COMMENTARY
INTERVIEW
SPECIALS
CHAT
ARCHIVES

BSE approves fund for avoiding trade defaults

The governing board of the Bombay Stock Exchange has approved a separate fund termed 'The Stock Exchange Brokers' Contingency Fund' to further safeguard the interest of investors.

The fund, with an initial corpus of Rs 95.1 million and having a maximum advance limit of Rs 5 million, is a major step towards bridging the gap between stringent risk management system and a trade guarantee fund.

This fund will be managed by a committee comprising of the president, executive director, vice president, honorary treasurer, and three non-elected directors, a release said in Bombay on Wednesday.

According to BSE President M G Damani, the main objective of the fund is to make temporary refundable advance to the members for tiding over a temporary mismatch in his fund flow.

As per the guidelines, the stock exchange may from time to time contribute to the fund as per the governing board's discretion. All the active members will contribute a nonrefundable amount of Rs 1,000 each once the fund comes into force, and newly-elected members will on election pay Rs 250,000 each towards the fund.

Further, at the end of every settlement, all the active members will forthwith contribute 0.00025 per cent (that is, 0.25 paise per Rs 1000) of his turnover during the settlement concerned which will be accounted as 'continuous contribution'. This contribution would be nonrefundable.

The members of the governing board and trustees of the fund will not be entitled to claim any refundable contingency advances, the release said.

UNI