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INSTRUCTIONS PROCESSING
INTER-CONNECTED STOCK
EXCHANGE OF INDIA LTD.
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INDEX:-
INSTRUCTIONS DETAILS.
INSTRUCTIONS ENTRY AND VERIFICATIONS.
PROCESSING TO BE COMPLETED.
DEADLINES.
INTERACTIVE SESSION
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ACCOUNT TRANSFERS:-
The electronic transfer of shares from one account to another are
referred to as Account Transfers. Such transfers can be effected
between various clients within the same Depository or between
various depositories.
The transfer of shares could be from one Beneficiary account to
another, from Pool account to a Beneficiary account, from Pool
Account to Clearing Corporation, Inter settlement
instruction, Inter Depository instruction etc.
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The following flow chart gives a diagrammatic
representation of Settlement of Trades.
CLIENT A BROKER A
CLEARINGCORPORATIO
STOCK
EXCHANGE
BROKER B CLIENT B
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Every selling client has an obligation to delivery shares to the broker
who in turn has an obligation to deliver the shares to the
Exchange/Clearing Corporation. The Exchange/ Clearing Corporationthen delivers the shares to the buying broker. Hence the main role
of the DP is to effect the transfer of shares in the accounts of the
various intermediaries.
The Delivery Instructions given by Clients can be broadly
categorised into:-
(i) Market Trades.
(ii) Off-Market Trades.
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Market Trades:
The transfer of securities from the Beneficiary Account to a
Clearing Member Pool Account is a Market Trade.
The following are the details to be filled up by the client for
execution of Market Trade.
1. CM BP ID: Clearing Member - Business Partner ID is allotted
by CDSL to the broker. A broker can open only one CM account
with a DP. He cannot open multiple CM accounts. The CM BP ID
is a unique identification given to the DP across the Depository.
A CM has different CM BP IDs for different exchanges.
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3. Market Type: There are different market types under which trading
is done in exchanges. The most common market type is "NORMAL or
ROLLING" market type.Under this market type the settlement is usually
for a period of 2 working days. That is T + 2 days.
The other common market type are TRADE FOR TRADE, AUCTIONNORMAL, AUCTION ROLLING
Branch has to exercise utmost cautious while executing the delivery
instructions under correct market type or else any mismatch will lead
to AUCTION of shares and in turn loss to the client and bank.
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4. Execution Date: In the depository environment, there is a provision
for future dated execution dates. Execution date is the date on which
the client's account is actually debited and the shares transferred tothe counter party. The client can give an instruction on 07/XX/XXXX
and mention the execution date as 10/XX/XXXX. The account of the
customer will be actually debited on 10/XX/XXXX in this case.
The execution date should not be later than the Pay-In date for that
particular settlement.
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Off-Market Trades:
The transfer of shares from one Beneficiary Account to another
constitutes an Off-Market Trade. The transfers are effected betweentwo accounts of clients without the involvement of the broker.
The following are the details to be filled in by clients for execution
of Off-Market Trades.
1. DP ID: In case of Off-Market trades, the shares are transferred from
one beneficiary account to another, within the same DP or Inter DP.
The customer needs to mention the DP ID of the counter-party to
whose account the shares are to be transferred.
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2. Client ID: The client needs to furnish the client ID of the
counter-party to whom the shares have to be transferred. The
combination ofDP ID and Client ID is of utmost importance as anymistake may transfer to a completely different account since the
Client Ids are unique within a DP but not across all DPs.
3. Execution Date: The Client needs to mention the date on which
he wishes to transfer the shares to the counter-party.
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PAY-IN OF SECURITIES:
(a) The BRANCH shall ensure that the instruction form is complete
and the signature of the Clearing Member is valid.
(b) The Clearing Member may give Delivery-Out instructions to its
DP to move securities from its Pool account to its Delivery account
(c) The Clearing Member may give a Delivery-Out instruction to the
DP to move securities from its Pool account to its Delivery account
on irreversible basis. Such instructions once effected shall not be
modified or cancelled by the Clearing Member.
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(e) The BRANCH shall execute the Delivery-Out instruction to move
securities from the Pool account of the Clearing Member to the
Delivery Account of the Clearing Member
(h) The instructions to move securities from the Clients account to
the Pool account of the Clearing Member and the delivery-outinstructions to move securities from the Pool account of the Clearing
Member to the Delivery account of the Clearing Member shall have
effect only before the CDSL Deadline for the relevant settlement.
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PAY-OUT OF SECURITIES:
(a) The Clearing Member may give instructions to its DP to debit itsPool account and credit the Clients accounts.
(b) The BRANCH shall ensure that the instruction form is complete
and the signature of the Clearing Member is valid.
(c) The BRANCH shall execute the instructions of the Clearing
Member to debit its Pool account and credit the Clients accounts under
OFF - MARKET MODE.
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INTER-SETTLEMENT INSTRUCTIONS:
(a) The Clearing Member may for the purpose of moving securities
within its Pool Account submit an inter-settlement Instruction Form to
the Participant.
(b) The BRANCH shall ensure that the instruction form is completeand the signature of the Clearing Member is valid.
(c) The BRANCH shall execute the instructions of the Clearing
Member to move securities within its Pool account.
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INTER DEPOSITORY TRANSFER OF SECURITIES:
(a) Instruction in respect of inter-depository transfers shall be executed
by the BRANCH on receipt of a duly filled in inter-depository transferinstruction forms from Clients and Clearing Members for delivery
and receipt of securities.
(b) The BRANCH should check for the completeness of the forms andvalidity of the signature of the Client and Clearing Member before
the instructions are executed.
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PLEDGE AND HYPOTHECATION :
The investor may mark a pledge on his securities .For this purpose
, the bank granting loans should be a DP or client of a DP. It is a
must for the pledgee and pledgor to have an account in the
depository to create a pledge. However, the pledgor and the
pledgee may maintain accounts with two different DPs. In case of
pledge the ownership in securities does not transfer, the pledgorcontinues to remain the beneficiary holder of the pledged securities
and will receive benefits of a corporate action, if any.
Process flow with regard to Pledge.
The investor initiates a pledge instruction through his DP
The pledgee confirms the instruction through his DP.
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The pledge quantity is blocked in the investors account till the
pledge is closed.
Pledge account closes when the pledgee issues instructions tounblock the pledge quantity in the investors account or confirm the
pledge closure instructions initiated by pledgor
A pledge is / can be invoked at the option of the pledgee when thepledgor fails to meet his obligation. The pledgee may issue instructions
to his DP to dispose off the securities by debit of the investors account
with his DP. The securities that were pledged and were in lock-in
status, cannot be invoked before the lock-in release date.
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Rematerialisation.
In the Indian depository system, the customer has the option of
reconverting his holdings from the electronic form to physical form.This process of conversion of the electronic holdings into physical form
is known as Rematerialisation. The investor has the option of
rematerialisation of his shares in jumbo lots, which would enable him
to reduce the amount of physical paper with him. When the shares arerematerialised and new share certificates are issued to the investor, the
new certificates would contain the new folio and distinctive numbers.
At the time of Rematerialisation of securities the securities shall be
issued to the persons as per the pattern of holdings in the account of
the Depository Participant from which such securities are rematerialised.
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CLIENT DP
RTA CDSL
RRF forms
Electronic communication
Electronic communication
RRF forms sentPhysical
certifiate sent
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Precautions to be taken while processing DIS :
1) Settlement Calendar - It should be taken as PAY-IN Date wise in theMorning and Evening for the same date and next date.
2) Ensure DIS of same day Pay- in to be executed strictly before
9:45 a.m.
3) Ensure DIS of same day Auction Pay - in to be executed strictly
before 11:00 a.m.
4) Ensure DIS of same day irreversible delivery out to be executed
strictly before 02:00 p.m.
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Contd
5) Ensure DIS of same day Interdepository instructions to be verified
strictly before 5:00 p.m.
6) Ensure DIS of same day Account Transfer instructions to be verified
strictly before 07:00 p.m.
7) After verification of all the instructions ensure to take PENDING
REPORT and DOUBLE VERIFICATION REPORT from Main menu
of BIRDS.
8) Ensure to check the Waste verification report and physical slips mustbe equal to the DIs process as on date on daily basis. The process
should be maintained to tally the slips recd as on date.
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