SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021
August 20, 2001
To:
The President/Executive Director/Managing Director
Of all the Stock Exchanges
Dear Sir/Madam,
Rescheduling of settlements due to bank holidays
This is with reference to SEBI’s letter dated March 19, 2001 ref. No. SMD/Policy/25249/2001 where SEBI had advised about the rescheduling of the settlement cycles at the exchanges on account of scheduled and unscheduled bank holidays on settlement days.
The issue of the holidays affecting the schedule of the settlements was also discussed in the meeting of the Group on Risk Management Systems for the Equity Markets held on August 14, 2001. When a particular day is holiday for both trading and settlement, it poses no problems for the settlement at the exchanges. The difficulties however, arise on days which are holidays only for settlement while trading takes place on the exchanges. This leads to situations where there are more trading days than settlement days.
However, if the settlement holiday is unscheduled (on account of strike etc.), the clubbing of settlement at the last minute may not be possible and the provision of SEBI letter referred above shall be applicable.
It may be reiterated that stock exchanges would be free to take adequate risk containment measures to deal with the enhanced risk arising out of delayed settlements due to bank holidays.
You are advised to take note of the above decision and draw up the settlement schedule accordingly.
Yours faithfully
P K Bindlish
