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

SMDRP/POLICY/CIR-22/98
August 14, 1998

To,

The Executive Director/Managing Director
of all the Stock Exchanges

Dear Sir,

Please refer to SEBI Circular No. SMD/RCG/3737/96 dated August 13, 1996 regarding the decisions taken in the meeting of the Executive Committee of Inter Exchange Co-ordination Group of the Stock Exchanges held on August 09, 1996. It was provided in the circular that the Exchanges should collect marked to market margin on a daily basis. Further, it provided that for the marked to market margin there will be threshold limit of 25% of the base minimum capital plus additional capital kept with the stock exchanges or Rs. 10 lakhs whichever is lower.

Subsequently, in the meeting of the heads of Stock Exchanges held in December 17, 1997, it was clarified that the 25% is only a threshold limit and it should not be treated as an exemption limit. This was conveyed vide SMD/POLICY/Cir-2/98 dated January 14, 1998. In this connection, the Stock Exchanges have submitted to SEBI to reconsider the above decision on treatment of 25% threshold limit.

This matter has been examined and the Stock Exchanges are again advised that the limit 25% of the base minimum capital plus additional capital kept with the stock exchanges or Rs. 10 lakhs whichever is lower as provided in SEBI circular No. SMD/RCG/3737/96 dated August 13, 1998 should be considered only as a threshold limit towards the marked to market margin payable by the member. In other words, the same should not be considered as an exemption limit towards the mark to market margin.

Thanking you,
Yours faithfully,
P.K.BINDLISH
Division Chief
Secondary Market, Depository

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