The Securities and Exchange Board of India (SEBI) on July 01, 2020 issues a circular for Standard Operating Procedure (SOP) for Trading member (TM) and Clearing member (CM) leading to default. Due to the increase in complaints, the Board had to issue the guidelines for the purpose of proper operations.
Following guidelines have been issued by SEBI:
• All the members must conduct meetings with the designated directors of the TM within 3 trading days.
• A proper inspection should be carried out by the ISE’s and SE’s of TM, collecting all the relevant documents as well as the registers. The inspection should be carried out within the 3 trading days of conduct of the meeting.
• Further, the analysis shall be taken into consideration after the meeting and should be discussed and this should be carried out within 7 trading days.
• If there is a case of disablement, that shall be informed to the TM within 1 day of the disablement.
• Further, the TM shall stay suspended in any other segment or as a client. This should be done within 1 trading day, from the date the receipt of disablement has been received.
• The TM should be informed about the settlement of the accounts on the pay out date.
• Demat has the power to freeze the account of TM within 1 trading day from the receipt of information of the disablement.
• Banks should be issued a notice on account of the freezing of account of TM.
All these guidelines shall apply to CM as well in case of default.
[Circular No. SEBI/HO/MIR SD/DPIEA/CIR/P/2020/115]
