Sub: Circular Received from SEBI Regarding Turnover Details of the Trading Members
Total Page：16
File Type：pdf, Size：1020Kb
MEMBERSHIP DEPARTMENT
CIRCULAR No. 249
NSE/MEM/3314 April 5, 2002
Sub: Circular received from SEBI regarding turnover details of the trading members
SEBI has vide their circular ref:: SMD/POLICY/Cir-07/2002 dated March 28, 2002, informed the Exchanges of the procedure to be followed by trading members for submission of turnover details and the computation of fees payable to SEBI. A copy of the SEBI circular is enclosed herewith:
As instructed by SEBI, trading members are requested to submit the following documents to the Exchange.
SEBI acknowledged auditor’s certificate as per Annexure “A” of the SEBI circular along with a soft copy of the turnover details as per Annexure “B” of SEBI circular.
(Trading members located at centres other than Mumbai are requested to submit the turnover details at the respective regional offices of the Exchange).
Trading members are requested to take note of the same.
For National Stock Exchange of India Ltd.
Joseph H Bosco Asst.Vice President DEPUTY GENERAL MANAGER SECONDARY MARKET DEPARTMENT SMD/POLICY/ Cir -07/2002 March 28, 2002 The Executive Directors / Managing Directors All Stock Exchanges Dear Sir / Madam, SUB: FEES PAYABLE BY STOCK BROKERS SEBI has notified the SEBI (Stock Brokers and Sub-brokers) Regulations in 1992. Schedule III of the SEBI (Stock Brokers and Sub-brokers) Regulations 1992 which deals in detail with the payment of the fees was challenged by the brokers of the stock exchanges in their individual and representative capacity. The Hon'ble Supreme Court was pleased to deliver a judgement on February 01, 2001 on this issue inter alia directing SEBI to amend the regulations incorporating the recommendations of the R. S. Bhatt Committee Report. SEBI has amended the regulations on February 20, 2002 as per the judgement of the Hon’ble Supreme Court incorporating the recommendations of R. S. Bhatt Committee. It may be mentioned that the incidence of fees payable to SEBI by brokers has been reduced by the R.S. Bhatt Committee. R.S. Bhatt Committee has suggested different rates of payment of fees depending on nature of the transactions entered into. SEBI has accepted the recommendations of the R.S. Bhatt Committee and many brokers have paid fees in the past as per schedule III read down with the recommendations of the R.S. Bhatt Committee and such fees have been accepted by SEBI. Following the judgement of the Hon'ble Supreme Court, SEBI has received representations from the brokers in their individual capacities as well as their representative capacity. The issues have been examined by SEBI. Part A of this circular contains clarifications on the issues sought by the brokers. All the stock exchanges are advised to bring the following to the notice of their members :- 1. That Schedule III of the SEBI (Stock Brokers and Sub-brokers) Regulations 1992 has been amended on 20th February 2002. 2. That registration fees payable by the brokers to SEBI should be remitted in conformity with the amended regulations and taking into consideration the clarifications given in Part A of this circular. 3. That details of various components of the turnover as per the amended regulations should be furnished duly supported by auditors certificate as per format specified in Annexure – A. 4. That brokers must remit fees to SEBI along with the auditors certificate. 5. For the purpose of updating SEBI’s computer records, brokers shall be advised to send a soft copy of turnover data in Excel format as per structure specified in Annexure – B along with the hard copy of the auditors certificate. 6. In case fees paid is less than actual fees payable, the broker shall pay the balance fees upto 50% of the principal fees payable immediately and shall undertake to pay the remaining fees with interest within a period of two years. The format of undertaking is enclosed at Annexure – D. 7. That a copy of the auditors certificate furnished to SEBI shall simultaneously be forwarded to the Exchange concerned for due verification with their records. All stock Exchanges are advised that they shall :- A. Verify the turnover figures submitted by the members with their own records. B. In case of any discrepancy, the concerned Exchange shall settle the same with the members concerned. C. In case of any shortfall in fees after reconciliation, the Exchanges shall advise the members concerned to remit the balance fees to SEBI immediately in case the fees paid by the member concerned is less than 50% of the principal fees payable. D. The Exchanges shall confirm to SEBI the correct turnover figures of all its members ( including inactive and past members who were registered with SEBI) after due verification. The said turnover figures in both hard copy ( duly certified by the Exchange) as well as soft copy version ( Excel format) financial year-wise, member-wise from 1991-92 to 2001-02 may be forwarded strictly as per format specified in Annexure – C (strictly in the order prescribed). E. In respect of members who do not furnish the break-up of total turnover duly certified by the Auditor, the Exchange may furnish the total turnover of such members as per their records, once again, taking into consideration the steps underlined below, even though the said details may have been furnished earlier and there is no change in the turnover reported earlier. In order to facilitate direct loading of the turnover data in SEBI’s database, the Exchanges are further advised to take the following steps while forwarding the turnover data to SEBI as per structure specified in Annexure –C : I. In case of transfer/ conversion/ transmission of membership, the turnover data upto the date of transfer/ conversion/ transmission should be furnished for the transferor along with his SEBI Registration number and the subsequent turnover has to be furnished for the transferee along with his SEBI Registration number. II. In case member has ‘Nil’ turnover for a particular financial year in respect of any of the fields, Exchange shall specifically put the figure "0.00" in the said cell while forwarding the data to SEBI and not leave any field blank. III. Exchanges are advised to ensure and confirm the correctness of the SEBI registration numbers ( including past members and inactive members) and ensure that no blank space is left between alpha code "INB" & the remaining numeric code. IV. Exchanges are advised to ensure that summation of the break-up of the turnover under different heads is the same as the aggregate figure for the turnover. Yours faithfully, SD/- PARAG JAIN Encl:a.a. PART - A CLARIFICATIONS ON THE ISSUES ARISING OUT OF THE VARIOUS REPRESENTATIONS ON FEES TO BE PAID BY BROKERS TO SEBI The issues raised in the representations from brokers with respect to the payment of fees to SEBI are clarified as under: i. Reckoning of first five years fees :
It is clarified that the period of first five years as specified in the regulations shall be computed as under : Brokers who were already carrying on their activities in the financial year 1991-1992 would have to pay the fees for the financial year 1992-93 on the basis of their turnover for the previous financial year i.e. 1991-92. The brokers who have commenced their business from the financial year 1992-93 and onwards, would pay a flat fee of Rs.5,000/- for the first financial year if they have a nil turnover in the preceding financial year. For the next four years, brokers would pay fees based on their corresponding previous financial year’s turnover.
ii. Interpretation of `received' and 'receivable':
In the definition of Annual Turnover as appearing in sub-clause (3) of Regulation 10 of Schedule III of SEBI (Stock Brokers and Sub-brokers) Regulations, 1992, the words 'received' and 'receivable' shall be interpreted as follows: It is clarified that the words "received" and "receivable" refer to the price of the securities traded and not the securities themselves. Therefore, the words, "receive" and "receivable" cannot be restricted to the securities actually delivered or to transactions which involve the actual delivery of securities. Thus, turnover shall be computed as aggregate of sale and purchase price of securities received and receivable by the stock broker either on his own account as well as on account of his clients in respect of sale and purchase or dealing in securities during any financial year in conformity with Regulation 10 of Schedule III of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992. iii. Jobbing transactions:
The word 'jobbing' shall be interpreted in accordance with Schedule III of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 as amended on 20th February 2002. The SEBI circular no. SMD/DBA-II/Cir-31/98 dated November 5, 1998 issued in this regard for non-applicability of jobbing to order driven systems stands superceded. iv. Interest on delayed payment of fees: Interest on delayed payment of fees shall be computed @ 15% p.a. as under : As the statutory amendment for payment of interest has come into force from December 16, 1998, the liability to pay interest would be for fee outstanding for the delay beyond December 16, 1998, at the specified rate of 15% p.a. As per Schedule III, a broker is liable to pay fees on or before October 1st based on the previous year turnover. For the fees payable for the financial year 1999-2000 and thereafter, the interest shall be payable @ 15% p.a. from October 2nd of the corresponding financial year. v. Payment of fees in cash segment / Registration in derivatives segment :
The SEBI Board at its meeting held on December 28, 2001 had decided that all those brokers who did not pay fees should pay atleast 50% of the principal due in the cash market and give an undertaking to pay the balance fees within a period of 2 years along with interest. The brokers are required to give an undertaking in the format as given in the Annexure C of this circular. The Board further decided that any such member who abides by the above would be granted registration in the derivatives segment subject to the other conditions mentioned in the regulations.
vi. Fees payable by composite corporate members:
It is clarified that Regulations require every broker who wants to receive a certificate of registration from SEBI to make payment of fees to SEBI. This is irrespective of the number of cards which are held by the broker on the stock exchange. In case the broker has more than one registration certificate from SEBI on any stock exchange then he will be required to pay fees as per the Regulations for each and every certificate that he holds. In case the broker holds only one registration certificate and more than one card on any exchange it is clarified that registration fees are payable on the registration certificate and not on the number of cards held by the broker. The brokers' turnover will be the aggregate turnover of all cards.
vii. Fees payable on Government securities and PSU bonds:
Transactions in Government securities, bonds, units, etc. clearly form a part of the turnover and have to be included in the total turnover of the member and will have the benefit of concessional rate as mentioned in Regulation 10, Schedule III of the SEBI (Stock Brokers and Sub-brokers) Rules and Regulations, 1992 as amended on 20th February 2002. viii. Applicability of the notification on exemption from fees on corporatisation:
Notification dated January 21, 1998 was issued and the SEBI (Stock Brokers and Sub-brokers) Regulations were amended granting exemption from payment of fee on corporatisation of individual / partnership membership of the Exchange. It has been clarified vide notification dated February 20, 2002 that the amendment which was brought in on January 21, 1998 in respect of conversion of individual or partnership membership card of the exchange into corporate entity shall be deemed to be in continuation of the old entity subject to the condition mentioned in the above notification and no fee shall be collected again from the converted corporate entity for the period for which the erstwhile entity has paid the fees. The spirit behind notification dated January 21, 1998 was to give benefit of this amendment to stock brokers who have converted their individual / partnership membership into corporate on or after April 1, 1997. Accordingly such stock brokers shall be given the benefit of continuity subject to the satisfaction of conditions mentioned in the notification.
ix. Nomination by a member by an existing member / Transmission of Membership:
Wherever a new registration is required - where it is by virtue of transmission or transfer or any other reason, fresh fees, will have to be paid by the new broking entity.
x. Membership right acquired in auction purchase: Where a person 'purchases' the card of another defaulting member, then the said purchaser shall have to seek fresh registration with SEBI and he shall be liable to pay turnover fees like a new member of the stock exchange.
xi. Joining of Individual in Partnership Firm :
Where an individual joins a partnership firm as a partner there is no transfer. The registration would continue to be in the name of the partnership firm although by joining the partnership firm the broker carries on business along with the partners with reference to that very registration. xii. ALBM and BLESS transactions: ALBM and BLESS transactions, the new deferral products which were introduced by NSE and BSE, shall also be treated in the same manner as carry forward / badla transactions for the purpose of turnover fees and turnover fees as prescribed for badla / carry forward transactions as per Regulation 10 Schedule III of SEBI (Stock Brokers and Sub-brokers) Rules and Regulations, 1992.
FORMAT OF AUDITORS CERTIFICATE FOR REPORTING TURNOVER ANNEX - A Member’s name : Member’s trade name : Member’s SEBI Registration number : (as appearing on the SEBI Registration certificate) Name of the Stock Exchange : TURNOVER TABLE
Financial Jobbing Jobbing PSU bonds/ Other debt *Carry- Carry- Off-market Year turnover (sale turnover Govt market forward forward off- turnover side), if any (purchase securities turnover turnover, if setting entry (two-side), if side), if any turnover (two-side), if any turnover, if any (two-side), if any any {to be any given only if included in (6) }
(1) (2) (3) (4) (5) (6) (7) (8)
Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore Rs.crore
*Carry forward turnover shall include carry forward, renewal, badla, ALBM and BLESS transactions. FEES COMPUTATION TABLE
Financial Fees on Fees on PSU Fees on Other Fees on Carry- Fees on Off- Fees on Other Year Jobbing bonds/ Govt debt market forward turnover market turnover turnover, if securities turnover, if any less off-setting turnover, if any turnover, if any any turnover, if any entries(if included), if any
(1) (2) (3) (4) (5) (6) (7)
Rs. Rs. Rs. Rs. Rs. Rs.
Total Fees Payable Rs.
Less Fees Paid, if any, Rs
Balance Fees Payable Rs. Certification by Auditor should also include the following confirmation :- 1. That the break up into various components of the total turnover is in conformity with Schedule III of SEBI(Stock Brokers and Sub-Brokers) Regulations 1992 as amended on February 20, 2002 and, further, 2. jobbing transactions reported, are in conformity with Paragraph (1), clause (bb) of Schedule III of SEBI(Stock Brokers and Sub-Brokers) Regulations 1992 as amended on February 20, 2002, i.e. transactions that are reported as jobbing have been squared off during the same day and that such transactions have not been undertaken by the broker on behalf of clients. ANNEX - B FORMAT FOR REPORTING THE TURNOVER FIGURES BY BROKERS TO SEBI
Stock Exchange Code NUMBER(2) e.g.(xx => 01)
SEBI Registration No CHAR(12) e.g. (INB010034314)
Broker Name CHAR(70)
Trade Name CHAR(70)
Jobbing turnover(sale side), if any NUMBER(16, 04) {in Rs. Crore }
Jobbing turnover(purchase side) NUMBER(16,04) {in Rs. Crore }
PSU bonds/ Govt Securities NUMBER(16,04) {in Rs. Crore } turnover(two sided), if any
Other debt market turnover NUMBER(16,04) {in Rs. Crore } (two sided), if any
Carry-forward turnover, NUMBER(16,04) {in Rs. Crore } if any
# Carry-forward off-setting NUMBER(16,04) {in Rs. Crore } turnover, if any
Off-market transactions NUMBER(16,04) {in Rs. Crore } (two sided), if any
Other turnover (two sided) NUMBER(16,04) {in Rs. Crore }
* Total Turnover NUMBER(16,04) {in Rs. Crore }
Name of the Auditor ( if any) CHAR(70)
Date of Auditors certificate ( if any) DD/MON/YYYY e.g.(20-MAR-2002)
Remarks CHAR(100) {Suggestive Remarks}
From Fin Year NUMBER(4) {e. g. 2000}
To Fin Year NUMBER(4) {e. g. 2001}
# To be given only if off-setting entries have been included in carry forward turnover * Total Turnover = Jobbing turnover (sale side) + Jobbing turnover (purchase side) + PSU bonds/ Govt. securities turnover(two-sided) + Other debt market turnover(two sided) + Carry forward turnover - Carry forward off-setting turnover (if included in Carry forward turnover) + Off-market transactions(two-sided) + Other turnover(two- sided) ANNEX - C FORMAT FOR REPORTING THE TURNOVER FIGURES OF THE MEMBERS BY EXCHANGES TO SEBI Stock Exchange Code NUMBER(2) e.g.(xx => 01)
SEBI Registration No CHAR(12) e.g. (INB010034314) Broker Name CHAR(70)
Trade Name CHAR(70)
Jobbing turnover(sale side), if any NUMBER(16, 04) {in Rs. Crore }
Jobbing turnover(purchase side) NUMBER(16,04) {in Rs. Crore }
PSU bonds/ Govt Securities NUMBER(16,04) {in Rs. Crore } turnover(two sided), if any
Other debt market turnover NUMBER(16,04) {in Rs. Crore } (two sided), if any
Carry-forward turnover, NUMBER(16,04) {in Rs. Crore } if any
# Carry-forward off-setting NUMBER(16,04) {in Rs. Crore } turnover, if any
Off-market transactions NUMBER(16,04) {in Rs. Crore } (two sided), if any
Other turnover (two sided) NUMBER(16,04) {in Rs. Crore }
* Total Turnover NUMBER(16,04) {in Rs. Crore }
Name of the Auditor ( if any) CHAR(70)
Date of Auditors certificate ( if any) DD/MON/YYYY e.g.(20-MAR-2002)
Remarks CHAR(100) {Suggestive Remarks}
From Fin Year NUMBER(4) {e. g. 2000}
To Fin Year NUMBER(4) {e. g. 2001}
# To be given only if off-setting entries have been included in carry forward turnover * Total Turnover = Jobbing turnover (sale side) + Jobbing turnover (purchase side) + PSU bonds/ Govt. securities turnover(two-sided) + Other debt market turnover(two sided) + Carry forward turnover - Carry forward off-setting turnover (if included in Carry forward turnover) + Off-market transactions(two-sided) + Other turnover(two- sided) Certification by Exchange We have verified and reconciled from our records the total turnover figures as furnished by the member for the concerned financial years along with the auditors certificate and confirm that :- 1. the break up into various components of the total turnover has been certified by the auditor concerned to be in conformity with Schedule III of SEBI(Stock Brokers and Sub-Brokers) Rules and Regulations 1992 as amended on February 20, 2002 and, further, 2. in case of jobbing transactions reported, the auditor concerned has certified that the figures for jobbing transactions are in conformity with Paragraph (1), clause (bb) of Schedule III of SEBI(Stock Brokers and Sub-Brokers) Regulations 1992 as amended on February 20, 2002, i.e. transactions that are reported as jobbing are squared off during the same day and have not been undertaken by the broker on behalf of clients. For ------Stock Exchange
Date: Authorised Signatory ANNEX - D FORMAT OF UNDERTAKING ( To be submitted on Non-Judicial Stamp Paper of value as applicable) To, SEBI, Mumbai. I ------S/o/D/o/W/o Shri ------resident of ------Prop./ Director/ Partner of M/s. ------, member ------Stock Exchange having SEBI Registration number ------, SEBI Registration date ------and having its office at ------having appropriate authority to do so do hereby solemnly affirm and state as under :- That my/ our financial year-wise turnover figures duly certified by the Exchange/ qualified auditor as defined in Section 226 of the Companies Act 1956 from the financial year preceding the financial year of registration with SEBI (including that of erstwhile individual/ partner/ transferor, if applicable) are enclosed in conformity with the Auditors certificate format prescribed by SEBI at Annexure –‘A’. The details of fees payable based on the same & in conformity with Schedule III of SEBI (Stock Brokers & Sub-Brokers) Regulations 1992 amended as on February 20, 2002 (including fee payable in respect of erstwhile individual/ partner/ transferor, if applicable) and details of fees paid to SEBI is as given below :-
Turnover Fee Fees Fees Instrument Balance Year Yea Payable paid Number Fees r Rs. Payable Rs. Rs.
TOTAL
I/ We hereby confirm and undertake to pay arrears of my/ our Registration fees of Rs.------in the cash market shown as above to SEBI as detailed hereunder :-
1. I/We undertake to pay balance principal amount of Rs. ------( balance remaining after paying atleast 50% of the principal fees payable) with interest within a period of two years from the date of the undertaking.
2. In case, fees paid are less than the actual fees payable after verification, I/ We undertake to pay the balance fees upto 50% of the principal fees payable immediately.
3. I/ We undertake to pay interest computed @ 15 % per annum in conformity with the clarifications given in Part A of circular no.SMD/Policy/Cir-07/2002 dated March 28, 2002 till the date of payment. - on delayed payment of the outstanding principal amount as also on the principal amount which has already been paid.
4. That the break-up of turnover figures into various components furnished to the Exchange/ SEBI duly certified by a qualified auditor is in conformity with the SEBI (Stock Brokers & Sub- Brokers) Regulations 1992 amended as on February 20, 2002.
5. That my/ our terminal in the cash as well as in the derivatives segment may be deactivated by the Exchange in case of my/ our failure to pay the outstanding Principal amount with interest within a period of two years from the date of this undertaking .
6. That SEBI will be at liberty to take such action as it deems fit or as may be permissible under SEBI Act, 1992 and SEBI ( Stock Brokers & Sub-Brokers) Rules & Regulations 1992 in case of my/ our failure to pay the outstanding Principal amount with interest on time. Declared and affirmed at ------on this ------day of ------. Signature of Proprietor/ Designated directors/ Partners
For ------