The Executive Director/Managing Director

All Stock Exchanges

Dear Sir/ Madam,

SEBI, vide circular No. SMD/POLICY/Cir-07/2002 dated 28.3.2002, issued a clarification under the heading "Reckoning of five years fees" that the brokers have to pay fee on the basis of their turnover for the previous financial year from the date of commencement of business. This clarification was examined by the Securities Appellate Tribunal (SAT) while disposing off the Appeal No. 102/2002 in the matter of Mr. Anoop Jain Vs. SEBI.

The SAT, vide its order dated September 19, 2003, has observed that the fees are payable by brokers from the date of initial registration and not from the date of commencement of business. It also observed that there is no provision in the Act, Rules or the Regulation for making the registration effective retrospectively.

In view of the above, it is clarified that the five financial years contemplated in clause (c) of para (1) of Schedule III of the SEBI (Stock Brokers and Sub-Brokers) Regulations 1992 are reckoned with reference to the date on which initial registration is granted by SEBI to the stock broker under the said Regulations. The date on which the broker made application for registration or the date from which the broker commenced business has no relevance for reckoning the five year fee payable period. Therefore, for brokers registered during 1992-93, the five financial years in respect of which turnover based fee is payable would be the years 1991-92 to 1995-96 and for brokers registered during 1993-94, the relevant years would be 1992-93 to 1996-97 and so on.

The aforesaid circular dated March 28, 2002 shall stand modified as stated above.

You are advised to bring the above clarification to the notice of all brokers of your Exchange.

Yours faithfully,