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

SMD/Policy/ Cir-24 / 97
September 26, 1997

To

The President/Executive Director/Managing Director
All Stock Exchanges

Dear sir,

SEBI has received queries from Stock Exchanges regarding course of action to be taken against the stock-brokers, who are having multiple memberships, and have been declared defaulter at one of the Stock Exchanges. It has also been brought to our notice that if a stock broker is declared defaulter by a stock exchange, the information with regard to his default, is not being passed on to other Stock Exchanges.

In this connection, we enclose a copy of the directive of the Government of India issued vide circular ref. 1/26/SE/91 dated August 12, 1991, in terms of which if the defaulting member of a particular stock exchange holds membership in other stock exchange(s) in his/its own name then such member(s) should be declared defaulter(s) in other stock exchange(s) also.

The stock exchanges are, therefore, advised to comply with [more particularly Clause(viii) mentioned therein] the Circular dated August 12, 1991 referred to above and note that whenever a stock broker is declared defaulter by a stock exchange, the concerned stock exchange shall immediately inform all other stock exchanges about the default of the member. If membership is held in the name of a corporate body, then the names of the promoters/dominant shareholders should also be intimated. Further, if associates of defaulter broker are holding membership in other stock exchanges, then action, if any, required to be taken against such associate member(s), should be decided by respective stock exchanges after examining the relevant facts.

Stock Exchanges are advised to comply with above requirements with immediate effect.

Thanking you,

Yours faithfully,

M. D. PATEL
EXECUTIVE DIRECTOR

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