SECURITIES AND EXCHANGE BROAD OF INDIA
Deputy General Manager
Secondary Market Department
e-mail : email@example.com
January 30, 2002
The Executive Directors/Managing Directors All the stock exchanges
Pursuant to the discussions in the meeting of the Group on Risk Management Systems for the Equity Markets held on August 14, 2001 the following decisions have been taken :
In the absence of the deferral products and the introduction of the rolling settlement, the information of the open positions required in respect of top 500 scrips as required per circular SMDRP/POLICY/CIR-33/2000 dated July 27, 2000 had become redundant. It has been decided that exchanges would now disclose scrip wise deliverable positions grossed across clients for that day’s trading session in the following format:-
|Scrip Wise Delivery Position – Compulsory Rolling SettlementTrade Date____|
|1||2||3||4||% of column 4 to 3|
|Sr. no||Name of Scrip||Quantity Traded||Deliverable quantity(Gross across client level)||% of deliverable quantity to traded quatity|
No delivery period
Vide our circular no. SMDRP/POLICY/CIR-55/00 dated December 06, 2000 it was advised that ‘No Delivery Period’ on account of book closure/record dates for corporate actions such as issue of dividend and bonus shares is being abolished in respect of the scrips which are traded in the compulsory dematerialised mode. The Exchanges had communicated that they were facing difficulties in implementing the no “no delivery” as they required to process auction and then close out in case of short/failed deliveries for the trading periods which were before the book closure/record dates.
It was decided that in case of any short delivery by any member in the previous settlement where the delivery of securities is to be given on cum basis, then the Exchange may closed out to the extent of the short delivery if the shares cannot be acquired in auction on cum basis.
Henceforth, there will be no “no delivery” period on account of book closure/record dates for corporate actions such as issue of dividend and bonus shares in respect of the scrips which are traded in the compulsory dematerialised mode.
Reference price for close out
Vide our circular no. SMD/POLICY/IECG/5548/96 dated December 09, 1996 while advising the exchanges for the standardisation of the close out procedures stipulated that
“The close out Price will be the highest price recorded in that scrip on the exchange in the settlement in which the concerned contract was entered into and upto the date of auction/close out
20% above the official closing price on the exchange on the day on which auction offers are called for (and in the event of there being no such closing price on that day, then the official closing price on the immediately preceding trading day on which there was an official closing price),
WHICHEVER IS HIGHER.”
Since in the rolling settlement the auction and the close out takes place during trading hours, hence the reference price in the rolling settlement for close out procedures would be taken as the previous day’s closing price.
You are advised to take steps for the implementation of the above decision.