Committee on Model Rule and Bye-laws of Stock Exchanges

SMDRP/POLICY/CIR-52/2001 · 2001-12-20 · SEBI

Summary

This document is a SEBI circular dated December 20, 2001, addressing Executive Directors of Stock Exchanges regarding the implementation of Model Rules. It outlines four parts of the Model Rules, distinguishing between those already implemented, those to be introduced, and those awaiting corporatisation or legislative amendment. The circular advises exchanges to implement Part B rules and adopt Part A rules where material differences exist, while deferring Parts C and D. This section outlines specific qualification and disqualification criteria for stock brokers, including experience, financial requirements, and past conduct. It details the mandatory appointment of a compliance officer to monitor regulatory adherence and handle investor grievances. The text concludes by introducing broader categories of market participants such as partnership firms, sub-brokers, and clearing members. This section outlines eligibility criteria and conditions for multiple or trading memberships, including relaxations based on net worth. It details continuous requirements such as capital adequacy, restrictions on fund-based activities, and definitions of minimum trading activity. Finally, it addresses

Text

The Committee constituted by SEBI for examining the existing Articles and Memorandum of Association, Rules, Bye-laws and Regulations of Stock Exchanges and framing a uniform set of Rules and Bye-laws to be followed by all the stock exchanges of the country has submitted its report and the Model Rules for Stock Exchanges.

Part 'A' given in the Annexure contains rules which have already been implemented under SEBI directives etc. ... Such rules have been identified with asterisks in Part A.

In respect of Rules No. 5.5 (Compliance Officer), 6.8.1 (Special Authorisation by the Governing Board- Buy back of Membership), 7.20 (Declaration of Defaulter automatically), 7.34 (Apportionment of Consideration Realised/Other Realisation of Receivables) and 8.3.6 (Ethics Committee), SEBI Regulations/Circulars already issued in this regard will prevail.

Part 'B' gives reference to the rules in Model Rules and the subject matter, which are to be introduced by the stock exchanges.

Part 'C' gives reference to Model Rules. However introduction of these will have to await corporatisation/demutualisation of the stock exchanges.

Part 'D' gives reference to the Model Rules, which are related to the basic legal structure of the various stock exchanges and may require an amendment to the existing SEBI Act, 1992, SC (R) Act, 1956, SC (R) Rules, 1957 and other relevant Rules, Regulations and laws etc.

you are advised to implement the Rules under Part 'B'. In the case of Rules in Part 'A', the proposed rules may be adopted in case there is a material difference between these rules and the existing similar rules of the exchange.

The Model Rules along with the Committee Report are enclosed for adoption after necessary approvals from the General Body/Governing Board of the Exchanges.

However if there are any difficulties in implementation of these Rules, such difficulties may be brought to the notice of SEBI. A compliance report in this regard may be submitted to SEBI within 2 months.

The Exchanges will be suitably advised for introduction of Rules under Part 'C' and 'D'

As per Regulation 19 (a) (vii) of SEBI (Depositories & Participants) Regulations, 1996, a clearing corporation or a clearing house of a stock exchange may be registered as a depository participant.

SEBI's circular dated SMD/SED/RCG/270/96 dated January 19, 1996.

Source: SecMarx — Committee on Model Rule and Bye-laws of Stock Exchanges. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.