Meeting Of All Indian Stock Exchanges Held On December 20, 1999

The Meeting of all the Stock Exchanges was held to discuss the issues related to Survival of Small Stock Exchanges, Y2K preparedness of the Stock Exchanges and stock brokers and other issues. The following decisions were taken in the meeting. The various proposals related to survival of small stock exchanges were discussed in the meeting. It was agreed that the deposit to be collected from the sub brokers of the subsidiary of the promoted by the Stock Exchanges would be in the form 25% cash and 75% irrevocable bank guarantee. All the exchanges shall have the freedom to increase the membership or dealership subject to compliance of all the legal requirements, without the approval of SEBI. In order to utilise the existing infrastructural facilities of the regional stock exchange by the bigger exchanges, the BSE would be discussing the issue with the small stock exchanges and submit a report to SEBI by January 10, 2000. A small group comprising of representatives of small Exchanges, SEBI and Forward Markets Commission will be formed to explore possibilities of utilising the infrastructure facilities of the regional stock exchange for the purpose of commodities futures trading. During the meeting the preparedness of Stock Exchanges and stock brokers was reviewed and 21 stock exchanges have confirmed that they are Y2K compliant. Out of 2 non-compliant stock exchanges viz. Gauhati and Jaipur, the Jaipur Stock Exchange is expected to be Y2K compliant, shortly. The Gauhati Stock Exchange is also reported to be Y2K compliant but due to fire at exchange all the systems have been damaged and the exchange is in process of restoring the system. The exchanges have also confirmed that the trading terminals of the stock brokers who are not Y2K compliant have been deactivated or are being deactivated from the trading cycle commencing on/after December 15, 1999. It was also decided that December 30, 1999 shall be the last trading day of the last trading cycle in the calendar year 1999 for all stock exchanges. This would imply that all outstanding positions at the close of business on December 30, 1999, in all Stock Exchanges which do not have carry forward trading facilities, shall result in delivery. In the Exchanges which have carry forward facilities outstanding positions as determined at the end of business on December 30, 1999 may be carried forward to the next settlement which would be the first settlement in January 2000; All Exchanges shall conduct mock trading sessions on January 1 and January 2, 2000 to test all the systems including connectivity with depositories and submit a report to SEBI latest by 4.00 p.m. on both the days. The report shall include the nature of software problems if any, and corrective action taken ; The exchanges shall also submit daily reports to SEBI on actual trading indicating software problems if any, at the end of each day for the first trading cycle commencing in the year 2000. It was also informed that all participants of CDSL and NSDL are Y2K compliant. In order to ensure smooth functioning of the stock exchanges and give administrative freedom to the Executive Directors as CEOs of the exchanges, it was reiterated that the elected directors should not interfere in the day to day management of the exchange particularly relating to surveillance and the risk management functions. In the meeting issues related to surveillance and monitoring by Exchanges were also discussed. While the Exchanges have assured that because of the comprehensive margining system the markets have achieved comfortable levels of safety, it was again emphasised by SEBI that the Exchanges also have to ensure that the market is not manipulated. Particularly in the context of Information Technology Sector scrips, all the Exchanges were asked to be alert and vigilant. It was again emphasised that the Executive Directors of the Exchanges are responsible for ensuring the safety and integrity of market place. The Stock Exchanges were advised to set up the necessary mechanism for evaluating the system and infrastructure of the applicant broker for ascertaining that the specification outlined in the SEBI report are adhered to.