November 22, 2004


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Re: Clarification on the definition of institutional trades and use of physical contract note

Dear Sir,

1)   This is a clarification to our previous circular no. DNPD/Cir-22/04 dated April 1, 2004 which mandated the use of the Straight Through Processing (STP) system for all institutional trades w. e. f. July 1, 2004.

2)   It is reiterated that STP is mandatory for all institutional trades. However some institutions who directly settle their trades with the brokers and do not use custodians in the settlement process have raised questions on the mandatory applicability of STP for their trades. It is clarified that an institutional trade for the purpose of STP shall mean a trade which is settled through a custodian.

3)  SEBI has also received feedback from the market that some of the institutions insisted receiving the contract notes in physical form besides the issuance of contract note in the prescribed format of the STP system (IFN 515). This has caused unnecessary duplication of work, increased cost and brought in inefficiencies in the market. Accordingly, it is clarified that institutional trades where electronic contract note in the prescribed format is issued, no physical contract note (for such a trade) shall be issued by the brokers w. e. f. December 1, 2004.

Yours sincerely,


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