Members of Stock Exchanges as Sub Brokers

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

To
The Executive Directors /Managing Directors
of all Stock Exchanges

Dear Sir,

Please find enclosed a copy of the minutes of the Annual Meeting of all Stock Exchanges held on March 19, 1997. As was decided at the meeting, all stock exchanges are required to initiate immediate action on the following :

1. Role of Sub-Brokers :

• Efforts should be made to revive the institution of ‘remisier’ under the Rules and Bye Laws of the stock exchanges. A remisier is an agent of a broker and is registered with the stock exchange. However he is not authorised to issue a Contract Note/Confirmation Note to his investor; instead the contract is issued by the broker and as such the broker takes full responsibility in respect of that deal. This way the interest of the investor vis-a-vis the remisier or broker is protected.
• Transfer deeds bearing rubber stamps on the reverse thereof other than those of clearing members of the stock exchanges/clearing house/clearing corporations, SEBI registered sub-brokers and remisiers registered with the stock exchanges shall be treated as bad delivery in stock exchanges. This shall apply to all transfer deeds dated June 1, 1997 and thereafter.
• No broker shall deal with a person who is acting as a sub-broker unless he is registered with SEBI. It shall be the responsibility of the broker to ensure that his clients are not acting in the capacity of a sub-broker unless he is registered with SEBI as sub-broker or is recognised by the stock exchange as a remisier.

2. Negotiated Deals :

With effect from June 1, 1997 all "negotiated deals" on the Stock Exchanges would compulsorily result in delivery of securities.

3. New Arbitration Act :

All the Stock Exchanges would amend their by laws relating to arbitration proceeding in line with the new Arbitration act within a period of three months.

4. Reconstitution of the Executive Committee of Inter Exchange Co-ordination Group :

The Executive Committee of the Inter-Exchange Co-ordination Group has been reconstituted. The Executive Committee of the Group would comprise of representatives of Ahmedabad, Mumbai, Calcutta, Delhi, Madras, National Stock Exchange and one representative from the Mangalore, Bangalore, Jaipur, Ludhiana, Magadh and Vadodra Stock Exchange.

All the stock exchanges are advised to implement the above with immediate effect.

Yours faithfully,

O. P. GAHROTRA
SENIOR EXECUTIVE DIRECTOR
SECONDARY MARKET DEPARTMENT

cc to

 a] Chairman’s Secretariat.
 b] All Executive Directors, Division Chiefs and Regional Managers of SEBI.
 c] All SEBI Nominee Directors on the Board of Exchanges.
d] All Division Chiefs requested to circulate to all their officers.
 

Note :

1. SMD Stock Exchange Administration Division to follow-up with the Exchanges for implementation of the decisions.

 
2. All the SEBI Nominee Directors on the Board of the Exchanges to follow-up the issues in the Board Meeting of the Exchanges.