SEBI, based on the recommendations of the Secondary Market Advisory Committee (SMAC) chaired by Dr R H Patil, issued a circular on March 19, 2004 specifying the regulatory framework for Margin Trading Facility and the modus operandi for the Clearing Corporation/House of the stock exchanges to act as approved intermediaries under the Securities Lending Scheme, 1997 (SLS) for the purpose of borrowing and lending securities to meet settlement shortages. The SMAC in its meeting held on November 24, 2004 has reviewed the Margin trading Facility and the Securities Lending Scheme and made certain recommendations.

A discussion paper outlining the deliberations and the recommendations of the SMAC in this regard is placed below for public comments. Comments on the discussion paper may be forwarded to Shri V.S. Sundaresan, Deputy General Manager, SEBI, World Trade Centre, Centre-1, 29^th floor, Cuffe Parade, Colaba, Mumbai – 400 005