SEBI requires BSE to have a system of guaranteeing settlement of trades or set up a Clearing Corporation to ensure that the market equilibrium is not disturbed in case of payment default by the members. BSE has accordingly instituted a system to guarantee settlement of bonafide transactions of Members which form part of the settlement system.
BSE has a Trade Guarantee Fund, in operation since May 12, 1997, with the following objectives :
To guarantee settlement of bonafide transactions of BSE Members inter-se which form part of the Stock Exchange settlement system, so as to ensure timely completion of settlements of contracts and thereby protect the interest of investors and Members.
TGF is managed by the Defaulters' Committee, which is a Standing Committee constituted by BSE, the constitution of which is approved by SEBI. The declaration of a member, who is unable to meet his settlement dues as a defaulter is a pre-condition for invoking the provisions of this Fund.
BSE has contributed an initial sum of Rs.60 crores to the corpus of the Fund. All active members are required to make an initial contribution of Rs.10,000 in cash to the Fund and also contribute Re. 0.01 for every Rs.1 lakh of gross turnover in all the groups of scrips by way of continuous contribution which is debited to their settlement account in each settlement.
All active Members are required to maintain a base minimum capital of Rs.10 lakhs each with BSE. This contribution has also been transferred to the Fund and has been treated as refundable contribution of the Members. Each Member is also required to provide to the Fund a bank guarantee of Rs.10 lakhs from a scheduled commercial or co-operative bank as an additional contribution to the Fund.
The present corpus, as on 31/03/2008 ( unaudited ), is Rs 181 crores (cash component excluding collaterals & additional capital)
TGF has eliminated the age-old counter party risk, so that if a Member is declared a defaulter, other Members do not suffer.
Trade Guarntee Fund - G -Sec Segment
In 2003, BSE had set up a distinct Trade Guarantee Fund known as GSEC Trade Guarantee Fund for trading in the Central Government Securities and such fund was created with an initial contribution of Rs. 5 crores by transferring the said amout from the free reserves of BSE
The present corpus as on 31/03/08 (unaudited) is Rs.7 crores.
- To inculcate confidence in the secondary market traders including the global investors to attract larger participation.
- To protect the interests of the investors and to promote the development and regulation of the secondary market.
- make temporary refundable advance(s) to the Members facing temporary financial mis-match as a result of which they may not be in a position to meet their financial obligations to BSE in time;
- protect the interest of the investors dealing through the BSE Members by ensuring timely completion of settlement
- inculcate confidence in investors regarding safety of their bonafide transactions
|T + 3
||Patawat Arbitration session : Arbitration awards to be obtained from officials of the Bad Delivery Cell
||Securities under objection to be submitted in the Clearing House.
||The delivering members to collect such securities under objection from the clearing house
||Arbitration awards for invalid objection to be obtained from members of the Arbitration Review Committee/officials of the Bad Delivery Cell.
||10:30 a.m. to 11:30 a.m.
||11:00 a.m. to 12:00 noon
||2:00 p.m. to 3:00 p.m.
||5:00 p.m. to 5:30 p.m.
The transactions pertaining to un-rectified and invalid rectification of securities are directly closed-out by BSE as per the formula.
The shares in physical form returned under objection to the Clearing House as explained earlier are required to be accompanied by an arbitration award (Chukada) except in certain cases where the receiving Members are permitted to submit securities to the Clearing House without "Chukada" or arbitration award in the following cases: