Sebi Declines To Intervene In Nse Indemnity Ruckus

The Securities and Exchange Board of India (Sebi) has declined to intervene in the contentious issue of the National Stock Exchange (NSE) members signing indemnity bonds.

According to sources at Sebi, NSE officials met the Sebi top brass to discuss the issue and problems arising out of it. The Sebi source said, Our position on the issue is that it is an internal matter of the stock exchange, and it should be handled independently by the bourse. There is no question of intervention from Sebi.

The Sebi position emanates from the fact that NSE did not approach the capital market watchdog before introducing the scheme. NSE is a self-regulatory organisation and should resolve the issue on its own. The bourse did not seek our advice before issuing a deadline to members for signing the indemnity bonds, the source added.

 

The NSE board is expected to meet on July 1 to discuss the issue. The bourse has also extended the deadline to July 1 for a final decision on the issue. Said a NSE source: The board meeting will discuss the suggestions given by various associations and individuals to the bourse. A final decision will be taken only by the board since the decision to ask for indemnity was taken by the board.

The NSE source said that the Sebi top brass was appraised of the situation arising out of the issue. However, the source declined to comment on the issue of Sebi intervention.

The bourse has kept in abeyance the order to furnish personal guarantee until the next board meeting. Various associations have indicated that brokers do not want to take responsibility for their acts. This does not augur well for the integrity of the capital market, the source added.

The exchange issued a circular in May to all its members asking them to furnish a personal guarantee in order to curb the menace of fake/forged or stolen shares.