The National Stock Exchange (NSE) has decided to slap a penalty of Rs 5,000 on its erring trading members who fail to settle the trades routed through the Trade for Trade (TT) segment within the stipulated time.
The executive committee of the exchange which met last Tuesday has also decided to take stringent measures when members fail to settle the trades in this segment. As per the NSE bye-laws, all the trades in the TT segment are to be settled within 10 working days from the date of the deal directly between the clearing members.
However, it was brought to the NSE's notice that many a time the trading members did not settle the trades within the stipulated period. Also, the members failed to inform the exchange about the details of the trade. The bourse has given the flexibility to the members to reverse trades as well. The TT segment is specifically created keeping in mind the institutional trade. The segment help the institutions in minimising their exposure risks.
The deals in TT segments are to be necessarily reported to the National Securities Clearing Corporation (NSCCL). However, since these trades are to be settled between the members, the exchange of securities and funds have to take place between the buying and selling clearing members outside the clearing house.Thus deals in TT segment does not carry the incentive of settlement guarantee.
The NSCCL board also held its meeting last Tuesday and approved of the measures suggested by the executive committee.
