SEBI Circular Shortselling & SLB

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  • 7/26/2019 SEBI Circular Shortselling & SLB


    Chief General Manager

    Market Regulation Department-Division of Policy

    E-mail: mdrao@sei!gov!in

    MRD/DoP/SE/Dep/Cir- 14 /2007

    December 20, 2007

    1. The Executive Director/M!"!#i"# Director/$%mi"itr!tor

    o& !'' Stoc( Exch!"#e

    2. The Ch!irm!" !"% M!"!#i"# Director, )SD*

    +. The M!"!#i"# Director CE, CDS*

    De!r Sir / M!%!m,

    Sub:- Short selling and securities lending and borrowing

    1. Pursuant to the recommendations of the Secondary Market Advisory Committee (SMAC) ofSEBI and the decision of the SEBI Board, it has een decided to !ermit a"" c"asses ofinvestors to short se"" su#ect to the road frame$ork s!ecified in Anne%ure&1.

    '. In order to !rovide a mechanism for orro$in of securities to ena"e sett"ement of securitiesso"d short, it has a"so een decided to !ut in !"ace a fu""&f"eded securities "endin andorro$in (SB) scheme for a"" market !artici!ants in the Indian securities market under theover&a"" frame$ork of *Securities endin Scheme, 1++- of SEBI s!ecified y SEBI vide

    circu"ar o. SM/0PIC20S0CI3&4+0+ dated May 4, 1++. Such a reu"atory frame$orksha"" e su#ect to the road frame$ork s!ecified in Anne%ure&'.

    5. 6he Stock E%chanes sha"" issue the necessary uide"ines in this reard and sha"" !ut in!"ace systems to o!erationa"ise the aove mechanisms for short se""in and SB. 6he stocke%chanes sha"" a"so ensure that a"" a!!ro!riate tradin and sett"ement !ractices as $e"" assurvei""ance and risk containment measures, etc. are made a!!"ica"e and im!"emented inthis reard.

  • 7/26/2019 SEBI Circular Shortselling & SLB


    7. 6he Stock E%chanes and the /e!ositories are advised to !ut necessary systems in !"aceso as to distinuish the "endin and orro$in transactions e%ecuted in the frame$orks!ecified in the anne%ure from the norma" market transactions in the demat system.

    8. 6he date of im!"ementation of this circu"ar $i"" e communicated y SEBI suse9uent"y.

    :. 6he Stock E%chanes and the /e!ositories are a"so advised to ;

    :.1. test the necessary soft$are0systems and remove any "itches in its o!eration $e"" eforethe commencement date to avoid any !ro"ems in the "ive environment.

    :.'. make necessary amendments to the re"evant ye&"a$s, ru"es and reu"ations for theim!"ementation of the aove decision.

    :.5. rin the !rovisions of this circu"ar to the notice of the memer rokers0c"earinmemers, de!ository !artici!ants and a"so disseminate the same on their $esite.

    :.7. communicate to SEBI, the status of the im!"ementation of the !rovisions of this circu"arin the Month"y /eve"o!ment 3e!ort.

    . 6his circu"ar is ein issued in e%ercise of !o$ers conferred under Section 11 (1) of the

    Securities and E%chane Board of India Act, 1++' and Section 1+ of the /e!ositories Act,1++:, to !rotect the interests of investors in securities and to !romote the deve"o!ment of,and to reu"ate the securities market.

    our &!ith&u'',

    " # Murali Dhar Rao


    1. Annexure-1 Broad framework for short selling,

    2. Annexure-2 Broad framework for securities lending and borrowing