Bse Demat Plan Runs Into Tgf Glitch

Clearance for the BoI Shareholding Ltd to become a depository participant at the National Securities Depository Ltd (NSDL) will not come about unless all BSE members complete the formality of signing the trade guarantee fund agreement with the bourse.

However, senior Bombay Stock Exchange (BSE) officials said that NSDL has not communicated to the exchange regarding its insistence on indivdual agreements.

"NSDL officials have so far not mentioned to us about these apprehensions regarding the trade guarantee scheme. They raised questions earlier about the scheme for which we have given them the reply," said the BSE source.

The BSE has asked members to complete all formalities regarding the trade guarantee scheme by July 21.

"Completion of these formalities normally take a long time. The trade guarantee fund is fully operational for all practical purposes since May 12. Sebi has also approved the scheme.

The signing of the agreement is merely a formality as BSE bye-laws give the exchange the authority to access funds kept by each member in the form of base minimum capital in case of any default.

The fund is fully operational without individual contributions from brokers," a BSE source told Business Standard.

According to sources at NSDL, the proposal for granting a depository participant status to BOI Shareholding has been pending for six months. "Initially, the clearance was held up because of non-fulfillment of capital adequacy norms, then the trade guarantee fund had to be cleared by Sebi.

Now, all members have not signed the trade guarantee agreement. It is not possible to accept a trade guarantee scheme without individual agreement with NSDL.

The existing money that has been put in the fund is of the exchange and has not come from members," said a senior NSDL official.

The BSE contention is that Sebi has prescribed the Rs 60 cr minimum corpus for the trade guarantee fund.

"The exchange has procured funds to the tune of Rs 226 crore through base minimum capital and additional capital which also includes the minimum corpus as prescribed by Sebi for the TGF.

The regulator has given its clearance for the fund," the source added. NSDL sources contend that they are examining the BOI Shareholding proposal for adherence to all NSDL business rules.

According to the NSDL business rules, the clearing corporation shall be solely responsible to confirm payments for any securities transferred by NSDL on the basis of instruction from clearing corporation. BSE had put up its application for its clearing house, BoI Shareholding, as it guarantees trades through the Rs 172 cr initial corpus Trade guarantee scheme.