NSE Circular on: Clarification to the Rule 8(1)(f) and 8(3)(f) of Securities Contracts Regulation (Rules), 1957

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Date	Issuer	Subject	Topic
22-09-2022	NSE	Clarification to the Rule 8(1)(f) and 8(3)(f) of Securities Contracts Regulation (Rules), 1957	Securities Contracts Rules
Highlights of NSE Circular dated September 22, 2022 Clarification to the Rule 8(1)(f) and 8(3)(f) of Securities Contracts Regulation (Rules), 1957 This is further to NSE circular NSE/COMP/50957 dated January 07, 2022, wherein clarification to the Rule 8(1)(f) and Rule 8(3)(f) of Securities Contracts (Regulation) Rules, 1957 (“SCRR”), was provided in consultation with SEBI and other Stock Exchanges.   NSE has provided clarification on points ‘7’ and ‘10’ of the said Circular, which is as follows:   Point no. Point Description Clarification 7 Any arrangement with registered clients to borrow funds/loans If the lender (who is also a registered client of member) is a director, associate or group company, then members, who are constituted as a company, are permitted to take loans from such clients to meet the working capital requirements 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.) i.          Members may form a subsidiary company for undertaking the types of businesses which a member is otherwise permitted to undertake i.e., in connection with or incidental to or consequential upon the securities/ commodity derivatives business without any approval. ii.          Members may form a subsidiary company, with the prior approval of the Exchange, for undertaking other businesses that are considered useful or necessary for the functioning/ development of capital markets. (Ex: Member’s setting up IT subsidiaries for developing trading/back office related software etc.). iii.          It shall be noted that such investments may be made only from own/ proprietary funds and clients funds shall not be used under any circumstances.   NSE has further reiterated that, in case of default of a member, only the registered constituents/investors of the trading member are eligible for compensation from Investor Protection Fund Trust (IPFT) for the trades executed on the NSE Platform, and transactions related to other business segments such as Portfolio Management Services (PMS), Merchant Banking etc., executed either directly or indirectly are not eligible for compensation from Exchange’s IPFT.   Exchange circular dated January 07, 2022 is modified to the extent of the above. All other provisions of the said circular dated January 07, 2022 shall continue to remain applicable   NSE Circular No. NSE/COMP/53802 dated September 22, 2022 is enclosed herewith for your ready reference.   In case of any clarification or assistance required in implementation of this circular you may contact Vandana Vania– van...@secmark.in / 9223303460        Kaushik Jethwa – kau...@secmark.in / 9870210171

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