SECURITIES AND EXCHANGE BOARD OF INDIA
EXECUTIVE DIRECTOR
SECONDARY MARKET DEPARTMENT – II
SMD-II/ALLSE/CIR-02/2000
January 10, 2000
The President/Executive Directors
Managing Directors of all
Stock Exchanges
Dear Sir/Madam,
Subject: Meeting Of All Stock Exchanges
A meeting of heads of all the Stock Exchanges was held on December 20, 1999 to discuss the issues related to Revival of small stock exchanges, Y2K preparedness of the Stock Exchanges and Stock Brokers and other issues. The decisions taken in the meeting are given below for information/necessary action:
1. Revival/Survival Of Small Stock Exchanges
As per SEBI circular dated November 26, 1999, the sub-brokers of the subsidiary/company were required to maintain separate deposit with the subsidiary/company in the form of cash only. This condition was reviewed and it was decided that the same could be maintained 25% in the form of cash and the balance 75% in irrevocable bank guarantees.
2. Increasing the membership of stock exchanges
The exchanges will now have freedom to increase the membership or dealership subject to compliance of all the legal requirements, without the approval of SEBI.
3. Interference of Elected Directors in the Administration of the Exchange.
In order to ensure smooth functioning of the Stock Exchanges and to give administrative freedom to the Executive Directors, as CEOs of the exchanges, it was reiterated that the Elected Directors should not interfere in the day to day management of the exchange, particularly relating to surveillance and the risk management functions.
4.Internet Trading
The Stock Exchanges shall set up necessary mechanism for evaluating the system and infrastructure of the applicant broker for ascertaining that the specification outlined in the SEBI Committee Report on Internet Trading, are adhered to. All applications received in exchanges should be dealt with on top priority.
5. Vanishing Companies
The Exchanges should submit the information regarding vanishing Companies as per the format prescribed by SEBI vide circular No PMD/OPG/AG/7827/99 dated March 05, 1999 on a weekly basis, to Primary Market Department of SEBI. It was also suggested that exchanges should set up a small cell for scanning the reports received from the companies for which it is a regional exchange and take action against companies where the funds are not used for the purpose for which it was raised.
Yours faithfully,
M D PATEL
