The Securities and Exchange Board of India (SEBI) recently issued a circular aimed at enhancing the ease of doing business in the securities market. The circular, SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/25 dated April 24, 2024, addresses concerns raised by market participants regarding the publication of text related to the ‘fit and proper’ status on contract notes.
SEBI received representations from market participants via the Industry Standards Forum (ISF) requesting a relaxation in the requirement outlined in Chapter 6 at Para 2.4.2.2.2 of the Master Circular (Stock Exchanges and Clearing Corporations) dated October 16, 2023. This requirement pertains to publishing text regarding ‘fit and proper’ status on contract notes, in accordance with Regulation 19 and 20 of the SEBI (Securities Contract (Regulation) (Stock Exchanges and Clearing Corporation) Regulations, 2018 (SCR (SECC) Regulations, 2018).
In response to these representations and as a measure to facilitate ease of doing business, SEBI has decided to amend the requirement. The circular states that the text of Regulation 19 of the SCR(SECC) Regulations, 2018 on contract notes is no longer mandatory. Instead, a reference to the applicable regulation regarding fit and proper, along with the URL/weblink of Regulation 19 and 20 of the SCR(SECC) Regulations, 2018, shall be included in the contract note.
Stock Exchanges are instructed to make necessary amendments to their bye-laws, rules, and regulations for the immediate implementation of this decision. Additionally, they are required to notify their members about the provisions of this circular and disseminate the information on their websites. The status of implementation must also be communicated to SEBI in the Monthly Development Report.
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Securities and Exchange Board of India
Circular No.SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/25 Dated: April 24, 2024
To
All recognised Stock Exchanges
Dear Sir/ Madam,
Sub: Ease of Doing Business: Text on Contract Note with respect to Fit and Proper status of shareholders
1. SEBI has received representations from market participants through the Industry Standards Forum (ISF) to relax the requirement, under chapter 6 at Para 2.4.2.2.2 of the Master Circular (Stock Exchanges and Clearing Corporations) dated October 16, 2023, of publishing the text pertaining to ‘fit and proper’ on the contract note in terms of Regulation 19 and 20 of the SEBI (Securities Contract (Regulation) (Stock Exchanges and Clearing Corporation) Regulations, 2018 (i.e. SCR (SECC) Regulations, 2018).
2. As a step towards ease of doing business, the requirement to publishing the text of Regulation 19 of the SCR(SECC) Regulations, 2018 on the contract notes is no longer required and Clause 2.4.2.2.2 under Chapter 6 of the Master Circular (Stock Exchanges and Clearing Corporations) dated October 16, 2023 stands amended as under:
“In the post listing scenario, in lieu of text only a reference of the applicable regulation with regard to fit and proper (by mentioning the URL/weblink of Regulation 19 and 20 of the SCR(SECC) Regulations, 2018) shall be made part of the contract note.”
3. The Stock Exchanges are accordingly advised to:
a. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately, as may be necessary/applicable.
b. bring the provisions of this circular to the notice of their members and to disseminate the same on their website.
c. communicate to SEBI the status of implementation of the provisions of this circular in the Monthly Development Report.
a. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities market.
Yours faithfully,
Vishal Shukla
General Manager
vishals@sebi.gov.in
022-26449959
