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Brokers will not be able to make bank guarantees on customers funds, instructions to end existing guarantees by 30 Sep

Pankaj Prasad
SEBI
SEBI

SEBI has asked stock exchanges and clearing corporations to monitor closure of bank guarantees in an orderly manner.

Capital market regulator SEBI has now barred stock market brokers from creating bank guarantees on clients' funds. Also said that the existing guarantee should be terminated by 30 September. This new rule will come into effect from May 1. As per the current system, brokers and other intermediaries pledge clients' funds with banks, which in turn give guarantees for clearing large sums to clearing corporations. The Securities and Exchange Board of India (Sebi) said in a circular on Tuesday that the process exclusively puts customer funds at risk.

Stock Exchange and Clearing Corporation will monitor

SEBI has asked stock exchanges and clearing corporations to monitor closure of bank guarantees in an orderly manner. It may be noted that in the past also investors have suffered losses due to pledging of clients' shares. Analysts say that this order will prevent the possibility of misuse of customers' funds.

It will be necessary to give certificate of risk of investment in foreign currency

Indian residents will have to provide a certificate of exposure on investments in foreign currency to avail the benefit of opening of the Non-Delivery Forward Market (NDF) by the Reserve Bank of India (RBI). Bankers said the RBI had said at the Monetary Policy Committee (MPCP) meeting earlier this month that it would allow IFSC banking units as well as locals to offer non-deliverable foreign exchange derivative contracts linked to the Indian rupee. An IFAC Banking Unit (IBU) receives approval to operate from the International Financial Services Center (IFAC) on behalf of the RBI.

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Glenmark will settle the case for $ 8.75 million

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