Bourses Wary Of Certain Bad Delivery Cell Procedures

They were assembled at a training programme held at the Sebi office on Wednesday to brief BDC heads on the practical working of the cells. It is learnt that Sebi has given a mandate to all bourses to set up the cells in a month's time.

The primary concerns were regarding the closing out price, setting up infrastructure for BDCs considering the limited staff strength of various exchanges, and the increased paper work.

Sebi has also set up an inter-exchange arbitration panel for settlement of disputes arising between BDC's.

According to the draft procedure, the detailed working of the panel will be intimated to the exchanges in due course.

 

Sebi has, in its draft procedure, said that if the first introducing member fails to rectify or replace the shares within the stipulated 21 days, the local bourse will close the transaction as per exchange procedures.

However, the representatives wanted Sebi to clarify which price will be taken for the purpose of closing out.

Some representatives from the smaller bourses told Business Standard that 21 days time was too short a period for rectifying bad deliveries on two exchanges, and because of this, closing out could be frequent.

Besides, since the members of two bourses would be involved, the closing out price issue becomes crucial, they said.

Sebi has decided to take up the matter at the board level and include the decision in the final draft of the procedure, they added.

R S Kothari of MP Stock Exchange said: There was a suggestion to take either BSE or some other exchanges' price as a representative price for the purpose of closing out. However, a convincing formula is still to be found.

Another point on which the participants sought clarification waswhat happens if the introducing member is declared a defaulter.

However, there seemed no immediate answer to this at the meeting.

Dinesh Bhatt, assistant manager (operations), Mangalore Stock Exchange said: Limited staff will be a major problem for us. Besides paper work will increase and may be difficult to handle.