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Change in procedure for Transacting in Mutual Fund schemes through the Stock Exchange infrastructure

SEBI vide Circular No. CIR/IMD/DF/17/2010 dated November 9, 2010 has informed regarding facilitating transactions in Mutual Fund schemes through the Stock Exchange infrastructure. The procedure for subscription and redemption of MF units transacted through Stock Exchanges has undergone a change as mentioned below

Subscription

• Clients can subscribe to the Mutual Fund units through their Stock Brokers as per the existing process.
• The MF units will be credited by AMC / RTA into the Beneficiary Owner (BO) account of the AMC through credit corporate action. Subsequently, the AMC would transfer MF units from its BO account to its AMC/MF Clearing Member (CM) Pool account on or before 2.30 p.m. on the next day of the order date (i.e. by T+1 day) under market type "Normal Subscription" and "Mutual Fund - Subscription" in respect of NSCCL and BOISL respectively. AMC has to execute delivery out instructions from its CM Pool account or avail Auto DO facility of NSCCL / BOISL to deliver the MF units for Pay-in.
• Upon execution of Pay-in of securities as per the settlement schedule declared by NSCCL / BOISL, the CM Pool Account of the AMC will be debited through the usual settlement process.
• NSCCL and BOISL will credit the MF units into the respective subscriber CM's Pool accounts by Pay-out through usual settlement process.
• The CM would transfer the MF units to the subscriber's beneficiary account.

Redemption

For redemption purpose, in addition to the Client placing order through its Stock Broker, the Client will have to submit DIS to its Participant to transfer the MF units to the designated CM Pool account of NSCCL / BOISL as per the existing process.

This has been informed to Participants vide Circular No. NSDL/POLICY/2010/0137 dated December 24, 2010, which is posted on NSDL website www.nsdl.co.in.

Procedure for opening Pool Account of Mutual Fund (MF)

SEBI vide Circular No. CIR/IMD/DF/17/2010 dated November 9, 2010 has informed regarding facilitating transactions in Mutual Fund schemes through the Stock Exchange infrastructure. As per the guidelines issued by the Stock Exchanges, AMC / Mutual Fund will be required to open a Pool Account with any Participant of NSDL.

Further details about this facility are mentioned in Circular No. NSDL/POLICY/2010/0129 dated December 11, 2010, which is posted on NSDL website www.nsdl.co.in.

Activity schedule for Auction Session

SEBI vide Circular No. CIR/MRD/DP/ 39 /2010 dated December 28, 2010 has informed that as per extant practice, in case of default by the selling broker in a settlement, the security delivered short is bought in the auction session and is delivered to the buying broker on T+4 day.

In order to reduce the time involved in delivering the shares to the buying broker, in case of default, the auction will be conducted on the same day of the settlement, after the pay-in is completed. i.e. the auction for trades done on T day shall be conducted on T+2 day after pay-in is completed and shortfall is crystallized.

The activity schedule as under shall be applicable with effect from February 1, 2011:

Rolling settlement for T day trade

Auction settlement for T day trade

However, as the bank and stock exchange holidays are not common there are days when multiple settlements are conducted on the working day immediately following the day(s) of the closure. On such days when multiple settlements (say S1 and S2) are conducted on the same day (say Tm) the auction session shall be as under

• The auction of first settlement (S1) shall be conducted on the same day (Tm) and settled the next day (Tm+1).
• The auction for the second settlement (S2) shall be conducted on the next day

(Tm+1) along with the shortages/auction of that day. The settlement of the same shall happen on the subsequent day (Tm+2).

Further details about this facility are mentioned in Circular No. NSDL/POLICY/2010/0139 dated December 30, 2010, which is posted on NSDL website www.nsdl.co.in.

Acceptance of third party address as correspondence address

NSDL has informed all its Participants that SEBI vide Circular No. CIR/MRD/DP/37/2010 dated December 14, 2010 has received representations from Market Intermediaries seeking guidance and clarifications whether to accept and capture the address of some person (hereinafter referred to as "third party") other than the Beneficial Owner(BO) as a correspondence address in the details of the demat account of the BO.

In this regard, it is stated that SEBI has no objection to a BO authorizing the capture of an address of a third party as a correspondence address, provided that the Depository Participant (DP) ensures that all prescribed 'Know Your Client' norms are fulfilled for the third party also. The DP shall obtain proof of identity and proof of address for the third party.

Further details about this facility are mentioned in Circular No. NSDL/POLICY/2010/0132 dated December 15, 2010.

NCDO training / certification programmes for Participants

NSDL conducts training and certification programmes for Participants to increase the availability of trained personnel for depository operations. In December 2010, such programmes were conducted in Ahmedabad, Chandigarh, Gurgaon, Jaipur, Kolkata, Mumbai, Nagercoil, (Tamil Nadu) Nagpur, New Delhi, Patna, Pune, Rajkot, Thoothukudi (Tamil Nadu) and Trichy (Tamil Nadu). In all, 805 persons attended the training programmes conducted at these locations.

Closure of Artha Broking Services Limited Participant Operations

NSDL has informed all its Participants that Artha Broking Services Limited (DP ID IN303671), a Participant of NSDL has informed NSDL about its decision to discontinue depository operations. Further, the Participant ID (DP ID IN303671) has been deleted from the Depository System.

This has been informed to Participants vide Circular No. NSDL/PI/2011/0006 dated January 3, 2011.