Nse Bye Laws

NATIONAL STOCK EXCHANGE OF INDIA LIMITED
BYE LAWS
ARRANGEMENT OF CHAPTERS
Chapter
Description
Definitions
I.
Trading Segments
II.
Executive Committee
III.
Regulations
IV.
Dealings in Securities
V.
Trading Members
VI.
Participants
VII.
Dealings by Trading Members
VIII.
Trading System and Market Makers
IX.
Transactions and Settlements
X.
Rights & Liabilities of Members and Constituents
XI.
Arbitration
XII.
Default
XIII.
Investor Protection Fund
XIV.
Miscellaneous
National Stock Exchange of India Limited
Byelaws
DEFINITIONS
(1)
"Board" means Board of Directors of NSEIL.
(2)
"Exchange Securities" means securities which have been admitted to the Official
List(s) of NSE Securities.
(3)
"Exchange" means the Stock Exchange(s) operated by NSEIL.
(4)
"Executive Committee" or "EC" means the Committee of the NSE formed in

accordance with Chapter II.
(5)
"Issuer" includes a Government, a body corporate or other entity, whether

incorporated or not, which issues any security or other instrument, or draws or
accepts a negotiable instrument which is admitted to dealings on the NSE.
(6)
"Market-Maker" means a trading member registered under Chapter VIII.
(7)
"NSEIL" means the National Stock Exchange of India Limited.
(8)
"Official List of NSE securities" means the list of securities which are listed or
permitted to trade on the Exchange.
(9)
"Participant" means a constituent who is registered by the relevant authority from

time to time under Chapter VI of the Bye Laws.
(10)
"Regulations", unless the context indicates otherwise, includes business rules,

code of conduct and such other regulations prescribed by the relevant authority
from time to time for the operations of the Exchange and these shall be subject to
the provisions of the Securities Contracts (Regulation) Act, 1956 and Rules and
SEBI Act.
(11)
"Relevant Authority" means the Board, Securities and Exchange Board of India or
such other authority as specified by the Board from time to time as relevant for a
specified purpose.
(12)
"Relevant NSE Securities" or "Relevant Securities" means those NSE securities

pertaining to the relevant trading segment.
(13)
"Rules", unless the context indicates otherwise, means rules as mentioned

hereunder for regulating the activities and responsibilities of trading members of
NSE and as prescribed by the relevant authority from time to time for the
constitution, organisation and functioning of the Exchange and these rules shall be
subject to the provisions of the Securities Contracts (Regulation) Act, 1956 and
Rules and SEBI Act.
Byelaws
(14)
"SEBI" means the Securities and Exchange Board of India.
(15)
"Security" shall have the meaning assigned to it in the Securities Contracts

(Regulation) Act, 1956 and shall also include such other class of monetary
transactions or instruments, scrip less or otherwise, as may be admitted to
dealings on Exchange.
(16)
"Security admitted to dealings" includes a security which is listed or permitted to

trade on Exchange.
(17)
"Trading Member" means a Stock broker and the member of the NSE registered
in accordance with Chapter V of the Bye-Laws.
(18)
"Trading Segments" or "Segments" mean the different segments or divisions

comprising of NSE securities as may be classified and specified by the Board or
relevant authority from time to time.
(19)
"Trading system of the NSE" means a system which makes available to trading
members and the investing public, by whatever method, quotations in NSE
securities and disseminates information regarding trades effected, volumes, etc.
and such other notifications as may be placed thereon by the EC.
Byelaws
CHAPTER I
TRADING SEGMENTS
(1)
There may be more than one trading segment as may be specified by the relevant
authority from time to time. The Exchange shall seek the approval of SEBI before
introducing any new trading segment.
(2)
The securities which will be eligible for admission to the different trading
segments will be specified by the relevant authority from time to time.
(3)
Wholesale Debt Market Segment

Instruments used for Wholesale Debt Market transactions may be admitted to
dealings on the Wholesale Debt Market Trading Segment subject to trading
regulations which the relevant authority may prescribe from time to time.
(4)
Capital Market Trading Segment

Securities eligible under the Securities Contracts (Regulation) Act, 1956, may be
admitted to dealings on the Capital Market Trading Segment.
(5)
Futures & Options Trading segment

Derivatives contracts approved by SEBI may be admitted to dealings on the
Futures & Options Trading Segment.
Currency derivatives segment
(6)
Derivatives contracts based on currency or any other underlying approved by

SEBI may be admitted to dealings on the currency derivatives segment.
SME Trading segment
(7)
The specified securities issued by the Small & Medium Enterprises in accordance
with the Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009 may be admitted to the dealings on the SME
Trading segment.
Debt segment
(8)
Debt Securities and debt instruments may be admitted to dealings on the Debt
Segment subject to such trading regulations which the relevant authority may
prescribe from time to time. For the purpose of this Byelaw, Debt Securities and
debt instruments shall include the following:
Byelaws
(i)
"debt securities" as defined in Securities and Exchange Board of India
(Issue and Listing of Debt Securities) Regulations, 2008;
(ii)
Government Securities, Treasury Bills, State Government loans, SLR and
Non-SLR Bonds issued by Financial Institutions, municipal bonds, single bond
repos, basket repos and CBLO kind of products subject to RBI approval, where
required;
(iii) Securitised debt instruments as defined in SEBI (Public Offer and Listing
of Securitised Debt Instruments) Regulations, 2008;
(iv)
Any other debt instruments as may be specified from time to time by the
competent authority.
(v)
Such other debt securities as may be specified by the Relevant Authority
from time to time with prior approval of SEBI.
(9)
Further trading segments such as for debt instruments or equity instruments or any
other segment may be specified by the relevant authority from time to time.
(10)
The Exchange, subject to prior approval of SEBI, may enter into such
arrangement pursuant to proviso to Section 13 of the Securities Contracts
(Regulation) Act, 1956 with one or more recognised stock exchanges. In such an
event, the provisions of these Byelaws and Regulations shall apply subject to such
modifications as may be specified by Relevant Authority from time to time.
Byelaws
CHAPTER II
EXECUTIVE COMMITTEE
(1)
Executive Committee(s) shall be appointed by the Board for the purposes of

managing the day to day affairs of the different trading segment(s) in such manner
as laid down in the Rules.
(2)
The Executive Committee of each trading segment shall have such responsibilities
and powers as may be delegated to it by the Board as provided for in the Rules.
Byelaws
CHAPTER III
REGULATIONS
(1)
The Board or relevant authority may prescribe Regulations from time to time for
the functioning and operations of the Exchange and to regulate the functioning
and operations of the trading members of the Exchange.
(2)
Without prejudice to the generality of (1) above, the Board or relevant authority
may prescribe regulations from time to time, inter alia, with respect to:
(a)
norms, procedures, terms and conditions to be complied with for inclusion

of securities in the Official List of NSE securities;
(b)
fees payable by an Issuer for inclusion and continued inclusion in the

Official List of NSE Securities;
(c)
norms and procedures for admission of trading members in accordance with

Chapter-V;
(d)
norms and procedures for approval of market-makers to act as such;
(e)
forms and conditions of contracts to be entered into, and the time, mode and
manner for performance of contracts between trading members inter se or
between trading members and their constituents;
(f)
determination from time to time, of fees, system usage charges, deposits,

margins and other monies payable to the Exchange by trading members,
participants and by Issuers whose securities are admitted/to be admitted to
dealings on the Exchange and the scale of brokerage chargeable by trading
members;
(g)
prescription, from time to time, of capital adequacy and other norms which
shall be required to be maintained by trading members;
(h)
supervision of the market and promulgation of such Business Rules and

Codes of Conduct as it may deem fit;
(i)
maintenance of records and books of accounts by trading members as it may

deem fit and records as required under the Securities Contracts (Regulation)
Act and Rules and SEBI Act;
(j)
inspection and audit of records and books of accounts;
(k)
prescription, from time to time, and administration of penalties, fines and

other consequences, including suspension/expulsion for defaults or violation
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of any requirements of the Bye Laws and Regulations and the Rules and
Codes of Conduct and criteria for readmission, if any, promulgated
thereunder;
(l)
disciplinary action/procedures against any trading member;
(m) settlement of disputes, complaints, claims arising between trading members

inter-se as well as between trading members and persons who are not
trading members relating to any transaction in securities made on the
Exchange including settlement by arbitration;
(n)
norms and procedures for arbitration;
(o)
administration, maintenance and investment of the corpus of the Fund(s) set

up by the Exchange including Investor Protection Fund;
(p)
norms and procedures for settlement and clearing of deals, including

establishment and functioning of clearing house or other arrangements for
clearing and settlement;
(q)
norms, procedures, terms and conditions for registration and continuance of

registration of Participants;
(r)
norms and procedures in respect of, incidental or consequential to closing

out of contracts, deals or transactions;
(s)
dissemination of information, announcements to be placed on the trading

system;
(t)
any other matter as may be decided by the Board.
Byelaws
CHAPTER IV
DEALINGS IN SECURITIES
(1)
(2)
(3)
Dealings Allowed
Dealings in securities shall be permitted on the Exchange as provided in these
Bye Laws and Regulations and save as so provided, no other dealings are
permitted.
Admission of Securities to Dealings
(a)
Dealings are permitted on the Exchange in accordance with the provisions
prescribed in these Bye Laws and Regulations in that behalf, in securities
which are, from time to time, listed or permitted to trade on the trading
segments by the relevant authority.
(b)
Admission of securities to listing on the Exchange shall be in accordance

with provisions prescribed in these Bye Laws and Regulations in that
behalf.
(c)
The relevant authority may admit from time to time securities which are
permitted to trade on the Exchange.
Government Securities
(a)
Notwithstanding anything contained in Byelaw (2) above, dealings shall
be deemed to have been permitted in Government securities, which term
for the purpose of these Rules, Bye Laws and the Regulations made
thereunder shall denote securities issued by the Government of India, State
Governments, Port Trusts, Municipalities, local authorities, statutory
bodies and similar other bodies or authorities and include treasury bills
issued by the Government of India.
(b)
(4)
Government securities shall be deemed to have been admitted to dealing

on such market segment of the Exchange as may be prescribed by the
relevant authority as from the date of their inclusion on the Official List(s)
of NSE Securities.
Dealings in Securities Dealt on other Stock Exchanges

Without prejudice to the generality of Byelaw (2) above, the relevant authority
may in its discretion and subject to such conditions as it may deem proper, permit
dealings in any securities admitted to dealings on any other Stock Exchange or
which are regularly dealt in on such Stock Exchange.
(5)
(6)
Byelaws
Application for Admission to Listing

Applications for admission of securities to listing on the Exchange shall be made
to the relevant authority in such form as the relevant authority may from time to
time prescribe.
Conditions and Requirements of Dealings
The relevant authority may not grant admission to dealings to the securities of an
Issuer unless it complies with the conditions and requirements prescribed in these
Bye Laws and Regulations and such other conditions and requirements as the
relevant authority may from time to time prescribe.
(7)
Refusal of Admission to Listing

The relevant authority may, in its discretion, approve subject to such terms as it
deems proper, or defer, or reject any application for admission of a security to
listing on the Exchange.
(8)
Fees
Issuers whose securities are granted admission to dealings on the Exchange shall
pay such listing and such other fees and such other deposits as the relevant
authority may from time to time determine.
(9)
(10)
(11)
Dealings in Provisional Documents

The relevant authority may, in its discretion, permit dealings in Provisional
Documents. Provisional Documents for purposes of these Bye Laws and
Regulations denote Coupons, Fractional Certificates, Letters of Renunciation or
transferable Letters of Allotment, Acceptance or Application or options or other
rights or interests in securities, warrants issued or to be issued by an issuer or
other similar documents in respect of an issuer whose securities are sought to be
admitted/admitted to dealings on the Exchange.
Issuers Registered Outside India
Admission to dealings on the Exchange shall not be granted to securities issued
by a body corporate, fund or other entity registered or formed outside India
unless:
(a) there is adequate public interest in such securities in India;
(b) the body corporate, fund or other entity agrees to maintain a register of
members or other similar record in India and agrees to abide by such other criteria
as prescribed by the relevant authority are satisfied.
Specific Deals
The relevant authority may permit specific deals to be made in the case of
securities of Issuers not admitted to dealings on the Exchange, which for the time
being are prohibited or suspended for dealings.
(12)
(13)
(14)
(15)
(16)
(17)
Byelaws
Prohibited Dealings
The relevant authority may prohibit dealings on the Exchange in any security or
securities for any cause.
Suspension of Admission to Dealings on the Exchange
The relevant authority may suspend at any time the admission to dealings on the
Exchange granted to any security for such period as it may determine. At the
expiration of the period of suspension the relevant authority may reinstate such
security subject to such conditions as it deems fit.
Withdrawal of Admission to Dealings on Redemption or Conversion
The relevant authority may, if necessary, withdraw admission to dealings granted
to securities which are about to be exchanged or converted into other securities as
a result of any scheme of reorganisation or reconstruction or which being
redeemable or convertible securities are about to fall due for redemption or
conversion.
Withdrawal of Admission to Dealings on Liquidation or Merger
If any issuer be placed in final or provisional liquidation or is about to be merged
into or amalgamated with another entity, the relevant authority may withdraw the
admission to dealings on the Exchange granted to its securities. The relevant
authority may accept such evidence as it deems sufficient on such liquidation,
merger or amalgamation. Should the merger or amalgamation fail to take place or
should an issuer placed in provisional liquidation be reinstated and an application
be made for readmission of its securities to dealings on the Exchange. The
relevant authority shall have the right of approving, refusing or deferring such
application.
Withdrawal of Admission to Dealings on the Exchange
The relevant authority may, where deemed necessary, after giving an opportunity
to the issuer to explain, withdraw the admission to dealings on the Exchange
granted to its securities either for breach of or non-compliance with any of the
conditions or requirements of admission to dealings, or for any other reason
whatsoever.
Readmission to Dealings on the Exchange
The relevant authority in its discretion may readmit to dealings on the Exchange
the securities of an issuer whose admission to dealings has been previously
withdrawn.
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Byelaws
CHAPTER V
TRADING MEMBERS
(1)
Appointment and Fees

(a)
The relevant authority is empowered to admit trading members in
accordance with the Bye Laws, Rules and Regulations it may frame from
time to time in accordance with the Securities Contracts (Regulation) Act
and Rules and the SEBI Act.
(b)
The relevant authority may specify prerequisites, conditions, formats and

procedures for application for admission, termination, re-admission, etc. of
trading members to each trading segment. The relevant authority may, at
its absolute discretion, refuse permission to any applicant to be appointed
as trading member.
(c)
The trading member shall pay such fees, security deposits and other
monies as may be specified by the Board or the relevant authority from
time to time, on admission as trading member and for continued
admission. The fees, security deposits, other monies and any additional
deposits paid, whether in the form of cash, Bank Guarantee, Securities or
otherwise, with the Exchange, by a trading member from time to time,
shall be subject to a first and paramount lien for any sum due to the
Exchange and all other claims against the trading member for due
fulfillment of engagements, obligations and liabilities of trading members
arising out of or incidental to any dealings made subject to the Byelaws,
Rules and Regulations of the Exchange. The Exchange shall be entitled to
adjust or appropriate such fees, deposits and other monies for such dues
and claims, to the exclusion of the other claims against the trading
member, without any reference to the trading member.
(d)
Trading member of any trading segment may trade on the Exchange in the
NSE securities applicable to that segment.
(e) Trading members may trade in relevant securities either on their own account
as principals or on behalf of their clients unless otherwise specified by the
relevant authority and subject to such conditions which the relevant authority
may prescribe from time to time. They may also act as market-makers in such
securities if they are so authorised and subject to such conditions as under
Chapter VIII.
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Byelaws
(f) Any bank included in the Second Schedule of the Reserve Bank of India Act,
1934, and specifically authorised by Reserve Bank of India for this purpose,
i.
is eligible to become a Trading Member of the currency derivatives

segment of the Exchange, on the recommendation of the Relevant
Authority.
ii. such bank can act as a Trading Member for its proprietary dealings, to act
on its own account, in the currency derivatives segment of the Exchange.
iii. such bank can also act as a Trading Member for its clients or constituents
in the currency derivatives segment of the Exchange.
iv. such bank shall also abide by the circulars and directions issued by RBI
and SEBI in respect of dealings of such bank on the Exchange besides
Rules, Byelaws and Regulations of the Exchange.
(2)
Conditions
(a)
Trading members shall adhere to the Bye Laws, Rules and Regulations of
the Exchange and shall comply with such operational parameters, rulings,
notices, guidelines and instructions of the relevant authority as may be
applicable.
(b)
All contracts issued for deals on the Exchange shall be in accordance with
the Bye Laws, Rules and Regulations of the Exchange.
(c)
Trading members shall comply with such Exchange requirements as may

be prescribed by the relevant authority from time to time with regard to
advertisements and issue of circulars in connection with their activities as
trading members.
(d)
Trading members shall furnish declarations relating to such matters and in

such forms as may be prescribed by the relevant authority from time to
time.
(e)
Trading members shall furnish to the Exchange an annual Auditors'

Certificate certifying that specified Exchange requirements as may be
prescribed from time to time by the relevant authority pertaining to their
operations have been complied with.
(f)
Trading members shall furnish such information and periodic returns

pertaining to their operations as may be required by the relevant authority
from time to time.
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Byelaws
(g)
Trading members shall furnish to the extent such audited and/or unaudited
financial or quantitative information and statements as may be required by
the relevant authority from time to time.
(h)
Trading members shall extend full co-operation and furnish such

information and explanation as may be required for the purpose of any
inspection or audit authorised by the relevant authority or other authorised
official of the Exchange into or in regard to any trades, dealings, their
settlement, accounting and/or other related matters.
(i)
A trading member shall not deal with sub-brokers who are not registered
with SEBI nor allow operation of its trading terminal at any office other
than its registered office, branch offices and the offices of its registered
sub-brokers.
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Byelaws
CHAPTER VI
PARTICIPANTS
(1)
(2)
(3)
Registration of Participants on application

The relevant authority may register as a "Participant", those from amongst the
constituents as are desirous of registering themselves as such, in accordance with
these Bye Laws and Regulations framed from time to time, for such purpose and
subject to such terms and conditions as may be prescribed by the relevant
authority.
Suo Moto Registration of Participant
Notwithstanding anything contained in Byelaw (1) above, the relevant authority
may suo moto register as a 'Participant' those from amongst the constituents as, in
the opinion of the relevant authority for reasons to be recorded, should be so
registered, subject to such terms and conditions as may be prescribed by the
relevant authority.
Rights and Liabilities of Participants
(a)
Notwithstanding any provisions to the contrary as may be contained in any
other part of the Bye Laws especially VII(3) (a), the Exchange may
recognise a Participant as a party to the deal or trade made, firmed up or
contracted by the Participant through a trading member on any segment of
the Exchange, for such purposes (including for clearing and settlement)
subject to such terms, conditions and requirements and in such
circumstances as may be prescribed by the relevant authority from time to
time.
(b)
Save as otherwise provided in these Bye Laws and Regulations,

recognition of the Participant by the Exchange as a party to the deal or
trade made, firmed up or contracted by the Participant through the trading
member, shall not in any way affect the jurisdiction of the Exchange on
the concerned trading member in regard thereto and such trading member
shall continue to remain responsible, accountable and liable to the
Exchange in this behalf.
(4)
The relevant authority may prescribe from time to time such guidelines governing
the functioning and operation of the Participants on the Exchange and conditions
for continuance of their registration or recognition. Without prejudice to the
generality of the foregoing, such norms, requirements and conditions may include
prescription of, inter alia, deposits, margins, fees, system usage charges, system
maintenance/propriety, etc.
(5)
Rights and liabilities of the Participants as mentioned in this Byelaw are in

addition to their rights and liabilities under these Bye Laws as Constituents, save
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Byelaws
where a specific provision of these Bye Laws or Regulations prescribed from time
to time regarding any right or liability of a Participant is at variance with that
applicable to a Constituent. In the event of such a variance, the specific provision
by virtue of the terms and conditions of their registration with the Exchange,
regarding any right or liability of a Participant shall prevail.
(6)
Rights and liabilities of the Participants shall be subject to these Bye Laws and
Regulations as may be prescribed by the relevant authority from time to time.
(7)
Subject to the regulations prescribed from time to time, the relevant authority
shall at any time be entitled to cancel the registration or recognition of a
Participant on such terms and conditions as the relevant authority may specify.
Save as otherwise expressly provided in the regulation or in the decision of the
relevant authority, all rights and privileges available to the Participant shall
accordingly stand terminated on such cancellation.
(8)
At the discretion of the Exchange, and subject to such regulations as may be

prescribed or other terms and conditions as may be stipulated by the relevant
authority, the Participant may be permitted conditional and / or limited access to
the trading system or any part thereof, as may be decided by the relevant authority
from time to time.
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Byelaws
CHAPTER VII
DEALINGS BY TRADING MEMBERS
(1)
Jurisdiction
(a)
Any deal entered into through automated trading system of the Exchange
or any proposal for buying or selling or any acceptance of any such
proposal for buying and selling shall be deemed to have been entered at
the computerised processing unit of the Exchange at Mumbai and the
place of contracting as between the trading members shall be at Mumbai.
The trading members of the Exchange shall expressly record on their
contract note that they have excluded the jurisdiction of all other Courts
save and except, Civil Courts in Mumbai in relation to any dispute arising
out of or in connection with or in relation to the contract notes, and that
only the Civil Courts at Mumbai have exclusive jurisdiction in claims
arising out of such dispute. The provisions of this Byelaw shall not object
the jurisdiction of any court deciding any dispute as between trading
members and their constituents to which the Exchange is not a party.
(b)
The record of the Exchange as maintained by a central processing unit or a

cluster of processing units or computer processing units, whether
maintained in any register, magnetic storage units, electronic storage units,
optical storage units or computer storage units or in any other manner shall
constitute the agreed and authentic record in relation to any transaction
entered into through automated trading system. For the purposes of any
dispute the record as maintained by the computer processing units by the
Exchange shall constitute valid evidence in any dispute or claim between
the constituents and the trading member of the Exchange or between the
trading members of the Exchange inter-se.
(2)
Indemnity
The Exchange shall not be liable for any unauthorised dealings on the Exchange
by any persons acting in the name of trading member(s).
(3)
Trading Members Only Parties to Trades

(a)
The Exchange does not recognise as parties to any deal any persons other
than its own trading members, and
(b)
Every trading member is directly and wholly liable, in accordance with the
Bye Laws, Rules and Regulations of the Exchange, to every other trading
member with whom such trading member effects any deal on the
Exchange for due fulfillment of the deal, whether such deal be for account
of the trading member effecting it or for account of a constituent.
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(4)
(6)
All Dealings Subject to Bye Laws, Rules and Regulations

All dealings in securities on the Exchange shall be deemed made subject to the
Bye Laws, Rules and Regulations of the Exchange and this shall be a part of the
terms and conditions of all such deals and the deals shall be subject to the exercise
by the relevant authority of the powers with respect thereto vested in it by the Bye
Laws, Rules and Regulations of the Exchange.
Inviolability of Trade
(a)
All the dealings in securities on the Exchange made subject to the Bye
Laws, Rules and Regulations of the Exchange shall be in-violable and
shall be cleared and settled in accordance with the Bye Laws, Rules and
Regulations of the Exchange. However, the Exchange may by a notice
annul the deal(s) on an application by a Trading Member in that behalf, if
the relevant authority is satisfied after hearing the other party/parties to the
deal(s) that the deal(s) is/are fit for annulment on account of fraud or
willful misrepresentation or material mistake in the trade.
(b)
Notwithstanding anything contained in clause (a) above, the Exchange

may, to protect the interest of investors in securities and for proper
regulation of the securities market, suo motu annul deal(s) at any time if
the relevant authority is satisfied for reasons to be recorded in writing that
such deal(s) is/are vitiated by fraud, material mistake, misrepresentation or
market or price manipulation and the like.
(c)
Any annulment made pursuant to clauses (a) and (b) above, shall be final
and binding upon the parties to trade(s). In such an event, the trading
member shall be entitled to cancel the relevant contracts with its
constituents.
Deals by Representative trading members

(a)
A trading member may authorise another trading member to act as a
representative for a specified period with the prior permission of the
relevant authority.
(b)
(7)
Byelaws
When a trading member employs another trading member as a

representative to put through the transaction of a constituent, such
representative shall report the transaction to the employing trading
member at the same price as dealt in the market and the employing trading
member shall report the same price to the constituent in respect of such
transaction.
Restriction on the trading members

Unless the Exchange otherwise specifies, a Trading Member shall not become a
constituent of another Trading Member.
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Byelaws
CHAPTER VIII
TRADING SYSTEM AND MARKET MAKERS
(1)
(2)
Securities which will be eligible for market making, if at all, will be specified by
Registration of Market Makers
(a)
Trading members may apply to be market makers in any security eligible
for market making.
(b)
No trading member shall act as a market maker unless such Member is

approved in accordance with this Bye Law and the approval has not been
suspended or cancelled. Application for registration shall be in such forms
and with such particulars as may be prescribed from time to time.
(c)
A market maker shall apply to be registered to the relevant authority

before commencing market making operations in each relevant security.
If the relevant authority is satisfied, it shall within fifteen business days of
receipt of such notification, designate the market maker as a registered
market maker for that security. A registered market maker shall not
commence to make a market in any relevant security until one business
day after notice of its registration has been disseminated through the
trading system.
(d)
A registered market maker in any Exchange security must :
(e)
(i)
undertake to make bid and offer quotations in the trading system

with respect to that security and to effect transactions in a
minimum quantity of such other number of securities as may be
prescribed from time to time at its quoted price per business day;
(ii)
undertake to make market for the security for as long as prescribed

from time to time from the date the security becomes available for
trading by public in the case of a registered market makers
approved under Byelaw 2(b) above.
(iii)
undertake to execute orders for the purchase or sale of relevant

securities at its quoted prices with trading members or clients.
A registered market maker may cease making a market in a particular

Exchange security any time after a minimum period as prescribed from
time to time from commencement of making market in that security, after
having given the required notice of intention to the relevant authority. The
required period of notice in this case shall be fifteen business days or such
other period as may be prescribed from time to time.
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(f)
(3)
(4)
Byelaws
A registered market maker may cease making a market in that security

provided formal approval has been obtained from the relevant authority.
Such approval will normally be granted in situations where, in the opinion
of the relevant authority, it is either impractical or undesirable for the
registered market maker to continue to operate on account of events
beyond its control.
An obligation may be imposed on a trading member taking up market making

operations in certain securities to take up additional market making operations in
certain other securities as determined by the relevant authority from time to time.
Suspension and Prohibition of Market Makers
(a)
The relevant authority may limit or prohibit the authority of a registered
market maker to display on or enter quotations into the trading system or
deal in the securities in which he is registered as a market maker if:
(i)
such market maker has been or is expelled or suspended from

membership of the Exchange, or is unable to comply with the
Exchange's Bye Laws, Rules and Regulations or whose registration
is cancelled by the Securities and Exchange Board of India;
(ii)
such market maker has defaulted on any transaction effected in

respect of Exchange securities;
(iii)
such market maker is in such financial or operating difficulty that

the relevant authority determines that such market maker cannot be
permitted to display on or enter quotation into the trading system
with safety to investors, creditors, other trading members of the
Exchange;
(iv)
where such market maker in the view of the relevant authority,

ceases to meet qualification requirements for registration as market
maker.
(b)
Any market maker which the relevant authority takes action

against pursuant to Byelaw 4(a) above shall be notified in
writing of such action. Such a market maker shall forthwith
cease to make market.
(c)
Any market maker against which the relevant authority takes

action may request an opportunity for a hearing within ten days
of the date of notification pursuant to Byelaw 4(b) above. A
request for hearing shall not operate as a stay of action.
(d)
A written decision shall be issued within one week of the date of hearing
and a copy shall be sent to the market maker.
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(e)
Byelaws
On revocation of suspension or prohibition, the market maker can display

on or enter quotations into the trading system.
(5)
Operational Parameters for Market Makers

The relevant authority may determine and announce from time to time operational
parameters for market makers which registered market makers shall adhere to.
(6)
The operational parameters may, inter alia, include :

(a)
limit of spread between bid and offer rates for different securities, if found
necessary;
(b)
fixation of market lots, odd lots and/or minimum number of securities to

be offered to be bought or sold;
(c)
limit of variation within a day or between days in bid and offer prices;
(d)
the minimum stock of scrips which the trading member must maintain,
below which he must intimate the relevant authority;
(e)
in the event of stock of scrips with a market maker being sold out,
allowing the market maker to quote only purchase price offers till such
time as marketable lot of securities is built up to re-commence selling
operations; and
(f)
other matters which may affect smooth operation of trading in securities in

which he acts as a market maker, keeping in view larger interest of the
public.
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Byelaws
CHAPTER IX
TRANSACTIONS AND SETTLEMENTS
Transactions
(1)
(2)
(3)
Business Hours
The business hours for dealing in the Exchange securities in different segments on
the Exchange shall be during such time as may be decided by the relevant
authority from time to time. The relevant authority may, from time to time,
specify business hours for different types of deals such as for spot, ready and odd
lots.
The relevant authority may declare a list of holidays in a calendar year. The
relevant authority may from time to time alter or cancel any of the Exchange
holidays fixed in accordance with these provisions. It may, for reasons to be
recorded, close the market on days other than or in addition to holidays.
Trading System
(a)
Deals may be effected through order driven, quote driven (market makers)
or such other system as the Exchange may put in place for the trading
segments from time to time.
(b)
Deals between trading members may be effected by electronic media or

computer network or such other media as specified by the relevant
authority from time to time.
(c)
Deals may be effected on spot, ready or on such other basis as may be

specified by the relevant authority from time to time, subject to the
Securities Contracts (Regulation) Act and Rules and the SEBI Act.
(4)
Transaction at Best Quotation

In transaction with or on behalf of clients, trading members must indicate to the
clients the current best quotation as reflected in the trading system.
(5)
Operational Parameters for Trading

The relevant authority may determine and announce from time to time operational
parameters regarding dealing of securities on the Exchange which trading
members shall adhere to.
(6)
The operational parameters may, inter alia, include :

(a)
trading limits allowed which may include trading limits with reference to
net worth and capital adequacy norms;
21
(7)
(8)
Byelaws
(b)
trading volumes and limits at which it will be incumbent for trading

members to intimate the Exchange;
(c)
limit of spread between bid and offer rates for different securities, if found
necessary;
(d)
fixation of market lots, odd lots and/or minimum number of securities to

be offered to be bought or sold;
(e)
limit of variation within a day or between days in bid and offer prices;
(f)
other matters which may affect smooth operation of trading in securities

keeping in view larger interest of the public;
(g)
determine the types of trades permitted for a member and a security;
(h)
determining functional details of the trading system including the system

design, users infrastructure, system operation.
Suspension on Failure to meet Trading Limits

A trading member failing to restrict dealings on the Exchange to his trading limits
as provided in these Bye Laws and Regulations shall be required by the relevant
authority to reduce dealings to within trading limits forthwith. The relevant
authority at its discretion may suspend a trading member for violation of trading
limits and the suspension shall continue until the relevant authority withdraws
such suspension.
Contract Notes
Contract Notes shall be issued within such period as may be specified by the
relevant authority from time to time for deals effected with clients or on behalf of
clients, and will contain such details as the relevant authority may specify from
time to time. The contract notes shall specify that the deal is subject to the Bye
Laws, Rules and Regulations of the Exchange and subject to arbitration as
provided therein.
(9)
Details of all deals effected, as may be specified, shall be communicated to the

offices of the Exchange on the day of the transaction.
(10)
Unless otherwise provided in these Bye Laws, all dealings carried out in respect
of Exchange securities shall be subject to the Bye Laws, Rules and Regulations of
the Exchange.
(11)
Delivery of securities
Delivery of all securities, documents and papers and payments in respect of all
deals shall be in such manner and such place(s) as may be prescribed by the
relevant authority from time to time.
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Byelaws
(12)
The relevant authority shall specify from time to time, the securities, documents
and papers which, when delivered in prescribed manner, shall constitute good
delivery. Where circumstances so warrant, the relevant authority may determine,
for reasons to be recorded, whether or not a delivery constitutes a good delivery
and such finding shall be binding on the parties concerned. Where the relevant
authority determines that a delivery does not constitute a good delivery, the
delivering party shall be required to substitute good delivery instead within such
time period as may be specified.
(13)
The norms and procedures for delivery with respect to market lot, odd lot,
minimum lot, part delivery, delivery of partly paid securities, etc. shall be as
prescribed by the relevant authority from time to time.
(14)
The requirements and procedures for determining disputed deliveries or defective

deliveries, and measures, procedures and system of resolving the dispute or defect
in deliveries or of consequences of such deliveries or the resolution shall, subject
to these Bye Laws, be as prescribed by the relevant authority from time to time.
(15)
(16)
(17)
Clearing and Settlement

Clearing and Settlement of deals shall be effected by the parties concerned by
adopting and using such arrangements, systems, agencies or procedures as may be
prescribed or specified by the relevant authority from time to time. Without
prejudice to the generality of the foregoing, the relevant authority may prescribe
or specify, for adoption and use by the trading members, participants, and other
specified constituents, such custodial and depository services from time to time to
facilitate smooth operation of the clearing and settlement arrangement or system.
The function of the clearing house may be performed by the Exchange or any
agency identified by the relevant authority for this purpose. The role of the
clearing house shall be to act as a facilitator for processing of deliveries and
payments between trading members/participants for trades effected by them on
the Exchange. Settlement in each market segment of the Exchange shall be either
on netted basis, gross basis, trade for trade basis or any other basis as may be
specified by the relevant authority from time to time. Save as otherwise expressly
provided in the regulations, when funds and securities are, under a prescribed
arrangement, routed through the clearing house, the settlement responsibility shall
rest wholly and solely upon the counter parties to the trade and /or the concerned
trading members as the case may be and the clearing house shall act as the
common agent of the trading members / Participants for receiving or giving
delivery of securities and for receiving and paying funds, without incurring any
liability or obligation as a principal.
Closing out
Subject to the regulations prescribed by the relevant authority from time to time,
any dealing in securities made on the Exchange may be closed out by buying in or
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Byelaws
selling out on the Exchange against a trading member and/or Participant as

follows:-
(18)
(a)
in case of the selling trading member/Participant, on failure to complete

delivery on the due date; and
(b)
in case of the buying trading member/Participant, on failure to pay the

amount due on the due date, and any loss, damage or shortfall sustained or
suffered as a result of such closing out shall be payable by the trading
member or participant who failed to give due delivery or to pay amount
due.
Closing out of contracts or dealings in securities and settlement of claims arising

therefrom shall be in such manner within such time frame and subject to such
conditions and procedures as may be prescribed from time to time by the relevant
authority.
(18A) Subject to the regulations prescribed by the relevant authority from time to time,
any deal in securities made on the Exchange may be transferred from one Trading
Member to another Trading Member under such circumstances and in respect of
such trading segment of the Exchange as may be specified by the relevant
authority from time to time.
Margins
(19)
(20)
(21)
Margin Requirements
Dealings in any security or securities shall be subject to such margin requirements
as the relevant authority may from time to time prescribe.
Form of Margin Deposit
The margin to be furnished by a trading member under these Bye Laws and
Regulations shall, inter alia, be in the form of cash or Deposit Receipt of or a
Guarantee given by a Bank approved by the relevant authority or securities
approved by it subject to such terms and conditions as it may from time to time
impose. Deposits of cash shall not carry interest and the securities deposited by a
trading member valued at the ruling market price shall exceed the margin amount
for the time being covered by them by such percentage as relevant authority may
from time to time specify.
Value of Margin Deposit to be Maintained
The trading member depositing margin in the form of securities shall always
maintain the value thereof at not less than the margin amount for the time being
covered by them by providing further security to the satisfaction of the relevant
authority which shall always determine the said value and whose valuation shall
conclusively fix the amount of any deficiency to be made up from time to time
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(22)
(23)
(24)
(25)
(26)
(27)
Byelaws
Margin Deposit to be held by the Exchange

The margin deposits shall be held by the Exchange and when they are in the form
of Bank Deposit Receipts and securities and such Receipts and securities may at
the discretion of the relevant authority be transferred to such persons or to the
name of a Bank approved by the Exchange. All margin deposits shall be held by
the Exchange and/ or by the approved persons and /or by the approved Bank
solely for and on account of the Exchange without any right whatsoever on the
part of the depositing trading member or those in its right to call in question the
exercise of such discretion.
Letter of Declaration
A trading member depositing margin under the provisions of these Bye Laws and
Regulations shall when required to do so sign a Letter of Declaration in respect of
such matters and in such form or forms as the relevant authority may from time to
time prescribe.
Lien on Margins
The monies, Bank Deposit Receipts and other securities and assets deposited by a
trading member by way of margin under the provisions of these Bye Laws and
Regulations shall be subject to a first and paramount lien for any sum due to the
Exchange. Subject to the above, the margin shall be available in preference to all
other claims of the trading member for the due fulfillment of its engagements,
obligations and liabilities arising out of or incidental to any bargains, dealings,
transactions and contracts made subject to the Bye Laws, Rules and Regulations
of the Exchange or anything done in pursuance thereof.
Evasion of Margin Requirements Forbidden
A trading member shall not directly or indirectly enter into any arrangement or
adopt any procedure for the purpose of evading or assisting in the evasion of the
margin requirements prescribed under these Bye Laws and Regulations.
Suspension on Failure to Deposit Margin
A trading member failing to deposit margin as provided in these Bye Laws and
Regulations shall be required by the relevant authority to suspend its business
forthwith. A notice of such suspension shall be immediately placed on the trading
system and the suspension shall continue until the margin required is duly
deposited.
Interest, Dividends, Rights and Calls
The buying constituent shall be entitled to receive all vouchers, coupons,
dividends, cash bonus, bonus issues, rights and other privileges which may relate
to securities bought cum voucher, cum coupons, cum dividends, cum cash bonus,
cum bonus issues, cum rights, etc. The selling constituent shall be entitled to
receive all vouchers, coupons, dividends, cash bonus, bonus issues, rights and
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Byelaws
other privileges which may relate to securities sold ex voucher, ex coupons, ex

dividends, ex cash bonus, ex bonus issues, ex rights, etc.
(28)
The manner, mode, information requirements, alterations, date and timing, etc., of
adjustment with respect to vouchers, coupons, dividends, cash bonus, bonus
issues, rights and other privileges between buying trading member and selling
trading member shall be as prescribed by the relevant authority from time to time.
The trading members shall be responsible between themselves and to their
constituents for effecting such adjustments.
(29)
In respect of a contract in securities which shall become or are exchangeable for

new or other securities under a scheme of reconstruction or reorganisation, the
selling constituent shall deliver to the buyer, as the relevant authority directs,
either the securities contracted for or the equivalent in securities and/or cash
and/or other property receivable under such scheme of reconstruction or
reorganisation.
Brokerage on Dealings
(30)
Brokerage
Trading members are entitled to charge brokerage upon the execution of all orders
in respect of purchase or sale of securities at rates not exceeding the official scale
prescribed by the relevant authority from time to time.
(31)
Brokerage on Calls
A trading member buying securities on which calls have been prepaid by the
seller may charge brokerage on the purchase price with the amount of such calls
added.
(32)
(33)
Underwriting Commission and Brokerage

Unless otherwise determined and restricted by the relevant authority, a trading
member may, in its discretion, charge such brokerage or commission for
underwriting or placing or acting as a broker or entering into any preliminary
arrangement in respect of any floatation or new Issues or Offer for Sale of any
security as it may agree upon with the issuer or offerer or with the principal
underwriters or brokers engaged by such issuer or offerer, subject to limits
stipulated under the relevant statutory provisions as may be applicable from time
to time.
Sharing of Brokerage
(a)
A trading member may not share brokerage with a person who (i)
is one for or with whom trading members are forbidden to do

business under the Bye Laws, Rules and Regulations of the
Exchange;
26
(ii)
Byelaws
is a trading member or employee in the employment of another

trading member;
(b) Irrespective of any arrangement for the sharing of brokerage with any person,
the trading member shall be directly and wholly liable to every other member
with whom such trading member effects any deal on the Exchange.
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Byelaws
CHAPTER X
RIGHTS AND LIABILITIES OF MEMBERS AND CONSTITUENTS
(1)
(2)
(3)
(4)
All Contracts subject to Bye Laws, Rules and Regulations

All contracts relating to dealings permitted on the Exchange made by a trading
member shall in all cases be deemed made subject to the Bye Laws, Rules and
Regulations of the Exchange. This shall be a part of the terms and conditions of
all such contracts and shall be subject to the exercise by the relevant authority of
the powers with respect thereto vested in it by the Bye Laws, Rules and
Regulations of the Exchange.
Trading members not bound to accept Instructions and Orders
A trading member may not accept instructions or orders of constituents for
purchase, sale, etc., of securities where circumstances appear to justify such
action or on reasonable grounds. Where such refusal is made, the same may be
communicated to the constituent. The trading member shall also furnish the
constituent the reasons for such refusal on a request being made by him.
Margin
A trading member shall have the right to demand from its constituent the margin
deposit he has to provide under these Bye Laws, Rules and Regulations in respect
of the business done by it for such constituent. A trading member shall also have
the right to demand an initial margin in cash and/or securities from its constituent
before executing an order and/or to stipulate that the constituent shall make a
margin deposit or furnish additional margin according to changes in market
prices. The constituent shall when from time to time called upon to do so
forthwith provide a margin deposit and/or furnish additional margin as required
under these Bye Laws, Rules and Regulations in respect of the business done for
him by and/or as agreed upon by him with the trading member concerned.
Closing-out of Constituent's Account

(a)
The Exchange may close-out open positions of a constituent or transfer his
open positions to another trading member under such circumstances and in
respect of such trading segment of the Exchange as may be specified by
(b)
When closing-out the account of a constituent a trading member may

assume or take over such transactions to his own account as a principal at
prices which are fair and justified by the condition of the market or he may
close-out in the manner specified by the relevant authority and any
expense incurred or any loss arising therefrom shall be borne by the
constituent. The contract note in respect of such closing-out shall disclose
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Byelaws
whether the trading member is acting as a principal or on account of

another constituent.
(c)
(5)
(6)
(7)
Notwithstanding anything contained in clause (a) above closing out of

Participants' account shall be in such manner and subject to such
stipulations as may be prescribed from time to time.
Trading member not Liable to attend to Registration of Transfer

A trading member shall not be deemed to be under any obligation to attend to the
transfer of securities and the registration thereof in the name of the constituent. If
it attends to such work in the ordinary course or at the request or desire or by the
consent of the constituent it shall be deemed to be the agent of the constituent in
the matter and shall not be responsible for loss in transit or for the issuer's refusal
to transfer nor be under any other liability or obligation other than that
specifically imposed by these Bye Laws, Rules and Regulations. The stamp duty,
the transfer fees and other charges payable to the issuer, the fee for attending to
the registration of securities and all incidental expenses such as postage incurred
by the trading member shall be borne by the constituent
Registration of Securities when in Name of trading member or Nominee
(a)
When the time available to the constituents of a trading member is less
than thirty days to complete transfers and lodge the securities for
registration before the closing of the transfer books and where the security
is purchased cum interest, dividend, bonus or rights which the issuer may
have announced or declared the trading member may register the securities
in its or its nominee's name and recover the transfer fee, stamp duty and
other charges from the buying constituent.
(b)
The trading member shall give immediate intimation to the Exchange of

the names of such constituents and details of the transactions as may be
specified by the relevant authority from time to time. The trading member
shall also give immediate intimation thereof to the buying constituent and
shall stand indemnified for the consequences of any delay in delivery
caused by such action.
(c)
The trading member shall be obliged to retransfer the security in the name
of the original constituent as soon as it has become ex interest, dividend,
bonus or rights.
Closing-out/ transfer by Constituent on Failure to perform a Contract

If a trading member fails to complete the performance of a contract by delivery or
payment in accordance with the provisions of these Bye Laws, Rules and
Regulations the constituent shall, after giving notice in writing to the trading
member and Exchange, close-out such contract through any other trading member
of the Exchange or make an application to the Exchange for transfer of contracts
to another trading member as soon as possible and any loss or damages sustained
29
Byelaws
as a result of such closing-out or transfer, as the case may be, shall be

immediately payable by the defaulting trading member to the constituent. If
closing-out or transfer be not effected as provided herein, the damages between
the parties shall be determined on such basis as specified by the relevant authority
from time to time and the constituent and the trading member shall forfeit all
further right of recourse against each other.
(8)
(9)
(10)
(11)
No Lien on Constituent's Securities

If a trading member is declared a defaulter after delivering securities on account
of his constituent, the constituent shall be entitled to claim and on offering proof
considered satisfactory by the relevant authority, and in the absolute discretion of
the relevant authority, receive from the Exchange accordingly as the relevant
authority directs either such securities or the value thereof subject to payment or
deduction of the amount if any due by him to the defaulter.
Complaint by Constituent
When a complaint has been lodged by a constituent with the relevant authority
that any trading member has failed to implement his dealings, the relevant
authority shall investigate the complaint and if it is satisfied that the complaint is
justified it may take such disciplinary action as it deems fit.
Relationship between trading member and Constituents
Without prejudice to any other law for the time being in force and subject to these
Bye Laws, the mutual rights and obligations inter se between the trading member
and his/its constituent shall be such as may be prescribed by the relevant authority
from time to time.
The Relevant Authority shall constitute an Investor Services Committee to
supervise the working of the Investors Services Cell of the Exchange and in
suitable cases attend to grievances of the Investors personally. At any point of
time, not less than eighty percent of the members of the Investors Services
Committee shall be from among non-trading members who shall be nominated by
the Exchange.
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Byelaws
CHAPTER XI
ARBITRATION
Definitions
Arbitrator shall mean a sole arbitrator or a panel of arbitrators.
Act shall mean the Arbitration and Conciliation Act, 1996 and includes any statutory
modification, replacement or re-enactment thereof, for the time being in force.
Arbitral Award shall mean an award passed by the Arbitrator.
Appellate Arbitrator shall mean a panel of arbitrators who hears the appeal filed against the
Arbitral Award.
Appellate Arbitral Award shall mean an award passed by the Appellate Arbitrator.
(1)
(1A)
Reference to Arbitration
All claims, differences or disputes between the Trading Members inter se and
between Trading Members and Constituents arising out of or in relation to
dealings, contracts and transactions made subject to the Bye-Laws, Rules and
Regulations of the Exchange or with reference to anything incidental thereto or in
pursuance thereof or relating to their validity, construction, interpretation,
fulfilment or the rights, obligations and liabilities of the parties thereto and
including any question of whether such dealings, transactions and contracts have
been entered into shall be submitted to arbitration in accordance with the
provisions of these Byelaws and Regulations.
All claims, differences or disputes between the Trading Members and Subbrokers and between Sub-brokers and Clients of Sub-brokers arising out of or in
relation to dealings, contracts and transactions made subject to the Byelaws, Rules
and Regulations of the Exchange or with reference to anything incidental thereto
or in pursuance thereof or relating to their validity, construction, interpretation,
fulfilment or the rights, obligations and liabilities of the parties thereto and
including any question of whether such dealings, transactions and contracts have
been entered into shall be submitted to arbitration in accordance with the
provisions of these Byelaws and Regulations;
Provided in disputes between Sub-brokers and clients of Sub-brokers, the Trading
Member should be added as a necessary party.
Explanation: For the purpose of these Byelaws, Sub-broker and Clients will have
the respective meanings assigned by SEBI (Stock-Brokers and Sub-Brokers)
Regulations, 1992, provided the Sub-brokers have obtained SEBI registration
under the Trading Member of the Exchange.
(1B)
All claims, differences or disputes between the Trading Members inter se,
Trading Members and Constituents, whether or not registered as Participants,
Constituents inter se, whether or not registered as Participants, arising out of or in
relation to dealings, contracts and transactions executed or reported on the
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Byelaws
Wholesale Debt Market Trading Segment of the Exchange and made subject to
the Byelaws, Rules and Regulations of the Exchange or with reference to
anything incidental thereto or in pursuance thereof or relating to their validity,
construction, interpretation, fulfillment or the rights, obligations and liabilities of
the parties thereto and including any question of whether such dealings,
transactions and contracts have been entered into shall be submitted to arbitration
in accordance with the provisions of these Byelaws and Regulations.
Provided this Byelaw shall not in any way affect the jurisdiction of the Exchange
on the Trading Member, through whom such a Participant has dealt with or
traded, in regard thereto and such Trading Member shall continue to remain
responsible, accountable and liable to the Exchange in this behalf.
(1C) All claims, differences or disputes arising between an Issuer and a Constituent in
respect of such matters as may be specifically provided from time to time in the
Listing Agreement as entered into by an Issuer with the Exchange shall be
submitted to arbitration in accordance with the provisions of these Byelaws and
Regulations.
For the purpose of these Byelaws and Regulations, the term Issuer shall have
the same meaning as defined in these Byelaws and the term Constituent shall
mean the investor who has bought or sold, on the Exchange, the securities of the
Issuer in respect of which the claim, differences or dispute has arisen.
(1D) The Exchange shall be entitled to facilitate arbitration for such disputes and parties
other than those mentioned in the provisions of Byelaws 1, (1A), (1B), and (1C)
of this Chapter by adopting such procedures as may be prescribed by it under this
Chapter.
(2)
Provisions of these Byelaws and Regulations deemed to form part of all

dealings, contracts and transactions
In all dealings, contracts and transactions, which are made or deemed to be made
subject to the Byelaws, Rules and Regulations of the Exchange, the provisions
relating to arbitration as provided in these Byelaws and Regulations shall form
and shall be deemed to form part of the dealings, contracts and transactions and
the parties shall be deemed to have entered into an arbitration agreement in
writing by which all claims, differences or disputes of the nature referred to in
Bye laws (1), (1A), (1B) and (1C) above shall be submitted to arbitration as per
the provisions of these Byelaws and Regulations.
Limitation period for arbitration

(3)
The limitation period for filing an arbitration application shall be governed by the law
of limitation i.e. The Limitation Act, 1963 as specified under section 43 of the Act.
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Byelaws
Explanation: Arbitration Applications filed prior to September 1, 2010, where the

Arbitration application has been dismissed solely on grounds of limitations and three
years from the date of dispute have not yet elapsed will be covered in the limitation
period stated above.
(4)
Power of the Relevant Authority to prescribe Regulations

(a)
The Relevant Authority may, from time to time prescribe Regulations for
the following:
(i)
(ii)
The procedure to be followed by the parties in arbitral proceedings.

In particular, and without prejudice to the generality of the
foregoing power, such procedure may, inter alia, provide for the
following:
(a)
the forms to be used;
(b)
the fees to be paid;
(c)
the mode, manner and time period for submission of all

pleadings by both the parties;
(d)
matters relating to requests from the parties for amending

or supplementing the pleadings; and
(e)
the consequences upon failure to submit such pleadings by

the parties.
The procedure to be followed by the arbitrator in conducting the

arbitral proceedings. In particular, and without prejudice to the
generality of the foregoing power, such procedure may, inter alia,
provide for
(a)
adjournment of hearings; and
(b)
terms and conditions subject to which the arbitrator may

appoint experts to report on specific issues and the
procedure to be followed in arbitral proceedings upon such
an appointment.
(iii)
Different set of arbitration procedures for different claims,

differences or disputes after taking into consideration such
circumstances and facts as the Relevant Authority may deem fit,
which circumstances and facts may include the value of the subject
matter and the persons who are involved as parties to such claims,
differences or disputes.
(iv)
Creation of seats of arbitration for different regions or prescribing

geographical locations for conducting arbitrations and prescribing
the courts which shall have jurisdiction for the purpose of the Act.
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Byelaws
(v)
The claims, differences or disputes which may be referred to a sole

arbitrator and the claims, differences or disputes which may be
referred to a panel of arbitrators.
(vi)
The procedure for selection of persons eligible to act as arbitrators.
(vii)
The procedure for appointment of arbitrator.
(viii) The terms, conditions and qualifications subject to which any

arbitrator may be appointed.
(ix)
Determination of the number of arbitrators in the case of a panel of

arbitrators, subject to the condition that where any claim,
difference or dispute is heard and determined by Panel of
Arbitrators, the number of arbitrators of such a panel shall not be
an even number and shall not include Trading Members.
(x)
The time period within which a substitute arbitrator has to be

appointed in case the office of the arbitrator falls vacant for any
reason whatsoever.
(xi)
The matters to be disclosed by any person who is approached in

connection with his possible appointment as an arbitrator.
(xii)
The procedure to be adopted by the parties for challenging an

arbitrator.
(xiii) (a)
The claims, differences or disputes which, may be decided

by the arbitrator without a hearing unless either party in
writing requests the Relevant Authority for a hearing and
the time period within which such a request shall be made.
(b)
The claims, differences or disputes which, may be decided

by the arbitrator only by hearing the parties unless both the
parties jointly waive the right to such hearing and the time
period within which such a waiver shall be made.
(xiv)
The place of arbitration for each reference and the places where the
arbitrator can meet for consultation, for hearing witnesses, experts,
or the parties, or for inspection of documents, goods or other
property.
(xv)
The making of the arbitral award including the manner in which a

decision is to be taken in the case of panel of arbitrators and the
form and contents of the arbitral award.
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Byelaws
The term arbitral award shall also include an arbitral award on

agreed terms. Prescriptions as to the contents of the arbitral award
may include provisions for costs and where the arbitral award is
for the payment of money, may include interest payable on
principal sum due.
(xvi)
The amount of deposit or supplementary deposit, as the case may

be, as an advance for the costs which it expects will be incurred in
respect of the claim, difference or dispute; Provided where a
counter-claim is submitted to the arbitrator, a separate amount of
deposit for the counter-claim may also be prescribed.
(xvii) The administrative assistance which the Exchange may render in

order to facilitate the conduct of arbitral proceedings.
(xviii) All matters regarding the mode and the manner of service of
notices and communications by the parties including
communication addressed to arbitrator.
(xix)
(b)
(5)
(6)
(7)
Any other matter which in the opinion of the Relevant Authority is

required to be dealt with in the Regulations to facilitate arbitration.
The Relevant Authority from time to time may amend, modify, alter,
repeal, or add to the provisions of the Regulations.
Disclosure by persons to be appointed as arbitrators

Every person who is approached in connection with his possible appointment as
an arbitrator, shall disclose to the Relevant Authority in writing any circumstances
likely to give rise to justifiable doubts as to his independence and impartiality. If
the person discloses any circumstances which in the opinion of the Relevant
Authority are likely to give rise to justifiable doubts as to his independence and
impartiality, then he shall not be appointed as an arbitrator.
Disclosure by persons appointed as arbitrators
An arbitrator, from the time of his appointment and throughout the arbitral
proceedings, shall, without delay, disclose to the Relevant Authority in writing
any circumstances referred to in Byelaw (5) above which have come to his
knowledge after his appointment as an arbitrator.
Termination of mandate of the arbitrator
The mandate of the arbitrator shall terminate if
(a)
the arbitrator withdraws from office for any reason; or
(b)
in the opinion of the Relevant Authority, the arbitrator becomes de jure or

de facto unable to perform his functions or for other reasons fails to act
without undue delay including failure to make the arbitral award within
35
Byelaws
the time period prescribed by the Relevant Authority. Such a decision of

the Relevant Authority shall be final and binding on the parties; or
(8)
(9)
(10)
(11)
(12)
(c)
the mandate of the arbitrator is terminated by the Relevant Authority upon

receipt of written request for the termination of the mandate of the
arbitrator from both the parties to arbitration; or
(d)
the arbitrator discloses any circumstances referred to in Byelaws (5) and

(6) which in the opinion of the Relevant Authority are likely to give rise to
justifiable doubts as to his independence and impartiality.
(e)
the arbitral proceedings are terminated as provided for herein.
Supplying of vacancy to the office of the arbitrator

At any time before the making of the arbitral award should the office of the
arbitrator fall vacant for any reason whatsoever including any vacancy due to the
illness or death of the arbitrator or termination of the mandate of the arbitrator by
the Relevant Authority or otherwise, the vacancy shall be supplied by the
Relevant Authority by following the same procedure as specified by it for
appointment of the arbitrator.
Consideration of recorded proceedings and evidence
Unless otherwise agreed by parties, any arbitrator who has been appointed by the
Relevant Authority to supply a vacancy to the office of the arbitrator, may repeat
any hearings previously held.
Order or ruling of previous arbitrator not invalid.
An order or ruling of the arbitrator made prior to the termination of his mandate
shall not be invalid solely because his mandate has been terminated; Provided that
when the termination has been effected pursuant to Byelaw (7)(d), the order or
ruling of the arbitrator made prior to termination of his mandate shall become
invalid unless otherwise agreed upon by the parties.
Interim arbitral award and interim measures ordered by the arbitrator
The arbitrator may be empowered to make an interim arbitral award as well as to
provide interim measures of protection. An arbitrator may require a party to
provide appropriate security in connection with an interim measure.
Appearance in arbitral proceedings by counsel, attorney or advocate
In arbitral proceedings where both the parties are Trading Members, the parties
shall not be permitted to appear by counsel, attorney or advocate but where one of
the parties is a Constituent, then the Constituent shall be permitted to appear by
counsel, attorney or advocate. If the Constituent chooses to appear by counsel,
attorney or advocate, then the Trading Member and Issuer shall be granted a
similar privilege.
36
(13)
(a)
Byelaws
Adjournment
Adjournment, if any, shall be granted by the arbitrator only in exceptional
cases, for bonafide reasons to be recorded in writing.
(b)
Time for completion of Arbitration

The arbitral proceedings shall be concluded by way of issue of an Arbitral
Award within four months from the date of appointment of Arbitrator(s) and
may be extended by such further time periods as may be specified by the
Managing Director.
(13A) Notwithstanding anything contained in the Byelaws, in cases where the arbitration
award is passed against the Trading Member and/or its sub-brokers and in favour
of a Constituent, the Exchange may debit from the deposits or other monies of the
Trading Member lying with the Exchange, the amount of award payable to the
awardee together with interest payable, if any, till the date of debit after setting off
the counter claim of the Trading Member and /or its sub-brokers allowed under
the award, if any, and keep aside the said amount in a separate account to be dealt
with in such manner as mentioned in Byelaw 13B below;
Provided however, where the award is for the delivery of securities, the Exchange
may consider the closing price of such securities on the Exchange as on the date
of the award or such other date the relevant authority may specify to be
reasonable, stating reasons for arriving at the value of such securities and award
amount.
(13B) The Exchange may make the payment of said amount so kept aside in a separate
account, to the awardee only after a confirmation was obtained from the member
to the effect that no appeal has been filed by him and whereas if the award is set
aside partially or fully, then the Exchange may reverse the debit to that extent and
restore the same to the credit of the Trading Member and make the payment of the
reduced award amount to the awardee.
13B(a) The Exchange shall make the payment of the Arbitral Award amount kept aside in a
separate account as specified in Byelaw 13A above to the awardee, along with
interest earned on the amount that has been set aside, as soon as the time for
preferring an appeal before the Appellate Arbitrator has expired and no appeal has
been preferred.
(b)
The Exchange shall make payment of the Appellate Arbitral Award to the awardee
along with the interest earned on the amount that has been set aside as soon as
i)
the time for making an application to a court to set aside such Appellate
Arbitral Award under Section 34 of Act has expired and no application has
been made, or
37
ii)
iii)
(14)
(15)
(16)
Byelaws
an application to a court to set aside such Appellate Arbitral Award under

Section 34 of the Act, having been made, has been refused by such court, or
an application to a court to set aside such Appellate Arbitral Award under
Section 34 of the Act, having been made, but where no stay has been granted
by such court within a period of three months from the date on which the
party making that application had received the Appellate Arbitral Award.
Arbitration proceedings subject to the provisions of the Act

The arbitration proceedings as provided for by the provisions of these Byelaws
and Regulations shall be subject to the provisions of the Act to the extent not
provided for in these Byelaws or the Regulations.
Construction of references
For the purposes of section 2(6) of the Act, in all claims, differences or disputes
which are required to be submitted to arbitration as per the provisions of these
Byelaws and the Regulations, wherever Part 1 of the Act leaves the parties free to
determine a certain issue, the parties shall be deemed to have authorised the
Relevant Authority to determine that issue.
Administrative assistance
For the purpose of section 6 of the Act, in all claims, differences or disputes
which are required to be submitted to arbitration as per the provisions of these
Byelaws and Regulations, the parties shall be deemed to have arranged for
administrative assistance of the Relevant Authority in order to facilitate the
conduct of the arbitral proceedings.
Jurisdiction
(17)
The arbitration and appellate arbitration shall be conducted at the regional centre
nearest to the Constituent. The application under Section 34 of the Act, if any,
against the decision of the Appellate Arbitral Award passed by the Appellate
Arbitrator shall be filed in the Competent Court nearest to such regional centre.
Exclusion
(18)
For removal of doubts, it is hereby clarified that the Exchange shall not be
construed to be a party to the dealings, contracts and transactions referred to under
these Byelaws; and the provisions of this Chapter shall not apply in case of
claims, differences or disputes between the Exchange and a Trading Member and
no arbitration shall lie between the Exchange and a Trading Member.
Appellate Arbitration
(19) (a) A party aggrieved by an Arbitral Award may appeal to the Appellate Arbitrator
against Arbitral Award within one month from the date of receipt of Arbitral Award
38
Byelaws
and in such manner as prescribed by the Relevant Authority from time to time
notwithstanding the provisions contained under Byelaw 3.
(b) The Appellate Arbitrator shall consist of three arbitrators who shall be different
from the ones who passed the Arbitral Award appealed against and such Appellate
Arbitrators shall dispose of the appeal by way of issue of an Appellate Arbitral Award
within three months from the date of appointment of the Appellate Arbitrator.
(c) A party aggrieved by the Appellate Arbitral Award may file an application in
accordance with Section 34 of the Act before the court of competent jurisdiction
nearest to the regional centre where the Appellate Arbitral proceedings have been
conducted.
(d) The above provisions of Byelaws 1 to 18 shall be applicable to Appellate
Arbitration.
39
Byelaws
CHAPTER XII
DEFAULT
(1)
(1A)
Declaration of Default
A trading member may be declared a defaulter by direction / circular / notification
of the relevant authority of the trading segment if(a)
he is unable to fulfil his obligations; or
(b)
he admits or discloses his inability to fulfil or discharge his duties,

obligations and liabilities; or
(c)
he fails or is unable to pay within the specified time the damages and the
money difference due on a closing-out effected against him under these
Bye Laws, Rules and Regulations; or
(d)
he fails to pay any sum due to the Exchange or to submit or deliver to the
Exchange on the due date, delivery and receive orders, statement of
differences and securities, balance sheet and such other clearing forms and
other statements as the relevant authority may from time to time prescribe;
or
(e)
if he fails to pay or deliver to the Defaulters' Committee all monies,

securities and other assets due to a trading member who has been declared
a defaulter within such time of the declaration of default of such trading
member as the relevant authority may direct; or
(f)
if he fails to abide by the arbitration proceedings as laid down under the

Bye Laws, Rules and Regulations; or
(g)
if he, being an individual and /or partnership firm, /it, being a company
incorporated under the Companies Act, files a petition before a Court of
Law for adjudication of himself as an insolvent or for its winding up, as
the case may be.
Without prejudice to the foregoing, if a trading member is either expelled or

declared a defaulter by any other recognised stock exchange on which he is a
member or if the registration certificate is cancelled by SEBI, the said Trading
Member may be expelled from the Exchange after providing an opportunity of
being heard to such Trading Member.
Notwithstanding anything contained in this Byelaw, the trading facility of the
member shall be withdrawn immediately after the receipt of information of
40
Byelaws
expulsion /default by any other stock exchange or cancellation of registration

certificate by SEBI..
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Failure to fulfil Obligations

The relevant authority may order a trading member to be declared a defaulter if
he fails to meet an obligation to a trading member or constituent arising out of
Exchange transactions.
Insolvent a Defaulter
A trading member, being an individual and/or partnership firm, has been
adjudicated as an insolvent or it, being a company incorporated under the
Companies Act, has been ordered to be wound up by a Court of Law in the
petition filed by any of his/its creditors, shall be declared a defaulter although
he/it may not have at the same time defaulted on any of his / its obligations on the
Exchange provided however the time for preferring an appeal against such order
under the applicable Acts, if any, has expired.
Trading member's Duty to Inform
A trading member shall be bound to notify the Exchange immediately if there be a
failure by any trading member to discharge his liabilities in full.
Compromise Forbidden
A trading member guilty of accepting from any trading member anything less
than a full and bona fide money payment in settlement of a debt arising out of a
transaction in securities shall be suspended for such period as the relevant
authority may determine.
Notice of Declaration of Default
On a trading member being declared a defaulter a notice to that effect shall be
placed forthwith on the trading system of the relevant trading segment.
Defaulter's Book and Documents
When a trading member has been declared a defaulter, the Defaulters' Committee
shall take charge of all his books of accounts, documents, papers and vouchers to
ascertain the state of his affairs and the defaulter shall hand over such books,
documents, papers and vouchers to the Defaulters' Committee.
List of Debtors and Creditors
The defaulter shall file with the Defaulters' Committee within such time of the
declaration of his default as the relevant authority may direct a written statement
containing a complete list of his debtors and creditors and the sum owing by and
to each.
41
(9)
(10)
(11)
(12)
Byelaws
Defaulter to give Information

The defaulter shall submit to the Defaulters' Committee such statement of
accounts, information and particulars of his affairs as the Defaulters' Committee
may from time to time require and if so desired shall appear before the Committee
at its meetings held in connection with its default.
Inquiry
The Defaulters' Committee shall enter into a strict inquiry into the accounts and
dealings of the defaulter in the market and shall report to the relevant authority
anything improper, unbusinesslike or unbecoming a trading member in
connection therewith which may come to its knowledge.
Vesting of assets in the Exchange
The Defaulters' Committee shall call in and realise the security deposits in any
form, margin money, other amounts lying to the credit of and securities deposited
by the defaulter and recover all moneys, securities and other assets due, payable
or deliverable to the defaulter by any other Trading Member in respect of any
transaction or dealing made subject to the Bye-laws, Rules and Regulations of the
Exchange and such assets shall vest ipso facto, on declaration of any trading
member as a defaulter, in the Exchange for the benefit of and on account of any
dues of the Exchange, National Securities Clearing Corporation Limited,
Securities and Exchange Board of India, other trading members, Constituents and
registered sub-brokers of the defaulter, approved banks and any other persons as
may be approved by the Defaulters' Committee and other recognised stock
exchanges.
Payment to Defaulters' Committee
(a)
All monies, securities and other assets due, payable or deliverable to the
defaulter must be paid or delivered to the Defaulters' Committee within
such time of the declaration of default as the relevant authority may direct.
A trading member violating this provision shall be declared a defaulter.
(b)
A trading member who shall have received a difference on account or

shall have received any consideration in any transaction prior to the date
fixed for settling such account or transaction shall, in the event of the
trading member from whom he received such difference or consideration
being declared a defaulter, refund the same to the Defaulters' Committee
for the benefit and on account of the creditor members. Any trading
member who shall have paid or given such difference or consideration to
any other trading member prior to such settlement day shall again pay or
give the same to the Defaulters' Committee for the benefit and on account
of the creditor member in the event of the default of such other member.
(c)
A trading member who receives from another trading member during any
clearing a claim note or credit note representing a sum other than a
difference due to him or due to his constituent which amount is to be
42
Byelaws
received by him on behalf and for the account of that constituent shall
refund such sum if such other trading member be declared a defaulter
within such number of days as prescribed by the relevant authority after
the settling day. Such refunds shall be made to the Defaulters' Committee
for the benefit and on account of the creditor members and it shall be
applied in liquidation of the claims of such creditor members whose
claims are admitted in accordance with these Bye Laws, Rules and
Regulations.
(13)
(14)
Distribution
The Defaulters' Committee shall at the risk and cost of the creditor members pay
all assets received in the course of realisation into such bank and/or keep them
with the Exchange in such names as the relevant authority may from time to time
direct and shall distribute the same as soon as possible pro rata but without
interest among creditor members whose claims are admitted in accordance with
these Bye Laws, Rules and Regulations.
Closing-out
(a)
Trading members having open transactions with the defaulter shall close
out such transactions on the Exchange after declaration of default. Such
closing out shall be in such manner as may be prescribed by the relevant
authority from time to time. Subject to the regulations in this regard
prescribed by the relevant authority, when in the opinion of the relevant
authority, circumstances so warrant, such closing out shall be deemed to
have taken place in such manner as may be determined by the relevant
authority or other authorised persons of the Exchange.
(b)
(15)
(16)
Differences arising from the above adjustments of closing out shall be

claimed from the defaulter or paid to the Defaulters' Committee for the
benefit of creditor trading members of the defaulter.
Claims against Defaulter

Within such time of the declaration of default as the relevant authority may direct
every trading member carrying on business on the Exchange shall, as it may be
required to do, either compare with the Defaulters' Committee his accounts with
the defaulter duly adjusted and made up as provided in these Bye Laws, Rules and
Regulations or furnish a statement of such accounts with the defaulter in such
form or forms as the relevant authority may prescribe or render a certificate that
he has no such account.
Delay in comparison or submission of Accounts
Any trading member failing to compare his accounts or send a statement or
certificate relating to a defaulter within the time prescribed shall be called upon to
compare his accounts or send such statement or certificate within such further
time as may be specified.
43
Byelaws
(17)
Penalty for Failure to compare or submit Accounts

The relevant authority may fine, suspend or expel any trading member who fails
to compare his accounts or submit a statement of its account with the defaulter or
a certificate that he has no such account within the prescribed time.
(18)
Misleading Statement
The relevant authority may fine, suspend or expel a member if it is satisfied that
any comparison statement or certificate relating to a defaulter sent by such trading
member was false or misleading.
(19)
Accounts of Defaulters' Committee

The Defaulters' Committee shall keep a separate account in respect of all monies,
securities and other assets payable to a defaulter which are received by him and
shall defray therefrom all costs, charges and expenses incurred in or about the
collection of such assets or in or about any proceedings it takes in connection with
the default.
(20)
Report
The Defaulters' Committee shall every six months present a report to the relevant
authority relating to the affairs of a defaulter and shall show the assets realised,
the liabilities discharged and dividends given.
(21)
Inspection of Accounts
All accounts kept by the Defaulters' Committee in accordance with these Bye
Laws, Rules and Regulations shall be open to inspection by any creditor trading
member.
(22)
Scale of Charges
The charges to be paid to the Exchange on the assets collected shall be such sum
as the relevant authority may from time to time prescribe.
(23)
Application of Assets
The Defaulters' Committee shall apply the net assets remaining in its hands after
defraying all such costs, charges and expenses as are allowed under the Rules,
Bye-laws and Regulations to be incurred by the Exchange, in satisfying the claims
in the order of priority provided hereunder:(a)
Dues to the Exchange, National Securities Clearing Corporation Limited,

Securities and Exchange Board of India
The payment of such subscriptions, debts, fines, fees, charges and other
moneys due to the Exchange, National Securities Clearing Corporation
Limited, Securities and Exchange Board of India, in the order in which
their names appear herein;
44
(b)
Byelaws
Dues to other Trading Members and to Constituents and registered subbrokers of the defaulter
The payments as may be admitted by the Defaulters' Committee, as being
due to other Trading Members and Constituents and registered subbrokers of the defaulter for debts, liabilities, obligations and claims arising
out of any contracts made by the defaulter subject to the Rules, Bye-laws
and Regulations of the Exchange, provided that if the amount is
insufficient then the amounts shall be distributed pro rata amongst other
Trading Members, all the Constituents and registered sub-brokers of the
defaulter. The other Trading members shall in turn share the amounts so
received with their Constituents on pro rata basis.
(c)
Dues to the Approved Banks and claims of any other persons as approved
by the Defaulters Committee
After making payments under Clause (b) above, the amounts remaining, if
any, shall be utilised to meet the claims of the approved banks and of any
other person as may be admitted by the Defaulters Committee. The
claims of the approved banks should have arisen by virtue of the Exchange
or National Securities Clearing Corporation Limited invoking any bank
guarantee issued by the bank concerned to the Exchange or National
Securities Clearing Corporation Limited as the case may be on behalf of
the defaulter to fulfil his obligation of submitting bank guarantee,
guaranteeing discharge of obligations under the Byelaws, Rules and
Regulations of NSEIL/NSCCL. The claims of other persons should have
arisen out of or incidental to the transaction done on the Exchange or
requirements laid down by the Exchange, provided that if the amount
available be insufficient to pay all such claims in full, they shall be paid
pro rata, and
(d)
Dues to any other recognised stock exchange:

After meeting the claims under (c) above, the remaining amounts, if any,
shall be disbursed to any other recognised Stock Exchange for the purpose
of meeting the obligations of the defaulter as a member of that Exchange.
If the defaulter is a member of more than one recognised stock exchange,
then the remaining amounts shall be distributed amongst all such
recognised stock exchanges and if the remaining amount is insufficient to
meet the claims of all such stock exchanges, then the remaining amount
shall be distributed pro rata among all such stock exchanges.
45
(e)
Byelaws
Surplus assets:
Surplus assets, if any, may be released to the defaulter after a period of
atleast one year from the date of declaration of the trading member as
defaulter or after satisfying the claims falling under Bye-law 23,
whichever is later.
(24)
(25)
Certain claims not to be entertained

The Defaulters' Committee shall not entertain any claim against a defaulter:
(a)
which arises out of a contract in securities dealings in which are not

permitted or which are not made subject to Bye Laws, Rules and
Regulations of the Exchange or in which the claimant has either not paid
himself or colluded with the defaulter in evasion of margin payable on
bargains in any security;
(b)
which arises out of a contract in respect of which comparison of accounts

has not been made in the manner prescribed in these Bye Laws, Rules and
Regulations or when there has been no comparison if a contract note in
respect of such contract has not been rendered as provided in these Bye
Laws, Rules and Regulations;
(c)
which arises from any arrangement for settlement of claims in lieu of bona
fide money payment in full on the day when such claims become due;
(d)
which is in respect of a loan with or without security;
(e)
which is not filed with the Defaulters' Committee within such time of date
of declaration of default as may be prescribed by the relevant authority.
Claims against Defaulting Representative trading member

The Defaulters' Committee shall entertain the claim of a trading member against a
defaulter in respect of loss incurred by it by reason of the failure of the
constituents introduced by such defaulter to fulfil their obligations arising out of
dealings which are permitted on the Exchange and made subject to the Bye Laws,
Rules and Regulations of the Exchange provided the defaulter was duly registered
as a representative trading member working with such creditor member.
(26)
Claims of Defaulters' Committee

A claim of a defaulter whose estate is represented by the Defaulters' Committee
against another defaulter shall not have any priority over the claims of other
creditor members but shall rank with other claims.
(27)
Assignment of Claims on Defaulters Estate

A trading member being a creditor of a defaulter shall not sell, assign or pledge its
claim on the estate of such defaulter without the consent of the relevant authority.
46
(28)
(29)
Byelaws
Proceedings in the Name of or against the defaulter

The Defaulters' Committee shall be empowered to (a) initiate any proceedings in
a court of law either in the name of the Exchange or in the name of the defaulter
against any person for the purpose of recovering any amounts due to the defaulter
(b) to initiate any proceedings in a court of law either in the name of the Exchange
or in the name of the creditors (who have become creditors of the defaulter as a
result of transactions executed subject to Byelaws, Rules and Regulations of the
Exchange) of the defaulter against the defaulter for the purpose of recovering any
amounts due from the defaulter. The defaulter as well as the creditors of the
defaulter shall be deemed to have appointed the Exchange as their constituted
attorney for the purpose of taking such proceedings.
Payment of Defaulters' Committee
If any trading member takes any proceedings in a court of law against a defaulter
whether during the period of its default or subsequent to its re-admission to
enforce any claim against the defaulter's estate arising out of any transaction or
dealing in the market made subject to the Bye Laws, Rules and Regulations of the
Exchange before it was declared a defaulter and obtains a decree and recovers any
sum of money thereon it shall pay such amount or any portion thereof as may be
fixed by the relevant authority to the Defaulters' Committee for the benefit and on
account of the creditor members having claims against such defaulter.
(30)
The Defaulters' Committee for the purpose of this Chapter shall be a Committee
as may be constituted by the Board of Directors from time to time. At any point
of time not less than eighty percent of the members of the Defaulters' Committee
shall be from among non-trading members who shall be nominated by the
Exchange.
(31)
Notwithstanding anything to the contrary contained in this Chapter, where any

securities are lodged for rectification of company objection arising out of
signature difference or otherwise against a defaulter, the Exchange or National
Securities Clearing Corporation Limited (Clearing Corporation) shall, after
satisfying itself about the bonafides of the receiving members/ client of the
receiving member, acquire the securities in its own name for the benefit of or in
trust for the receiving member/ client of the receiving member. The Exchange/
Clearing Corporation may upon payment of such charges as it may prescribe, sell
or otherwise dispose of the securities so acquired or transfer the securities to the
receiving member/ client of the receiving member, in full and final satisfaction of
the claim; Provided that the Exchange/ Clearing Corporation shall be free to
require such receiving member/ client of the receiving member to indemnify the
Exchange and Clearing Corporation in such form and manner as it may prescribe,
as a condition precedent; Provided further that such payment of sale proceeds or
transfer of securities to the receiving member/ client of the receiving member
shall discharge the claim completely and no further claim shall lie against the
defaulter on any ground whatsoever.
47
Byelaws
CHAPTER XIII
INVESTOR PROTECTION FUND
(1)
In respect of such market segment of the Exchange as may be prescribed by the

Exchange, an Investor Protection Fund (IPF) to be held in trust by National Stock
Exchange Investor Protection Fund Trust (Trust) shall be maintained to make
good claims for compensation which may be submitted by a trading members
Constituent who suffers loss arising from the said trading member being declared
as a defaulter by the Exchange under Chapter XII. No claim of a claimant, who is
a Trading Member of the Exchange or an associate of a Trading Member, shall be
eligible for compensation from the IPF unless he has acted as a Constituent of the
said trading member to the extent permitted by the Exchange.
(2)
Subject to this Part, the amount which any claimant shall be entitled to claim as
compensation shall be the amount of the actual loss suffered by him less the
amount or value of all monies or other benefits received or receivable by him
from any source in reduction of the loss.
(3)
The amount that may be paid under this Part to a claimant shall not exceed such
amount as may be decided by the Trust from time to time. The Trust shall
disburse the compensation to the claimants as and when claims have been
crystallised against the defaulter and admitted for payment by the Trust based on
the recommendations, if any, of the Defaulters Committee and such
compensation shall not be more than the maximum amount fixed for a single
claim.
(4)
Notwithstanding anything contained in any other Byelaw, the Trust shall have the
power to utilise the interest income earned on the investments made out of IPF,
either in part or whole, for educating investors, creating awareness among the
investor community at large and for any research connected therewith or
incidental thereto.
(5)
The Exchange shall publish in all editions of at least one English national daily
with wide circulation and in at least one regional language daily with wide
circulation, a notice specifying a date not being less than 3 months after the said
publication, on or before which claims for compensation shall be made in relation
to the defaulter specified in the notice. The notice shall contain the specified
period, the maximum compensation limit for a single claim of a claimant, etc. The
said notice shall also be displayed on the premises of the Exchange as well as on
the web-site of the Exchange for the entire specified period.
(6)
A claim for compensation in respect of a default shall be made in writing to the

Exchange on or before the date specified in the said notice and any claim which is
not so made shall be barred unless the Trust otherwise determines. The Exchange
shall process the claims in accordance with procedures as may be laid down by
48
Byelaws
Defaulters' Committee and if the assets of the defaulter are insufficient to meet the
approved claims, it shall forward the claims alongwith the recommendations of
the Defaulters Committee to the Trust. However, the Trust need not wait for the
realisation of the assets of the defaulter before the disbursement towards claims.
(7)
A claimant under this Chapter must sign an undertaking to be bound by the

decision of the Trust whose decision shall be final and binding.
(8)
The Trust in disallowing (whether wholly or partly) a claim for compensation

shall serve notice of such disallowance on the claimant.
(9)
The Trust, if satisfied that the default on which the claim is founded was actually
committed, may allow the claim and act accordingly.
(10)
The Trust may at any time and from time to time require the claimant to produce
and deliver any securities, documents or statements of evidence necessary to
support any claim made or necessary for the purpose of establishing his claims
and in default of delivery of any such securities, documents or statements of
evidence by such claimant, the Trust may disallow any claim by him under this
Chapter.
(11)
Contributions shall be made to the IPF from the following sources:(a) 1 % of the listing fees received, on a quarterly basis
(b) 100 % of the interest earned on the 1 % security deposit kept by the issuer
companies at the time of the offering of securities for subscription to the public,
immediately on refund of the deposit
(c). The difference of amount of auctions / closeout price
(d). The amount received from the proceeds of the sale of the securities written
off as per para 4 & 5 of SEBI circular No. FITTC/FII/02/2002 dated
May 15, 2002
(e). The amounts specified in pursuance of Regulation 28 (12) (e) (ii),
Regulation 28 (13) and Regulation 29(2) of SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations 1997.
(f). Such contribution by trading members of the Exchange as may be decided by
the Exchange from time to time based on the transaction value. The Exchange
shall further be empowered to call for such additional contributions as may be
required from time to time to make up for the shortfall, if any, in the IPF, at the
discretion of the Exchange.
49
Byelaws
(12) The IPF to be held in trust as aforesaid shall vest with the Trust which shall
administer the same. The IPF shall be well segregated and shall be immune from
any liabilities of the Exchange.
(13)
The Exchange, in consultation with the Trust, shall review and progressively
increase the amount of compensation available against a single claim from
an investor every three years. The Exchange shall disseminate the compensation
limit fixed and any change thereof, to the public through a Press Release and also
through web site of the Exchange.
(14)
The Trust may seek the advice of the Defaulters Committee as to the eligibility
or otherwise of individual claims of investors.
(15)
The Exchange shall arrange to provide administrative assistance to the Trust to

facilitate the processing and settlement of investor claims.
(16)
The claims of the claimants arising out of speculative transactions or which are
sham or collusive shall not be eligible for compensation from the IPF.
(17)
The balance of the IPF lying unutilised with the Trust shall continue to be utilised
only for such purposes as prescribed by SEBI. In the event of winding up of the
Exchange, the balance lying unutilised with the Trust shall be transferred to
SEBI. The funds will be maintained in a separate account and SEBI would act as
Trustee of these funds to be utilised for purposes of investor education, awareness
and research.
50
Byelaws
CHAPTER XIV
MISCELLANEOUS
(1)
The relevant authority shall be empowered to impose such restrictions on

transactions in one or more Exchange securities as the relevant authority in its
judgment deems advisable in the interest of maintaining a fair and orderly market
in the securities or if it otherwise deems advisable in the public interest or for the
protection of investors. During the effectiveness of such restrictions, no trading
member shall, for any account in which it has an interest or for the account of any
client, engage in any transaction in contravention of such restrictions.
(2)
Any failure to observe or comply with any requirement of this Bye Law, or any
Bye Laws, Rules or Regulations, where applicable, may be dealt with by the
relevant authority as a violation of such Bye Laws, Rules or Regulations.
(3)
Trading members have an obligation as the trading members of the Exchange to

inform the relevant authority of the Exchange and the Securities Exchange Board
of India about insider trading, information on takeover and other such
information/practices as may be construed as being detrimental to the efficient
operations of the Exchange and as may be required under SEBI Act and Rules and
Regulations.
(4)
Save as otherwise specifically provided in the regulations prescribed by the

relevant authority regarding clearing and settlement arrangement, in promoting,
facilitating, assisting, regulating, managing and operating the Exchange, the
Exchange should not be deemed to have incurred any liability, and accordingly no
claim or recourse, in respect of, in relation to, any dealing in securities or any
matter connected therewith shall lie against the Exchange or any authorised
person(s) acting for the Exchange.
(5)
No claim, suit, prosecution or other legal proceedings shall lie against the
Exchange or any authorised person(s) acting for the Exchange, in respect of
anything which is in good faith done or intended to be done in pursuance of any
order or other binding directive issued to the Exchange under any law or
delegated legislation for the time being in force.
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51

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NATIONAL STOCK EXCHANGE OF INDIA LIMITED

Dealings by Trading Members

Trading System and Market Makers

Transactions and Settlements

Rights & Liabilities of Members and Constituents

Investor Protection Fund

National Stock Exchange of India Limited

"Board" means Board of Directors of NSEIL.

"Exchange" means the Stock Exchange(s) operated by NSEIL.

"Executive Committee" or "EC" means the Committee of the NSE formed in

"Issuer" includes a Government, a body corporate or other entity, whether

"Market-Maker" means a trading member registered under Chapter VIII.

"NSEIL" means the National Stock Exchange of India Limited.

"Participant" means a constituent who is registered by the relevant authority from

"Regulations", unless the context indicates otherwise, includes business rules,

"Relevant NSE Securities" or "Relevant Securities" means those NSE securities

"Rules", unless the context indicates otherwise, means rules as mentioned

National Stock Exchange of India Limited

"SEBI" means the Securities and Exchange Board of India.

"Security" shall have the meaning assigned to it in the Securities Contracts

"Security admitted to dealings" includes a security which is listed or permitted to

"Trading Segments" or "Segments" mean the different segments or divisions

National Stock Exchange of India Limited

Wholesale Debt Market Segment

Capital Market Trading Segment

Futures & Options Trading segment

Derivatives contracts based on currency or any other underlying approved by

National Stock Exchange of India Limited

National Stock Exchange of India Limited

Executive Committee(s) shall be appointed by the Board for the purposes of

National Stock Exchange of India Limited

norms, procedures, terms and conditions to be complied with for inclusion

fees payable by an Issuer for inclusion and continued inclusion in the

norms and procedures for admission of trading members in accordance with

norms and procedures for approval of market-makers to act as such;

determination from time to time, of fees, system usage charges, deposits,

supervision of the market and promulgation of such Business Rules and

maintenance of records and books of accounts by trading members as it may

inspection and audit of records and books of accounts;

prescription, from time to time, and administration of penalties, fines and

National Stock Exchange of India Limited

disciplinary action/procedures against any trading member;

(m) settlement of disputes, complaints, claims arising between trading members

norms and procedures for arbitration;

administration, maintenance and investment of the corpus of the Fund(s) set

norms and procedures for settlement and clearing of deals, including

norms, procedures, terms and conditions for registration and continuance of

norms and procedures in respect of, incidental or consequential to closing

dissemination of information, announcements to be placed on the trading

any other matter as may be decided by the Board.

National Stock Exchange of India Limited

Admission of securities to listing on the Exchange shall be in accordance

Government securities shall be deemed to have been admitted to dealing

Dealings in Securities Dealt on other Stock Exchanges

National Stock Exchange of India Limited

Application for Admission to Listing

Refusal of Admission to Listing

Dealings in Provisional Documents

National Stock Exchange of India Limited