NATIONAL SECURITIES CLEARING CORPORATION LIMITED
November
11, 2004
Download ref no: NSE/CMPT/5591
Circular
No: NSCCL/SEC/2004/1084
To
All Members,
Further to our Circular Download No.
NSE/CMPT/5128 dated
A. Funds Shortages in respect of cleared deals:- Members failing to fulfill their funds obligations (all markets including the valuation debit raised on account of securities shortages) to Clearing Corporation shall be subjected to the following penalty structure:-
|
S. No |
Type of Non-Fulfillment |
Penalty Charge % per day |
Action |
|
a) |
Value Rs. 5 lakhs or more |
0.07 |
The trading facility of the member shall be withdrawn immediately & Securities pay out shall be withheld. |
|
b) |
Value less than Rs. 5 lakhs |
0.07 |
If in the
last three months, the member is short over Rs. 2 lakhs on more than six
occasions, the trading facility of the member shall be withdrawn and the
securities pay out. shall be withheld* |
*on
making good the shortage amount, the member shall be permitted to trade with
reduced exposure limits as per the slabs
mentioned below:
|
Cumulative
Funds Shortage (in Rs.) |
Exposure Limit allowed (%of current exposure
limit) |
|
2-5 lakhs |
80% |
|
>5
lakhs |
60% |
If the cumulative funds shortage for the next
ten settlements is less than Rs. 2 lakhs, the exposure limits shall be
restored.
The exposure limit may also be restored if the
member provides a deposit, by way of cash, fixed deposit receipts, bank
guarantee, equivalent to the cumulative funds shortage as the 'funds shortage
collateral' in the clearing account. Such deposit will be kept with the
Clearing Corporation for a period of ten settlements and will be released only
if no further funds shortages are reported for the member in next ten
consecutive settlements. Members may further note that there shall not be any
exposure benefit nor any interest payment on this amount so deposited as 'funds
shortage collateral'.
Recovery
of funds due through liquidation of securities withheld:
The funds defaulting member will be allowed such
time as may be permitted by the relevant authority depending upon the facts of
the case to bring in the amount in default. If funds are not brought at any
time by the defaulting member the Clearing Corporation at its discretion will
proceed to close out securities in the normal / auction market. If the member
does not bring in the amount by the time permitted by the relevant authority,
and continues to default thereafter, the relevant authority may proceed to
declare him a defaulter.
B. Securities Shortages in respect of cleared deals:- Members failing to fulfill their securities deliverable obligations to Clearing Corporation shall be subjected to the following penalty structure:-
|
S. No |
Type of Non-Fulfillment |
Penalty Charge % per day |
Action |
|
(a) |
Security Shortage |
0.05 |
The valuation amount of the shortage will be considered as funds shortages where shortage confirmation is not received from the bank and penal action as prescribed for “Funds Shortage in respect of Cleared Deals” in point “A” above shall be applicable |
C. Margin Shortages: Members not fulfilling their Daily Margin and/or additional margin requirements shall be subjected to the following penalty structure:-
|
S. No |
Type of Non-Fulfillment |
Penalty Charge % per day |
Action |
|
(a) |
Value Rs. 5 lakhs or more |
0.07 |
Trading facility of the member shall be withdrawn |
|
(b) |
Value less than Rs. 5 lakhs |
0.07 |
If the member is short in fulfilling the margins obligation on more than three times in the last six occasions. * |
* Members may note that in case they are short in Margins payment of Rs.50,000/- and above on more than three times in the last six occasions, their trading facility shall be withdrawn.
D. Security Deposit Shortages: Members not fulfilling the security deposit requirement for continued membership shall be subjected to the following penalty structure:-
|
S. No |
Type of Non-Fulfillment |
Penalty Charge % per day |
Action |
|
(a) |
Value Rs. 5 lakhs or more |
0.09 |
The trading facility of the member shall be withdrawn |
|
(b) |
Value less than Rs. 5 lakhs |
0.09 |
The member shall be given a week’s time to replenish the shortfall in security deposit failing which the trading facility of the member shall be withdrawn. |
E. Client Code Modification :-
|
Percentage (%) of client codes
changed to total orders (matched) on a daily basis |
Fine |
|
Less than or equal to 1% |
Nil |
|
Greater than 1% but less than or equal to 5% |
Fine of Rs.500/- per day |
|
Greater than 5% but less than or equal to 10% |
Fine of Rs. 1,000/- per day |
|
Greater than 10% |
Fine of Rs. 10,000/- per day |
F. Failure to give
Good Delivery:- In case of bad deliveries rectified, delayed good delivery
processing charges will be at the rate of 0.09 % per day computed from the day
on which securities were originally due to be brought in up to the day on which
the securities are replaced/rectified.
In case of bad deliveries not rectified, bad delivery processing charges will be @ 0.09% per day computed from the day on which securities were originally due to be brought in upto
(i) the day on which the securities are brought in or
(ii) till auction settlement is completed or
(iii) where auction is partially successful or not successful and the deal is deemed closed out or
a.
When the
deal is squared off and the corresponding funds adjustments are completed,
whichever is later.
In case of auction bad deliveries
and rectified / replaced objection cases which are reported as bad delivery,
the penal interest will be 0.09% per day from the rectification date till the
date of closing out.
G. Incorrect claim for
corporate benefits:-
|
Type of Default |
Charges |
|
Wrong
claims of dividend, bonus, interest etc. |
Rs.
100/- per claim |
|
Same set of shares reported twice under
objection |
10% of
value of shares reported under
objection subject to a minimum of Rs. 5,000/- per claim |
H. Incorrect undertaking:-
|
Incorrect undertaking on form 6-I |
10% of the
value of shares reported under objection, subject to a minimum of Rs. 5,000/-
per claim. |
I. Late withdrawal of
company objection: Processing fee for late withdrawal at the rate of Rs. 2 per
share subject to a minimum of Rs.200/- shall be levied for all withdrawals
where a member has not withdrawn the invalid/incorrect objection/corporate
benefits claim on the scheduled withdrawal date, for the following reasons:
Members wanting to avail 'late' withdrawals will be required to affix pre-paid coupons for the late withdrawal fee, at the time of reporting the same. Acceptance of such late withdrawals shall be subject to approval only.
J. Trade for Trade Segment
|
S.No. |
Types of default |
Penalty Charge |
|
a. |
Non settlement of trade |
0.5% of the trade value |
|
b. |
Cancellation of trade |
Rs. 1000/- per trade per side |
|
c. |
Failure to settle within the stipulated time |
Rs. 500/- per trade per day, subject to maximum of 2.50 times the value of the trade for each side with a ceiling of Rs. 10000/- |
|
d. |
Failure to report within the stipulated time |
Rs. 500/- per trade per day subject to maximum of 2.50 times the value of the trade for each side with a ceiling of Rs. 5000/- |
K. Penalty points: Penalty points will be calculated for each settlement and cumulated for all the settlements over the month.
|
Types of default |
Penalty points per settlement |
Action |
|
Non confirmation of custodial trades |
4 |
- |
|
Non allocation of institutional (INST) trades |
4 |
- |
|
Non reporting of institutional (NCIT) trades |
4 |
- |
|
Gross Exposure / Turnover violation * |
|
|
|
4 |
Trading facility of the member shall be withdrawn |
|
2 |
Trading facility of the member shall be withdrawn |
* In addition to the above, a penalty of Rs.5000/-
will be levied for violation of gross exposure/ intra-day turnover limit. In
case of subsequent violation during the day, penalty will be increased by Rs.
5000/- for each such instance.
Action for the total penalty points is as given below:
|
Penalty Points |
Penalty |
|
0 to 20 |
No action |
|
21 to 30 |
Reprimand letter |
|
31 to 50 |
A fine of Rs. 2000/- per point over 30 points |
|
51 to 100 |
A fine of Rs. 5000/- per point over 50 points plus Rs. 40,000/- |
|
Over 100 |
Allowable exposure to be reduced by 75% for 10 settlements in Normal Regular Market* |
*If the total penalty points exceed
100 due to the penalty points on account of non-reporting/non-allocation of institutional
trades, monetary penalty will be levied on the total penalty points at the rate
applicable to the highest monetary penalty slab. However, the Exchange may
consider reduction of the allowable exposure by 75% for 10 settlements in
normal regular market in place of the monetary penalty, if requested for by the
trading member under exceptional circumstances, within 4 days of download of
the consolidated penalty bill, subject to the genuineness of the circumstance.
In addition to the above, a penal interest at the rate of 9 basis points for each day of default shall be levied on the members who have not paid the penalty imposed on them.
L. Charges for rectification of errors committed
by Clearing Members
A processing fee penal charge shall be levied
for rectification of error that has been committed by the clearing member. The
fee for all such error rectification that results in credit greater than Rs.
1,000 / - to be passed on to the clearing member, would be levied on the
clearing member receiving the benefit.
|
Amount of credit received by the clearing
member |
Rectification charges to be levied (Amount in Rs.) |
|
Rs.
1000 to Rs. 10,000 |
100 |
|
>
10,000 |
1000 |
The processing fee will be required to be paid
in advance by the clearing member, by way of a cheque, drawn in favour of
'National Securities Clearing Corporation Limited',
The circular shall be effective from September, 2004.
For National Securities Clearing Corporation Ltd.
Jaya Chatterjee
Manager