Securities and Exchange Board of India (SEBI) notified the definition of ‘Professional Clearing Member’.
In exercise of the powers conferred under Section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board made the regulations to further amend the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992.
The notification stated that in the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992, in regulation 2, in sub-regulation (1), clause (ca) shall be renumbered as (cb) and before the clause so renumbered, the new clause (ca) shall be inserted which read that “professional clearing member” means a member having clearing and settlement rights in any recognized clearing corporation, but not having trading rights in any recognized stock exchange.”
The notification further stated that for the purposes of this Schedule, ‘base networth’ shall mean paid up capital, fully, compulsorily and mandatorily convertible debentures / bonds / warrants which are convertible within a period of 5 years from the date of issue, free reserves and other securities approved by the Board from time to time, but shall not include fixed assets, pledged securities, value of member’s card, non-allowable securities (unlisted securities), bad deliveries, any debts and advances (except trade debtors of less than 3 months), prepaid expenses, losses, intangible assets and 30% value of marketable securities.
Provided that in case of securities pledged to clearing corporation, the post haircut value of shares owned by the Trading Member / Clearing Member, as may be specified by the Board from time to time, shall be considered for computation of the networth.
Provided further that the deposit requirement specified for the debt segment shall not be applicable when a clearing member clears and settles all the trades only on gross basis for both securities and funds, without using settlement or trade guarantee fund: Provided further that where the stock broker, clearing member or self-clearing member in the debt segment, is also regulated by a sectoral regulator other than the Board, the networth shall be computed in the manner as specified by such sectoral regulator or as specified by the Board, whichever is higher.
It was notified that for the purposes of this Schedule, free reserves shall include Profit and Loss, General Reserve, Securities Premium, Preference Share Redemption Reserve and Capital Redemption Reserve, but shall not include reserves created by revaluation of assets.