SEBI Circular on Penalty for Repeated Delivery Failure

SEBI Circular on Penalty for Repeated Delivery Failure

Securities and Exchange Board of India (SEBI) vide notification / Circular No. SEBI / HO / CDMRD / DRMP / CIR / P / 2021/619 issued and published with date August 17, 2021, has introduced “Penalty for repeat delivery Default” in exercise of the powers conferred under Section 11 (1) of the Indian Securities and Exchange Board Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956

The Circular was addressed to:

  • The CEOs / CEOs,
  • All Clearing Companies with Commodity Derivatives Segment

Need for the Circular:

1. To protect the interests of investors in securities and
2. Promote the development and regulate the stock market.

 Applicability of the provisions of this circular

It will be effective after one month from the date of issuance of the circular.

Circulate shortly:

SEBI has decided the following, in consultation with the Clearing Companies (CC)

1) In the event of repeated non-compliance by a seller or buyer, for each case of repeated non-compliance, an additional penalty will be imposed, which will be 3% of the value of the non-delivery.
2) Repeated default shall be defined as an event in which a breach of delivery obligations occurs 3 times or more during a period of six months on a continuous basis.
3) The sanction imposed will be transferred to the Settlement Guarantee Fund (SGF) of the Clearing Corporation.

Link: myself

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