14th
June 2011
Attention of trading members of the
Exchange is drawn to the provisions of SEBI Circular No. Cir/MIRSD/03/2010, dated 6th June, 2011, regarding Pre-funded instruments /
Electronic fund transfers. The contents of the circular are reproduced below:
QUOTE
CIR/MIRSD/03/2011 June 9,
2011
To
All
Recognized Stock Exchanges
Dear
Sir/Madam,
Sub:
Pre- funded instruments / Electronic fund transfers
1. SEBI
vide Circular No. SEBI / MRD / SE / Cir-33 / 2003 / 27 / 08 dated August 27,
2003, while specifying the mode of receipt and payment of funds, has permitted
the stock brokers to accept Demand Drafts from their clients.
2. While
receiving funds from the clients through pre-funded instruments, suchas, Pay
Order, Demand Draft, Banker’s cheque, etc., it is observed that the stock
brokers are unable to maintain an audit trail of the funds so received, as the
details of the name of the client and bank account-number are not mentioned on
such instruments. This may result in flow of third party funds /unidentified
money, which is not in accordance with the provisions of the aforesaid circular
and also affects the integrity of the securities market.
3.
Therefore, with a view to address the aforesaid concerns, it has been decided
in consultation with the major stock exchanges and associations of stock
brokers, as under:
a. If the
aggregate value of pre-funded instruments is ` 50,000/- or more, per day per
client, the stock brokers may accept the instruments only if the same are
accompanied by the name of the bank account holder and number of the bank
account debited for the purpose, duly certified by the issuing bank. The mode
of certification may include the following:
i.
Certificate from the issuing bank on its letterhead or on a plain paper with
the seal of the issuing bank.
ii.
Certified copy of the requisition slip (portion which is retained by the bank)
to issue the instrument.
iii.
Certified copy of the passbook/bank statement for the account debited to issue
the instrument.
iv.
Authentication of the bank account-number debited and name of the account
holder by the issuing bank on the reverse of the instrument.
b.
Maintain an audit trail of the funds received through electronic fund
transfers
to ensure that the funds are received from their clients only.
4.
Stock Exchanges are advised to :
a.
issue necessary instructions to bring the provisions of this Circular to the
notice of their constituents and also disseminate the same on their websites;
b.
make amendments to the relevant bye-laws, rules and regulations for the
implementation of the above, as deemed necessary;
c.
communicate to SEBI, the status of the implementation of the provisions of this
Circular by June 30, 2011; and
d.
develop the monitoring mechanism through internal audit and inspections.
5.
This Circular is issued in exercise of powers conferred under Section 11 (1)
of
the Securities and Exchange Board of India Act, 1992 to protect the interests
of investors in securities and to promote the development of, and to regulate
the securities market and shall come into effect from the date of this
Circular.
6.
This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework” and
“Circulars”.
Yours
faithfully,
V S Sundaresan
Chief General Manager
022-26449200
sundaresanvs@sebi.gov.in
All
trading members are requested to take note of the above.
Manager (Surveillance)