Policy for annulment of trades undertaken on stock exchanges
Summary
This circular establishes a uniform policy for stock exchanges regarding the annulment of trades resulting from material mistakes or erroneous orders. It mandates specific procedural timelines, fee structures, and oversight mechanisms to ensure transparency and market integrity. The directive requires exchanges to amend their bye-laws within one month and implement frameworks to penalize brokers placing erroneous orders.
Text
Stock exchanges are empowered to annul trades under SCRA Section 9 but should avoid annulment to ensure finality of trades.
Examination may be suo moto or upon request; exchanges shall define criteria to discourage frivolous requests.
Stock exchanges shall prescribe the procedure for submission of requests, including electronic mechanism.
Brokers must submit requests within 30 minutes; exchanges may consider late requests up to 60 minutes in exceptional cases with recorded reasons.
Stock exchanges shall inform details of such requests to all stock brokers in a time-bound manner.
Exchanges shall decide no later than the start of the next trading day, considering potential effects on other trades.
Stock exchanges may consider resetting the price of trades as an alternate mechanism if less disruptive.
Annulment or price reset shall only occur in exceptional cases after recording written reasons in the interest of investors and market integrity.
If requests are submitted to more than one exchange for similar trades, exchanges shall jointly take a decision.
Exchanges shall convey reasoned decisions to counterparties and publish details on their website.
A mechanism to review decisions shall be provided; aggrieved parties must submit requests before the payout deadline.
Review requests shall be referred to the independent oversight committee; payouts shall be withheld until review completion.
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Source: SecMarx — Policy for annulment of trades undertaken on stock exchanges. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.