosures to the Exchange with respect to all transactions in a scrip where total quantity of shares bought
/ sold is more than 0.5% of the number of equity shares of the company listed on the Exchange.
The relevant content of the SEBI circular is as below:
Sub: Disclosure of trade details of bulk deals
1.

With a view to imparting transparency in bulk deals so as to prevent rumours /speculation about such deals
causing volatility in the scrip price, it has been decided to bring about greater disclosure of such deals as mentioned
below :

1.1.

The disclosure shall be made with respect to all transactions in a scrip where total quantity of shares bought/sold
is more than 0.5% of the number of equity shares of the company listed on the stock exchange.

1.2.

The brokers shall disclose to the stock exchange the name of the scrip, name of the client, quantity of shares
bought/sold and the traded price.

1.3.

The disclosure shall be made by the brokers immediately upon execution of the trade.

1.4.

The Stock exchanges shall disseminate the aforesaid information on the same day after market hours to the
general public.
Accordingly and after seeking necessary clarifications from SEBI, members are advised to send the undermentioned
information :
1. Single Trade: Immediately upon the execution of the order where the traded quantity either buy or sell on
account of any trade is more than 0.5% of the number of equity shares of the company listed on the stock
exchange.
2. Cumulative Trades for the Day: Within one hour from the closure of the trading hours, where the cumulative
quantity traded under any single client code on that day either purchase or sale is more than 0.5% of the
number of equity shares of the company listed on the stock exchange.

The information is to be sent in the format given below on Fax No. 022-22723353, as under :
Sr.. No.

Date of
Trade

Scrip
Code

Scrip
Name

Client
Name

Buy (B) /
Sell (S)

Quantity

Trade Price/ Weightage


Average Trade Price

The Stock Exchange will arrange to disseminate the aforesaid information after compilation on the same day to the
general public through its website www. bseindia.com (Circulars/Notices Section).
This notice is effective from Tuesday, February 17, 2004.
For any clarifications, members are advised to contact the following officers:
Mr. Kirit Mithiya (Extn 8599) / Mr. Neeraj Agarwal (Extn: 5093) and Mr. Ashit R. Raja (Extn: 5092).

Devika Shah
General Manager (Surveillance)

199

Notice no
:
Notice date
:
Subject
:
Segment Name:

20040311-7
Thursday, March 11, 2004
Disclosure of trade details of Bulk Deals and listed equity capital of the company.
Equity

The Exchange vide its Notice No. 20040216-10 dated February 16, 2004, has advised the member brokers to make
disclosure to the Exchange with respect to all transactions in a scrip where total quantity of shares bought / sold is
more than 0.5% of the company equity capital listed on the Exchange.
In continuation of above notice, the Exchange has now provided a facility to the member-brokers, to enable them to
ascertain the listed capital of the company, on their BOLT-TW(s) by downloading the file CIddmmyy.txt under the folder
Capital of Companies in DLOAD. The format of file is as given below
Scrip Code

Scrip Name

Number of shares in lacs

Recently, the Exchange has observed that on a few occasions members are reporting bulk deal transaction on a day
after the actual transaction took place. In this connection members are once again advised to report
(i)

Single Trade: Immediately upon the execution of the order where the traded quantity either buy or sell on account
of any trade is more than 0.5% of the number of equity shares of the company listed on the Stock Exchange.

(ii)

Cumulative Trades for the Day: Within one hour from the closure of the trading hour, where the cumulative quantity
traded under any single client code on that day either purchase or sale is more than 0.5% of the number of equity
shares of the company listed on the Stock Exchange.

Devika Shah
Gen. Manager - Surveillance

200

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20040722-11
Thursday, July 22, 2004
Disclosure of trade details of Bulk Deals through Data Upload System.
Equity

Attention of the member-brokers is drawn to Exchange Notice No. 20040216-10 dated February 16, 2004, wherein
members were advised to make disclosure to the Exchange with respect to all transactions in a scrip where total quantity
of shares bought / sold is more than 0.5% of the listed equity capital of the company on the Exchange. The members
were required to report the same to the Exchange by fax on No. 022-22723353.
2.

In this connection, the members are advised that they can now report bulk deal transactions through Data
Upload System (DUS) with effect from July 26, 2004. The detailed procedure relating to reporting of Bulk Deal
transactions through DUS System together with file structure is given as Annexure A.

3.

Members may please note the following, while reporting the bulk deal transactions
(i)

Single Trade: Immediately through DUS upon execution of the order where the traded quantity either buy
or sell on account of any trade is more than 0.5% of the number of equity shares of the company listed on
the Stock Exchange.

(ii)

Cumulative Trades for the Day: Within one hour from the closure of the trading hour, where the cumulative
quantity traded under any single client code on that day for either purchase or sale is more than 0.5% of the
number of equity shares of the company listed on the Stock Exchange. (The members can report the bulk
deals through DUS upto 5.00 p.m. on the day of execution of deal)

4.

The Exchange would be disseminating the information relating to Bulk Deal transactions, as hitherto, based on
the reporting made by the member brokers through DUS to the Exchange.

5.

In case of any clarification, the members may contact the following officials -

Official Name

Purpose

Extn. No.

Department

Shri Shirish Bhosle

Data Upload System

8718

Information Systems

Shri Kirit Mithiya

Clarification on Bulk Deal Transactions

8599

Surveillance

Sanjiv J. Kapur
Gen. Manager Surveillance & CSD

201

ANNEXURE A
OPERATIONAL INSTRUCTIONS FOR BULK DEALS REPORTIN
This DUS software is available to the members through DLOAD32. The member can use this software to report the
Bulk deals transaction done by him. Operational procedures are as mentioned below

The member will have to login to the DUS software thru this screen.
Drive : This is the drive where the DUS software has been installed on the PC. It can be C drive or D drive or E drive etc.

Broker Code
Password

: Same login as BDCUPLOAD login eg B9999 (where 9999 is the member number)
: Password Same as settlement download password.

After providing the broker code and password the username is validated. If valid user then the menu is displayed.

202

As shown in the screen above the member has to select the Spot Deal Entry option from the Surveillance option under
Department menu.
After selecting the Bulk Deal Data option the Bulk Deal entry screen is displayed.

203

Data Item

Description

Remarks

Member No

This field is only display field. The value in this


field is picked up from the broker code which
is entered in the login screen

Scrip Code

Scrip Code in which the member has made a deal

Scrip Name

Will be automatically displayed depending upon


the selected scrip code

Transaction Type

Whether it is a purchase transaction or sale transaction

Client Code

Client Code

Client Name

Client Name will be accepted in

Quantity

Quantity of the deal

Trade Price

Trade price to be entered in decimal

Eg.1000.00

Deal Date

Date of the deal

To be entered in dd/mm/yyyy format.

Click on the appropriate radio button

No special characters this field

Add new Records.


When the bulk deal entry screen is always opened in an add more. The user can start entering the data directly. On
completing the entry click on <ADD> button to save the record.
<Record saved successfully> is the message that is displayed. The added record will be displayed in the display window
on the screen and the cursor is again positioned on the scrip code field.
Modify Existing Records
From the display window select the record which has to be modified. Modify the data and then click on the <Modify>
button to save the record.
Deleting Existing Records
From the display window select the record which needs to be deleted. Click on the <Delete> button. The record will
be deleted.
Uploading the File to the Exchange
After the entry of the bulk deals is completed click on the <Upload> button. A file will be created and uploaded to the
Exchange. The file name will be Bkddmmyyyy.TXT
Please note that each time the member uploads a file, the records inserted will be appended to the previous
records of the same day the file will contain all the records done for a particular day, unless physically deleted
by the user. If the user reports one record at 10.00 am and another one record at 12:00 noon, then the file,
which is uploaded at 12:00 noon, will be appended to the previous records of the day.
Loading a Bulk Deal File
If the total number of transactions are more, then the member can upload a pipe delimited text file thru the load facility.
The member has to take care that the file format is exactly in the same format as specified.
MemberNO|ScripCode|Scrip Name|Client Code|Client Name|SalePurchase|Quantity|Rate|DealDate|

204

Field Name

Type

Eg.

Member No

Numeric

0999

Scrip Code
Scrip Name

Numeric
Alphanumeric

500410
A.C.C.

Client Code

Alphanumeric

Length 12 characters

Client Name

Alphanumeric

Abc

Sale Purchase Flag

Character 1

P for Purchase, S for Sale

Quantity

Numeric

1000

Rate
Deal Date

Numeric
Dd/mm/yyyy

9999.99
12/04/2004

PLEASE NOTE THE FILE UPLOADED THROUGH THE LOAD OPTION SHOULD BE IN THE FORMAT SPECIFIED
ABOVE. IF THE FILE IS NOT IN THE ABOVE FORMAT THEN THE RECORDS WILL BE REJECTED.

205

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20051108-28
Tuesday, November 08, 2005
Modalities for Block Deal
General

Sub: Modalities for Block Deal.


Trading Members may refer to Exchange Notice No.20051014-6 dated October 14, 2005, and Exchange Notice
No.20051028-4 dated October 28, 2005, informing them about the proposed change in BOLT TWS32 version 37,
which interalia includes facility of entering block deal orders in the system. The trading members of the Exchange are
hereby informed that they shall be allowed to enter block deal orders with effect from November 14, 2005. This is in
accordance with SEBI circular No.MRD/DoP/SE/Cir-19/05 dated September 2, 2005 (copy enclosed as Annexure I).
In the new BOLT release the Exchange has provided a separate order type button Block Deal in the normal Order
Entry Window for entering of Block Deal orders. The screen print format of the new Order Entry Window is enclosed
as Annexure II. The salient features of entering Block Deals orders in the BOLT System is given below:

The facility to enter block deal orders in this mode is available for the first 35 minutes from the start of market
hours i.e normally between 9:55 a.m. to 10:30 a.m.

Any orders entered by the trading members having Order quantity of less than 5,00,000 shares or having order
value of less than Rs. 5 crore shall not be accepted by the system.

Valid Price Range for entering Block Deals Orders in the BOLT System: Trading Members are hereby informed
that block deal orders in respective scrips which are within +/-1% from the ruling market price (i.e. last traded
price) or the previous closing price (if there is no trade executed in the scrip before entering of the block deal
orders) subject to the applicable circuit filter limits will only be accepted as valid orders in the system.

The block deal orders in a scrip will be matched against the counter order with same quantity and price on a time
priority basis.

Trading Members may further note that the block deal orders entered by them shall be valid for 90 seconds and if
they remain unexecuted till then the orders shall automatically be deleted by the system.

Trading Members should note that the rates of block deal transactions executed in a scrip shall not be considered
for computation of opening price, closing price of the scrip, and for calculation of INDEX values.

All the block deal orders, which had resulted into trades, are to be settled on a Trade to Trade basis (e.g. as settled
in T Group) and any shortage shall result directly into close out of transaction as per the applicable formula.

STT shall be charged on these block deal transactions on similar lines as is being charged for scrips which are
settled on a Trade to Trade basis (eg.. T Group).

6A/7A facility is also available for settlement of block deal transactions.

Margins as applicable at client level in the normal trading window would be applicable for block deals.

The facility of early pay-in of securities is provided.

The trading members who have executed the block deal transactions are required to enter the trading details such
as the name of the scrip, name of the client, bought/sold, quantity of shares, trade price etc, in the DUS software
and the same shall be disseminated by the Exchange on its website after the end of the market hours. A separate
notice detailing the modalities for uploading the said details by the trading members is being issued in this regard.

206

In case of any clarification the Trading members are requested to contact the undermentioned officials:
A)

For Technical Queries:

Mr. Sushil Limbulkar (Extn:8190)

Mr. Yogesh More (Extn:8456)

B)

For Settlement Queries:

Ms. Sheela Anjaria (Extn: 8149)

Ms. Netra Sahani

(Extn: 8304)

Devika Shah
General Manager
(Clearing & Settlement)

Sanjiv Kapur
General Manager
(Department of Surveillance and Supervision)

Tuesday, November 8, 2005.

207

Annexure I
General Manager
Market Regulation Department Policy
Email:-sundaresanvs@sebi.gov.in
MRD/DoP/SE/Cir- 19 /05

September 2, 2005

The Executive Directors/Managing Directors/


Administrators of all Stock Exchanges
Dear Sir / Madam,
Sub : Guidelines for execution of block deals on the stock exchanges
1.

SEBI had issued a circular (reference no. SEBI/MRD/SE/Cir-7/2004) on January 14, 2004 on disclosures of details
of bulk deals with a view to impart greater transparency to the market on such transactions executed on the
stock exchanges. In terms of paragraph 1.1 of that circular, a bulk deal constituted of all transactions in a
scrip (on an exchange) where total quantity of shares bought/sold is more than 0.5% of the number of equity
shares of the company listed on the exchange. Thus the quantitative limit of 0.5% could be reached through one
or more transactions executed during the day in the normal market segment.

2.

There is however a felt need of the market to execute large trades through a single transaction easily without
putting either the buyer or the seller in a disadvantageous position. In order to facilitate execution of such large
trades, the stock exchanges are being permitted to provide a separate trading window. A trade, with a minimum
quantity of 5,00,000 shares or minimum value of Rs.5 crore executed through a single transaction on this separate
window of the stock exchange will constitute a block deal as distinguished from bulk deal defined earlier.

3.

A block deal will be subject to the following conditions :


a. The said trading window may be kept open for a limited period of 35 minutes from the beginning of trading
hours i.e. the trading window shall remain open from 9.55 am to 10.30 am.
b. The orders may be placed in this window at a price not exceeding +1% from the ruling market price/previous
day closing price, as applicable.
c. An order may be placed for a minimum quantity of 5,00,000 shares or minimum value of Rs.5 crore.
d. Every trade executed in this window must result in delivery and shall not be squared off or reversed.
e. The stock exchanges shall disseminate the information on block deals such as the name of the scrip, name of
the client, quantity of shares bought/sold, traded price, etc to the general public on the same day, after the
market hours.
f. There is no change in regard to the disclosure of trade details of bulk deals as specified in the earlier SEBI
circular reference no. SEBI/MRD/SE/Cir -7/2004 dated January 14, 2004, and such disclosures shall be continued
to be made by the stock exchanges to the general public on the same day after the market hours.

4.

5.

The stock exchanges shall ensure that all appropriate trading and settlement practices as well as surveillance and
risk containment measures, etc., as presently applicable to the normal trading segment are made applicable and
implemented in respect of the proposed special window also.
The stock exchanges are advised to
a. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the
above decision immediately.

208

6.

b.

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.

c.

communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly
Development Report for the month of September 2005.

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,
V S SUNDARESAN

209

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20051108-29
Tuesday, November 08, 2005
Disclosure of trade details of Block Deals
Equity

This is with reference to notice no. 20051108-28 dated November 08, 2005 issued by the Exchange regarding
introduction of Block Deal. As mandated under SEBI circular MRD/DoP/SE/Cir-1905 dated September 02,2005, the
Exchange is providing facility for execution of BLOCK DEALS, w.e.f., November 14,2005. SEBI has mandated that
the information on BLOCK DEALS shall be disseminated by the exchanges on the same day after the market hours.
The modalities relating to disclosure of BLOCK DEALS are as follows:
I.

DISCLOSURES TO BE MADE:
Trade details of BLOCK DEAL such as Deal date, Scrip code, Scrip Name, Quantity, Buy or Sell, Rate, Client code
and Client name are to be reported by the member to the Exchange through the Data Upload System (DUS). It
may be noted that members are required to upload information of each trade executed in block deal separately.
The detailed procedure of uploading the information in the DUS along with file structure is attached as Annexure
I.

II.

TIME OF DISCLOSURE/ UPLOAD OF INFORMATION BY THE MEMBER:


The details of BLOCK DEAL executed by the member are to be uploaded by the trading member on the same day
of execution of trade through the DUS. The DUS software will be available for upload of information till 5 p.m

III.

DISSEMINATION OF BLOCK DEAL INFORMATION:


The BLOCK DEAL information uploaded by all the members will be disseminated by the Exchange to the market,
on the same day, after the end of trading hours. The information will be available on the website at Equity Market
summary BLOCK DEALS for the latest trading day. The BLOCK DEAL Data for historical period will be available
on the website in ARCHIVES BLOCK /BULK DEALS. The information will be available in the following format.

Deal Date

Scrip code

Scrip Name

Client Name (#)

Buy or Sell

Trade Quantity

Trade Price

# Client Name will be the name of the Client whose code is entered at the time of execution of the deal
It may be noted that there is no change in regard to the disclosure of trade details on bulk deals as specified in the
Exchange notice no. dated 20040216-10 dated February 16,2004.
Purpose

Official Name

Extn.
No.

Department

Functional Queries- Clarification on Block


Deal Transactions

Mr. Kirit Mithiya


Mr. Jayesh Ashtekar

8599
8354

Department of Surveillance and


Supervision

Technical Queries - Data Upload System

Shri Hrishikesh Sukhtankar

8718

Information Systems

(Sanjiv Kapur)
General Manager - Department of Surveillance and Supervision

210

ANNEXURE - I
OPERATIONAL INSTRUCTIONS FOR BLOCK DEALS REPORTING
The member can use DUS software to report the Block deals transaction done by him. The Operational procedure is
explained below.
After logging in, the Block Deal Data sub-menu can be invoked by clicking on the Surveillance menu as shown in
the figure below.

After selecting the Block Deal Data option the Block Deal entry screen is displayed.

211

Data Item

Description

Remarks

Member No

This field is only display field. The value in this


field is picked up from the broker code which is
entered in the login screen

Scrip Code

Scrip Code in which the member has made a deal

Scrip Name

Will be automatically displayed depending upon


the selected scrip code

Transaction Type

Whether it is a buy transaction or sell transaction

Client Code

Client Code

Client Name

Client Name in this field

Quantity

Quantity of the deal Eg. 9999

Trade Price

Trade price to be entered in decimal

Eg.1000.00

Deal Date

Date of the deal

To be entered in dd/mm/ yyyy format.

Click on the appropriate radio button

No special characters will be


accepted

212

Note : While adding/updating the Block Deal Record, quantity cannot be less than 5,00,000 OR Trade Value (Qty *
Price) should not be less than 5,00,00,000 (Rs.).
Add new Records
When the block deal entry screen is always opened in an add more. The user can start entering the data directly. On
completing the entry click on <ADD> button to save the record.<Record saved successfully> is the message that is
displayed. The added record will be displayed in the display window on the screen and the cursor is again positioned
on the scrip code field.
Modify Existing Records
From the display window select the record which has to be modified. Modify the data and then click on the <Modify>
button to save the record.
Deleting Existing Records
From the display window select the record which needs to be deleted . Click on the <Delete> button. The record(s)
will be deleted.
Uploading the File to the Exchange
After the entry of the block deals is completed click on the <Upload> button. A file will be created and uploaded to the
Exchange. The file name will be BLOCK<dd><mm><yy>.<memberid>
Please note only one file is allowed for upload per day. If the member uploads more than one file on a particular day,
the last file uploaded will be considered for dissemination of information. The member may please ensure all the records
for the day are included in the file uploaded.
Loading a Block Deal File
If the total number of transactions are more , then the member can upload a pipe delimited text file through the load
facility. The member
Field Name

Type

Eg.

Member No

Numeric (Max 4 Digits)

0999

Scrip Code
Client Code

Numeric (6 Digits)
Alphanumeric

500410
Length 12 characters

Client Name

Alphanumeric (Max 60)

E.g. Abc123

Sale Purchase Flag

Character 1

P for Purchase,S for Sale

Quantity

Numeric

600000

Rate

Numeric

9999.99

Deal Date

dd/mm/yyyy

12/04/2004

Note: Quantity cannot be less than 5,00,000 OR the trade Value (Qty * Rate) can not be less than 5,00,00,000.

213

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20040402-31
Friday, April 02, 2004
Margin Trading
Equity

April 2, 2004
Sub : Margin Trading
Attention of the members is invited to Exchange Notice No. 20040325-19 dated March 25, 2004 wherein SEBI guidelines
on Margin Trading and Securities Lending and Borrowing as per SEBIs circular No. SEBI/MRD/SE/SU/Cir-15/04 dated
March 19, 2004 were advised. SEBI has subsequently issued a circular No. SEBI/MRD/SE/SU/Cir-16/04 dated March
31, 2004 clarifying certain aspects in the matter. A copy of the said circular is enclosed as Annexure- A.
2.

The members are advised that the Exchange has decided to permit the members of the Exchange to provide
facility of Margin Trading to their clients within the aforesaid SEBI guidelines with immediate effect.

3.

The modalities with respect to the Margin Trading facility by the members of the Exchange to their clients are
given as under:

Permission from the Exchange :


Corporate members with a Net-worth of Rs. 3.00 crores are eligible to provide the facility of Margin Trading to their
clients. Such eligible members are required to make a request to the Membership Dept. on the 1st Floor of the
Exchange seeking Exchanges permission in this regard. The request could be faxed on 022 2272 3185 with
original request delivered to the Dept. within 2 days from the date of faxed message. The members are required
to submit Net-worth certificate from their auditor in the prescribed format alongwith their application. Draft formats
of the request letter along-with the format for Net-worth certificate are enclosed as Annexure- B. The members
can submit certificate confirming Net-worth as on September 30, 2003 or as on March 31, 2004, while making the
request. However, in case the members who have given Net-worth Certificate as on September 30, 2003, they
would be required to submit Net-worth Certificate as on March 31, 2004 latest by April 30, 2004. The Membership
Dept. will grant permission to the members for providing Margin Trading to their clients.

Eligible Securities :
The securities forming part of Group I securities for computation of VaR Margins would be eligible for margin
trading facility. Currently, 367 scrips are included in Group 1. A list of these securities where the Margin Trading is
permitted during April 2004 is enclosed as

214

Annexure- C. A list of eligible securities would be periodically announced by the Exchange at the end of the month,
which would be effective from the first date of the ensuing month.

Reporting of Margin Trades :


The members are required to report Margin Trades latest by 12:00 noon on the following day. The members may
please note the following:

The members are required to report only the Margin Trades position where the transactions have been executed
on the Exchange.

The members would be required to report cumulative outstanding position of Margin Trading. The formats of
reports specified by SEBI are enclosed as Annexure- D for information of the members.

The Exchange has provided a system of reporting of these trades through Data Upload System (DUS). The
details regarding mechanism of reporting Margin Trade in DUS system as well as file structures are given as
Annexure- E.

The members are required to report the Margin Trade position in the DUS system on the next trading day only
between 9:00 a.m. and 12:00 noon.

The members are required to place suitable internal systems to ensure that they are complying with the various
SEBI stipulations relating to Maximum borrowing, total and single client exposure etc. as per the aforesaid SEBI
circular and various other circular issued in this regard by SEBI from time to time.

Utmost care should be taken to ensure accuracy of Margin Trade data in DUS system. The members may be
liable for strict disciplinary action in case of wrong/ false Margin Trade data reporting.

Disclosure of Margin Trade position by the Exchange :


Based on the reporting done by the brokers to the Exchange, the Exchange would disclose the Margin Trade
position across the market (for all its members) at the end of the day.

Half- yearly Certificates :


The members providing facility of Margin Trading to their clients would be required to submit the following certificates
:

Net-worth Certificate : The Net- worth certificate should be submitted in the format enclosed as AnnexureB to
the Membership Dept of the Exchange. The members are required to submit Net-worth certificate in the prescribed
format
confirming
Net-worth
as
on
30th September and 31st March latest by 31st October and 30th April.

Margin Trading Compliance Certificate : The books of accounts, maintained by the members, with respect to
margin trading facility offered by them would be audited. The member would be required to submit an auditors
certificate certifying the extent of compliance with the conditions of Margin Trading facility. The members are
required to submit such certificate for the half- year ending 31st March and 30th September latest by 31st October
and 30th April to Inspection Department.

Arbitration : It may be noted that the arbitration mechanism of the exchange would not be available for settlement
of disputes, if any, between the client and members, arising out of the margin trading facility. However, any
disputes relating to transactions done on the exchange, whether normal or through margin trading facility, shall be
covered under the arbitration mechanism of the exchange.

IPF/ TGF: The amounts lying in these funds would not be available for settling any loss suffered in connection with
the margin trading facility. However, the aforesaid funds will continue to be available for all transactions done on

215

the exchange, whether normal or through margin trading facility.

Inspection by the Exchange : It may please be noted that the Exchange may inspect the books of the members
to ensure compliance of the various SEBI guidelines for the Margin Trading. Also, the Exchange may advise a
member to discontinue facility of Margin Trading to their clients in the overall interest of the market.

4.

The detailed mechanism regarding Securities lending and Borrowing would be advised to the members in due
course.

5.

In case of any queries or clarifications the members may approach their Account Managers or the Helpdesk over
Extension 5000 or Shri Shirish Bhosle in ISD on DUS system over Extension.No. 8718

Kevin Desouza
CGM - Membership & Inspection.

Sanjiv Kapur
GM Clearing & Settlement

216

Annexure- A
Deputy General Manager
Market Regulation Department
Email:-sundaresanvs@sebi.gov.in
SEBI/MRD/SE/SU/Cir-16/04
March 31, 2004
The Managing Directors/ Executive Directors/Administrators of all the Stock Exchanges
Dear Sir,
SUB :- MARGIN TRADING AND SECURITIES LENDING AND BORROWING - CLARIFICATION
1.

Please refer to the SEBI Circular SEBI/MRD/SE/SU/Cir-15/04 dated March 19, 2004 on the captioned subject.

2.

Since the notified date for obtaining the new Unique Identification Number (UIN) by the intermediaries registered
with SEBI has been postponed to June 30, 2004 and some intermediaries have informed SEBI that as at present,
they are not in a position to obtain UIN for all their clients availing of margin trading facility in a short period of time
on account of logistic difficulties, it has been decided to allow a further period of 3 months, i.e. up to June 30, 2004,
to the clients who want to avail margin trading facility to obtain an UIN. Till such time the clients obtain the UIN, the
broker shall obtain suitable undertaking from the clients and do due diligence to ensure that the client is not
availing the margin trading facility from more than one broker at any point of time.

3.

The exchanges have submitted that they are in the process of getting their clearing corporation/house registered
as an intermediary under the SEBI securities lending and borrowing scheme (SLS), for handling settlement
shortages. Therefore, pending registration under SLS, the stock exchanges are advised to continue with the
existing system for handling settlement shortages. The exact date of implementation of the close-out procedure
as per the circular No.15/2004 dated 19th March, 2004 would be decided by NSE in consultation with BSE.

4.

The provisions stated under the head Section XI. Arbitration of the Model Margin Trading Agreement enclosed
as annexure 1 to the aforesaid circular, stands deleted, on account of the provisions of clause 1.10 of the circular.

5.

In addition to the above, clauses 1.5.4 and 1.5.5 of the said circular may be read as follows:

1.5.4 The maximum allowable exposure of the broker towards the margin trading facility shall be within the self imposed
prudential limits and shall not, in any case, exceed the borrowed funds and 50% of his net worth. The term
exposure will mean the aggregate outstanding margin trading amount in the books of the broker for all his
clients.
1.5.5 While providing the margin trading facility, the broker shall be prudent and also ensure that there is no concentration
on any single client. In any case, the exposure to any single client at any point of time shall not exceed 10% of the
brokers lendable resource (i.e. borrowed funds for the purpose of margin trading + 50% of net-worth)
6.

The other contents of the circular would remain unchanged.

Yours faithfully,

V S SUNDARESAN

217

Annexure - B
(On letterhead of Members of the Exchange)
Date :
To,
Membership Department,
1st Floor, Rotunda Bldg.
Dalal Street,
Mumbai.
Sub :

Application for Margin Trading and Securities Lending and Borrowing

Dear Sir,
We are desirous of providing margin-trading facilities to our clients in the Cash Segment.
In this connection, we undertake to comply with the conditions mentioned in the SEBI Circular SEBI/MRD/SE/SU/Cir15/04 dated March 19, 2004.
We also undertake to report to the Exchange on a daily basis, the amount financed by us under the Margin Trading
Facility.
A copy of Networth Certificate as on September 30, 2003*/ March 31, 2004* duly certified by the Chartered Accountant
is enclosed as Annexure 1. Networth Certificate as on March 31, 2004 would be submitted to the Exchange on or
before April 30, 2004*
You are requested to kindly permit us to provide margin trading facility to our clients.
Thanking You,

Yours faithfully,

218

Director / Authorised Signatory.


Encl : as above
* Strike out if not applicable.
Computation of Networth for the Members of the Exchange applying for Margin Trading (Minimum Requirement:
Rs. 3 Crore)
Name of the Member
Clearing No.
Statement of Networth as on
Particulars
1
2
3

Rs.

Paid-up Capital ( excluding preference share capital)


Free Reserves

Rs.

Rs.

Annexure

x
x

SUB-TOTAL A(Items 1+2)

Less :
4

Fixed assets

Pledged Securities

Members card

Non-allowable securities (unlisted securities)

Bad deliveries

Doubtful debts and advances*

10

Prepaid expenses

11

Intangible assets

12

30% of marketable securities

13

TOTAL B [Items 4 to 12]

14

NETWORTH [A (-) B]

X
X

Explanation :
CAPITAL (EXCLUDING PREFERENCE SHARE CAPITAL) + FREE RESERVES
Less : non-allowable assets

219

Annexure- D
Format of the Daily Reporting by the members to the Exchange on the amount financed by them under the Margin
Trading Facility specified by SEBI:
Name of the member
Name of Client

MAPIN No.

Clearing No.
Name of the scrip/s

Qty financed (No. of Shares)

Sl.No.

Particulars

(Rs. in lakhs)

01

Total outstanding on the beginning of the day

02

Add : Fresh exposure taken during the day

03

Less: exposure liquidated during the day

04

Net outstanding at the end of the day

SOURCES OF FUNDS (Refer to item No. 4 above)


01

Out of net worth

02

Out of borrowed funds

03

If borrowed, name of lenders and amount borrowed to be specified separately

Note : Disclosure is required to be made on or before 12 noon on the following day.

220

Amount (Rs. in lakhs)

Annexure- E
DUS USER MANUAL
MARGIN TRADING POSITION MONITORING WINDOW

Figure 1 : Margin Trading Position Monitoring Window

Figure 2 : Margin Trading Position Monitoring Window

221

How to use MARGIN TRADING POSITION MONITORING WINDOW :

Select Margin Trade pop up option from the Surveillance submenu of the Departments Main menu. This will
open Margin Trading Position Monitoring Window for you. Or using keyboard press [Alt] +D +V +M.

How to Add a record :


Select a Scrip Code. The corresponding Scrip Name for the selected scrip code can be seen in the Scrip
Name box. Enter Client Code, Client Name, MAPIN No., Quantity and Amount (in Lakhs). Click on the
Add button or from the keyboard press [Alt] + A. A message box is displayed with the message: Record
added successfully.
The record is added in the display box of the window as shown in the figures below :

Figure 3: Record added is displayed in the window.


The entire data displayed in the window can be seen by using the scroll bar of the Margin Trading Position Monitoring
Window as shown in the figure below:
Figure 4 : Use the scroll bar of see the entire data displayed in the window.

How to modify a record :


Select the record using mouse or keyboard.
All the fields of selected record can be seen in the edit boxes of the window.
Change record as required and click modify button or press [Alt] +M.
The modified record is displayed in the window in place of the record selected.

How to delete a record :


Select the record using mouse or keyboard.
All the fields of selected record can be seen in the edit boxes of the window.

222

Press Delete button or press [Alt] +D. A confirmation message is displayed to the user, Are you sure you
want to delete the record[s]?
If you click yes the record is deleted from the window.

How to Load a record :


Click on the Load button of press [Alt] +L. The LOAD FILE box is opened. Select a file name to open the file. The
input file naming convention is *.mrg.

All the proper records in the file are displayed in the window and the user gets message that the records are loaded
giving the number of records loaded from the file.
User has to prepare a pipe delimited text file , *.mrg file. The file format is given below: Please note that the amount
financed should be entered in lakhs.
MEMBERNO|CLIENTCODE|CLIENTNAME|MAPIN NO|SCRIPCODE|
Quantity Financed|Amount Financed|
E.g.997|code|nameclient|MAPIN12|500112|150|600|

How to Upload the records:


If you want to upload the records displayed in the window click the Upload button or from the keyboard press Alt

223

+U. You get the message in the message box giving the Total Amount Financed.
If you click Ok, the records in the window are uploaded and a message is displayed Margin file uploaded
successfully. If you click Cancel, the records wont be uploaded.
How to Upload Other Files :
You also have an option of uploading other files, namely, Scripwise Outstanding/Exposure file and Sources of Funds
file. For uploading, you have to select the radio button for the type of file you want to upload. After that, click Upload
Other Files button. It will invoke a Load File Dialog box. The default filter will be either MGA* or MGB* depending on
the radio button selected. If Scripwise Outstanding/Exposure radio button is selected, the default filter will be MGA*
and if Sources of Funds radio button is selected, the default filter will be MGB*. Once you select a file, the file will
be uploaded. The uploaded file name will be either MGA<dd><mm><yyyy>.xxxx or MGB<dd><mm><yyyy>.xxxx, where

<dd>, <mm>, <yyyy> current day, month and year.


xxxx Member Number.
The MGA* file should be a pipe delimited text file in the following format.
Date|MemberCode|ScripCode|Total BOD Outstanding|Fresh Exposure|Exposure Liquidated|Net Outstanding at EOD
In all there are 7 fields in the MGA* file.
The MGB file should also be a pipe delimited text file in the following format
DATE|MEMBERCODE|OWN OR LENDER NAME|AMOUNT BORROWED
In all there are 4 fields in the MGB file. If the members is using his own funds then he has to mention OWN in the 3 field.
Or else the lenders name.
Please note that the file formats which are mentioned are adhered to or else the data will be rejected.

224

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20041029-13
Friday, October 29, 2004
Information regarding Client funding by the Members
Equity

The members of the Exchange are hereby informed that the Securities and Exchange Board of India vide its letter
dated July 16, 2004 addressed to the Exchange, has directed the members to disclose on the Exchanges website on
a monthly basis, the following details:
Quote :
Extent of client funding by the broker and the number of clients for whom such funding has been made (for the cash
segment only). The client funding for such purposes shall include the margin and settlement obligations of a client
funded by the member/broker.
Unquote
Members are requested to use the DUS software for entering all the requisite data. This software will be available
w.e.f. November 1, 2004, for reporting data related to the month of October 2004. Members should note that they can
enter the data till November 8, 2004 only.
OPERATIONAL INSTRUCTIONS :
After logging on to the DUS software, the member has to select the Client funding option from the Inspection option
under the Department Menu.

Data Item

Description

Total Amount Funded

The member has to enter the total amount funded by him to his various
clients for the reporting month.

Total Settlement Amount

The member has to enter the total settlement obligation of all the clients
who have been funded by him for thereporting month.

Total Margin Obligation

The member has to enter the total margin obligation of all the clients who
have been funded by him for the reporting month.

No. Of Clients

The number of clients who have been funded during the reporting month.

In case of any queries/ clarification, members may contact the under mentioned officials:
NAME

INTERCOM NO.

Ms. Srividhya Subramanian

8404

Mr. Shirish Bhosle (For system related queries only)

8718

Devika Shah
General Manager
Membership & Inspection

Mayank Mehta
Asst. General Manager
Inspection

225

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20050824-16
Wednesday, August 24, 2005
Information regarding Client funding by the Members for July 2005
General

Members of the Exchange are requested to refer Exchange Notice no. 20041029 13 dated October 29, 2004 on the
above-mentioned subject. In continuation of the above notice, Members are hereby informed that SEBI vide letter dated
June 29, 2005 advised Members that the disclosure of their net exposure towards their clients on a particular day
should be maximum/peak exposure of funding by the Members for their clients. The disclosure shall include the temporary
funding of the Member for their clients towards margin (retail clients), settlement obligations (both institutional and retail
clients) and margin trading as also the total. (i.e the maximum/peak exposure of funding by the member broker for their
clients).
Members of the Exchange are requested to report the data in the modified version of the DUS software (Ver.11.20)
available w.e.f August 24, 2005 for entering all the requisite data for the month of July 2005 ONLY in the manner as
explained herein below under operational instructions. Members should note that they could enter the data till August 30,
2005 upto 6 p.m.
Operational Instructions :
After logging on to the DUS software, the member has to select the Client funding option from the Inspection option
under the Department Menu.
Data Item

Description

Amount Funded as Margin Obligation on behalf of


Clients ( A )

The amount funded means and includes members own money


put towards clients margin obligations. The amount entered
should correspond to the day when the total funding under
column (E) is at its peak/maximum and the amount entered in
this column together with the amount entered in(B), (C) and
(D) should add upto the maximum/ peak(total funding) entered
under column (E).

Amount Funded as Settlement Obligations for


Institutional Clients ( B )

The member has to enter the amount funded towards


settlement obligations of the Institutional Clients who have
been funded by him for the reporting month. If this column is
not applicable then the member has to enter 0. The amount
entered should correspond to the day when the total funding
under column (E) is at its peak/maximum and the amount
entered in this column together with theamount entered in
(A), (C) and (D) should add upto the maximum/ peak (total
funding) entered under column (E).

Amount Funded as Settlement Obligations for


Non-Institutional Clients( C )

The member has to enter the amount funded towards


settlement obligations of the Non-institutional clients who NonInstitutional Clients( C ) have been funded by him for the
reporting month. If this column is not applicable then the
member has to enter 0. The amount entered should
correspond to the day when the total funding under column
(E) is at its peak/maximum and the amount entered in this
Non-Institutional Clients( C )column together with the amount
entered in (A), (B) and (D) should add upto the maximum/
peak(total funding) entered under column (E).

Amount Funded under Margin Trading facility ( D )

Amount funded by the member to clients under the option of


Margin Trading. If this column is not applicable then the
member has to enter 0. The amount entered should
correspond to the day when the total funding under column
(E) is at its peak/maximum and the amount entered in this

226

column together with the amount entered in (A), (B) and (C)
should add upto the maximum/peak(total funding) entered
under column (E).
Total Amount Funded Maximum/peak of sum
( A + B + C + D)on a particular day

It will be the Maximum/peak[sum total of Amount funded as


Margin total of Obligation on behalf of Clients + Amount funded
as Settlement Obligations for Institutional Clients + Amount
Funded as Settlement Obligations for Non-Institutional Clients
on a particular day + Amount Funded under Margin Trading
facility] for a particular day of the month.

Total No. of Unique Clients

This column will include the total number of clients who have
been funded under Margin obligation, Settlement obligation
for institutional clients, Settlement obligation for noninstitutional clients and under Margin trading facility. If any
particular client has been funded under more than one
category, then the client will counted only once so as to avoid
duplication.

The Members who have even a single instance of funding extended to their clients as above should compulsorily upload
the information. Members who have no instances of funding extended to their clients need not upload any information
in this regard.
In case of any queries/ clarification, members may contact the under mentioned officials:
NAME

INTERCOM NO.

Ms. Shaila Valsan

8316

Mr. Sanjay Pai

8356

Mr. Hrishikesh Sukhtantkar (For system related queries only)

8718

P.K.Ramesh
Dy. General Manager
DOSS

Kritika Daga
Asst. General Manager
DOSS

227

Notice no
Notice date
Subject

: 20051216-8
: Friday, December 16, 2005
: Information regarding client funding by the Trading
Members.
Segment Name : General

Information regarding client funding by the Trading Members.


Attention of the Trading Members of the Exchange is drawn to Exchange Notice No.-20041029-19 dated October 29,
2004 and Exchange Notice No. 20050824-16 dated August 24, 2005 regarding the captioned subject. The disclosure
of client funding data by the Trading Members is disseminated through the Exchange website, by the 10th working day
of every month.
In order to mitigate the procedural difficulties involved in reporting the funding done by brokers with respect to
transactions of small quantities executed on behalf of large no. of clients, the Securities & Exchange Board of India
vide letter no. MRD/Policy/AT/55628/2005 dated December 13, 2005 has clarified that Member brokers may be advised
to exclude the funding done by them with respect to contracts of value Rs.1 lakh or below, executed by them on behalf
of their clients for the purpose of the aforesaid requirements w.e.f December 2005.
The Trading Member are requested to take note of the above clarifications of SEBI and may therefore exclude the
funding done by them with respect of Contracts of value upto Rs. 1 lakh on a particular day while disclosing the client
funding data.
Trading Members may also note that all other provisions/reporting requirements as specified in the above referred
notices would remain unchanged.

P.K.Ramesh
Dy. General Manager
Surveillance & Supervision

Pankaj Gupta
Asst. General Manager
Surveillance & Supervision

228

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20060221-10
Tuesday, February 21, 2006
Penalty Norms for not uploading the client funding details.
Equity

As per the requirement of SEBI Trading Members are required to disclose their peak client funding during the month,
on a monthly basis after excluding the contract notes of upto Rs. 1 lakh. This disclosure includes the temporary funding
of the Trading Member for their clients towards settlement obligations, Margins and Margin trading.
In order to ensure that all active members are reporting the client funding details on a monthly basis the Exchange,
has decided to impose penalty on Trading Members who are not uploading the client funding Details within in the
prescribed time.
The penalty structure for not reporting client funding details is as under :Sr. No.

Particulars

Fines/Penalties

1.
2.

Not reporting the client funding data by due date.


Consecutive defaults in reporting the data of client funding
data for subsequent months.

Rs. 1000/Rs. 1,500/-

All the Trading members would now be required to compulsorily upload the client funding data in the DUS software
even if funding during the month is zero. Failure to upload the data within the prescribed time limit by the members
would attract penalty as per the norms.
Those members who do not have a system in place to calculate and upload the client funding details are advised to
have a system in place to compute and upload the client funding details. The penalty for not reporting the client funding
details would be applicable for reporting the client funding from the month of April 2006 for which members would
upload the details in the month of May 2006.
The Trading members are advised to take note of the above.
In case the Trading Members require any clarification, they may please contact any of the following: NAME
Ms Shaila Valsan
Ms Amita Tarwale
Mr. Yogesh Betsur

INTERCOM NO.
8316
8262
8297

Sanjiv Kapur
General Manager
Surveillance & Supervision

Pankaj Gupta
Asst. General Manager
Surveillance & Supervision

229

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20040927-13
Monday, September 27, 2004
Securities Transaction Tax (STT) - Equity Segment
Equity

To: All Members of the Exchange


SUBJECT : SECURITIES TRANSACTION TAX- EQUITY SEGMENT
This has reference to the Securities Transaction Tax (STT) introduced in Chapter VII of the Finance (No. 2) Act 2004 and
SEBI circular No MRD/DoP/SE/Cir-32/04 dated September 23, 2004 in this regard (copy enclosed refer Annexure III).
As per the Finance (No. 2) Act 2004, STT on the transactions executed on the Exchange will be as under :
Sr No.

Taxable Securities Transactions

Rate

Payable by

(1)

(2)

(3)

(4)

1.

Purchase of an equity share in a company or a unit of


an equity oriented fund, where

0.075 percent

Purchaser

0.075 percent

Seller

0.015 percent

Seller

(a) the transaction of such purchase is entered into in a


recognised stock exchange; and
(b) the contract for the purchase of such share or unit is
settled by the actual delivery or transfer of such share or unit.
2.

Sale of an equity share in a company or a unit of an


equity oriented funds, where
(a) the transaction of such sale is entered into in a recognised
stock exchange; and(b) the contract for the sale of such share
or unit is settled by the actual delivery or transfer of such
share or unit.

3.

Sale of an equity share in a company or a unit of an equity


oriented fund, where (a) the transaction of such sale is entered
into in a recognised stock exchange; and (b) the contract for the
sale of such share or unit is settled otherwise than by the actual
delivery or transfer of such share of unit.

Members may note that the Exchange will adopt the following procedures for calculation, levy and collection of STT:
a)

Normal market netted transactions

STT is applicable for all transactions.

STT shall be determined at the end of each trading day.

All the transactions shall be identified based on the trading client code placed by the members at the time
of order entry on the trading system of the Exchange and as may be modified by the member using the
client code modification facility provided by the Exchange within the prescribed time.

4.

Members may note that under the draft STT Rules 2004, the value of taxable securities transaction shall be
determined with respect to the trade executed under a particular trading client code. Therefore the exchange
shall only reckon the client code entered by the member while placing the order or as may be modified
within the prescribed time. It is therefore imperative that members exercise extreme caution and diligence
while entering the client code at the time of entering an order.

5.

For each trading client code, all the buy and sell transactions for a trading day shall be aggregated for each
security.

230

6.

The difference between the buy quantity and the sell quantity shall denote the quantity that shall be required
to be settled by actual delivery.

7.

The buy or sell quantity that has been offset shall denote the quantity that shall be settled other than by
actual delivery.

8.

The transactions that are settled by actual delivery or other than by actual delivery shall be valued at the
volume weighted average price calculated for that client.

9.

Volume weighted average price is calculated as follows: For each trading client code and a security it is the
total traded value divided by the total traded quantity, where trade value is trade price multiplied by trade
quantity. This price shall be rounded off to the nearest paisa.

10.

In respect of transactions that are required to be settled by actual delivery, the value of the actual delivery
transactions shall be determined as, the quantity that is required to be settled by actual delivery multiplied
by the volume weighted average price. On this value, the STT rate as prescribed shall be applied to determine
the STT liability.

11.

In respect of transactions that are to be settled other than by actual delivery, the value of the transactions
that are settled other than by actual delivery shall be determined as the quantity that is to be settled other
than by actual delivery multiplied by the volume weighted average price. On this value, the STT rate as
prescribed shall be applied to determine the STT liability.

12.

A sum total of all such STT calculated for different securities transacted by a client shall be the total STT
liability for the client for that trading day.

13.

STT payable by the member shall be the sum total of STT payable by all his clients.

b) Trade for trade transactions


1

STT is applicable for all transactions.

STT shall be determined at the end of each trading day.

All the transactions shall be identified based on the trading client code placed by the members at the time
of order entry on the trading system of the Exchange and as may be modified by the member using the
client code modification facility provided by the Exchange within the prescribed time.

4.

Members may note that under the draft STT Rules 2004, the value of taxable securities transaction shall be
determined with respect to the trade executed under a particular trading client code. Therefore the exchange
shall only reckon the trading client code entered by the member while placing the order or as may be
modified within the prescribed time. It is therefore imperative that members exercise extreme caution and
diligence while entering the trading client code at the time of entering an order. Members are also advised
to carry out client code modification, if any within the prescribed time. The exchange shall not entertain any
request for modification thereafter.

5.

Each trade shall be considered to be settled by actual delivery.

6.

Each trade shall be valued at the actual trade price and the trade value shall be the trade price multiplied by
the trade quantity.

7.

STT rate as prescribed shall be applied on the trade value to determine the STT liability for each transaction.

8.

A sum total of all such STT calculated for different securities transacted by a client shall be the total STT
liability for the client for that trading day.

231

9.
c)

STT payable by the member shall be the sum total of STT payable by all his clients.
Auction transactions

1.

STT is applicable for all transactions.

2.

STT shall be determined at the end of each trading day.

3.

Sale transactions in the auction session shall be identified based on the trading client code placed by the
members at the time of order entry on the trading system of the Exchange and as may be modified by the
member using the client code modification facility provided by the Exchange within the prescribed time.

4.

Members may note that under the draft STT Rules 2004, the value of taxable securities transaction shall be
determined with respect to the trade executed under a particular trading client code. Therefore the exchange
shall only reckon the trading client code entered by the member while placing the order or as may be
modified within the prescribed time. It is therefore imperative that members exercise extreme caution and
diligence while entering the trading client code at the time of entering an order. Members are also advised
to carry out client code modification, if any within the prescribed time. The exchange shall not entertain any
request for modification thereafter.

5.

Each trade shall be considered as quantity that shall be required to be settled by actual delivery.

6.

For each sale transaction, each trade shall be valued at the actual trade price and the trade value shall be
the trade price multiplied by the trade quantity.

7.

For each buy transaction, each trade shall be valued at the weighted average price as is being announced
by the Exchange currently.

8.

STT rate as prescribed shall be applied on the trade value to determine the STT liability for each transaction.
A sum total of all such STT calculated for different securities transacted by a client shall be the total STT
liability for the client for that trading day.

9.

STT payable by the member shall be the sum total of STT payable by all his clients.

Information of STT to members


A report shall be provided to the members at the end of each trading day. This report shall contain information on the
total STT liability, client wise STT liability and also the detailed computations for determining the client wise STT liability.
The format of the report is given at Annexure I.
Client Code Modifications
As explained above, since the Exchange shall be reckoning the client code entered by the members, members are
advised to carry out client code modifications, if any, within the prescribed time. The Exchange shall not
entertain any request for modification thereafter.
Payin of funds
Members shall be required to pay the STT on T+2 day. The STT amount shall be collected as per the timelines stipulated
for the funds payin. A separate transaction shall be created and the monies shall be collected from the settlement
account of members through their clearing banks as per the process currently followed in respect of settlement
obligations.
Failure to pay funds
Non-payment of STT will be treated as non-fulfillment of settlement obligations for the purpose of all consequential
actions against the member.

232

Information of STT to clients


The contract note should specify the total securities transaction tax for the transactions mentioned therein. Members
shall issue the STT details as provided by the Exchange to their respective clients in the format given at Annexure II,
along with the contract note for the transactions executed on the Exchange. Members should ensure that this Annexure
should contain the same amount of STT as specified in the daily reports downloaded to them by the Exchange. However,
in respect of institutional clients the STT details statement may be given separately.
Members are also advised to peruse the STT draft rules annexed to the SEBI circular MRD/DoP/SE/Cir-32/04
dated 23/9/2004 which is also available on the website of SEBI. i.e. http://www.sebi.gov.in. The members may
note that the provisions of Finance (No. 2) Act and Rules on STT will prevail.
Should you need any clarifications on the subject matter you may kindly contact following officials on board lines i.e.
022- 22721233/34
Queries

Contact Person

Department

Extension No.

System related Queries and levy,


calculation of STT

Ms. Tejal Desai

ISD

8253

Collection of STT from members

Mr. Prashant Navadgi

Finance & Accounts

8558

Settlement related queries

Mr. Ravindra Palande


Ms Sheela Anjaria

Clearing & Settlement

8308
8149

P P Kaladharan
General Manager-ISD

S S Bolar
General Manager-Finance & Accounts

233

Annexure I
File Format for Memberwise/Scripwise/Clientwise S.T.T.: Pipe Separated :

1)

File Name : CLNTSTTddmmyy.xxx


where dd day
mm month
yy year
xxx Member code
Field

Length

Type

Description

Date

Character

Ddmmyyyy

Member Code

Numeric

Scrip Code
Group Code
Client Code
Mapin No
Pan No
TranType

6
2
11
9
10
1

Numeric
Character
Character
Character
Character
Character

Trans SettlNo

12

Character

WAP Rate

Numeric

Purchase Delivery Quantity


Purchase Delivery Value

9
13

Numeric
Numeric

Sale Delivery Quantity

Numeric

Sale Delivery Value

13

Numeric

Non-Delivery Quantity

Numeric

Non-Delivery Value

13

Numeric

Value in paisa

STT on Purchase Delivery


STT on Sale delivery

11
11

Numeric
Numeric

Value in paisa
Value in paisa

STT on Non-Delivery

11

Numeric

Value in paisa

234

NNormal A Auction BBad Delv


Auction I Institution
Xxx/yyyyyyyy for whichTrading
Auction/Bad Delivery Auction is
conducted
Value in paisa(WAP rate applicable for
only net settlement)
Value in paisa
Value in paisa

2)

File Format for Memberwise/Clientwise S.T.T.: Pipe Separated :


File Name: MBRSTTddmmyy.xxx
where dd day
mm month
yy year
xxx Member code

Control record: Member level STT information


Field

Length

Type

Remarks

Date

Character

ddmmyyyy

Member code

Numeric

Total STT

12

Numeric

Value in paisa

Type

Description
ddmmyyyy

Detail record - Client level STT information


Field

Length

Date

Character

Client code

11

Character

Total STT

12

Numeric

235

Value in paisa

Annexure II
Statement of Securities Transaction Tax for equity share in a company or a unit of an equity-oriented fund to be
given along with the Contract notes to clients by the members.
Stock Exchange
Stock Broker Code

Stock Broker Name

Trading Client Code

Trading Client Name

Trading Client PAN

Trading Client MAPIN

Contract Note No.

Contract Note Date

Serial No.

Security

Transactions settled
by Delivery Purchase
Qty

Price

Value

STT

Transactions settled
by Delivery Sale
Qty

Price

Value

STT

Transactions settled
other than by Delivery
Qty

Price

Value

Total STT

STT

TOTAL

For

Place :
Date :

Authorised Signatory

236

Annexure -III
DEPUTY GENERAL MANAGER
MARKET REGULATION DEPARTMENT
MRD/DOP/SE/CIR-32/04
September 23, 2004
1.

The Executive Directors/Managing Directors/Administrators of All Stock Exchanges

2.

All Mutual Funds registered with SEBI

3.

Association of Mutual Funds in India (AMFI)

Dear Sirs/Madam,
Sub : Securities Transaction Tax (STT) Draft Rules, 2004
1.

Please refer to circular No.MRD/DoP/SE/Cir-28/2004 dated August 23, 2004 on the captioned subject.

2.

Pursuant to the enactment of the Finance (No.2) Act, 2004, the Government of India is expected to notify the
Securities Transaction Tax Rules, 2004, very shortly. Meanwhile, in order to facilitate the stock exchanges, their
members and mutual funds to put in place the necessary systems and procedures for proper implementation, the
draft rules on the captioned subject along with the proposed format of the necessary forms are enclosed.

3.

Accordingly, the stock exchanges, their members and mutual funds are hereby advised to ensure that necessary
software and procedures for the levy, collection and remittance of STT are put in place immediately in accordance
with the enclosed draft Rules.

Yours faithfully,

V S SUNDARESAN
Encl : Copy of draft Rules along with the proposed format of forms.

237

SECURTIES TRANSACTION TAX (DRAFT) RULES


1.

2.

Short title and commencement (1)

These rules may be called the Securities Transaction Tax (draft) Rules

(2)

They shall come into force on the day of, 2004.

Definitions (1)

In these rules, unless the context otherwise requires,-

(a)

Act means the Finance (No.2) Act, 2004 ( 29 of 2004);

(b)

authorised bank means any bank as may be appointed by the Reserve Bank of India as its agent under
the provisions of sub-section (1) of section 45 of the Reserve Bank of India Act, 1934 (2 of 1934);
Form means a Form set out in the Appendix hereto.

(c)
(2)

3.

Words and expressions used but not defined in these Rules and defined in the Act, or the Securities Contracts
(Regulation) Act, 1956, or the Income-tax Act, 1961, shall have the meanings respectively assigned to them
in those Acts.

Value of taxable securities transaction


For the purposes of clause (c) of section 99 of the Act, the value of a taxable securities transaction, being a
purchase or sale of an equity share in a company or a unit of an equity oriented fund, entered into in a recognised
stock exchange, shall be determined in the following manner, namely:(a)

where the equity share or unit is purchased or sold by a person on a trading day in the netted settlement
mode,-

(i)

the quantity of shares or units purchased or sold in each trade in that equity share or unit executed by the
person on that day, shall be multiplied by the price at which the trade is executed, to determine the trade
value of each such trade;

(ii)

the aggregate trade value of all trades in the equity share or unit by the person on that day shall be arrived
at by totalling the trade values determined under sub-clause (i);

(iii)

the aggregate trade value arrived at under sub-clause (ii), shall be divided by the total quantity of the equity
share or unit traded by the person on that day, to determine the volume weighted average price of that
equity share or unit for that person for that day;

(iv)

such volume weighted average price (rounded off to the nearest paisa) shall be taken to be the value of the
taxable securities transaction relating to the equity share or unit.Explanation - For the removal of doubts, it
is hereby clarified that the determination of the value of the taxable securities transaction under this clause
in a case where the equity share or unit is purchased or sold through a member of the stock exchange, shall
be made with reference to the trades executed in the equity share or unit under a particular client Code
through that member;

(b)

where the equity share or unit is purchased or sold by a person in the trade-for-trade settlement mode, the
value of the taxable securities transaction shall be the price at which the equity share or unit is purchased
or sold;

(c)

where the equity share or unit is purchased in the auction settlement mode, the value of the taxable securities
transaction shall be the volume weighted average price of the equity share or unit, determined in the manner
specified in clause (a), in respect of all trades in that equity share or unit carried out in the auction session;

238

(d)

where the equity share or unit is sold in the auction settlement mode, the value of the taxable securities
transaction shall be the price at which the equity share or unit is sold.

Explanation - For the purposes of this rule

4.

(i)

netted settlement mode means a mode of settlement of transactions in a recognised stock exchange
where the quantity of an equity share or unit purchased by a person on a trading day is set off against the
quantity of that equity share or unit sold by him on that day and actual delivery is required to be taken or
given by him as the case may be, only in respect of the net quantity purchased or sold as has not been so
set off;

(ii)

trade-for-trade settlement mode means a mode of settlement of transactions in a recognised stock exchange
where each trade is compulsorily required to be settled by actual delivery;

(iii)

auction settlement mode means a mode of settlement, in a stock exchange, of transactions carried out in
the auction session, being a trading session in which the stock exchange makes purchases of equity shares
or units through an auction process initiated by it, so as to settle transactions where there has been a failure
to deliver such equity shares or units which were required to be delivered.

Rounding off value of taxable securities transaction, securities transaction tax, etc. The value of taxable securities transaction and the amount of securities transaction tax, interest and penalty
payable, and the amount of refund due, under the provisions of Chapter VII of the Act shall be rounded off to the
nearest rupee and, for this purpose, where such amount contains a part of rupee consisting of paise then, if such
part is fifty paise or more, it shall be increased to one rupee and if such part is less than fifty paise it shall be
ignored.

5.

Person responsible for collection and payment of securities transaction tax in case of a Mutual Fund
In the case of a Mutual Fund, the person responsible for collection and payment of securities transaction tax in
accordance with sub-sections (2), (3) and (4) of section 100 of the Act, shall be the trustee of the Fund, or such
other person managing the affairs of the Mutual Fund as may be duly authorised by the trustee in this behalf.

6.

Payment of Securities Transaction Tax Every recognised stock exchange, or, as the case may be, the trustee of every Mutual Fund or the person authorised
by the trustee, who is required to collect and pay securities transaction tax under section 100, shall pay the
amount of such tax to the credit of the Central Government by remitting it into any branch of the Reserve Bank of
India or of the State Bank of India or of any authorised bank accompanied by a securities transaction tax challan.

7.

Return of taxable securities transactions (1)

The return of taxable securities transactions required to be furnished under sub-section (1) of section 101 of
the Act shall,
(a)

in the case of a recognised stock exchange, be in Form No. 1 and be verified in the manner indicated
therein;

(b)

in the case of a Mutual Fund, be in Form No. 2 and be verified in the manner indicated therein.

(2)

The details required to be furnished in the schedules to Form No. 1 and Form No. 2 referred to in sub-rule
(1) shall be furnished on a computer media, in accordance with the following, -

(a)

the computer media conforms to the following specifications:i)

CD ROM of 650 MB capacity or higher capacity; or

ii)

4mm 2GB/ 4GB (90M/ 120M) DAT Cartridge, or

239

iii)

Digital Video Disc;

(b)

if the data relating to the schedules is copied using data compression or backup software utility, the
corresponding software utility or procedure for its decompression or restoration shall also be furnished;

(c)

the return shall be accompanied by a certificate regarding clean and virus free data.

(3)

In the case of a Mutual Fund, the return referred to in sub-rule (1) shall be furnished by the trustee of the Fund, or
such other person managing the affairs of the Mutual Fund as may be duly authorised by the trustee in this behalf.

(4)

The return of taxable securities transaction entered into during a financial year shall be furnished on or before the
30th June immediately following that financial year.

8.

Return by whom to be signed The return under sub-section (1) of section 101 of the Act shall be signed and verified
(a)

(b)

9.

in the case of a recognised stock exchange


(i)

being a company, by the managing director or a director there of;

(ii)

in any other case, by the principal officer thereof.

in the case of a Mutual Fund, by the trustee or such other person managing the affairs of the Mutual Fund
as may be duly authorised by the trustee in this behalf.

Time limit to be specified in the notice calling for return of taxable securities transaction Where an assessee fails to furnish the return under sub-section (1) of section 101 of the Act within the time
specified in sub-rule (4) of rule 7, the Assessing Officer may issue a notice to such person requiring him to furnish,
within thirty days from the date of service of the notice, a return in the Form prescribed in rule 7 as applicable to
him and verified in the manner indicated therein.

10.

Notice of demand Where any tax, interest or penalty is payable in consequence of any order passed under the provisions of Chapter
VII of the Act, a notice of demand in Form No. 3 specifying the sum so payable shall be served upon the assessee.

11.

Prescribed time for refund of tax the person from whom such amount was collected Every assessee, in case any amount is refunded to it on assessment under sub-section (2) of section 102 of the
Act, shall, within thirty days from the date of receipt of such amount, refund the same to the concerned person
from whom it was collected.

12.

13.

Form of Appeals to Commissioner of Income-tax (Appeals) (1)

An appeal under sub-section (1) of section 110 to the Commissioner (Appeals) shall be made in Form No.
4.

(2)

The form of appeal prescribed by sub-rule (1), the grounds of appeal and the form of verification appended
thereto relating to an assessee shall be signed and verified by the person who is authorised to sign the
return of taxable securities transactions under rule 8, as applicable to the assessee.

Form of appeals to Appellate Tribunal (1)

An appeal under sub-section (1) or sub-section (2) of section 111 of the Act to the Appellate Tribunal shall
be made in Form No. 5, and where the appeal is made by the assessee, the form of appeal, the grounds of
appeal and the form of verification appended thereto shall be signed by the person specified in rule 8.

240

APPENDIX
FORM NO. 1
[See rule 7 of Securities Transaction Tax Rules, 2004]

RETURN OF TAXABLE SECURITIES TRANSACTIONS


STTS 1
For recognised stock exchanges

ACKNOWLEDGEMENT
For Office use only
Receipt No. .....................
Date .........................

Please follow instructions.


Use block letters only.

1.

NAME OF THE STOCK EXCHANGE

ADDRESS OF THE STOCK EXCHANGE

3.

PERMANENT ACCOUNT NUMBER (PAN)

4.

FINANCIAL YEAR (TRANSACTIONS


RELATING TO WHICHARE REPORTED)

5.

WARD/CIRCULE/RANGE
CODE*
(Schedule)
01.

(A[7])

02.

(A[8])

03.

(A[9])

04.

(B[8])

05.

(B[9])

Seal and Signature of Receiving


Official

SVALUE (IN RS.)

TOTAL
6.

VALUE OF TAXABLE SECURITIES TRANSACTIONS

7.

TOTAL SECURITIES TRANSACTIONTAX COLLECTIBLE


CODE* (Schedule)
VALUE (IN RS.)
01.

(A[10])

02.

(A[11])

241

03.

(A[12])

04.

(B[10])

05.

(B[11])

TOTAL
(Schedule)
8.

TOTAL SECURITIES TRANSACTION TAX COLLECTED


(C[5])

9.

TOTAL SECURTIES TRANSACTION TAX PAID


(C[6])

10. SECURITIES TRANSACTION TAX PAYABLE/ REFUNDABLE (7-9)

11. INTEREST PAYABLE UNDER SECTION 104


(C[7])

12. INTEREST PAID


(C[8])

VERIFICATION
I,
(full name in block letters), son/ daughter of
solemnly declare that to the best of
my knowledge and belief the information given in this return and schedules accompanying it is correct and complete
and that the total value of taxable securities transactions and other particulars shown therein are truly stated and are
in accordance with provisions of Chapter VII of the Finance (No.2) Act, 2004 and Securities Transaction Tax Rules,
2004.
I further declare that I am making this return in my capacity as
return and verify it.

and I am also competent to make this

Date
Place

(Name and Signature)

242

*CODES IN RESPECT OF TAXABLE SECURITIES TRANSACTION


S.NO

NATURE OF TRANSACTION

CODE

1.

Purchase of an equity share in a company or a unit of an equity oriented fund, where

01

(a)
(b)
2.

the transaction of such purchase is entered into in a recognised stock exchange; and
the contract for the purchase of such share or unit is settled by the actual delivery or
transfer of such share or unit.

Sale of an equity share in a company or a unit of an equity oriented fund, where


(a)

the transaction of such sale is entered into in a recognised stock exchange; and

(b)

the contract for the sale of such share or unit is settled by the actual delivery or transfer
of such or unit.

02

3.

Sale of an equity share in a company or a unit of an equity oriented fund, where


(a) the transaction of such sale is entered into in a recognised stock exchange; and
(b) the contract for the sale of such share or unit is settled otherwise than by the actual
delivery or transfer of such share or unit.

03

4.

Sale of a derivative being option in securities, where the transaction of such sale is entered
into in a recognised stock exchange.

04

5.

Sale of a derivative being futures, where the transaction of such sale is entered into in a
recognised stock exchange.

05

243

APPENDIX
FORM NO. 1
[See rule 7 of Securities Transaction Tax Rules, 2004]
RETURN OF TAXABLE SECURITIES TRANSACTIONS
STTS 2
For Mutual Funds

ACKNOWLEDGEMENT
For Office use only

Please follow instructions.


Use block letters only.

Receipt No. .....................


Date .........................

Seal and Signature of Receiving


Official

1.

NAME OF THE STOCK EXCHANGE

2.

DATE OF REGISTRATION OF TRUST DEED FOR THE MUTUTAL FUND UNDER THE INDIAN REGISTERATION ACT, 1908

3.

NAME AND ADDRESS OF THE TRUSTEES - SCHEDULE - A

4.

NAME AND ADDRESS OF ASSET MANAGEMENT COMPANY FOR THE FUND

5.

PERMANENT ACCOUNT NUMBER (PAN) OF ASSET MANAGEMENT COMPANY FOR THE FUND

6.

FINANCIAL YEAR (TRANSACTIONS


RELATING TO WHICHARE REPORTED)

7.

WARD / CIRCULE / RANGE

8.

NUMBER OF EQUIT ORIENTED FUNDS

9.

(Schedule)
VALUE OF TAXABLE
SECURITIES TRANSACTIONS

(IN Rs.)

10. TOTAL SECURITIES TRANSACTION


TAX COLLECTIBLE
(B[8])
11. TOTAL SECURITIES TRANSACTION
TAX COLLECTED
(C[6])
12. TOTAL SECURITIES TRANSACTION
TAX PAID
(C[7])
13. SECURITIES TRANSACTION TAX
PAYABLE/REFUNDABLE (10-12)

244

14. INTEREST PAYABLE UNDER


SECTION 104
(C[8])
15. INTEREST PAID

(C[9])

VERIFICATION
I,

(full name in block letters), son/ daughter of

solemnly declare that to the best of my knowledge and belief the information given in this
return and schedules accompanying it is correct and complete and that the total value of taxable securities transactions
and other particulars shown therein are truly stated and are in accordance with provisions of Chapter VII of the Finance
(No.2) Act, 2004 and Securities Transaction Tax Rules, 2004.
I further declare that I am making this return in my capacity as
and verify it.

and I am also competent to make this return

Date
Place
( Name and Signature )

245

FORM NO. 3
[See rule 10 of Securities Transaction Rules, 2004]
Notice of demand
To
Status
PAN
1.

This is to give you notice that for the financial year


a sum of Rs.
given on the reverse, has been determined to be payable by you.

, details of which are

2.

The amount should be paid to the Manager, authorized bank/ State Bank of India/ Reserve Bank of India at
within 30
days of the service of this notice. The previous approval of the Additional/ Joint
Commissioner of Income-tax has been obtained for allowing a period of less than 30 days for the payment of the
above sum. A challan is enclosed for the purpose of payment.

3.

If you do not pay the amount within the period specified above, you shall be liable to pay simple interest at one per
cent for every month or part of a month from the date commencing after end of the period aforesaid in accordance
with section 220(2) of the Income-tax Act read with section 109 of the Finance (No.2) Act, 2004.

4.

If you do not pay the amount of the tax within the period specified above, penalty (which may be as much as the
amount of tax in arrear) may be imposed upon you after giving you a reasonable opportunity of being heard in
accordance with section 221 of the Income-tax Act read with section 109 of the Finance (No.2) Act, 2004.

5.

If you do not pay the amount within the period specified above, proceedings for the recovery thereof will be taken
in accordance with section 222, 227, 229 and 232 of the Income-tax Act, 1961 read with section 109 of the
Finance (No.2) Act, 2004.

6.

If you intend to appeal against the assessment/ penalty, you may present an appeal under section 110 of Chapter
VII of the Finance (No.2) Act, 2004, to the Commissioner of Income-tax (Appeals)
within thirty days of
the receipt of this notice, in Form NO. 4 duly stamped and verified as laid down in that form.

7.

The amount has become due as a result of the order of the Commissioner of Income-tax (Appeals) under section
110 of the Chapter VII of the Finance (No.2) Act, 2004. If you intend to appeal against the aforesaid order, you may
present an appeal under section 111 of Chapter VII of the said Act to the Income-tax Appellate Tribunal within
sixty days of the receipt of that order, in Form No. 5, duly stamped and verified as laid down in that form.

Place
Date
Assessing Officer
Address
Notes:
1.

Delete in appropriate paragraphs and words.

2.

If you wish to pay the amount by cheque, the cheque should be drawn in favour of the Manager, authorized bank/
State Bank of India/ Reserve Bank of India.

3.

If you intend to seek extension of time for payment of the amount or propose to make the payment by instalments,
the application for such extension or as the case may be, permission to pay by instalments, should be made to the
Assessing Officer before the expiry of the period specified in paragraph 2. Any request received after the expiry of
the said period will not entertained in view of the specific provisions of section 220(3) of the Income-tax Act.

246

FORM NO. 4
[See rule 12 of Securities Transaction Rules, 2004]
Appeal to the Commissioner of Income-tax (Appeals)
Designation of the Commissioner (Appeals)
*No

of

1.

Name and address of the appellant

2.

Permanent Account Number

3.

Financial year in connection with which the appeal is preferred

4.

Assessing Officer passing the order appealed against

5.

Section and sub-section of the Chapter VII of the Finance (No.2) Act, 2004, under which the Assessing Officer
passed the order appealed against and the date of such order

6.

Where the appeal relates to any assessment or penalty, the date of service of the relevant notice of demand

7.

In any other case, the date of service of the intimation of the order appealed against

8.

Section and sub-section of the Chapter VII of the Finance (No.2) Act, 2004, under which the appeal is preferred.

9.

Where a return has been filed by the appellant for the financial year in connection with which the appeal is
preferred, whether tax due on the value of taxable securities transaction returned has been paid in full (if the
answer is in the affirmative, give details of date of payment and amount paid)

10.

Relief claimed in appeal

11.

**Where an appeal in relation to any other financial year is pending in the case of the appellant with any
Commissioner (Appeals), give the details as to the -

12.

(a)

Commissioner (Appeals), with whom the appeal is pending;

(b)

financial year in connection with which the appeal has been preferred;

(c)

Assessing Officer passing the order appealed against;

(d)

section and sub-section of the Chapter VII of the Finance (No.2) Act, under which the Assessing Officer
passed the order appealed against and the date of such order

Address to which notices may be sent to the appellant

Signed
(Appellant)
STATEMENT OF FACTS
GROUNDS OF APPEAL

Signed
(Appellant)

247

Form of Verification
I,
and belief.

, the appellant, do hereby declare that what is stated above is true to the best of my information

Place
Date

Signature

Status of appellant
Notes:
1.

The form of appeal, grounds of appeal and the form of verification appended thereto shall be signed by a person
in accordance with the provisions of rule 9 of Securities Transaction Rules, 2004.

2.

The memorandum of appeal, statement of facts and the grounds of appeal must be in duplicate and should be
accompanied by a copy of the order appealed against and the notice of demand in original, if any.

3.

Delete the inappropriate words.

4.

*These particulars will be filled in in the office of the Commissioner (Appeals).

5.

If the space provided herein is insufficient, separate enclosures may be used for the purpose.

6.

**If appeals are pending in relation to more than one financial year, separate particulars in respect of each financial
year may be given.

7.

The memorandum of appeal shall be accompanied by a fee of one thousand rupees.

The fee should be credited in a branch of the authorized bank or a branch of the State Bank of India or a branch
of the Reserve Bank of India after obtaining a challan from the Assessing Officer.

248

FORM NO. 5
[See rule 13 of Securities Transaction Rules, 2004]
Form of appeal to the Appellate Tribunal
In the Income-tax Appellate Tribunal
*Appeal No

of

Versus
APPELLANT

RESPONDENT

1.

The State in which the assessment was made

2.

Section of the Chapter VII of the Finance (No.2) Act, 2004 under which the order appealed against was passed

3.

The Commissioner (Appeals) passing the appealed against

4.

Financial year in connection with which the appeal is preferred

5.

Total value of taxable securities transactions declared by the assessee for the financial year referred to in item 3

6.

Total value of taxable securities transactions as computed by the Assessing Officer for the financial year referred
to in item 3

7.

The Assessing Officer passing the original order

8.

Section of the Chapter VII of Finance (No.2) Act, 2004 under which the Assessing Officer passed the order

9.

Date of communication of the order appealed against

10.

Address to which notices may be sent to the appellant

11.

Address to which notices may be sent to the respondent

12.

Relief claimed in appeal

GROUNDS OF APPEAL
1.

2.

3.

Signed
(Authorised representative, if any)

4. etc.

Signed
Signed(Appellant)
Verification

I,
and belief.

, the appellant, do hereby declare that what is stated above is true to the best of my information

Signed
Notes:
1.

The memorandum of appeal must be in triplicate and should be accompanied by two copies (at least one of which
should be a certified copy) of the order appealed against, two copies of the relevant order of the Assessing Officer,
two copies of the grounds of appeal before the first appellate authority, two copies of the statement of facts, if any,
filed before the said appellate authority.

249

2.

The memorandum of appeal by an assessee under section 111(1) of the Chapter VII of Finance (No.2) Act, 2004
must be accompanied by a fee of one thousand rupees.
It is suggested that the fee should be credited in a branch of the authorized bank or a branch of the State Bank of
India or a branch of the Reserve Bank of India after obtaining a challan and the triplicate challan sent to the
Appellate Tribunal with a memorandum of appeal. The Appellate Tribunal will not accept cheques, draft, hundies
or other negotiable instruments.

3.

The memorandum of appeal should be written in English or, if the appeal is filed in a Bench located in any such
State as is for the time being notified by the President of the Appellate Tribunal for the purposes of rule 5A of the
Income-tax (Appellate Tribunal) Rules, 1963, the, at the option of the appellant, in Hindi, and should set forth,
concisely and under distinct heads, the grounds of appeal without any argument or narrative and such grounds
should be numbered consecutively.

4.

*The number and year of appeal will be filed in the office of the Appellate Tribunal.

5.

Delete the inapplicable columns.

6.

If the space provided is found insufficient, separate enclosures may be used for the purpose.

250

251

TOTAL

Name
of
equity
oriented

Month

Unique
Client
Code
of the
fund

TOTAL

Unique Client
Code of the
whom units

Name of
equity
oriented
fund

S.No.

Value of
taxable
Securities
transact
ion
during the
month
(In Rs.)

(In Rs.)

(In Rs.)
5

Securities
transacttax
collected

(In Rs.)

Securities
transacttax paid

Name of person
from whom
units
purchased

Securities
transaction tax
collectible

Folio number of
person from
units
purchased

Name

(In Rs.)

Interest
payable
u/s. 104

TOTAL

(In Rs.)

Value of
taxable
collected
collectible
(In. Rs.)
8

(In. Rs.)

Securtities
transaction tax
tax collected

10

(In Rs.)

Tax/
Interest

11

Name of
the bank
branch

12

BSR code
of bank
branch

13

Date of
deposit

14

Serial No.
of challan

15

Amount

Securities
transaction

Particulars of payment of Securities Transaction Tax/interest


u/s. 104

MAPIN of
person from
securities
transactions
(In Rs.)

Interest
paid u/s.
104

SCHEDULE - C

PAN of person
from whom
whom units
purchased

SCHEDULE - B

SCHEDULE A
Address

NOTES:
1.

This Form must be used by a Mutual Fund only.

2.

Details required in Schedules A, B & C may be filed on computer media specified in rule 7.

3.

Details required in Schedule B be given separately for each equity oriented fund set up by the Mutual Fund
and sub-total for each fund be also given.

4.

Details required in Schedule C be given separately for each month for each equity oriented fund set up by the
Mutual Fund and sub-total for each month be also given.

252

253

Sl. No.
Member

Sl. No.

Clearing
Broker
Code

Stock
Broker

Stock
Client
Code

Trading
Code

Trading
Name
Code

Client
Name

TOTAL

Client
Client

TOTAL

PAN of
Client

Code 01

PAN of
Client

MAPIN of
Client

Code 02

Code 05

10

11

Code 05

Code 04

12

Code 03

Code 04

11

Code 02

Securities transaction tax


(In Rs.)

10

Code 01

Securities transaction tax collectible


(In Rs.

Value of taxable securities


transactions (In Rs.)

Code 03

Value of taxable securities transactions


(In Rs.)

SCHEDULE B

MAPIN of
Client

SCHEDULE A

254

13

Serial No.
of challan

14

(In Rs.)

Amount

Details required in Schedule C may be given separately for each month for each type of transaction (Codes 01 to 05) and sub-total for each month be
also given..

12

Date of
deposit

5.

11

BSR code
of bank
branch

Particulars of Trading Client Code in Schedule A need not be given in respect of purchase transactions conducted by the stock exchange during auction
sessions on behalf of stock brokers who have failed to deliver shares or unit in settlement.

10

Name of
the bank
branch

4.

TOTAL

(In Rs.)

Tax/
Interest

Particulars of payment of Securities Transaction Tax/interest


u/s. 104

Details required in Schedules A & B may be given separately for each stock Broker code and Clearing Member Code as the case may be. Particulars
of Client Name, PAN and MAPIN of client should be given wherever available.

(In Rs.)

Interest
paid u/s.
104

3.

(In Rs.)

Interest
payable
u/s. 104

Details required in Schedules A, B & C may be furnished on computer media specified in rule 7.

(In Rs.)

Securities
transacttax paid

2.

(In Rs.)

(In Rs.)

Securities
transacttax
collected

Securities
transaction tax
collectible

This Form must be used by a recognised stock exchange only.

Value of
taxable
Securities
transact
ion
during the
month

1.

NOTES:

TOTAL

Taxable
securities
transaction
Code

Month

SCHEDULE - C

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20041005-7
Tuesday, October 05, 2004
Securities Transaction Tax (STT) - Equity Segment
Equity

With reference to our Notice Nos. 20040927-13 and 20040930-5 dated September 27, 2004 and September 30, 2004
respectively regarding Securities Transaction Tax (STT) Equity Segment, we would like to inform the members that
in the Equity Segment, the Exchange is charging STT on institutional transactions based on the institutional ID (DFI,
FII, MF and Bank) captured from the BOLT order screen.
Accordingly, all the institutional Buy and Sell transactions are treated separately for the calculation of STT and all these
transactions are treated as delivery based transactions. No netting of institutional transactions is allowed for the calculation
of STT and the STT applicable on delivery based transactions is being levied on such transactions.
Members are requested to refer to Annexure I of Notice No. 20040927-13 dated September 27, 2004, wherein Tran
Type I indicates STT details pertaining to the institutional transactions.
For any clarification you may kindly contact the following officials on board lines i.e. 022- 22721233/34 :

Contact Person

Extension No.

Mobile No.

Ms. Tejal Desai

8253

9820796495

Mr. Vijay H. Mali

8592

9819555437

P. P. Kaladharan
General Manager
ISD

S. S. Bolar
General Manager
Finance & Accounts

255

Notice no
Notice date
Subject
Segment

:
:
:
:

20050520-14
Friday, May 20, 2005
Securities Transaction Tax (STT) - Equity & Derivatives Segment
NameGeneral

To : All Members of the Exchange


SUBJECT : SECURITIES TRANSACTION TAX- EQUITY & DERIVATIVES SEGMENT
This has reference to Finance Bill, 2005 introduced by the Honble Finance Minister on 28th February 2005. The said
Finance Bill, 2005 has received the assent of the President of India on 13th May 2005.
As per the Finance Bill, 2005, sub clause ( c ) of clause 124 sought to amend the section 98 of the Finance (No. 2)
Act, 2004 relating to charge of Securities Transaction Tax as under :Sr. Taxable Securities
No.

Old Rate

Revised
rate

Payable
by

0.075 %

0.1%

Purchaser

2. Sale of an equity share in a Seller company or a unit of


an equity oriented fund, where a) the transaction of
such sale isentered into in a recognisedstock exchange;
and(b) thecontract for the sale of suchshare or unit is
settled by theactual delivery or transfer of suchshare or
unit.

0.075 %

0.1%

3. Sale of an equity share in a company or a unit of an


Seller equity oriented fund, where(a) the transaction
of such sale is entered into in a recognised stock
exchange; and(b) the contract for the sale of such share
or unit is settled otherwisethan by the actual delivery or
transfer of such share or unit.

0.015 %

0.02%

1.

Purchase of an equity share in a company or a unit of


an equity oriented fund, where (a) the transaction of
such purchase is entered into in a recognised stock
exchange; and(b) the contract for the purchase of such
share or unit is settled by the actual delivery or transfer
of such share or unit.

Sale of a derivative, where the transaction of such sale


is entered into in a recognised stock exchange.

0.01 %

0.0133%

Seller

The change in STT rates will come into effect from trading day 1st June 2005. Kindly note that the Exchange will
continue to adopt the existing procedures for calculation, levy and collection of STT, the only exception
being change in STT rates. Members can refer to earlier notice nos. 20040927-13 dated 27/9/04 and 20040927-15
dated 27/9/04 for detailed procedures regarding levy and collection of STT.
Members are requested to note the above and once again ensure compliance as per above-mentioned BSE notices
For further clarifications on the subject matter you may kindly contact the following official on BSE board lines i.e.
022- 22721233/34
Contact Person

Department

Prashant Navadgi Investments & Accounts

Extension No.

Mobile No.

8558

9819555359

Arun P Dhanawade
AGM, Investments and Accounts

256

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20040420-12
Tuesday, April 20, 2004
Mandatory Use of STP system for all Institutional trades executedon the Stock Exchanges
General

April 20, 2004


Sub : Mandatory Use of STP system for all Institutional trades executed on the Stock Exchanges
SEBI vide circular No. DNPD/Cir-22/04 dated April 01, 2004 has, inter-alia, advised that all institutional trades executed
on the stock exchanges would be mandatorily processed through the Straight Through Processing (STP) System w.e.f.
July 01, 2004. A copy of the said SEBI circular, the contents of which are self-explanatory, is enclosed as Annexure- A
for the information of the members.

Niraj Karwa
Manager- Clearing and Settlement.
Encl.a.a.

257

Annexure- A
PRATIP KAR
EXECUTIVE DIRECTOR
DNPD/Cir- 22 /04
April 01, 2004
To
All Stock Exchanges, Depositories and Custodians.
Dear Sir,
Mandatory use of STP system for all institutional trades executed on the stock exchanges.
Straight Through Processing (STP) is generally understood to be a mechanism that automates the end to end processing
of transactions of financial instruments. It involves use of a system to process or control all elements of the work flow
of a financial transaction, what are commonly known as the Front, Middle, Back office and General Ledger. In other
words, STP allows electronic capturing and processing of transactions in one pass from the point of order origination
to final settlement. STP thus streamlines the process of trade execution and settlement and avoids manual entry and
re-entry of the details of the same trade by different market intermediaries and participants. Usage of STP enables
orders to be processed, confirmed, settled in a shorter time period and in a more cost effective manner with fewer
errors. Apart from compressing the clearing and settlement time, STP also provides a flexible, cost effective
infrastructure, which enables e-business expansion through online processing and access to enterprise data.
SEBI vide letter dated October 3, 2002 informed the stock exchanges, depositories and custodians that it proposed to
introduce STP for electronic trade processing with a common messaging standard ISO 15022 w.e.f December 2, 2002.
Accordingly, STP was launched in India on November 30, 2002. Currently, STP is being used by the market participants
on a voluntary basis. To facilitate STP, SEBI has also issued circulars SMDRP/POLICY/Cir-15/00 dated December 15,
2000 & circular SEBI/SMD/SE/15/2003/29/04 dated April 29, 2003 which permitted the issue of electronic contract
notes with digital signature obtained from a valid Certifying Authority provided under the Information Technology Act,
2000 (IT Act) and circular no. DNPD/Cir-9/04 dated February 3, 2004 & circular no. SEBI/MRD/SE/Cir-11/2004 dated
February 25, 2004 directing exchanges to amend their bye-laws, rules and regulations for the equity and the debt
segment to streamline the issuance of electronic contract notes as a legal document like the physical contract note.
Exchanges are in the process of amending their bye-laws, rules and regulations.
While several STP Service Providers have been providing STP service to the market participants, however, there was
no inter-operability between the STP Service Providers.
To resolve the issue of inter-operability between the STP Service Providers, it has been decided in consultation with
the stock exchanges and the STP Service Providers that a STP Centralised Hub would be setup. Currently this STP
Centralised Hub has been setup and made operational by NSE. NSE has obtained the necessary approvals from
Department of Telecommunications (DoT) as an Internet Service Provider (ISP). Subsequently this STP Centralised
Hub would be further developed jointly with BSE.
In view of the aforesaid developments, it has been decided that all the institutional trades executed on the stock
exchanges would be mandatorily processed through the STP System w.e.f July 01, 2004. This circular is being issued
to provide adequate notice to the market and market participants about the mandatory use of STP Service for institutional
trades. A circular containing the detailed process flow, role and responsibilities of the STP Service Providers and the
STP Centralised Hub, standard agreement between the STP Service Providers and the STP Centralised Hub would
be issued shortly.
This circular is being issued in exercise of powers conferred by section 11 (1) of the Securities and Exchange Board
of India Act, 1992, read with section 10 of the Securities Contracts(regulation) Act 1956, to protect the interests of
investors in securities and to promote the development of, and to regulate the securities market.
Yours faithfully,
PRATIP KAR

258

Notice no

: 20040705-10

Notice date

: Monday, July 05, 2004

Subject

: Straight Through Processing & use of ExchangeAllotted Unique Client Codes

Segment Name : General


Members attention is drawn to Securities and Exchange Board of India (SEBI) Circular No. DNPD/CIR-25/2004 dated
June 10, 2004 (copy enclosed) regarding Transaction work flow for the system of Straight Through Processing in the
Indian securities Market & standardization of the messaging formats.
Pursuant to Para 3 (g)(vii) of the above- mentioned Circular, members are required to input the Unique Client Code
allotted by the Exchange(s) in the prescribed messaging standard in the case of Institutional Investors like financial
institutions , banks, etc..
Further, SEBI vide its letter SEBI/MRD/UCC/AT/13976/2004 dated June 30, 2004 has directed the Exchanges to ensure
that all the transactions executed on or after July 1, 2004 on behalf of the Banks & Financial Institutions through the
trading platform of the Stock Exchanges necessarily carry this Unique Client Code allotted by the Exchange (s).
Members are required to take note of the same & ensure compliance with SEBI guidelines in this regard.
For any clarification in the matter, the members may contact the following officials on Tel. Nos. - 22721233 / 34 :
NAME

INTERCOM NO.

MUKESH KUWAD

8497

HITESH SAVLA

8585

Devika Shah
General Manager
Membership & Inspection

Mayank J. Mehta
Asst. General Manager
Inspection

259

CHIEF GENERAL MANAGER


DERIVATIVES AND NEW PRODUCTS DEPARTMENT
DNPD/Cir-25/04
June 10, 2004
All Exchanges, Clearing Corporation / Clearing House, STP Centralised Hub Depositories, Custodians, AMFI and STP
service providers
Sub : Transaction work flow for the system of Straight Through Processing in the Indian Securities Market and
standardisation of the messaging formats
Dear Sir,
1.

This is in continuation to our previous circular no. DNPD/Cir-9/04 dated February 3, 2004 & circular no. SEBI/
MRD/SE/Cir-11/2004 dated February 25, 2004 on the issuance of electronic contract notes as a legal document
like the physical contract note for the equity and debt segments, circular no. DNPD/Cir-22/2004 dated April 1,
2004 mandating the use of the Straight Through Processing (STP) system for all institutional trades w. e. f. July 1,
2004, circular no. DNPD/Cir-23/04 dated April 27, 2004 prescribing the detailed system flow of the STP system
and circular no. DNPD/Cir-24/04 dated May 26, 2004 prescribing the SEBI (STP centralised hub and STP service
providers) Guidelines, 2004.

2.

SEBI in consultation with the STP centralised hub, STP service providers and the STP users has prescribed the
transaction work flow for the STP system. All institutional investors shall follow the following transaction work flow
on a mandatory basis from July 1, 2004 :
a.

A contract note in electronic form in the prescribed format (IFN 515 messaging format) shall be issued by the
broker & sent to the custodian and / or the institutional investor.

b.

In case the contract note is processed directly by the institutional investor, the institutional investor shall
send the trade confirmation of acceptance or rejection of the contract note to the broker by using the IFN
598 messaging format. The custodian shall also send the confirmation of acceptance or rejection of such
contract note to the broker using the messaging standard IFN 548.

c.

In case the contract note is processed by the custodian on behalf of the institutional investor, the custodian
shall send the confirmation of acceptance or rejection of the contract note to the broker by using the IFN
548 messaging format.

d.

The institutional investor shall send settlement instructions to its custodian in IFN 540 to IFN 543 messaging
formats to the custodian for the following trade types:

e.

f.

i.

IFN 540: settlement instruction for a clearing house buy trade

ii.

IFN 541: settlement instruction for a delivery-v/s-payment (DVP) buy trade

iii.

IFN 542: settlement instruction for a clearing house sell trade

iv.

IFN 543: settlement instruction for a delivery-v/s-payment (DVP) sell trade

The custodian shall confirm / reject the execution of the settlement instructions to the institutional investor
in IFN 544 to IFN 547 messaging formats in the following manner:
i.

IFN 544: confirmation / rejection of an instruction received in messaging format IFN 540

ii.

IFN 545: confirmation / rejection of an instruction received in messaging format IFN 541

iii.

IFN 546: confirmation / rejection of an instruction received in messaging format IFN 542

iv.

IFN 547: confirmation / rejection of an instruction received in messaging format IFN 543

It is clarified that if a message (for the activities mentioned above) is sent using the STP centralised hub
framework from one user to another user, then the confirmation / rejection for such a message shall also be
sent using the STP centralised hub framework.

260

3.

SEBI vide circular no. DNPD/Cir-9/04 dated February 3, 2004 had prescribed the format of the contract note in
electronic form. After deliberation with the STP service providers and the market participants the following changes
are incorporated to the existing messaging format (IFN 515):
a.

The mandatory requirement of mentioning the relevant bye-laws / rules / regulations of the exchange subject
to which the said contract note is being issued on each contract note stands modified in the following
manner:
i.

The requirement is not mandatory but optional

ii.

The broker shall ensure that the relevant bye-laws / rules / regulations of the exchange subject to
which the contract note is being issued, is mentioned in the broker-client agreement and the tripartite
agreement
between
the
broker-sub-broker-client agreement (if applicable).

iii.

The existing field for the above provision shall not be deleted and may be used as a free text field for
one constituent to communicate remarks (if any) to another constituent.

b.

The clause of payment of consolidated stamp duty for each contract note shall be mentioned in the brokerclient agreement and the tripartite agreement between the broker-sub-broker-client agreement (if applicable).
The said clause may be stated in the free text field (as mentioned in point 3 (a (iii))) of each contract note.

c.

In the field market type (field 70E) a category of TT i.e. trade for trade and OT i.e. Others shall be added
to represent the supplementary categories of market types.

d.

The order time was prescribed as a mandatory field in the contract note. The order time shall now be
included in the optional fields.

e.

There are certain securities which are not de-materalised and hence do not have an ISIN code. For such
securities (where ISIN number is not available) the STP users would be required to input the security code
given by the exchange in the ISIN number field. In case the number length of the exchange scrip code is
shorter than the prescribed field length of 12 characters, the code shall be prefixed with zeros.

f.

In order to maintain a complete audit trail, it is clarified that in case an electronic contract note is rejected,
the custodian (in messaging format IFN 548) or the fund manager (in messaging format IFN 598) shall be
required to send a rejection message to the broker. Only on receipt of the rejection message, the broker
shall cancel the rejected contract note and issue a fresh contract note bearing a new number.

g.

In order to bring in standardisation in the input of the identification codes in the prescribed messaging
standards, it is clarified that the following codes shall be used by the various entities:

h.

i.

Brokers: SEBI registration number (until MAPIN ID is available for every broker)

ii.

Mutual Funds and schemes of Mutual Funds: SEBI registration number for Mutual Funds and Unique
client code issued by the exchanges for schemes (until MAPIN ID is available for each scheme of a
mutual fund)

iii.

FIIs and sub-accounts: SEBI registration number for FII and Unique client code issued by the
exchanges for sub-account (until MAPIN ID is available for each FII and their sub-accounts)

iv.

Custodians: SEBI registration number (until MAPIN ID is available for every custodian)

v.

STP service providers and STP centralised hub: MAPIN ID

vi.

Depositories and exchanges / clearing house / clearing corporation: MAPIN ID.

vii.

Other Institutional Investors like financial institutions, banks etc.: Unique client code issued by the
exchanges (until MAPIN ID is available for each Institutional Investor)

All market participants shall issue the electronic contract note for institutional trades in the modified format
enclosed Annexure I.

261

4.

The prescribed messaging formats for IFN 540, IFN 541, IFN 542, IFN 543, IFN 544, IFN 545, IFN 546, IFN 547,
IFN 548 and IFN 598 are enclosed in Annexure II. After consultation with the market participants and confirming
their preparedness, it has been decided to make these messaging formats (in addition to IFN 515) mandatory for
all institutional trades w. e. f. July 1, 2004.

5.

It is reiterated that the STP system shall be initially mandatory for all institutional trades in the equity segment w.
e. f. July 1, 2004.

6.

The standard terms of contract as are required to be mentioned in the Contract Notes as per the Bye-laws and
Regulations of exchanges, which are not contained in electronic contract notes, shall be incorporated in the Client
Broker Agreement or where applicable, the Tripartite Agreement between the stock broker, sub-broker and the
client. The stamp duty in respect of the electronic contract notes shall be paid by the broker.

7.

This circular is being issued in exercise of powers conferred by section 11 (1) of the Securities and Exchange
Board of India Act, 1992, read with section 10 of the Securities Contracts(regulation) Act 1956, to protect the
interests of investors in securities and to promote the development of, and to regulate the securities market.

Yours sincerely,

N. PARAKH
Encl.

262

1.

Messaging Format for IFN 515 (modified format)

2.

Messaging Format for IFN 540

3.

Messaging Format for IFN 541

4.

Messaging Format for IFN 542

5.

Messaging Format for IFN 543

6.

Messaging Format for IFN 544

7.

Messaging Format for IFN 545

8.

Messaging Format for IFN 546

9.

Messaging Format for IFN 547

10.

Messaging Format for IFN 548 (C to B)

11.

Messaging Format for IFN 548 (C to I)

12.

Messaging Format for IFN 598 (I to B)

263

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20031112-5
Wednesday, November 12, 2003
Norms for imposition of late fees, fines and penalties - Cash Segment
General
Contents :

The Exchange has reviewed and rationalised the existing norms for imposing late fees, fines and penalties. The revised
norms have been approved by the Disciplinary Action Committee (DAC) of the Exchange in its meeting held on October
22, 2003.
Statement indicating the nature of irregularity/violation and the consequential late fees, fines and penalties that would
be levied is enclosed for the information of the members. The members may please note that these norms shall be
applied for the violations observed during the course of inspection conducted on or after the date of this notice.
It may be noted that the actions including fines for violations are only indicative. In case of a large number of instances
of a violation involving large amount of funds / large quantity of securities or of repetitive nature, DAC may take such
strict action as it may deem fit including levy of higher fines / suspension / expulsion.
The members are once again advised to ensure compliance with the various Rules, Byelaws & Regulations of the
Exchange.
In case the members require any clarification, they may please contact any of the following officials :
Sr. No.

Name

1.

Mr. Ranjan Prabhu

8214

2.

Ms. Srividhya Subramanian

8404

Kevin Desouza
General Manager

Intercom No.

Mayank MehtaChief
Asst. General Manager Inspection & Membership Inspection

264

List of violations alongwith indicative fines.

Sr.

Violation

Rule/Byelaw/
Regulation/
Notice no.

Upto 3
instances

Multiple
instances

Contract Notes
1.

Non-issue of contract notes.

Bye law 219 & Exchange


Notice No. 5116/93 dated
November 11, 1993.

Rs. 5,000

Rs. 10,000

2.

Contract Note not as per the format prescribed


by the Exchange

Regulation 14.2/
Exchange notice No.
20021109-9 dated
November 9, 2003.

Advice

Rs. 5,000

3.

Board Resolution / Power of Attorney for signing of Exchange


Contract Notes not submitted to the Exchange
notice no. 1024/98
dated March
20, 1998.

Advice

Advice

4.

Contract notes not issued within 24 hours of trade


execution or duplicates of the contract notes
issued not acknowledged by clients / no proof
of delivery.

Bye law 247


A/Exchange Notice No.
4914/96 dated
August 3, 1996

Advice

Rs.10,000

5.

Duplicates of the contract notes issued not


maintained. Counter foils maintained having no
adequate details.

Exchange notice no.


4850/97 dated
December 10, 1997.

Advice

Warning

6.

Details of the trade have not been attached as an


Annexure to the contract note (original / duplicate)
issued in case of consolidated trade shown in
contract note.

Notice no. 4646/97


dated November 29, 1997

Advice

Warning

7.

Instances of brokerage charged at a rate


higher than the permissible maximum.

Regulation
14.1

The Member to be advised


to refund the excess
Brokerage charged to the
constituents and a fine of an
equivalent amount or Rs
5000/-, whichever is higher,
be levied on the Member.

8.

Execution of Negotiated Deals (including Cross


Deals) not through price and order matching
mechanism of the Exchange.

Notice no. 245012/99


dated Sept. 2, 1999.

Rs.1,00,000

9.

Execution of transactions in securities not listed/not Byelaw 45, 49 & 50.


permitted on the Exchange.

Refer the matter to DAC

10.

Difference in rate mentioned in the contract note


and the executed rate.

Excess amount to be
returned to the client and
fine 11, 1993.equal to twice
the excess amount charged
or Rs25,000/- whichever is
higher, to be levied on the
member

Notice No. 5116/93


dated November

265

Rs. 2,00,000

Sr.

Violation

Rule/Byelaw/
Regulation/
Notice no.

Upto 3
instances

Multiple
instances

Client Codes
11.

Transfer of trades executed for one client to


another client.

Notice no. 101502/2001


dated October 12, 2001.

Advice

Rs. 5,000

12.

Transfer of trades from Own account to client


account or vice-versa

Notice no. 101502/2001


dated October 12, 2001.

Rs. 5,000

Rs.10,000

client account or vice-versa

101502/2001 dated Octo.


12, 2001.

Rs. 5,000

Rs.10,000

13.

Evasion of margin by entering wrong client code


in the system.

Notice no. 101502/2001


dated October 12, 2001.

Rs. 5,000

Rs.10,000

14.

Use of fictitious client codes during order


placement.

Notice no. 101502/2001


dated Octo.12, 2001.

Rs. 10,000

Rs. 20,000

Spot Transaction
15.

Not taken written consent from the client for


principal to principal transactions.

Byelaw 199/ Exchange


Notice No. 4914/96
dated Augu. 13, 1996.

Rs.5,000

Rs.10,000

16.

Contract Notes not issued / not in prescribed


Form B for principal to principal transactions.

Reg. 14/ Exchange


Notice No. 4914/96
dated Augu.13, 1996

Rs.5,000

Rs.10,000

17.

Transactions done on a spot basis are not at all


reported to the Exchange.

SEBI Circular no.


SMD/RCG/ CIR/(BKG)/
293/95 dated March
14, 1995.

Rs.5,000

Rs.10,000

18.

Transactions done on a spot basis are not reported SEBI Circular no.
to the Exchange within the prescribed time limit.
SMD/RCG/ CIR/(BKG)/
293/95 dated March
14, 1995.

Advice

Rs. 5,000

19.

Transactions done on a spot basis are not


settled within the prescribed time limit.

Section 2(i) of the SCRA,


1956.

1% of the
transaction
value or
Rs. 5,000/whichever
is lower.

2% of the
transaction
value or
Rs.10,000/whichever
is higher.

Reg. 17(1) of the SEBI


(Stock Brokers &
Sub Brokers) Rules, 1992

10,000/-

N.A.

5,000/Reprimand
10,000/per office

N.A.
N.A.
N.A.

Reprimand

N.A.

Books of accounts & other documents


20.

Not maintained

Not maintained properly


Not made available for verification when asked for
Not maintained for branch / sub-broker
5,000/- per office
Not maintained properly for sub-broker
Not made available for branch / sub-broker when
asked for.

266

Sr.

Violation

21.

Segregation of Exchange wise / Segment wise


client ledgers not maintained.

22.

Incomplete / Non-maintenance of registers


(Register of Securities / Register of Transactions /
Register of Complaints/ Dividend ledge / Margin
Deposit Book)

Rule/Byelaw/
Regulation/
Notice no.

Upto 3
instances

Multiple
instances

10,000/-

N.A.

Exchange notice no.


4850/97 dated
10.12.1997

Advice

N.A.

Bye law 247A/


Exchange Notice nos.
7031/94 & 4850/97
dt.10.12.1997

Rs.25,000

N.A.

Reprimand

10,000

Rs.50,000

Rs.1,00,000

Advice

Rs.5,000
(In case
inordinate
delays of
than week,
double the
fine amount to
be
collected.)

Dealing with clients


2.

Clients funds not routed through designated


Client Account/Non maintainance of Client
account.
Non-segregation of own and client transactions
in separate bank accounts
Use of Client account for non specified purposes
Use of clients funds for ownpurposes / Misuse of clients
funds / Unauthorised transfer of funds from one
clients account to another clients account.
Delay in payments of funds to the clients.

24.

Non-payment or delay in payment of dividend


amounts to constituents / non- reconciliation of
dividend account

Advice

Rs.5,000

Securities due to the clients transferred to the


members beneficiary account

Bye law 247A


Exchange notice nos.
7031/94 & 4850/97 dated
10.12.1997

Reprimand

Rs.5,000

Rs.50,000

Rs.1,00,000

Securities due to one client transferred to another


client OR Securities due to the clients used for
meeting the pay-in obligation of the member/other
client.
Delay in delivery of securities to clients.

Rs.5,000

25.

Transaction with clients in cash.

Notice no. 5 dated


03/09/2003

Advice

26.

Deliver / Receive securities other than from


respective Clients Beneficiary Account. or under
approved scheme.

Notice no.5 dated


September 3, 2003.

Advice

Rs.5,000

27.

Half yearly statement of accounts for funds


/securities not sent to the clients.

Notice no.9 dated


January 14, 2003.

Advice

Rs. 5,000

Notice no. 1798/97


dated April 24, 1997

Advice

Rs.10,000

Advice

Rs.10,000

Client Registration
28.

Non execution of Client Registration Form or


maintaining incomplete client database.
Non execution of member- client agreement or
agreement not in prescribed format.

267

Sr.

Violation

Rule/Byelaw/
Regulation/
Notice no.

Upto 3
instances

Multiple
instances

29.

Not assigned unique client codes and / or not


mapping the client code with PAN/ Passport etc.
in the back office, and/or not registering the client
details on BOLT

Notice no. 20030115-5


dated January 15, 2003

Rs 5000

Rs 10,000

Rs.25,000
per unregistered
Sub broker.

Dealing with Intermediaries


30.

Dealing with un-registered sub-brokers

Notice no. 623111/2000


dated September
18, 1999.

Rs.25,000
per unregistered
Sub broker.

31.

Members of other Exchanges routing orders of


their clients through BOLT, without being
registered as Sub-brokers with SEBI.

Notice no.
54809/2000
dated July 1, 2000

Advice the member to


comply with registration
requirement within one
month. If not complied, fine
of Rs. 25,000/- pe
unregistered sub broker
to be imposed.

32.

Sharing Commission/ brokerage without


registering such persons as Remisiers
with the Exchange.

Bye law 218/ Exchange


notice no. 2628/97
dated 9.6.1997.

Rs. 5,000

Rs10,000/

33.

Sharing of brokerage with -another member


-an employee of another member or a person
for or with whom trading members are forbidden
to do business.

Byelaw 218 Exchange


Notice No. 2628/97
Date 9.6.1997

5 ,000/-

10,000/-

34.

Allotting BOLT TWSs to another member of the


Exchange.

Notice no. 104616/2001


dated November
12, 2001.

Rs.15,000
per instance
and deactivation
of the said
BOLT TWS

Rs.15,000
per instance
and deactivation
of the said
BOLT TWS

35.

Executing trades for another member of the


Exchange.

Rs. 10,000

Rs.25,000

36.

Done business on behalf of suspended/defaulter/


expelled members without obtaining prior
permission of the Exchange.

Bye- Law 358 (vi)

Rs.10,000

Rs.25,000

Margins
37.

Non submission/late submission of Compliance


Certificate regarding collection of up-front
margin from non-institutional clients.

Notice no. 5 dated


September 18, 2003

Fine of
Rs.100 day
till the date
of submission.

N.A.

38.

Non collection / short collection of a margin from


non-institutional clients on their respective net
open positions by the member / sub-broker.

Notice No.123621/2002
May 21,2002.

Rs.5,000

Refer the
matter
to DAC

39.

Non collection of compliance certificate from


sub-broker(s) regarding collection of margin
from non-institutional clients on their respective
net open positions.

Notice no. 84618/2001


dated April 26, 2001.

Rs.5,000

Refer the
matter to
DAC

40.

Submission of wrong compliance certificate


regarding collection of up-front margin
from non- institutional clients.

Notice no. 123621/2002

Rs.5,000

Refer the
matter
to DAC

May21,2002.

268

Sr.

Violation

Rule/Byelaw/
Regulation/
Notice no.

Upto 3
instances

Multiple
instances

Rs.5,000/-

Others
41.

Non receipt of reply seeking clarification on


inspection.

Advice

42.

Submitting late/wrong Compliance Certificate


regarding implementation of suggestions made
at the time of inspection

i) The Compliance of
the Inspection Report
observations should be
submitted within 30 days /
prescribed time of the
date of receipt of the
letter communicating the
observations failing which, a
fine of Rs.5,000/- may be
imposed
ii) If it is observed that the
member has submitted a
wrong compliance
certificate, a fine upto
Rs.25,000/- may be
imposed.

43.

Delay / Non submission of


Audit Report, Audited Accounts
and Networth Certificate.
Note : Submission of incorrect,
unaudited or not in a
prescribed format will be treated
as non-submission of the same.

44.

Non-attendance of DAC
meetings without prior
intimation.

45.

Involved in Fund Based activities

Notice No.7
dated July
10, 2003.

Non-submission of
documents by due date
Fine of Rs. 100/- per
day till the date of
submission of the
documents.
Non-submission of
documents after two
months of due date:
Fine of Rs. 500/- per
day after two months
of due date until
submission of the
documents.
To be referred to N.A.
DAC

SMD/ POLICY/
CIR-6/97 dated
May 7,1997.

Advice

Rs.20,000

Notes :(1)

In respect of repeated violations, action may be restructured to cases where multiple instances of a violation
have been observed in both the last annual inspection of a member and the current inspection and 50% of
the fine applicable for multiple instances of the violation be levied additionally. In all other circumstances of
repeat violation, the fine structure in respect of initial violations to be followed.

(2)

The above actions including fines are only indicative. In case of a large number of instances of a violation
involving large amount of funds / large quantity of securities or of repetitive nature, the Exchange may take
such strict action as it may deem fit including levy of higher fines / suspension / expulsion.

269

Notice no
Notice date
Subject

:
:
:

Segment Name

20041019-4
Tuesday, October 19, 2004
Revision of certain penalty norms in respect of fines/penalties to be imposed in case of
irregularities observed during the course of inspection
General

The Disciplinary Action Committee (DAC) at its meeting held on September 21, 2004 had revised and approved certain
penalty norms for imposition of fines/penalties on members in respect of irregularities observed during the course of
inspection.
The statement indicating the nature of irregularities / violation and the consequential fines and penalties that would
be levied is enclosed for information of the members. Members may please note that these norms shall apply for
violations observed during the course of inspection conducted on or after the date of this notice.
It may be noted that the actions including the fines for violations are only indicative. In case of large number of instances
of violation including large number of funds / large quantities of securities or of a repetitive nature, the DAC may take
such strict action as it may deem fit including levying of higher fines / suspension / expulsion.
In view of the above, members are requested to ensure compliance with the various Rules, Bye-laws and Regulations
of the Exchange and the provisions contained in the notices issued by the Exchange from time to time.
In case members require any clarification, they may please contact any of the following officials.
Sr.No.

Name

Extn.

1.

Ms.S. Srividya

8404

2.

Mr.Sandeep Gupta

8153

3.

Ms.Parul Kothari

8196

4.

Ms.Shaila Valsan

8316

Kevin Desouza
CGM Inspection & Membership

Mayank Mehta
AGM - Inspection

270

List of Violations with indicative fines.


Violation

BSE Notice No.

Cash dealing with clients

Notice No.20030903-5 dated 3.9.2003.


Multiple instances

Few instances Advice


Rs.10,000/-

Non appointment of Compliance Officer

Notice No.20021001-5 dated 1.10.2002.

Rs.10,000/-

Execution of trades on own account


without disclosing to the clients.

Notice No.20031125-7 dated 25.11.2003 Few instances Advice


Multiple instances
Rs.10,000/-

Execution of trades on own account


from locations other than those allowed
by the Exchange

Notice No.20030909-1dated 3.9.2003

Rs.10,000/-

Transfer of trades executed for one


client to another client.

Notice No.101502/2001dated
October 12,2001.of the value of trades
transferred or Rs.5,000/- ,
whichever is higher.

Few instances Advice


Multiple instances 0.02%

Transfer of trades from Own account


to client

Notice No.101502/2001dated
October 12, 2001

Few instances account


or vice-Multiple versa 0.02%
Rs.5,000/- instances of the
value of trades transferred
or Rs.10,000/- whichever is
higher.

Transfer of trades from Client account


to Own account.

Notice No.101502/2001 dated


October 12, 2001

Few instances Advice


Multiple instances - 0.02%
of the vale of trades
transferred or Rs.10,000/-,
whichever is higher.

Use of fictitious client codes during


order placement

Notice No.101502/2001dated
October 12, 2001.

Few instances Rs.10,000/Multiple instances -0.02%


of the vale of trades
transferred or Rs.20,000/whichever is higher.

271

Fines

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20051102-5
Wednesday, November 02, 2005
Revision of norms for imposition of late fees / fines / and penalties - Cash Segment
General

The Exchange has reviewed and rationalised the existing norms for imposing late fees, fines and penalties for the
Cash segment. The revised norms have been approved by the Disciplinary Action Committee (DAC) of the Exchange
in its meeting held on October 20, 2005.
A consolidated list indicating the nature of irregularity/violation and the consequential late fees, fines and penalties
that would be levied is enclosed for the information of the Trading Members. The Trading Members may please note
that the consolidated list of revised norms shall be applied for the violations observed during the course of inspection
conducted on or after November 7, 2005.
It may be noted that the actions including fines for violations are only indicative. In case of a large number of instances
of a violation involving large amount of funds / large quantity of securities or instances of repetitive nature, the DAC
may take such strict action as it may deem fit including levy of higher fines / suspension / expulsion.
The Trading Members are once again advised to ensure compliance with the various Rules, Byelaws & Regulations of
the Exchange.
Trading Members require any clarification, they may please contact any of the following officials :
NAME

INTERCOM NO.

Mr. Pankaj Gupta

8120

Ms. Shaila Valsan

8316

Ms. Parul Kothari

8196

Mr. Amita Tarwale

8262

P.K.Ramesh
Dy. General Manager
Surveillance & Supervision

Pankaj Gupta
Asst. General Manager
Surveillance & Supervision

272

List of Violations alongwith indicative fines


Sr.

Violation

Rule/Byelaw/ Regulation/Notice no.

No.
I

Up to 3

Multiple

instances

instances

List of Violations with indicative fines for routine inspection.

Contract Notes

Non-issue of
contract notes.

Bye law 219 & Exchange Notice No.


5116/93 dated November 11, 1993.

Rs. 5,000*

Rs.10,000*

Contract Note not as


per the formate
prescribed by
the Exchange

Regulation 14.2/Exchange notice No.


20021109-9 dated November 9, 2003.

Advice

Rs. 5,000

Board Resolution/Power
Exchange notice no. 1024/98 dated
of Attorney for signing
March 20, 1998.
of Contract Notes not
submitted to the Exchange

Advice

Advice

Contract notes not issued


within 24 hours of trade
execution or duplicates
of the contract notes
issued not acknowledged by clients/ no proof
of delivery.

Bye law 247 A/Exchange Notice No.


4914/96 dated August 13, 1996

Advice

Rs. 10,000*

Duplicates of the contract


notes issued not
maintained Counter foils
maintained having no
adequate details.

Exchange notice no. 4850/97 dated


December 10, 1997.

Advice

Warning

Details of the trade have


not been attached
as an Annexure to the
contract note (original /
duplicate) issued in case
of consolidated trade
shown in contract note.

Notice no.4646/97dated November


29, 1997

Advice

Warning

Instances of brokerage
charged at a rate higher
than the permissible

Regulation 14.1

The Member to be advised to refund


the excess brokerage charged to
the maximum. constituents and a fine
of an equivalent amount or Rs 5000/-,
whichever is higher, belevied on the
Member.

Non-charging of brokerage
to the clients

Execution of transactions
in securities not listed/not
permitted on the Exchange.

Byelaw 45, 49 & 50.

Refer the matter to DAC

10

Difference in rate
mentioned in the
contract note and the

Notice No. 5116/93


dated November 11, 1993.

Excess amount to be returned to the


client to twice the excess amount
charged executed rate.or Rs 25,000/whichever is higher, to be levied on the
member.

Advice
Warning

273

Reprimand/

Sr.
Violation
No.

Rule/Byelaw/ Regulation/Notice no.

Up to 3
instances

Multiple
instances

Client Codes
11

Transfer of trades executed Notice no. 101502/2001 dated


for one client to another
October 12, 2001.
client.

Advice

0.02% of the
value of trades
transferred or
Rs.5,000
whichever
is higher

12

Transfer of trades from


Own account to client
account or vice-versa

Notice no. 101502/2001 dated


October 12, 2001.

Rs.5,000

0.02% of the
valueof trades
transferred or
Rs.10,000
whichever is
higher

13

Evasion of margin by
entering wrong client
code in the system.

Notice no. 101502/2001


dated October 12, 2001.

Rs.5,000#

Rs.10,000#

14

Use of fictitious client


codes during order
placement.

Notice no. 20041019-4


dated October 19, 2004

Rs.10,000

0.02% of the
value of trades
transferred or
Rs.20,000
whichever
is higher

15

Execution of Trades on
account without
disclosing to the clients.

Notice no. 20041019-4


dated October 19, 2004

Advice

Rs.10,000**

16

Execution of Trades on
Notice no. 20041019-4
own account from
dated October 19, 2004
locations other than those
allowed by the Exchange.

Rs.10,000

17

Institutional trades not


routed through STP
system

Advice

Rs.10,000*

18

Not using the prescribed


identification codes for
transaction routed through
STP system

Advice

Rs.10,000*

Rs.5,000#

Rs.10,000#

DNPD/Cir-22/04 dated April 1, 2004

Spot Transaction
19

Not taken written consent


from the client for
principal to principal
transactions.

Byelaw 199/ Exchange


Notice No. 4914/96
dated August 13, 1996.

20

Contract Notes not issued / Reg. 14/ Exchange Notice No. 4914/96
not in prescribed
dated August 13, 1996
Form B for principal to
principal transactions.

Rs.5,000*

Rs.10,000*

21

Transactions done on a
spot basis are not at all
reported to the Exchange.

Rs.5,000#

Rs.10,000#

SEBI Circular no. SMD/RCG/CIR/(BKG)/


293/95 dated March 14, 1995.

274

Sr.
Violation
No.

Rule/Byelaw/ Regulation/Notice no.

Up to 3
instances

Multiple
instances

22

Transactions done on a
SEBI Circular no. SMD/RCG/CIR/(BKG)/
spot basis are not reported 293/95 dated March 14, 1995.
to the Exchange within the
prescribed time limit.

Advice

Rs.5,000#

23

Transactions done on
a spot basis are not
settled within the
prescribed time limit.

1% of the
transaction
value or
Rs.5,000/whichever
is higher.

2% of the
transaction
value or
Rs.10,000/whichever
is higher.

Section 2(i) of the SCRA,1956.

Books of accounts & other documents


24

Not maintained

Reg. 17(1) of the SEBI (Stock Brokers


& Sub Brokers) Rules, 1992.

10,000/-

Not maintained properly

5,000/- per office

Not made available for


verification when asked for.

Reprimand

Not maintained for branch /


sub broker

10,000/- per office

Not maintained properly


for branch / sub-broker

5,000/- per office

Not made available for


branch /sub-broker when
asked for.

Reprimand

25

Segregationof Exchange
wise /Segment wise client
ledgers not maintained.

Rs.10,000

26

Non-maintenance of
vouchers (entries being
directly posted to ledger)
Reprimand/ Warning

Advice

27

Non-maintenance of up to
date bank reconciliation
statements

Advice

Reprimand/
Warning

28

Incomplete/Non-maintenance of registers (Register


of Securities / Register
of Transactions /
Register of Complaints /
Dividend ledger / Margin
Deposit Book)

Rs.5,000
per register office

Rs.5,000
per register office

29

Non-availability of
prescribed Warning
information in Registers

Advice

Reprimand/

Exchange notice no.


4850/97 dated 10.12.1997.

Dealing with clients


30

Clients funds not routed


through designated
Client Account/
Non maintainance of
Client account.

Bye law 247A/Exchange


notice nos. 7031/94
dated 6.12.1994 & 4850/97
dated 10.12.1997.

275

Rs.25,000

Sr.
Violation
No.

Rule/Byelaw/ Regulation/Notice no.

Up to 3
instances

Multiple
instances

- Non-segregation of own
and client transactions in
separate bank accounts

Reprimand

10,000

- Use of Clients account


for non specified purpose

Reprimand

10,000

- Use of clients funds for


own purposes / Misuse of
clients funds/Unauthorised
transfer of funds from one
clients account to another
clients account.

Rs.50,000
(up to 3
transactions)

Rs.1,00,000
(for multiple
transactions)

- Delay in payments of
funds to the clients.

Advice

Rs.5,000
(In case of
inordinate delays
of more than
1 week,double the
fine amount to be
collected.)

Advice

Rs. 5,000

-Non-payment or delay in
payment of dividend
amounts to constituents /
non-reconciliation of
dividend account
31

- Securities due to the


clients transferred to
the members beneficiary
account.

Reprimand

Rs. 5,000

- Securities due to one


client transferred to
another client OR
Securities due to the
clients used for meeting the
pay-in obligation of the
member/ other client.

Rs.50,000
(up to 3
transactions)

Rs.1,00,000
(for multiple
transactions)

- Delay in delivery of
securities to clients.

Advice

Rs. 5,000
(In case of
inordinate
delays of more
than 1 week,
double the fine
amount be levied.)

32

Non-segregation of clients
securities into separate
beneficiary dema account /
Non-maintenance constituents
beneficiary demat account
for keeping client securities

Rs.10,000**

Rs. 25,000**

33

Use of constituents
Warning
benefici ary demat
account for purposes other
than specified

Rs.10,000

276

Sr.
Violation
No.

Rule/Byelaw/ Regulation/Notice no.

Up to 3
instances

Multiple
instances

34

Transaction with clients


in cash.

Notice no. 20041019-4


dated October 19, 2004

Advice

Rs.10,000

35

Deliver/Receive securities Notice no. 5 dated September 3, 2003.


other than from respective
Clients Beneficiary
Account.or under approved
scheme.

Advice

Rs. 5,000

36

Half yearly statement of


accounts for funds/
securities not sent to the
clients.

Notice no. 9 dated January 14, 2003.

Rs.5,000**

Rs.10,000**

Exchange Notice No.1798/97


dated April 24, 1997 & SEBI Circular
SEBI/MIRSD/DPS-1/Cir-31/2004 dated
August 26, 2004

Advice

Rs.10,000**

Advice

Rs.10,000**

Client Registration
37

- Non execution of Client


Registration Form or
maintaining incomplete
client database.
- Non execution of memberclient agreement /Tripartite
Agreement or agreement
not in prescribed format.

38

Non-issue of Risk
Disclosure Document or
not in prescribed format

SEBI Circular SEBI/MIRSD/


DPS-1/Cir-31/2004
dated August 26, 2004

Warning

Rs.10,000**

39

Not assigned unique


client codes and / or not
mapping the client code
with PAN/ Passport etc.
in the back office, and/or
not registering the client
details on BOLT

Notice no. 20030115-5


dated January 15, 2003

Rs.5000

Rs.10,000

Dealing with Intermediaries


40

Dealing with un-registered Notice no.623111/2000


dated September 18,1999.

Rs. 25,000 per unregistered


Sub broker.

41

Inspection of books of
registered Sub-brokers
not done

Reprimand/
Warning

42

Members of other
Notice no. 54809/2000
Exchanges routing orders dated July 1, 2000
of their clients through BOLT,
without being registered
as Sub-brokers with SEBI.

Advice the member to comply with


registration requirement within one
month. If not complied, fine of Rs.
25,000/- per unregistered sub-broker
to be imposed.

43

Sharing Commission/
brokerage without
registering such persons
as Remisiers/ sub-broker
with the Exchange.

Rs.5,000

SEBI Circular No. SMD/


POLICY/CIR-4/2003
dated February 11, 2003

Bye law 218/ Exchange


notice no. 2628/97 dated 9.6.1997.

277

Rs.10,000

Rs.10,000

Sr.
Violation
No.

Rule/Byelaw/ Regulation/Notice no.

Up to 3
instances

Multiple
instances

44

Byelaw 218

-another member

5 ,000/-

10,000/-

-an employee of another


member or a person for
or with whom trading
members are forbidden
to do business.

10,000/-

20,000/-

Sharing of brokerage
with

45

Allotting BOLT TWSs


to another member of
the Exchange.

Notice no. 104616/2001


dated November 12, 2001.
said BOLT TWS

Rs.15,000 per instance


and de-activation of the

46

Usage & operation of a


trading terminal
by a unauthorised person

Exchange Notice No. 104616/2001


dated November 12, 2001.

Advice

47

Trading terminals provided


to unregistered
intermediaries/
unauthorised extension
of trading network/ non
submission of required
details of IML terminals to
the Exchange

Rs.20,000 per terminal for the first


five terminals and the fine amount
be stepped up by Rs. 5,000 per
terminal in successive batches of
five terminals each thereafter.

48

Executing trades for


another member of the
Exchange.

Rs.10,000

Rs.25,000

49

Dealing with one member SEBI/MIRSD/Cir-06/2004


broker/ subbroker of
dated January 13, 2004
another exchange for
proprietary trading without
intimating the name of
such member broker/subbroker to the Exchange

Warning

Rs.10,000

50

Dealing with more than one


member broker/sub-broker
of another exchange for
proprietary trading

Rs. 10,000 for every additional


member broker/ sub-broker

51

Done business on
Bye- Law 358 (vi)
behalf of suspended /
defaulter / expelled
members without
obtaining prior permission
of the Exchange.

Rs.10,000

Rs.10,000

Rs.25,000

Margins
52

Non submission/late
submission of
ComplianceCertificate

Notice no. 5 dated September 18, 2003

278

Fine of Rs.100 per day till the date


of submission.

Sr.
Violation
No.

Rule/Byelaw/ Regulation/Notice no.

Up to 3
instances

Multiple
instances

Notice no. 123621/2002 May 21, 2002.

regarding collection of
up-front margin from
non-institutional clients.
53

Non collection / short


collection of a margin
from non-institutional
clients on their respective
net open positions by the
member sub-broker.

Rs. 5,000

Refer the matter


to DAC.

54

Non collection of
Notice no.84618/2001dated April 26, 2001. Rs. 5,000
compliance certificate
from sub-brokers)
regarding collection of
margin from non-institutional
clients on their respective
net open positions.

Refer the matter


to DAC.

55

Submission of wrong
compliance certificate
regarding collection of
up-front margin from noninstitutional clients.

Refer the matter


to DAC.

Notice no. 123621/2002 May 21, 2002.

Rs.5,000

Others
56

Non receipt of reply seeking Advice


clarification on inspection.

Rs.5,000/-

57

Delay / Non- submission of


Compliance Certificate
regarding implementation
of suggestions made at the
time of inspection

The Compliance Certificate should be


submitted within 30days/prescribed
time of the date of receipt of theletter
communicating the observations failing
which, a fine of Rs.5,000/- may be
imposed.

58

Delay / Non submission of


Audit Report Audited
Accounts and Networth
Certificate.
Note : Submission of
incorrect, unaudited or
not in a prescribed format
will be treated as nonsubmission of the same.

Notice No. 7 dated July 10, 2003.

Non-submission of documents by due


date : Fine of Rs. 100/- per day till
the date of submission of the
documents.
Non-submission of documents after
two months of due date: Fine of Rs.
500/- per day after two months of due
date until submission of thedocuments.

59

Non-attendance of DAC
meetings without prior
intimation.

60

Involved in Fund Based


activities

To be referred to DAC

SMD/POLICY/CIR-6/97 dated May 7, 1997.

279

Advice

Rs.20,000

Sr.
Violation
No.

Rule/Byelaw/ Regulation/Notice no.

Up to 3
instances

61

Non appointment of
Compliance Officer

Notice no. 20041019-4


dated October 19, 2004

Rs.10,000

62

Non-display of SEBI
Registration Certificate

Rs.10,000

63

Commencement of Internet SMDRP/POLICY/CIR- 06/2000


Trading without prior
dated January 31, 2000
approval of the Exchange

Rs.10,000

Multiple
instances

Rs.20,000

Margin Trading
64

- Providing margin trading


facility to clients without
obtaining prior permission
of the Exchange

SEBI Circular Nos. SEBI/MRD/SE/SU


/Cir- 15/04 dated March 19,2004 and
SEBI/MRD/SE/SU/Cir- 16/04 dated
March 31, 2004 and Exchange Notice
No. 20040402-31 dated April 2, 2004

65

Non-execution of agreement
for providing margintrading
facility or agreement not in
prescribed format

Warning

Rs.10,000

66

- Non-obtainment of
declaration from clients,
giving details of margin
trading facility availed from
any broker in any
exchange/ rejection of the
clients request for margin
trading with any broker / etc.

Warning

Rs.5,000

67

- Non-maintenance of
separate demat account for
every client for holding
client wise securities
purchased under margin
trading facility

Rs.5,000

Rs.10,000

68

- Not enabling the client to


observe the movement of
securities from his / her
demat account through
internet

Advice

Rs.5,000

69

- Non-maintenance of
separate record of details
(including the sources ) of
funds used for the purpose
of margin trading

Rs. 5,000

N.A.

70

- Providing margin trading


facility using funds other
than own funds and / or
borrowings from scheduled
commercial banks and
NBFCs regulated by RBI

Rs.50,000

Rs.1,00,000

280

Rs.1,00,000

Sr.
Violation
No.

Rule/Byelaw/ Regulation/Notice no.

Up to 3
instances

Multiple
instances

71

- The total indebtedness


of the trade member.

79

Dealing in securities in
OWN account.

0.01% of the value of trades done


in its own account subject to a
minimum of Rs.5,000 and a maximum
of Rs. 25,000

80

Non-appointment of CEO

Matter to be referred to SEBI

81

Governing Board of the


Trading Member not having
the prescribed composition

82

Staff memebrs of the


Trading Member not
segregated from the
functions of the parent
stock exchange

281

II

Post Compliance Inspection

Submitting wrong Compliance Certificate


regarding implementation of suggestions
made at the time of inspection

In respect of repeated violations


observed in both the last normal
inspection and the post compliance
inspection

Rs. 15,000

- where the penalty was levied

Twice the amount of penalty


levied under routine
inspection

- Where the Member was issued warning


or was reprimanded

Fines levied for multiple


instances under routine
inspection

Note :
1

Inspection of books of registered Sub-brokers to be done - 20% per year

All the requisite records, if available / maintained by members in electronic form, shall be considered as compliance.

* Based on number of contract notes


** Based on number of clients
# Based on number of trades
## And to raise the shareholding to the prescribed level.

282

Notice no
Notice date
Subject
Segment Name

:
:
:
:

20080211-19
Monday, February 11, 2008
Client Margin Information
General

CONTENTS :
To
Member brokers
The member brokers of the Exchange are hereby informed that at present reports are being downloaded to member
brokers on a daily basis, which give the client-wise details of VaR, ELM and Mark To Market margins levied by the
Exchange.
As per the directions of SEBI, the member brokers are now advised to inform their clients about the margins levied on
their traded positions on a day-to-day basis by way of either sending the margin information through email or along
with the physical contract notes. The member brokers are also advised to include the following information in the
statements being provided to their Clients:
l

Total collateral deposits placed by the client upto day T-1 (with break-up in terms of cash, FDRs, BGs and securities)

Collateral deposits utilised towards margins upto the end of T-1

Collateral deposits placed by the client on day T (with break-up in terms of cash, FDRs, BGs and securities)

Margin adjustments for T day

Collateral status (balance with the member / due from the client) at the end of T day

The member brokers are required to comply with the said requirements with effect from February 18, 2008.
For any clarifications member brokers may contact the following Exchange officials:
Mr.Mitesh Thakkar and Mr. Nitesh Agarwal
Phone Nos.- 22721233/34 Ext - 8879/8354

P K Ramesh
General Manager
Surveillance and Supervision

Yogesh Bambardekar
Manager
Surveillance and Supervision

283

Notice No
Date
Subject
Dept Name
Segment Name

:
:
:
:
:

20060221-12
21/02/2006
Penalty Norms for Inspection of books of accounts and other Documents - Cash Segment
Inspection
Equity

With a view to ensure better compliance from the trading members and to complete the inspection process smoothly
the Exchange, has decided to impose penalty for non submission of required details/ documents/ records for inspection
purposes by the members, within the prescribed time.
The penalty structure in respect of the above is as under: -

Sr. No.

Particulars

Fines/ Penalties.

1.

Non-Submission of the Inspection Questionnaire duly filled in by


the member within the specified time, as mentioned in the letter
addressed to the member whose inspection is ordered.

Rs. 500/- per day from the expiry


of the specified time till the
questionnaire is submitted.

2.

The member Submitting Inspection Questionnaire with incorrect


or incomplete information.

Rs. 5,000/-

3.

Not making available the documents / records for inspection


purposes within the prescribed time without proper justification.

Rs. 500/- per day from the


expiry of the specified time till the
records / documents are submitted.

Trading members are advised to take note of the above.


In case the Trading Members require any clarification, they may please contact any of the following officials: -

NAME

INTERCOM NO.

Ms Parul Kothari

8196

Ms Shaila Valsan

8316

Ms Amita Tarwale

8262

Sanjiv Kapur
General Manager
Surveillance & Supervision

Pankaj Gupta
Asst.General Manager
Surveillance & Supervision

284

Notice no
Notice date
Subject

:
:
:

Segment Name

20051102-6
Wednesday, November 02, 2005
Introduction of norms for imposition of late fees / fines/ and penalties WDM / RDM /
Corporate Debt Segment
General

The Exchange introduced its wholesale debt segment (WDM) for reporting of trades in government securities, in June
2001 (Exchange Notice No.74133/2001 dated January 11, 2001). A Retail Debt Segment (RDM) for executing
transactions in government securities through the Order Matching mechanism was introduced in January 2003
(Exchange Notice No.20030114-17 dated January 14, 2003). The Exchange also streamlined the procedures for
reporting of Spot Market Deals and for execution of Specific Bargains in Corporate Debt Securities in August 2003
(Exchange Notice No.20030806-3 dated August 6, 2003).
The Exchange has laid down prudential norms for carrying out inspection of the Books and Accounts of the Trading
Members in the WDM / RDM segments and also the deals reported in the Corporate Debt segment.
The Exchange has now devised norms for imposing late fees, fines and penalties for the WDM/RDM/Corporate Debt
segment. The norms have been approved by the Disciplinary Action Committee (DAC) of the Exchange in its meeting
held on October 20, 2005.
Statement indicating the nature of irregularity/violation and the consequential late fees, fines and penalties that would
be levied is enclosed for the information of the Trading Members. The Trading Members may please note that these
norms shall be applied for the violations observed during the course of inspection conducted on or after November 7,
2005.
It may be noted that the actions including fines for violations are only indicative. In case of a large number of instances
of a violation involving large amount of funds / large quantity of securities or instances of repetitive nature, the DAC
may take such strict action as it may deem fit including levy of higher fines / suspension / expulsion.
The Trading Members are once again advised to ensure compliance with the various Rules, Byelaws & Regulations of
the Exchange.
In case the Trading Members require any clarification, they may please contact any of the following officials :

NAME

INTERCOM NO.

Mr. Pankaj Gupta

8120

Ms. Shaila Valsan

8316

Ms. Parul Kothari

8196

Mr. Amita Tarwale

8262

P. K. Ramesh
Dy. General Manager
Surveillance & Supervision

Pankaj Gupta
Asst. General Manager
Surveillance & Supervision

285

Wholesale Debt Market Segment, RDM & Spot Deals in Corporate Debt
Sr. Violation
No.
I

Rule/Byelaw/
Regulation/Notice no.

Up to 3
instances

Multiple
instances

List of violations alongwith indicative fines


WDM / RDM

WDM trades not settled on T+1


(effective from May

Exchange Notice no. 20050520-8


dated May 20, 2005 24, 2005)

Rs.5,000

Rs.10,000

WDM prices quoted on a cuminterest basis (Dirty price)

Exchange Notice No. 74133/2001


dated January 11, 2001

Advice

Warning

Non-maintainance of the prescribed


Net-worth level in WDM/RDM

Exchange Notice No. 74133/2001


dated January 11, 2001 &
20030114-17 dated
January 14, 2003

Warning

Issue of contact notes in WDM


without reporting to the Exchange

Exchange Notice No. 74133/2001


dated January 11, 2001

Rs.5,000*

Rs.10,000*

Difference in rate mentioned in the


contract note and the confirmation
slip.

Notice No. 5116/93 dated


November 11, 1993.
Advice

Reprimand

Specific Bargains
6

Execution of transactions in
securities not listed/not permitted
on the Exchange without taking
permission for specific bargains

Byelaw 45, 49 & 50.


Exchange Notice No. 20030806-3
dated August 6, 2003

Rs.10,000

Rs.25,000

Issue of contract notes in the case


of specific bargains prior to
obtaining written permission
from the Exchange

Exchange Notice No. 20030806-3


dated August 6, 2003

Advice

Warning

Byelaw 199/ Exchange


Notice No. 4914/96
dated August principal transactions.

Rs.5,000

Rs.10,000

Spot Transaction
8

Not taken written consent from the


client for principal to

13,1996.

Contract Notes not issued / not in


prescribed Form B for principal to
principal transactions.

Reg. 14/ Exchange


Notice No. 4914/96
dated August 13,1996

Rs.5,000

Rs.10,000

10

Transactions done on a spot basis


are not at all reported to the
Exchange.

SEBI Circular no. SMD/RCG/CIR/


(BKG)/293/95 dated March
14,1995.

Rs.10,000

Refer matter
to DAC

11

Transactions done on a spot basis


are not reported to the Exchange
within the prescribed time limit.

SEBI Circular no. SMD/RCG/CIR/


Rs.5,000
(BKG)/293/95 dated March 14, 1995.

Rs.10,000

12

Transactions done on a spot basis


are not settled within the prescribed
time limit.

Section 2(i) of the SCRA, 1956.

Rs.10,000

286

Rs.5,000

Sr. Violation
No.

Rule/Byelaw/
Regulation/Notice no.

Up to 3
instances

Multiple
instances

Contract Notes
13

Non-issue of contract notes.

Bye law 219 &


Exchange Notice No.5116/93
dated November 11, 1993.

Rs.5,000*

Rs.10,000*

14

Contract Note not as per the format


prescribed by the Exchange

Exchange Notice
dated February 20, 2001

Advice

Rs.5,000

15

Board Resolution / Power of


Attorney for signing of Contract Notes
not submitted to the Exchange

Exchange notice no.1024/98


dated March 20, 1998.

Advice

Rs. 5,000

16

Contract notes not issued within 24


hours of trade execution or
duplicates of the contract notes
issued not acknowledged by clients
/ no proof of delivery.

Bye law 247 A/


Exchange Notice No.4914/96
dated August 13, 1996

Advice

Rs.10,000*

17

Duplicates of the contract notes


issued not maintained. Counter
foils maintained having no adequate
details.

Exchange notice no. 4850/97


dated December 10, 1997.

Advice

Warning

18

Instances of brokerage charged


at a rate higher than the
permissible maximum.

Regulation 14.1

The Member to be advised to


refund the excess brokerage
charged to the constituents and a
fine of an equivalentamount or
Rs 5000/-, whichever is higher,
be levied on the Member.

Books of accounts & other documents


19

- Not maintained
- Not maintained properly
- Not made available
for verification when asked for.

20

Segregation of Exchange wise /


Segment wise client edgers not
maintained.

21

Incomplete / Non-maintenance of
Register of Complaints

Reg. 17(1) of the SEBI (Stock


Brokers & Sub Brokers)
Rules, 1992.

10,000/5,000/Rs.10,000
Rs.10,000

Exchange notice no. 4850/97


dated 10.12.1997.

Advice

Reprimand

Dealing with clients


22

Securities due to the clients


transferred to the members
beneficiary account.

Bye law 247A/


Exchange notice nos. 7031/94
dated 6.12.1994 & 4850/97
dated 10.12.1997.

Reprimand

Rs.5,000

23

Transaction with
clients in cash.

Notice no. 20041019-4


dated October 19, 2004

Advice

Rs.10,000

Notice no. 1798/97


dated April 24, 1997

Advice

Rs.10,000**

Client Registration
24

- Non execution of Client


Registration Form or maintaining
incomplete client database.

287

Sr. Violation
No.

Rule/Byelaw/
Regulation/Notice no.

- Non execution of member-client


agreement or agreement not in
prescribed format.

Up to 3
instances

Multiple
instances

Advice

Rs.10,000**

5,000/-

10,000/-

10,000/-

20,000/-

Dealing with Intermediaries


25

Sharing of brokerage with

Byelaw 218

-another member
-an employee of another member
or a person for or with whom
trading members are forbidden to
do business.
26

Allotting BOLT TWSs to another


member of the Exchange.
said BOLT TWS

Notice no. 104616/2001


dated November 12, 2001.

Rs.15,000 per instance and


de-activation of the

27

Usage & operation of a trading


terminal by a person (an employee
of the trading member) other than
an approved user.

Exchange Notice No. 104616/2001


dated November 12, 2001.

Advice

28

Trading terminals provided to


unregistered intermediaries/
unauthorised extension of trading
network/ non submission ofrequired
details of IML terminals to the
Exchange

Exchange Notice No.104616/2001


dated November 12, 2001.

Rs. 20,000 per terminal for the


first five terminals and the fine
amount be stepped up by
Rs. 5,000 per terminal in
successive batches of five
terminals each thereafter.

Rs. 10,000

Others
29

Non receipt of reply seeking


clarification on inspection.

Advice

30

Delay in submitting the Compliance


Certificate regarding implementation
of suggestions made at the time
of inspection

The Compliance of the Inspection


Report observations should be
submitted within 30 days /
prescribed time of the date of
receipt of the letter communicating
the observations failing which, a
fine of Rs.5,000/- may be
imposed.

288

Rs.5,000/-

II

Post Compliance Inspection

Submitting wrong Compliance


Certificate regarding implementation of
suggestions made at the time of inspection

In respect of repeated violations


observed in both the last normal
inspection and the post compliance
inspection

Rs.15,000

- where the penalty was levied

Twice the amount of penalty


levied under routine inspection

- Where the Member was issued


warning or was reprimanded

Fines levied for multiple


instances under routine
inspection

Note :
1

All the requisite records, if available / maintained by members in electronic form, shall be considered as
compliance.

* Based on number of contract notes


** Based on number of clients

289

Notice No
Notice date
Subject
Segment Name

:
:
:
:

20060331-6
Friday, March 31, 2006
Penalty structure for non-registration of client codes by the stipulated time
General

SEBI vide its Letter No. SMDRP/Policy/CIR-39/2001 dated July 18, 2001 has made it mandatory for brokers to use
unique client codes for all their clients. Further, all brokers are required to furnish particulars of their clients to the
Stock Exchanges in respect of all clients having order value of Rs. 1 lakh and above.
SEBI vide its letter dated December 30, 2002 has clarified that consequent to the above directives, w.e.f. January 1,
2003 no member shall be allowed to execute any order having value of Rs. 1 lakh or more for any client without obtaining
the requisite details from the client. SEBI vide this letter further directed the Exchanges to promptly deactivate the
trading terminals of the trading members who do not implement the provisions of Unique Client Code w.e.f. January 1,
2003.
SEBI vide its Circular No. SEBI/MRD/SE/Cir-34 /2003/29/09 dated September 29, 2003 decided to call for the requisite
client details from the brokers on a monthly basis. As per the SEBI Circular, such information for a specific month
should reach the Exchange within 7 working days of the following month.
Attention of trading members is also drawn to Exchange Notice No. 20040609-24 dated June 09, 2004 whereby trading
members were informed that with effect from June 11, 2004 all client codes punched for order value of Rs. 1 lakh and
above on any day, need to be registered strictly by the next working day.
Currently, the Exchange provides members with a daily report on unregistered client codes in respect of all client codes
punched but not registered by the member, for order value of Rs. 1 lakh and above. In addition, the Exchange also
provides members with reports on the total unregistered codes for a month on 3 occasions in the next month, namely
on the 2nd, 5th and 7th working day of the next month. This is being done in order to enable members to register client
code details with the Exchange before the stipulated time towards compliance of SEBI and Exchange requirements.
In order to ensure timely registration of client codes, a penalty scheme is being ntroduced from April 2006 for nonregistration of client codes by the stipulated time. The penalty structure would be as follows
Sr. No.

* No. of unregistered codes


for a month

Fine ( Rs. )

1 to 5

NIL

6 to 20

2000/-

21 to 50

5000/-

More than 50

10000/- and BOLT Terminals to be


deactivated for a single day

Wrongly punched client codes as intimated by the member are reduced from the total number of unregistered
codes to arrive at the final count of unregistered client codes.

The penalty levied for a particular month will be debited through the General Charges bill of the member pertaining to
the succeeding month. To clarify, penalty for not registering the client codes for April 2006 by the stipulated time i.e.
the 7th working day of May 2006 will be debited through the General charges bill pertaining to May 2006.
After imposition of the fine, the member will have to either register the client codes or in case the codes were wrongly
punched, the member would be required to submit details in the prescribed format, within 5 working days of the stipulated
time for registration of the client codes. In case a member fails to do so, his BOLT terminal would be liable for deactivation
/ continue to remain deactivated till this is done.

290

The above penalty structure would be implemented from the month of April 2006. Consequently, all client codes punched
for order-value of Rs.1 lakh and above from April 1, 2006 and which have not been registered by the trading member
with the Exchange before the stipulated date, will attract the penalty as given above. Trading members are advised in
their own interest to strictly ensure registration of all client codes by the stipulated time.
For any assistance / clarification in the matter, trading members may contact the following officials on Tel. Nos. 022 22721233 / 34:
SR.NO.

NAME

INTERCOM NO.

Mr. Mukesh Kuwad

8497

Mr. Sanjay Pardiwala


(For system-related queries only)

8252

Mr. K. Mohanan
(For Client registration issues)

8416

Trading members may also seek assistance from their respective Relationship Managers in the Member Services and
Development department in this respect.

P. K. Ramesh
Dy. General Manager
Surveillance and Supervision

Mukesh Kuwad
Dy. Manager
Surveillance and Supervision

291

INDEX
SR. NO.

TOPIC

PAGE NO.

1.

Introduction

2.

Inspection Mechanism

3.

Maintenance of Books of Accounts, Records and Documents

4.

Dealing with Clients

11

5.

Mode of Payment & Delivery

15

6.

Compliance Officer

16

7.

Unique Client Code (UCC)

17

8.

Permanent Account Number (PAN)

18

9.

Trading Terminals (BOLT / IML)

19

10.

Pro-Account Trading

20

11.

Brokerage

21

12.

Statement of account for Funds & Securities

22

13.

Collection of Margins from Clients

23

14.

Client Margin Information (Margin reporting to the clients)

24

15.

Principal to Principal Transactions

25

16.

Margin Trading

26

17.

Client Funding

27

18.

System Audit

28

19.

Trading through another member

29

20.

Sub-brokers

30

21.

Remisier

32

22.

Display of SEBI Registration Certificate & Notice Board

33

23.

Anti Money Laundering Provisions

34

24.

Specific Bargains

35

25.

Bulk Deals

36

26.

Block Deals

37

27.

Straight Through Processing (STP)

38

28.

Transactions in scrips where FII limit has been reached

39

29.

Advertisement

40

30.

Involvement in any other business / any other capacity

41

31.

Audited Accounts & Networth Certificate

42

32.

Compliance with Regulatory Directives

43

33.

Code of conduct for members

44

34.

Penalty Norms

46

35.

Index of Relevant Rules/Bye-laws/Regulations/Notices

50

36.

Relevant Rules/Bye-laws/Regulations/Notices

56-291

The Exchange has been conducting inspection of the trading members on a regular basis. During the course of
inspection of the books and accounts, records and documents of the trading members, the Exchange has observed
certain common irregularities / deficiencies.
This Compliance Manual is prepared in order to help the trading members to take note of the statutory compliance
requirements so that such irregularities / deficiencies can be avoided.
In case of any clarifications, the trading members may contact the following officials of the Exchange at Telephone no
22721233/34.

Sr. No.

Name of the Official

Extn. No.

1.

Ms. Parul Kothari

8196

2.

Ms. Shaila Valson

8316

P. K. Ramesh
General Manager
Surveillance & Supervision

Mitesh Thakkar
Manager
Surveillance & Supervision