Chittagong Stock Exchange Innvestors' Protection Fund Regulations, 1999

1. Short Title:

These regulations may be called the Chittagong Stock Exchange (Member’s Margin) Regulations, 2000.

2. Definitions:

    (1)  In these regulations, unless the context otherwise requires, –

          (a) "additional trade exposure" means the amount of the aggregate (gross) trade exposure exceeding the free limit for each member;

      (b) "aggregate (gross) trade exposure" means total buys and total sales position of a member at any point of time during a trading day’

      (c) "clearing house" means the clearing house set up by the Exchange;

      (d) "direct settlement" means direct settlement between the members under the Settlement of Stock Exchange Transactions Regulations, 1998;

      (e) "Exchange" or CSE means the Chittagong Stock Exchange Limited;

      (f) "free limit" means the amount of the aggregate (gross) trade exposure for each member on which no member’s margin shall be applicable;

      (g) "instruments" means the papers and documents including cash for the purpose of members’ margin;

      (h) "member" means a member of the Exchange who is registered as the stock-dealer or stock-broker by the Securities and Exchange Commission under the Securities and Exchange Commission (Stock-dealer, Stock-broker and Authorised Representative) Regulations, 1994;

      (i) "member’s margin" means the margin deposited by a member with the clearing house under these regulations;

      (j) "security deposit" means the amount compulsorily deposited by each member with the clearing house as prescribed by the Exchange.

    (2) Words and expressions used herein but not defined shall have the same meanings respectively assigned to them in the Securities & Exchange Ordinance, 1969 (XVII of 1969), Securities and Exchange Commission Act, 1993 (XV of 1993), and the rules and regulations made there under.

3.Free Limit :-

The free limit shall be taka five crore only in respect of the stock exchange members’ margin deposit with the stock exchange on each trading day based on the total buy exposure , without linking to the capital requirements.

 

Provided that there shall remain no unsettled sale exposure at the end of respective trading day (i.e., pay in will be done on T+0)

4. Member’s margin :-

• Every member shall, in addition to the security deposit, deposit with the clearing house, free of interest, as member’s margin an amount at the rate specified in sub-regulation (3) on his additional trade exposure before exceeding the free limit failing which his trade shall remain suspended.
• Transaction for direct settlement between member’s shall be excluded from calculation of the aggregate (gross) trade exposure.
• Every member shall deposit the member’s margin with the clearing house on the additional trade exposure at the following rates:-

Additional trade exposure	Member’s Margin rate
(a) Above taka one crore but not exceeding taka two crore	@ 20%
(Above taka two crore but not exceeding taka three croreb)	@ 30%
(c) Above taka three crore but not exceeding five crore	@ 50%
(d) Above taka five crore	@ 100%

5.Instruments for member’s margin: -

    (1) The following instruments shall be the instruments for the member’s margin: -

          (a) Irrevocable and without Recourse to the Drawer Bank or Insurance Guarantee or Guarantee issued by the non-banking financial institution (NBFI) registered with the Bangladesh Bank provided such NBFI is lawfully authorised in this behalf;

           (b) Government securities;

           (c) Fixed Deposit Receipt issued by any scheduled bank;

           (d) Sanchay Patra and Defense Saving Certificate issued by the Government of Bangladesh;

           (e) Life Insurance Policy at surrender value;

           (f) Demand Draft or Payment Order issued by any scheduled bank;

           (g) Securities listed with the Exchange (valued at seventy percent of the lowest market price prevailed in the Exchange in the previous week); and

           (h) Cash

 

    (2) The instruments mentioned in clause (a), (b), (c), (d), (e), (f) or (g) under sub-regulation (1) shall be endorsed in favour of the Exchange.

 

    (3) 90% of the value of the instruments mentioned in sub-regulation (2) shall be considered as the value of the member’s margin deposited under these regulations.

6.Adjustment or refund of member’s margin :-

    (1) The Exchange, in addition to other available recourses, shall , without giving any prior intimation to the member concerned, immediately realise the value of the instruments deposited by a member as member’s margin and adjust the amount so realised against the dues of the member concerned, if he fails to settle his trade with the clearing house on the settlement day.

    (2) The member shall be liable to pay the shortfall, if any, to the clearing house which remains after making the adjustment as per sub-regulation (1), including the costs, interest, charges and expenses involved in the realisation process, within three days of the written notice of demand issued to him by the Exchange.

    (3) The Exchange shall issue the notice of demand within twenty-four hours of realisation of member’s margin as per sub-regulation (1).

    (4) The notice of demand shall contain, among others, details of the dues, the amount realised against member’s margin, the costs, interests, charges and expenses involved in the realisation process, and the amount that remains outstanding for payment by the member to the clearing house.

    (5) The Exchange may either retain the unutilised member’s margin or refund the same to the member concerned within twenty-four hours of receipt of the member’s request in writing in this respect.

    (6) Trade of the concerned member shall remain suspended until full realisation from him the amount mentioned in the notice of demand as per sub-regulation (4).

7.Maintenance of Books and Records : -

    (1)  The clearing house and every member shall maintain proper books and records in respect of the member’s margin in such Form as the Exchange, with the prior approval of the Commission, prescribes from time to time.

    (2)  The books and records maintained under sub-regulation (1) shall always be kept updated and ready for inspection by the Exchange or by the Commission.

8.  Power to grant Exemption: -

The Commission may, from time to time, exempt any order or trade of any member from all or any of the provisions of these regulations.

9. Power to add, delete or modify

Notwithstanding anything contained in these regulations, the Commission may, in the interest of investors and development of capital markets, direct the stock exchange to add, delete or modify any provision of the said regulations, as it deems appropriate from time to time.