NSE Circular on : Clarification to the Rule 8(1)(f) and 8(3)(f) of Securities Contract (Regulation) Rules, 1957
Updates from SecMark
Facing issues in day to day processes, feeling inadequate control over your business.
“DESIGN & IMPLEMENT STANDARD OPERATING PROCEDURES”
Contact: 9869265949, in...@secmark.in
|
Date |
Issuer |
Subject |
Topic |
|
07-01-2022 |
NSE |
Clarification to the Rule 8(1)(f) and 8(3)(f) of Securities Contract (Regulation) Rules, 1957 |
Compliance |
|
|
|||
|
Highlights of NSE Circular dated January 07, 2022 Clarification to the Rule 8(1)(f) and 8(3)(f) of Securities Contract (Regulation) Rules, 1957 It has been observed that members are engaged in businesses other than securities or commodity derivatives business like entering loan arrangement with clients/entities, collecting money in the form of deposit or otherwise by offering fixed/guaranteed/periodic returns orally or in writing, extending corporate guarantees etc. in contravention of Rule 8(3)(f) of SCRR.
Hence NSE issued circular informing Members that they are not permitted to engage in any business or activities or transactions, directly or indirectly, other than that of securities or commodity derivative except as a broker or agent not involving any personal financial liability.
NSE has also provided following illustrative list of activities that are construed as non-compliance to Rule 8(1)(f) and 8(3)(f) of SCRR, if undertaken by a member: 1. Issuing Corporate Guarantees towards credit facilities availed by any entity, including group companies such as subsidiaries & associates etc. of the Member, not in connection with or incidental to or consequential upon securities / commodity derivatives business, as applicable. 2. Deposit pledged with the bank for overdraft facilities availed by any entity, including the group companies such as subsidiaries & associates etc. of the Member, not in connection with or incidental to or consequential upon securities / commodity derivatives business, as applicable. 3. Borrowing of funds for the purpose of granting loans to its associates/ group companies or other entities. 4. Issuing commercial papers to raise money (except as permitted vide Exchange circular No: NSE/COMP/35521 dated August 03, 2017, for providing the margin trading facility) and funding it to any entity including group companies, not in connection with or incidental to or consequential upon securities business. 5. Engaging into activities/schemes of unauthorised collective investments/portfolio management, promising or indicating fixed/guaranteed/regular returns/capital protection. 6. Entering into any arrangement with clients to extend loans, financing the securities transactions directly/indirectly except as allowed for Margin Trading purposes. 7. Any arrangement with registered clients to borrow funds/loans. 8. Pledging of client securities with Bank/NBFC for raising funds. 9. Entering into any arrangement for extending loans or giving deposits / advances to any entity, including group companies such as subsidiaries & associates etc., not in connection with or incidental to or consequential upon the securities/ commodity derivatives business 10. Investments made in group companies such as subsidiaries & associates etc., not in connection with or incidental to or consequential upon the securities/ commodity derivatives business. (Ex: Investment in companies engaged in other businesses such as NBFC, Real Estate etc.) 11. Entering into any arrangement/scheme for accepting securities from any client/ entity other than through approved Securities and Lending Borrowing mechanism into the own Demat account of the Stockbroker/director/shareholder/entity associated with Trading Member. 12. Entering into any arrangement/scheme and providing a platform to the clients for buying and selling of digital gold or any product not covered under the definition of securities as per SCRR.
NSE has also informed that the activities mentioned above are only illustrative in nature. On a case-to-case basis and based on the gravity of the violation, the relevant authority of the Exchange shall deal with such non-compliances after following the due process and providing the necessary opportunity to the trading members for clarification in the matter.
NSE Circular no. NSE/COMP/50957 dated January 07, 2022 enclosed herewith for your ready reference In case of any clarification or assistance required in implementation of this circular you may contact VANDANA VANIA (SecMark Consultancy Ltd.) – van...@secmark.in / 9223303460 SHARDUL SHAH - shard...@secmark.in/ 9869265949 / 9653415968 |
|||
Cracking your trading password can be easier than it appears.
“VULNERABILITY ASSESSMENT AND PENETRATION TESTING”
Contact: 9869265949, in...@secmark.in
