Recovery of assets of defaulter member and recovery of funds from debit balance clients of defaulter member for meeting the obligations of clients / Stock Exchange / Clearing Corporation
Summary
This circular mandates Recognised Stock Exchanges and Clearing Corporations to recover assets from defaulter members and debit balance clients. It requires these entities to liquidate movable and immovable assets within six months of a member's default declaration. The directive is issued under Section 11(1) of the SEBI Act to protect investor interests and regulate the securities market.
Text
The SE/CC are advised to initiate suitable actions for liquidating the assets (movable and immovable) of defaulter member including that of debit balance clients (to the extent of debit balance), within six months of declaration of defaulter, for recovery of the assets not in possession of the SE/CC, before appropriate court of law.
draw attention of the provisions of this circular to the notice of their members and participants, as the case may be, and disseminate the same on their websites;
make amendments to their bye-laws, rules, regulations wherever necessary;
communicate to SEBI, the status of the implementation of the provisions of this circular in their monthly development report.
This circular is being issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Recovery of assets of defaulter member and recovery of funds from debit balance clients of defaulter member for meeting the obligations of clients / Stock Exchange / Clearing Corporation. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.