Home Back   
 

LETTER DATED SEPTEMBER 09, 2004 OF RAM KISHAN CHIRIPAL STOCK & SHARE BROKERS

Dated 9th Sept. 2004

Mr. V S Sundaresan

The Secondary Market Policy Division,

Securities & Exchange Board of India

29th Floor, World Trade Centre No.1

Cuffe Parade, Mumbai – 400005

Sub:  Request for Informal Guidance under Clauses – 4 & 5 (ii) of the SEBI (Informal Guidance) Scheme, 2003

Respected Sir,

1)     We are a stockbroker registered with SEBI under Section-12 of the SEBI Act, 1992, vide Registration No. INB 050458627 and wish  to obtain your interpretative guidance on the Negotiated Deals  as on date.  The issue as we understand is as under:-

2)     A wishes to enter into a Negotiated Deal for sale of shares to B, who is a client of another stockbroker, through the on-line mechanism of the Exchange.  A & B would put their orders at the same time in the on-line trading system of the stock exchange.

3)     As we comprehend, the issue that would arise in that respect would be related to the SEBI Circular No:- SMDRP/POLICY/CIR-32/1999 dated 14/9/1999.  Various persons related to the stock markets have informed us that as per the said circular, from 14/9/1999 onwards, Negotiated Deals are allowed to be conducted only on the screen of the stock exchanges, just like any normal trade, and not in the manner allowed earlier, like through Negotiated window or off-the-floor of the Exchanges.

We have also been told that synchronized order placement per SE is not illegal, as has been stated by SEBI before the Joint Parliamentary Committee in the year 2001, implying that they are legal unless proved illegal by SEBI.  That is how ‘Block Deals’, which also fall in the category of ‘Negotiated Deals’ and are a frequent phenomenon, are allowed to be executed on the screens of the exchanges, as we understand.

4)     We are seeking your guidance under the said Scheme regarding the status of the Negotiated Deals under the existing legal provisions and the interpretation of the SEBI Circular No: SMDRP/POLICY/CIR-32/1999 dated 14/9/1999.

5)     We are also enclosing herewith a demand draft of Rs.25,000/- as required under Clause-6 (ii) of the said Scheme.

An early reply in this regard is sincerely solicited and shall be highly appreciated.

Thanking you

Yours faithfully

for M/s RAM KISHAN CHIRIPAL

 

 

SANJAY CHIRIPAL

Partner

 

Dated:  9th Sept., 2004

 

Encl:  Demand Draft of Rs.25,000/-

            No.163944 dtd. 9/4/2004 drawn on

            Canara Bank, DSE E/c N.Delhi

 

LETTER DATED SEPTEMBER 23, 2004 OF RAM KISHAN CHIRIPAL STOCK & SHARE BROKERS

 

Dated 23rd Sept., 2004

 

Mr. V S Sundaresan

The Secondary Market Policy Division,

Securities & Exchange Board of India

29th Floor, World Trade Centre No.1

Cuffe Parade, Mumbai – 400005

Sub:  Request for Informal Guidance under Clauses – 4 & 5 (ii) of the SEBI (Informal Guidance) Scheme, 2003

Respected Sir,

Kindly refer to our letter dated 9th Sept. 2004 in the captioned matter.  Further to that, we are forwarding herewith the following information to you, as required.

SEBI Registration No         :  INB  050458627

UIN No. under MAPIN         :  100056705

 

Thanking you

Yours faithfully

for M/s RAM KISHAN CHIRIPAL

 

 

SANJAY CHIRIPAL

Partner

REPLY GIVEN BY MRD-DIVISION OF POLICY

 

Deputy General Manager

Market Regulation Department – Policy

Email:-sundaresanvs@sebi.gov.in

MRD/Policy/IGS/AT/26980/2004

December 01, 2004

Shri Sanjay Chiripal

Partner

Ram Kishan Chiripal Stock & Share Brokers

24/4384, Ansari Road,

Flat No. 105, Darya Ganj

New Delhi – 110 002

 

Dear Sir,

 

 Sub: Informal Guidance – Interpretative Letter – Clarification on Negotiated Deals

 Ref:  Request for Guidance from Ram Kishan Chiripal Stock & Share Brokers vide letters dated September 09, 2004 and September 23, 2004.

 

1.      Please refer to the letters referred to above seeking clarification on Negotiated Deals under SEBI (Informal Guidance) Scheme, 2003.

2.      You had represented as under:

a.      You are a member of the Delhi Stock Exchange and registered with SEBI.

b.      You have sought our clarification on the interpretation of the SEBI circular dated September 14, 1999 on negotiated deals under the following circumstances:-

                                      i.      A wishes to enter into a negotiated deal with B for sale of shares to B, who is a client of another stock broker.

                                    ii.      A and B decide to put their orders in the same time in the online trading terminal of the Stock Exchanges.

                                  iii.      In such a scenario, whether such synchronized order placement would amount to a violation of SEBI circular dated September 14, 1999.

 

3.      Our clarification to your aforesaid query is as under:-

 

  1. Synchronized order placements/transactions as mentioned by you are not per se illegal or a violation of the aforesaid SEBI circular. However, any such transaction can be examined by Stock Exchanges/SEBI in light of all circumstances, including other transactions of the parties, for motive/intent behind the same or its manipulative effect, with a view to verify whether it was in compliance with the applicable laws, regulations and bye-laws, including section 12A of the SEBI Act, 1992 and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
  2. If any violation is found, suitable action may be taken by the stock exchange/SEBI.

 

4.      The above clarifications are based on the representation made to the Department in your aforesaid letter. Different facts or conditions might require a different result. This letter does not express decision of the Board on the questions referred.

 

 

Yours faithfully,

 

 

 

V S SUNDARESAN