BSE reduces membership deposit by 90% for new members

* Aims to build an expanded pan national membership base to promote financial inclusion **

Bombay Stock Exchange Limited (BSE) has reduced membership deposit and fee requirements for new members in the BSE’s Cash and Equity Derivatives segments with immediate effect. In the new offer by the Exchange membership can be obtained by paying a deposit of Rs. 10 Lakh in place of the existing Rs. 1 crore.

“By offering this exciting pricing scheme we intend to make it affordable to all those aspiring for BSE membership,” said Mr. Madhu Kannan, Managing Director & CEO, BSE. “We hope this new scheme to generate a good response from the market participants whereby building and expanding our existing membership base to promote financial inclusion,” he added.

Details of the new scheme :

In addition to the aforesaid amount of Rs.10 Lakhs (Interest free deposit) the member has to pay the following amounts at the time of commencement of business :

• Base Minimum Capital (Refundable) – Rs.10,00,000/- (Rs.1.25 lakhs in cash + Rs.8.75 lakhs Cash/Cash equivalent).
• Trade Guarantee Fund (Refundable) – Rs.10,00,000/- (Cash/Bank Guarantee/FDR)
• Admission Fees (Non refundable) –

-Rs.5,000/- (Add : Service Tax as applicable) : if the applicant applies in all segments.

-Rs.2,50,000/- (Add: Service as applicable ) : if the applicant applies only in the cash segment.

• Annual Subscription (Non refundable) – Rs.25,000/- (Add : Service Tax as applicable)
• Initial Contribution towards Trade Guarantee Fund (Non refundable) – Rs.10,000/- (Add : Service Tax as applicable) – Cash

Moreover, to facilitate the process, application and submission of documents has been made online.

For more details, please refer to the FAQs attached herewith.

Kalyan S. Bose

Head – Corporate Communications

Corp.comm@bseindia.com

www.bseindia.com

April 22, 2010

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FAQs

What is the net worth requirement for becoming a deposit based member?

The minimum net worth criteria for becoming a Trading Member of the Exchange is 30 Lakhs. This net worth criteria is applicable to individuals as well as to corporate applicants.

What is the Networth requirement for Derivatives segment?

Professional Clearing Member (PCM): 3 Crore

Trading Cum Clearing Member (TCM): 3 Crore

Self Clearing Member (SCM): 1 Crore

Trading Member (TM): 25 Lacs

Limited trading member (LTM): 25 Lacs

What is the minimum paid up capital requirement?

The minimum paid up capital of the firm as per SEBI norms is 30 Lakhs

Which other membership is offered along with Deposit Based Membership?

Derivatives Membership – along with cash segment

(Admission fees would be Rs 5,000/- if applicant applies for both the segments: Equity and Derivatives else in case the applicant applies only for equity membership then admission fees will be Rs 2,50,000/-)

Corporate Debt & Mutual Funds – Once the member receives SEBI registration (Equity).

If I am sub – broker of BSE Ltd., is it compulsory for me to terminate the sub – brokership

It is not compulsory for the applicant to cancel the sub – brokership while applying for Trading Membership at BSE Ltd. Please note that the sub – brokership will have to be cancelled before commencement of business and the Trading Member will have to give an undertaking before the documents are forwarded to SEBI that he will not commence business until cancellation of sub – brokership.

Can my deposits at NSE be shown in the net worth statement to be submitted to BSE Ltd.?

Yes the deposits at NSE can be taken for the purpose of calculating net worth statement for BSE Ltd.

Is it compulsory to have an office in Mumbai?

No it is not mandated to have an office in Mumbai. The mandation was removed vide notice number Notice no: 20021023-4 dated Wednesday, October 23, 2002.

Who can apply for Deposit Based Membership?

Corporates and Individuals can only apply for Deposit Based Memberships.

What is the total cost for obtaining the Trading Membership Right at BSE Ltd.?

Please note monies specified in points 4, 5 & 6 are non-refundable monies and exclusive of service tax.

* Admission fees would be Rs 5,000/- if applicant applies for both the segments: Equity and Derivatives else in case the applicant applies only for equity membership then admission fees will be Rs 2,50,000/-

Can Partnership firm apply for membership?

No, Partnership firm cannot apply for membership.

Do we provide exposure on the Deposit?

Yes, Exposure is provided on 10 Lacs deposit and TGF of 10 lacs

Is there any lock-in period on the deposit?

No, there is no lock–in period on the deposit.

Process for surrender of Membership (Refund of deposit)?

Any trading member who wants refund of Interest Free Deposit of Rs.10 lacs shall be first required to apply for surrender of trading membership right. Before applying for surrender of trading membership right, such member shall ensure voluntary closure of business. The voluntary closure should be at least for a period of 6 months prior to the date of surrender. Where the trading terminals of the member have remained deactivated for a period of 6 months prior to the date of surrender it shall be construed as closure of business. On receipt of application for surrender, the Exchange will give Public Notice in newspaper to enable the investors /public to lodge claims, if any, against surrendering trading member, giving a period of 3(three months) from the date of Public Notice. However, this condition would not apply to the members who have not commenced business or have not activated their trading terminals at all. Further, the amount of Interest Free Deposit will be refunded only after recovering outstanding amount if any by BSE and after getting NOC from SEBI.

What portion of the total deposit to be included in the Networth?

Deposit of Rs. 10 Lacs can be included in the Networth.

FAQ (Existing DBM Members)

Who is eligible for this scheme?

DBM member who also holds membership in BSE’s Derivative segment.

Parameter for calculation of Rebate ?

Interest @ 12% p.a. will be calculated on Rs. 65/90 lacs subject to the transaction charges paid by the member in all the segments whichever is less.

How will the members benefit out of this scheme?

The existing DBM’s would be compensated to the extent of their notional interest loss on their existing cash deposit (Over and above Rs. 10 lacs) lying with the Exchange by giving them a rebate on the transaction charges paid by them.

Initially the above rebate @12% p.a. will be credited to their accounts on a quarterly basis for a financial year subject to a maximum amount which is equivalent to 12% of their cash deposit of Rs. 65/90 lacs or the transaction charges paid by the member in all the segments whichever is less. The above will be reviewed periodically.

No carry forward of rebate will be allowed from one quarter to another quarter.

If the member wants to avail this facility he has to lock in the existing deposit of Rs. 75/100 Lacs for a further period of 3 years from the expiry of existing lock in period if applicable.

From when will the scheme be applicable?

The scheme will be applicable from the date of member’s letter agreeing to lock-in the deposit for 3 years.

Is there any time period to apply for the new scheme?

It is in the interest of the member to apply fast as rebate will get pushed to the next quarter if he delays the same.

If the member does not opt for this scheme will the member continue to get exposure on the deposit amount?

Yes

Is there any Change in the BMC component?

At present BMC of Rs. 10 lacs is deposited in cash form. Existing DBM’s can convert their BMC composition in SEBI prescribed format i.e. Rs. 1.25 Lacs in cash and balance Rs. 8.75 lacs in Cash/BG/FDR. This will be applicable to all DBM members.

What if the member does not want to lock his deposit?

Then he does not get any benefit of the scheme.