NATIONAL STOCK EXCHANGE OF INDIA LIMITED
CAPITAL MARKET OPERATIONS
CIRCULAR
Circular
No.: NSE/CMO/0149/2004
Download
No. NSE/CMTR/5634
Date:
December 7, 2004
Dear Members,
In continuation to SEBI
Circular no. DNPD/Cir-22/04 dated
For any clarifications, Trading Members are advised
to contact the following officers:
Mr. Janardhan Gujaran / Mr.
Viral Shah at 26598153 and 26598156.
For and on behalf of
National Stock Exchange of India Ltd.
Suprabhat Lala
Manager (Capital Market - Operations)
Annexure
- 1
PRATIP KAR
EXECUTIVE DIRECTOR
DNPD/Cir- 22 /04
To
All Stock Exchanges, Depositories and Custodians.
Dear Sir,
Mandatory use
of STP system for all institutional trades executed on the stock exchanges.
Straight Through
Processing (STP) is generally understood to be a mechanism that automates the
end to end processing of transactions of financial instruments. It involves use
of a system to process or control all elements of the work flow of a financial
transaction, what are commonly known as the Front, Middle, Back office and
General Ledger. In other words, STP allows electronic capturing and processing
of transactions in one pass from the point of order origination to final
settlement. STP thus streamlines the process of trade execution and settlement
and avoids manual entry and re-entry of the details of the same trade by
different market intermediaries and participants. Usage of STP enables orders
to be processed, confirmed, settled in a shorter time
period and in a more cost effective manner with fewer errors. Apart from
compressing the clearing and settlement time, STP also provides a flexible, cost
effective infrastructure, which enables e-business expansion through online
processing and access to enterprise data.
SEBI vide letter dated
While several STP Service Providers have been
providing STP service to the market participants, however, there was no
inter-operability between the STP Service Providers.
To resolve the issue of inter-operability
between the STP Service Providers, it has been decided in consultation with the
stock exchanges and the STP Service Providers that a STP Centralised
Hub would be setup. Currently this STP Centralised
Hub has been setup and made operational by NSE. NSE has obtained the necessary
approvals from Department of Telecommunications (DoT)
as an Internet Service Provider (ISP). Subsequently this STP Centralised Hub would be further developed jointly with
BSE.
In view of the aforesaid developments, it has
been decided that all the institutional trades executed on the stock exchanges
would be mandatorily processed through the STP System
w.e.f
This circular is being issued in exercise of
powers conferred by section 11 (1) of the Securities and Exchange Board of
India Act, 1992, read with section 10 of the Securities Contracts(regulation)
Act 1956, to protect the interests of investors in securities and to promote
the development of, and to regulate the securities market.
Yours faithfully,
PRATIP KAR
Annexure - 2
|
CHIEF
GENERAL MANAGER DERIVATIVES
AND NEW PRODUCTS DEPARTMENT DNPD/26276/04 To, All exchanges, STP centralised hub, STP service providers, AMFI and
custodians Re: Clarification on the definition of institutional
trades and use of physical contract note Dear Sir, 1)
This is a clarification to our previous
circular no. DNPD/Cir-22/04
dated 2)
It is reiterated that STP is mandatory
for all institutional trades. However some institutions who
directly settle their trades with the brokers and do not use custodians in
the settlement process have raised questions on the mandatory applicability
of STP for their trades. It is clarified that an institutional trade for the
purpose of STP shall mean a trade which is settled through a custodian. 3)
SEBI has also received feedback from
the market that some of the institutions insisted receiving the contract
notes in physical form besides the issuance of contract note in the
prescribed format of the STP system (IFN 515). This has caused unnecessary
duplication of work, increased cost and brought in inefficiencies in the
market. Accordingly, it is clarified that institutional trades where
electronic contract note in the prescribed format is issued, no physical
contract note (for such a trade) shall be issued by the brokers w. e. f. Yours sincerely, N. PARAKH |