Mumbai, Sep 28 (IANS The Securities and Exchange Board of India (SEBI) has directed stock exchanges and clearing corporations to initiate proceedings for liquidation of both movable and immovable assets of defaulting trading and clearing members within six months of declaration of the defaulters.
In a circular on Monday, the securities market regulator said that in certain cases, there is a shortfall of funds or securities with defaulter members to meet the obligation of clients, exchanges of clearing corporations.
The bye-laws of the bourses and clearing corporations provide for the procedure for declaring a member as defaulter when, amongst other reasons, the member is not able to fulfil their obligations and also provide for initiation of proceedings in a court of law whenever a member is declared as a defaulter and there is a shortfall of funds or securities with the defaulter member.
“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,” the SEBI circular said.
It also asked the stock exchanges and clearing corporations to bring 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 and make amendments to their bye-laws, rules, regulations, wherever necessary.
They have also been asked to communicate to SEBI, the status of the implementation of the provisions of this circular in their monthly development report.
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