The Hindu Business Line : How trade-for-trade segment works

*Which have not established connectivity with both the depositories as per SEBI directive. The list of these securities is notified by SEBI from time to time.

*On account of surveillance action.

The National Securities Clearing Corporation Ltd (NSCCL) does not undertake clearing and settlement of deals executed on the Trade for Trade sub-segment as well as negotiated deals executed on any sub-segment of the Exchange.

Primary responsibility of settling these deals rests directly with the members and the Exchange only monitors the settlement. The parties are required to report settlement of these deals to the Exchange.

Procedure for settlement: At the end of the day, NSCCL downloads to Clearing members a report of settlement obligations for Trade-for-trade (TT) deals. Custodian clearing members also receive a report of settlement obligations for TT deals executed on behalf of their clients at the end of the day.

The custodians are required to confirm TT Market deals executed on behalf of their clients for settlement purpose within one working day from the date of the deal.

In case the custodian clearing member does not confirm the deal, the responsibility to settle the deal will shift to the clearing member who executed the deal.

Settlement Obligations for TT deals have to be settled within two working days from the date of the deal, directly between the buying and selling clearing members.

The exchange of funds and securities (through transfer of securities between accounts through the depository system) take place between the buying and selling clearing members.

The selling clearing member is required to render delivery of the securities through depository to the buying clearing member in exchange for funds, which may be paid by means of Cheque/Demand Draft/Pay-order by the buying clearing member.

The means of payment must be such as to enable the selling clearing member to realise the funds on the same day as the exchange of securities through transfer of securities between accounts through depository. Settlement details must be reported by Custodian and TM clearing members to the Clearing Corporation in the formats prescribed within 24 hours of the settlement.

The delivery of securities in settlement of TT Market deals can be in the following units:

* in marketable lot, or

* the traded quantity.

The choice of deciding on the delivery units will rest with the delivering clearing member

Cancellation of Trades: In case a deal executed in TT segment is cancelled by a clearing member, a penal charge of Rs1,000 for each cancellation is levied. If a clearing member is the buying as well as the selling member, Rs 2,000 would be collected as charge for cancellation of the trade.

The cancellation charges are levied without prejudice to any disciplinary action and on continuance of such instances, the matter may be referred to the Disciplinary Action Committee.

Failure to settle on settlement date: If members would not be able to settle the trades by the settlement date due to unavoidable circumstances, they are required to seek prior approval of NSCCL for extension of the settlement date.

The relevant authority may, if satisfied that such circumstances exist in its absolute discretion, approve any such extension of settlement date.

Where a member fails to obtain prior approval from NSCCL for extension of the settlement date of the TT trades, the following penal charges are imposed upon such a member:

**Rs 10,000 for any delay in settlement or Rs 500 per trade for each day of delay in settlement subject to a maximum of two and half times the value of the trade whichever is higher.

**Rs 20,000 for any delay in settlement or Rs 1,000 per trade for each day of delay in reporting of settlement subject to a maximum of two and half times the value of the trade whichever is higher in case the buying and selling member are the same.

**Rs 5,000 for any delay in settlement or Rs 500 per trade for each day of delay in settlement subject to a maximum of two and half times the value of the trade whichever is higher.

**Rs10,000 for any delay in settlement or Rs 1,000 per trade for each day of delay in reporting of settlement subject to a maximum of two and half times the value of the trade whichever is higher in case the buying and selling member are the same.

Where a member can establish, to the satisfaction of the relevant authority, that the failure to settle, was on account of non-payment of funds or non-delivery of securities by the counter-party member and that he has fulfilled his part of obligation in full and in time, the relevant authority in such cases may not impose the penal charges on such a member.

Source: www.nseindia.com

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