Securities and Exchange Board of India (SEBI)
November 30, 1992
SMD-II/11969
Shri G. B. Desai
President
Bombay Stock Exchange
Phiroze Jeejeebhoy Towers
Dalal Street
BOMBAY 400 001.
Dear Sir,
Computation and collection of registration fees
This is to acknowledge receipt of your letter dated November 25, 1992 seeking clarifications on the question of computation of “annual turnover” mentioned in Schedule III to the SEBI (Stock-Brokers and Sub-Brokers) Regulations, 1992. While the points raised in your letter are under examination, we shall be glad to have your replies on certain aspects concerning stock trading practices followed in your exchange. They have been set out in the annexure. The replies may be given in the light of the rules, bye-laws and regulations of your exchange. Your replied on the said points would help us to examine your queries in the proper perspective.
On receipt of your replies we intend to set up an Expert Committee to go into the areas of clarification. An early reply from you to the questions will help us in finalising the matter without delay.
The registration certificates are being granted and issued to the stock brokers on the terms and conditions specified in the rules and regulations which have already been notified. It will therefore be obligatory upon the stock brokers to pay the fees in accordance with the regulations to keep their registration certificates in force. Accordingly, pending the issue of clarification, with regard to the points raised in the said letter, you are advised to collect from each broker the fees of Rs.5,000/- plus an amount computed on the basis of percentage laid down in the regulation, for that part of the turnover on which no clarification has been sought. Balance amount if any, could be collected from the concerned brokers and remitted to us after the issue of clarifications by us.
Yours faithfully,
sd/-
C.B. BHAVE
HOD (SMD-II)
Encl : As above.
cc: To Presidents of all Stock Exchanges for similar replies relating to their Exchanges.
ANNEXURE
1.(a) Indicate in detail the methodology adopted for computing annual turnover published by the stock exchange on gross basis and net basis.
(b) Whether the annual turnover computed for (a) above, cover only actual deliveries or deliveries received or receivable and whether includes other transactions and components which may not in actual practice result in delivery of securities.
2.(a) Indicate whether Group B (non-specified) deliveries in a settlement are made on net basis or gross basis.
(b) Indicate similar position for Group A (specified) securities.
3.(a) How is jobbing defined and identified; Whether jobbing transactions are identified separately while reporting the transactions to the stock exchange by the stock broker.
(b) Does the stock exchange distinguish between jobbing as distinct from other transactions, which were for delivery but got squared up because the same broker executed sales and purchase orders at different times from his clients.
4.(a) Are there stock brokers, who undertake only jobbing business?
(b) Whether the stock brokers, who avail of the services of jobbers for completing the transactions, can take delivery or square up the transactions by booking profit or loss.
5. What part (in percentage terms) do the transactions bought and sold in a settlement cycle on the same account or vice-versa constitute a trading activity on the stock exchange. Specific figures for Group A shares and Group B may be indicated.
6.(a) Where the transactions are carried forward in both Group A and Group B or are renewed after each settlement period whether such transactions are treated as fresh transactions. Is renewal or carry forward permissible under the law in Group B (non-specified) securities?
(b) Indicate the proportion of shares carried forward and/or renewed in specified group and in non-specified group.
(c) Is brokerage charged when a Transaction is renewed or carried forward every time?
7. Where the transactions are renewed or carried forward, indicate if any link is maintained with the original transactions; if so, what action is taken by the stock exchange on the expiry of 90 days from the date of the respective original transaction.
8.(a) Where vyaj badla facility is extended to the stock brokers whether such facility results in new transactions on the stock exchange.
(b) Does a badla of Vyaj badla transaction result in delivery?
(c) Whether any broker can finance a badla transaction. If not, does the Exchange have a list of permitted brokers who are allowed to finance a badla transaction?
(d) Whether the transactions arising out of vyaj badla facilities are taken into account for computation of turnover figures on the stock exchange.
Is it not a fact that transactions in Government securities and bonds of public sector undertakings are allowed to be undertaken through only by the member brokers of recognised stock exchanges.
