To:E.Ds / M.Ds. of all Stock Exchanges

SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021

SMDRP/POLICY/CIR-16/1631/98
June 16, 1998

To,

The Executive Directors/Managing Directors
of all the Stock Exchanges

Dear Sir,

Certain measures were taken by SEBI yesterday i.e. (June 15, 1998) in consultation with the Inter-Exchange Surveillance Group and the Stock Exchanges regarding the introduction of concentration margins and incremental margin on Carry Forward trades. The market position was further reviewed today and in consultation with Stock Exchanges, it has been decided that the Stock Exchanges should take the following measures. These measures are temporary and will be reviewed shortly :
 
 

1. With effect from June 17, 1998, the net outstanding sale position at the end of any trading day in each such security must result in delivery.
2. However, in respect of carry forward business, all outstanding short sale positions at the end of trading of June 16, 1998 will be squared up in the following manner:

1. atleast 50% of the current settlement, and
2. the balance in the succeeding settlement.

1. This measure will not be applicable for securities which are ‘No Delivery’. However, net sale transactions in these securities will attract a daily margin of 50% of the net outstanding position in the settlement in which the securities are in ‘No Delivery’. All outstanding net sale position at the end of the ‘No Delivery’ period must result in delivery.
2. Squaring up of net outstanding purchase position is permitted.

All Stock Exchanges must ensure strict compliance with these stipulations.
 

You are advised to keep a close watch on the outstanding positions and levy appropriate special margins in addition to the normal margins. A copy of the press release issued in this regard is enclosed.

Thanking you,

Yours faithfully,
 

P.KAR
EXECUTIVE DIRECTOR