GENERAL MANAGER

Market Regulation Department

E-mail: sundaresanvs@sebi.gov.in

SEBI/MRD/SE/Cir- 12/2005

May 13, 2005

The Executive Directors / Managing Director/Administrators

of All Stock Exchanges

Dear Sir / Madam,

Sub: Comprehensive Risk Management Framework for the Cash Market

Dear Sir,

1. Please refer to SEBI Circular No.MRD/DoP/SE/Cir-07/2005 dated February 23, 2005 on the captioned subject.

2. In terms of the said circular, the Stock Exchanges were required to put in place the necessary systems to ensure the operationalization of the comprehensive risk management framework with effect from May 18, 2005 (Wednesday). Further, the exchanges were to ensure that they have tested the software and removed any glitches in its operation well before the above mentioned date to avoid any problems in the live environment.

3. In view of the representations received from some of the Stock Exchanges requesting to make the provisions of the circular applicable, preferably, from Monday (instead of during the middle of the week), it has been decided that the provisions of the said Circular shall now be implemented with effect from Monday, the 30^th May, 2005, instead of Wednesday, the 18^th May, 2005.

4. Accordingly, the Stock Exchanges are advised to note that from the date of the scheduled implementation, no stock exchange shall permit trading activity unless the exchange is in a position to implement the revised risk management framework as specified in the aforesaid SEBI Circular.

5. The Stock Exchanges are advised to

a. 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.

b. 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 May 2005.

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, 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

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GENERAL MANAGER Market Regulation Department E-mail: sundaresanvs@sebi.gov.in SEBI/MRD/SE/Cir- 12/2005 May 13, 2005 The Executive Directors / Managing Director/Administrators of All Stock Exchanges Dear Sir / Madam, Sub: Comprehensive Risk Management Framework for the Cash Market Dear Sir, 1. Please refer to SEBI Circular No.MRD/DoP/SE/Cir-07/2005 dated February 23, 2005 on the captioned subject. 2. In terms of the said circular, the Stock Exchanges were required to put in place the necessary systems to ensure the operationalization of the comprehensive risk management framework with effect from May 18, 2005 (Wednesday). Further, the exchanges were to ensure that they have tested the software and removed any glitches in its operation well before the above mentioned date to avoid any problems in the live environment. 3. In view of the representations received from some of the Stock Exchanges requesting to make the provisions of the circular applicable, preferably, from Monday (instead of during the middle of the week), it has been decided that the provisions of the said Circular shall now be implemented with effect from Monday, the 30^th May, 2005, instead of Wednesday, the 18^th May, 2005. 4. Accordingly, the Stock Exchanges are advised to note that from the date of the scheduled implementation, no stock exchange shall permit trading activity unless the exchange is in a position to implement the revised risk management framework as specified in the aforesaid SEBI Circular. 5. The Stock Exchanges are advised to a. 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. b. 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 May 2005. 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, 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