Trading members of the Exchange vide Notice No. 20170615-23 dated June 15, 2017 had informed the trading members about the provisions contained in the SEBI circular No. CIR/MRD/DP/54/2017 dated 13th June, 2017 regarding margin trading.
The said circular includes one of the eligibility criteria for the brokers to provide margin trading facility to clients. This criteria indicates that only corporate brokers with a net worth of at least Rs.3 Crores would be eligible for offering margin trading facility to their clients.
The "net worth" for the purpose of margin trading facility would mean "Capital" plus free reserves less non allowable assets, i.e. fixed assets, pledged securities, non-allowable securities, bad deliveries, doubtful debts and advances (including debts and advances overdue for more than 3 months or given to associates), prepaid expenses, intangible assets and 30% of the marketable securities."
The said circular also states that the broker should submit to the exchange half yearly networth certificate, i.e. as on 31st March and 30th September from an auditor confirming their net worth. Such a certificate shall be submitted not later than 30th April and 31st October of the year.
The following penalty norms has been laid down for late/non submission of networth certificate in the L.C.Gupta format within prescribed time (i.e. on or before 31st October, 2018) by members providing Margin trading facility to their clients.
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Late / Non Submission of Networth Certificate for Margin Trading
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I) As on : 31st Mar, : Due Date : 30th April
Discontinuation of Margin Trading Facility : October 1st
II) As on : 30th Sept.: Due Date : 31st October
Discontinuation of Margin Trading Facility : April 1st
Fine / Penalty Structure
Ø Fine of Rs.100/- per day for first month from the due date.
Ø Fine of Rs.200/- per day for second month after due date.
Ø Fine of Rs.300/- per day till the date of submission or date of discontinuation of Margin Trading facility whichever is earlier.
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In view of the above, trading members who are availing margin trading facility are hereby requested to furnish Networth Certificate as on September 30, 2018 duly certified by Auditor, as per the L.C.Gupta Format shown in Annexure 1 on BEFS portal w.e.f. October 1, 2018. User manual to upload the same is attached.
Accordingly, Networth Certificate is required to be uploaded on BEFS portal on or before October 31, 2018 failing which the action stated above will be initiated.
Please note that if the networth certificate and computation of Networth is not in the prescribed format the same will not be taken on record. Penalties for late/non-submission will be imposed if the Networth for the aforesaid period are not submitted correct and complete in prescribed format on or before the aforesaid due date/s.
For further clarification in the aforesaid matter, trading member can contact Mr. Ankit Kothari (022-2272 8287) or Mr. Prakash Bhat (022-2272 8466)
Amit Kadam Prakash Bhat
Senior Manager Manager
Membership Operations Membership Operations
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