Sebi Panel To Pen Se Common Members' Rules

The Securities & Exchange Board of India (Sebi) has set up a working group to finalise modalities to share more information with regard to common members of various stock exchanges.

According to D R Mehta, chairman, Sebi, the working group will finalise actions that can be jointly initiated by stock exchanges against members having multiple memberships.

"The group will finalise guidelines with regard to the action that exchanges can take if a common member faces problems. This has been done to ensure that any default in payment on one exchange does not spill over to the entire market place," he said.

The group comprises executive directors of the Bombay Stock Exchange, Delhi Stock Exchange, Calcutta Stock Exchange, Bangalore Stock Exchange and the managing director of National Stock Exchange.

Senior Sebi executive director L K Singhvi said that since corporate members are a company, their exposure needs to be monitored jointly by stock exchanges.

The inter-exchange co-ordination committee and the inter-exchange surveillance group set up by Sebi met yesterday. The groups discussed the issue of code of ethics for elected directors with regard to handling the surveillance affairs at stock exchanges.

"We have set up a working group of elected directors from BSE, NSE, CSE and DSE along with BSE executive director R C Mathur and NSE deputy managing director Ravi Narain to finalise the code. We expect that the elected directors will not interfere in the surveillance department and adopt a self-imposed code towards its functioning," Singhvi said.

The working group is expected to finalise recommendations in the first week of November. A certification process is also expected to be finalised for the staff of surveillance departments of stock exchanges. Mehta said that all stock exchanges need to adopt a focussed approach towards surveillance.

The committee also debated the merits of the StockWatch system. "Some bourses are expected to implement the first phase of the system by the end of December. Monitoring of price and volume trends will be done on an on-line basis," Singhvi added.

Meanwhile, the inter-exchange co-ordination committee meeting held earlier debated the issue of eligibility of a broker to the governing board of a stock exchange.

Pratip Kar, executive director, incharge of secondary market operations, Sebi, said the committee decided that stock brokers, who have their trading rights suspended by stock exchanges, will not be allowed to be represented on the governing board of the stock exchange. "The notified person will not be eligible to be elected to the governing board for a period of two years from the day his rights have been suspended," Kar said.