SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021
CIR.NO:-SMD/POLICY/IECG/ 1 - 97
February 11, 1997
To,
The Managing Directors/
Executive Directors of all
the Stock Exchanges
Dear Sir,
Please find enclosed a copy of the Minutes of the meeting of the Executive Committee of the Inter Exchange Co-ordination Group held on February 04, 1997. As was decided at the meeting, all Stock Exchanges are required to initiate immediate action on the following points:
- Base Minimum Capital
Considering the liquidity problem of the brokers, particularly of the smaller Stock Exchanges, it has been decided that the additional base minimum capital may be brought in, in the form of specified liquid shares. Further, in case where a member has crossed the intra-day trading limits, he will deposit the additional capital with the Stock Exchanges which will be retained with the stock exchange for a period of one month instead of six months at present.
- Uniform Price Band
As regards to the uniform price band, it has been decided that the price band will relate to the closing price of the scrip on the previous day which will be the weighted average price of the last half-an-hour trading in the scrip in that Exchange. This would bring about uniformity in determination of closing price. Since different Stock Exchanges are not uniformly following system of daily price bands which leads to enormous volatility in the market, it has been decided that daily price band would be 10% with an overall weekly limit of 25%. However, in case of scrips up to value of Rs.20/-, the price bands could be decided by the Stock Exchange at their discretion. Needless to mention that Stock Exchanges would continue to monitor all cases where price manipulation is suspected.
- Know Your Client
The Stock Exchange would ask member brokers to maintain a database of their client. The exchanges would assess the present procedure followed by the member brokers and design a suitable client introduction form in consultation with SEBI. The format ‘Client Registration Application Form’ proposed by UTI Securities Exchange Limited is enclosed for guidance.
- Uniform Post Budget Trading Session.
It has been decided that all the Stock Exchanges will hold the uniform post-budget trading session from 6.00 p.m. to 8.00 p.m.
- Implementation of Recommendation of B. D. Shah Committee on Short Sales.
It has been decided that Stock Exchanges would ask their members to submit not only their scrip-wise net short sale position but also net long position at the end of each trading day. The Stock Exchange would compile the scrip-wise cumulative long purchase position like short sale position at present and would make it public before opening of the trading on the next day, through notice board, trading terminal screen as well as media. This transparency in all Stock Exchanges for both sell and buy position would improve the functioning of the market.
- Investor Information Booklet.
SEBI has issued a publication titled "Investor Grievances Rights and Remedies". All the Stock Exchanges are advised for publication of this in regional language for the benefit of the investors.
- Time Stamping of Orders.
The broker member should maintain record of time when the client has placed the order and reflect the same in contract note along with the time of execution of the order.
All the Stock Exchanges are advised to implement the above with immediate effect.
Thanking You,
Yours faithfully
sd /
O. P. GAHROTRA
SR. EXECUTIVE DIRECTOR
SECONDARY MARKET DEPARTMENT
cc.to
-
- All Executive Directors of SEBI.
- All Divisional Chiefs of SMD : Requested to circulate to all their officers.
- All SEBI Nominee Directors on the board of Exchanges.
- All Regional managers i.e. SRO, NRO and ERO.
Note:
- SMD Stock Exchange Administration Division to follow-up with the Exchanges for implementation .
- All the SEBI Nominee Directors on the Board of Exchanges to follow-up the issues in the Board Meeting of the Exchanges