OTC EXCHANGE OF INDIA

CLEARING & SETTLEMENT

Circular No. OTC/NSCC-OPS/062                                              Date: July 1, 2003

To,

All Members / Custodians

Sub :- Close out mark up in respect of debentures and bonds traded on the Stock         Exchanges.

 The SEBI Circular No. SMD/Policy/IECG/5548/96 dated December 09,1996, stipulates in para no 1, that the mark up for the close out shall be 20% above the official closing price. This mark up was applicable to close out of equities as well as debentures and bonds.

 SEBI has received representations from the exchanges that the debentures and bond issued by the companies and traded at the exchanges do not experience daily price variation in fashion similar to the equities and the presently applicable 20% close out mark up is almost equal to the interest due on bonds and debentures in most cases and thus is unduly high. The matter was discussed in the Advisory Committee on Derivatives and Market Risk Management of SEBI.

 Pursuant to the discussions of the committee, it has been decided by SEBI that close out mark up of 5% would be applied in case of debentures and bonds which are assigned a credit rating of triple A and above. However, for the other debentures and the bonds without the triple A credit rating, the existing close out mark up of 20% shall be applicable as is applicable in the case of equities.

 In case of any clarification in respect of the above, you may please contact Mr. Sanjay Patil / Mr. Ashish Bansal or the undersigned on 26598388 / 22188608.

 Yours faithfully,

For OTC Exchange Of India

R. Anand

Astt Vice President