SEBI relaxes short selling norms

India Infoline News Service | Mumbai |

Clearing Members will not be required to enter into agreement with clients for trading in the SLB segment.

Securities and Exchange Board of India (Sebi) said that the Authorised Intermediary (AIs) shall sign an agreement with Clearing Members (CMs) for the purpose of facilitating lending and borrowing of securities.
Securities Lending and Borrowing (SLB) framework was introduced in 2007 which has been modified from time to time.
With regard to the requirement of an agreement between Clearing Member and client for the purpose of lending and borrowing of securities, representations were received from market participants, SEBI said in a circular on Wednesday.
According to the changes made by SEBI in the SLB framework, The Authorised Intermediary (AIs) shall enter into an agreement with Clearing Members (CMs) for the purpose of facilitating lending and borrowing of securities.
The agreement shall specify the rights, responsibilities and obligations of the parties to the agreement. The agreement shall include the basic conditions for lending and borrowing of securities as prescribed under SLB framework. Further, the exact role of AIs/CMs vis-à-vis the clients shall be laid down in the agreement. AIs shall ensure that there shall not be any direct agreement between the lender and the borrower.
In addition to that, AIs may also include suitable conditions in the agreement to have proper execution, risk management and settlement of lending and borrowing transactions with clearing member and client.
The AIs shall frame a rights and obligations document laying down the rights and obligation of CMs and clients for the purpose of lending and borrowing of securities. The rights and obligation document shall be mandatory and binding on the CMs and the clients for executing trade in the SLB framework.
Stock Exchanges and Depositories are advised to take necessary steps and put in place necessary systems for implementation of the above, SEBI added.


 

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