Nse Set To Slam Erring Members
The National Stock Exchange (NSE) is likely to take stern action against members who fail to settle deals routed through the trade for trade (TT) segment.
The NSE has called for the executive committee meeting on Tuesday to discuss this and many other issues. According to sources, the exchange plans to impose a penality on the trading members if they fail to settle the trades executed through the TT segment within the stipulated 10 days. It has been brought to the notice of the exchange that not all trades in the TT segment are settled within the prescribed limit.
The exchange also to plans to refer all such matters to the disciplinary action committee (DCA) in order to take sterner action against the erring members.
NSEs bye-laws insist all the trades in this segment should be settled within 10 working days from the date of the deal. Also these deals are to be directly settled between clearing members and each deal is to be reported to the clearing corporation. The exchange of securities and funds has to take place between the buying and selling clearing members outside the clearing house.
The executive committee will also review the square-off price for securities that come up for re-auction. At present the securities are auctioned at 20 per cent higher than the prevailing market price on the auction day. The trading members say that securities come under company objections for very minor reasons, at times. Under such circumstances, the trading members are forced to pay 20 per cent more than the prevailing market price, which seems unreasonable. The exchange is expected to fix square-off price at 10 per cent above the market price on the day of auction.
The company objections arise when on lodgement of the securities with the company for transfer by the receiving/clearing member, they are returned by the company due to signature mismatch or for any other reason for which the transfer of security in the recievers name cannot take effect.
The other issue which the executive committee will take up for discussion is the slashing of lock-in period for the deposit which the trading members keep, when the bad delivery introduced by them breaches Rs 5 lakh mark.
At present, the exchange keeps this deposit for a period of six months. However, following request from the members, th exchange now plans to reduce this lock-in period to three months.
The EC will also make some fresh appointments in the arbitration committee. At present, the arbitration committee consists of 20 members, of which 12 are non-trading members and the remaining trading members. Since many of the non-trading members on this committee have been on the committee for long, the exchange plans to infuse fresh life by replacing some non-trading members.
The committee is also expected to carry out some changes in the listing requirement of debt securities.