DEPUTY GENERAL MANAGER
Market
Regulation Department
E-mail: sundaresanvs@sebi.gov.in
SEBI/MRD/SE/Cir-
32/2003/27/08
The Executive Directors/Managing
Director/Administrators
Of All Stock Exchanges
Dear Sir/Madam,
Sub:- “Pro – account”
trading terminal
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 pro-account from various
locations rather than using “pro-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” 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, stock exchanges are
directed to ensure the following:-
2.1. Facility
of placing orders on “pro-account” through trading terminals shall be extended
only at one location of the members as specified / required by the members
2.2. 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.
2.3. In case
any member requires the facility of using “pro-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 “pro-account”
at multiple locations and the stock exchange may, on case to case basis after
due diligence, consider extending the facility of allowing use of “pro-account”
from more than one location.
3. Stock Exchanges
are directed to implement the above requirement with immediate effect and take
necessary disciplinary action wherever such facility is being misused by any
member.
4. The
undersigned has been authorized to direct the exchanges to
4.1. make necessary amendments to the relevant bye-laws,
rules and regulations for the implementation of the above decision immediately.
4.2. 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.
4.3. 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 for the month of August, 2003.
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.
Yours faithfully,
V