OTC EXCHANGE OF INDIA  

Ref No: 0366/2004/NSCCL/OTC/23                                       February 19, 2004

 To,

All Members / Dealers/ Custodians

Subject:  T+2 rolling settlement - Cash Market - Risk Management

Attention of members/dealers is drawn to the provisions mentioned in the circular ref no SEBI/MRD/SE/AT/47/03 dated December 30, 2003 issued by Securities and Exchange Board of India regarding the upfront collection of VAR based margins in the cash market segment at the time of trade, instead of T + 1 day (copy enclosed).

A detailed circular in this regard shall be issued by OTC Exchange of India in due course.

For OTC Exchange of India

R Anand

Asst. Vice President

Deputy General Manager

Market Regulation Department – Policy

Email:-sundaresanvs@sebi.gov.in

SEBI/MRD/SE/AT/47/03

December 30, 2003

The Managing Director/ Executive Directors/Administrators

Of all the Stock Exchanges

Dear Sir/Madam,

Sub:- T+2 rolling settlement - Cash Market - Risk Management

1. This is in continuation of our circular no. SMD/Policy/Cir-9/2003 dated March 11, 2003, on "Risk Management for T+2 rolling settlement." In partial modification of the aforesaid circular, the Stock Exchanges are advised to comply with the following provisions regarding collection of VaR based margin.
2. VaR based margin

1. The VaR based margin shall be collected on an upfront basis at the time of trade (instead of T+1 day).
2. The VaR based margin shall be collected /adjusted against the additional capital /collateral deposited by the member in the form as specified in circular No. SEBI/SMD/SE/Cir-22/2003/11/06 dated June 11, 2003.
3. The margin so collected may be released along with the pay-in.

1. Implementation

The aforesaid provisions shall be implemented after the software changes have been made by the stock exchanges which is likely to take about 6 to 8 weeks.

2. The other provisions of the circular No. SMD/Policy/Cir-9/2003 dated March 11, 2003 shall remain unchanged.
3. The stock exchanges are directed to :
1. make necessary amendments to the bye-laws, rules and regulations for the implementation of the above decision immediately, as may be applicable/necessary.
2. bring the provisions of this circular to the notice of the member brokers/clearing members of the Exchange and also to disseminate the same on the website for easy access to the investors; and

3. communicate to SEBI, the status of the implementation of the provisions of this circular in Section II, item no. 13 of the Monthly Development Report for the month of January 2004.

4. This circular is being issued in exercise of powers conferred by section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.

Yours faithfully,

V S SUNDARESAN