Refund of base minimum capital - SEBI - SEBI/SMD/SE/Cir- 24/2003/18/06

Circulars General Manager Secondary Market Department e-mail : [email protected] SEBI/SMD/SE/Cir- 24/2003/18/06 June 18, 2003 To The Managing Directors and Executive Directors of all the stock exchanges Dear Sir/Madam, Sub:- Refund of base minimum capital 1. SEBI circular no. SMD/SED/Cir/93/22570 dated October 21, 1993, prescribed an absolute base minimum capital for various exchanges. The requirements of the base minimum capital were revised and enhanced vide SEBI circular no. SMD/SED/RCG/270/96 dated January 19, 1996 wherein the requirement of the base minimum capital was doubled. 2. SEBI has received representations from stock exchanges with a request for refund/withdrawal of the base minimum capital in view of the insignificant volumes at the exchanges. 3. The issue has been examined and it has been decided to review the capital requirements as prescribed in our circulars no. SMD/SED/Cir/93/22570 dated October 21, 1993 and SMD/SED/RCG/270/96 dated January 19, 1996, as follows. 4. The exchanges having average daily turnover of less than ₹ 1 crore for the past three consecutive months from the date of this circular may maintain the BMC at ₹ 1 lakh. Besides, the exchanges which would have the average daily turnover less than ₹ 1 crore for any three consecutive months after the date of this circular would also be eligible to maintain the BMC at ₹ 1 lakh. The excess of the BMC over ₹ 1 lakh may be refunded to the member subject to the following conditions : (1) The member has been inactive at the stock exchange for the past 12 months, i.e. he has not carried out any transaction on that stock exchange during the past 12 months. (2) There are no investor complaints pending against the member. (3) There are no arbitration cases pending against the member. (4) The exchange shall retain/deduct/debit from the BMC to be refunded, the amount of any complaints/claims of the investors against the member and for dues crystallized and contingent to the exchange/SEBI arising out of pending arbitration cases, appealed arbitration awards, administrative expenses, SEBI turnover fees, e.t.c. (5) The exchange shall ensure that the member has paid the SEBI turnover fees and has obtained a No-Objection Certificate (NoC) from SEBI in this regard. 5. However, if the average daily turnover of the exchange exceeds the prescribed level of ₹ 1 crore for a period of one month at any time after the date of this circular, the exchange shall enhance the requirement of the BMC of the members back to the level stipulated in SEBI Circular No. SMD/SED/RCG/270/96 dated January 19, 1996 and shall obtain undertaking to this effect from the members. 6. The undersigned has been authorised to direct the stock exchanges (1) to take immediate steps to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision, (2) to bring the provisions of this circular to the notice of the member brokers/clearing members of the Exchange and also to disseminate the same on the website, (3) to communicate to SEBI, the status of the implementation of the provisions of this circular in Section II, item no. 13 of the Monthly Development Report for the month of May 2003. 7. This circular is being issued in exercise of powers conferred by 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. 8. The provisions of this circular are applicable with immediate effect. Yours faithfully P K Bindlish