7h Pre funded policy

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PRE - FUNDED POLICY


It’s a Master Policy of the Company for the acceptance of Prefunded Instruments. This
policy is Subject to the rules and regulations of the Exchange from time to time.

Title:
Acceptance of Prefunded Instrument for trades on Exchanges.

Coverage:
Head office, all the branches of the Company and all thefranchisees of the company
wherever trading terminals / IBTterminals are there.

Scope:
Acceptance of Prefunded Instruments like Demand Draft/Payorder/Bank Guarantees
from a client against Payin Obligation/ Margin.

Procedures:
The Prefunded Instruments must be accepted only in following special circumstances;

1) If there are Bank Holidays on the following day.
2) If the client does not have an account in the bank in which the company has
accounts.
3) If the client wants to create a position immediately and has no other way of
transferring funds.
4) If the Bank account of the client is in a cooperative bank, which may take some time
for the cheque to be cleared.
5) If the company Bank accounts clearing branch is not available in the city/village
where the client has his bank account.
6) All the procedures prescribed in Cir/MIRSD/03/2011 dated 9/6/2011 Dt 09/06/2011
which is annexed with.

Objective:
 The Objective of this policy is to minimize the frequency of acceptance of Prefunded
Instrument, specially Demand Draft where there is a difficultyin tracking the correct
source of Issuance.

Permissible Limits:
The Prefunded Instruments must be accepted only in cases mentioned above and not
otherwise. Approval for acceptance must be taken by either of the executive Directors
or the Managing Director and only then credit should be given..
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                  Securities and Exchange Board of India

                                   CIRCULAR
CIR/MIRSD/03/2011                                                       June 9, 2011

To

All Recognized Stock Exchanges

Dear Sir/Madam,

         Sub: Pre- funded instruments / Electronic fund transfers

1. SEBI vide Circular No. SEBI / MRD / SE / Cir-33 / 2003 / 27 / 08 dated
   August 27, 2003, while specifying the mode of receipt and payment of
   funds, has permitted the stock brokers to accept Demand Drafts from their
   clients.

2. While receiving funds from the clients through pre-funded instruments, such
   as, Pay Order, Demand Draft, Banker’s cheque, etc., it is observed that the
   stock brokers are unable to maintain an audit trail of the funds so received,
   as the details of the name of the client and bank account-number are not
   mentioned on such instruments. This may result in flow of third party funds /
   unidentified money, which is not in accordance with the provisions of the
   aforesaid circular and also affects the integrity of the securities market.

3. Therefore, with a view to address the aforesaid concerns, it has been
   decided in consultation with the major stock exchanges and associations of
   stock brokers, as under:

      a. If the aggregate value of pre-funded instruments is ` 50,000/- or
         more, per day per client, the stock brokers may accept the
         instruments only if the same are accompanied by the name of the
         bank account holder and number of the bank account debited for the
         purpose, duly certified by the issuing bank. The mode of certification
         may include the following:




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               i. Certificate from the issuing bank on its letterhead or on a plain
                  paper with the seal of the issuing bank.
              ii. Certified copy of the requisition slip (portion which is retained
                  by the bank) to issue the instrument.
             iii. Certified copy of the passbook/bank statement for the account
                  debited to issue the instrument.
             iv. Authentication of the bank account-number debited and name
                  of the account holder by the issuing bank on the reverse of the
                  instrument.
      b. Maintain an audit trail of the funds received through electronic fund
         transfers to ensure that the funds are received from their clients only.

4. Stock Exchanges are advised to :

      a. issue necessary instructions to bring the provisions of this Circular to
         the notice of their constituents and also disseminate the same on
         their websites;
      b. make amendments to the relevant bye-laws, rules and regulations for
         the implementation of the above, as deemed necessary;
      c. communicate to SEBI, the status of the implementation of the
         provisions of this Circular by June 30, 2011; and
      d. develop the monitoring mechanism through internal audit and
         inspections.

5. This Circular is issued in exercise of powers conferred under Section 11 (1)
   of the Securities and Exchange Board of India Act, 1992 to protect the
   interests of investors in securities and to promote the development of, and
   to regulate the securities market and shall come into effect from the date of
   this Circular.

6. This circular is available on SEBI website at www.sebi.gov.in under the
   categories “Legal Framework” and “Circulars”.
                                                                  Yours faithfully,

                                                              V S Sundaresan
                                                       Chief General Manager
                                                                022-26449200
                                                    sundaresanvs@sebi.gov.in




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