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Appendix 1

Analysis of Questionnaire I for Regulators:

1. On query of whether the institutions monitor derivative trading, the institutions replied:

2. On query on the list of instruments allowed to trade in derivatives market,

3. How many audits do you perform in a year?

4. Do you train market participants in derivatives trading?

5. How do you train derivative traders?

6. How frequently? 7. How do you enforce regulation compliance? 8. How many times do you carry out periodic audits?

9. How many times in a year does a trader have to present a compliance report?

10. How many surprise checks do you carry out in a year?

11. How many periodic meeting do you conduct with the traders and institutional investors in

a year?

12. What does the compliance report consist of?

13. Does a trader have to be qualified for derivatives trading?

14. How do you ensure compliance?

15. How do you incorporate new regulations?

16. How do you ensure compliance on information dissemination?

17. How do you make investors aware of the risk involved in derivatives trading?

18. How many companies approach SEBI for derivative trading?

19. How many listed companies (%) of the applied meet SEBI criteria in participating in

derivatives trading?

20. Do you collaborate with SEC?

21. How much international exposure do you allow in derivatives trading

22. How is the red alert signaled?

23. How do you monitor mark to market investors’ positions?

24. How does SEBI monitor day to day trading pattern?

25. How do you penalize non- compliance?

26. Do you think a separate exchange for derivative trading should be established?

27. If yes, why do you think so?

28. How frequently do you introduce new products in the Derivatives Market?

220  

29. Do you think Indian Financial System is matured enough to adapt to exotic products in

Derivatives?

30. Why?

31. Has any trader/broker defaulted?

32. Have you taken any action on the defaulted trader/ broker?

33. If yes, then how many?

34. On what grounds have the traders/ brokers defaulted?

35. What actions do you normally take on the default by the traders/ brokers?

36. Do you have a mechanism to monitor high performance individuals/ traders/ brokers?

37. If yes, then how do you monitor high performance individuals/ traders / brokers?

38. Are there any regulatory concerns to be addressed in the near future?

39. If yes, then what?

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Appendix 2

Questionnaire for professionals in banking and finance area

I am an Assistant Professor at Symbiosis Institute of Management Studies pursuing Doctoral programme under the aegis of Symbiosis International (Deemed) University, Pune, Maharashtra, India. The title of my thesis is ‘An Analytical study of the present regulatory structure for Indian Derivatives Market’. In this regard a questionnaire has been drafted to collect primary data from the stakeholders in the derivative market. I am reaching out to you for your help in collecting the same. You being an expert and knowledgeable in the above mentioned area of study, are hence requested to kindly fill the questionnaire for a more comprehensive analysis of the topic and to validate data collected through secondary research. I assure you that the data collected would be kept confidential and would be used for academic purposes only. This gesture of help on your part would be thankfully appreciated in the interest of academic research promotion. Please spare few minutes to complete the following questionnaire. Please tick the appropriate answer. Please rate the parameters between 1-5 for an appropriate answer, if the question desires. 5- Strongly Agree, 4- Agree, 3- Neither Agree nor Disagree, 2- Disagree, 1- Strongly Disagree. It is purely an academic exercise. Data would be kept confidential.

* Required

1. Do you trade in Financial Derivatives?

• Yes

• No

2. If yes, what is the approximate annual turnover of the financial derivative trading (in Rs.)?

• Less than 100 crore

• 100-200 crore

• 200-300 crore

• 300-400 crore

• 400 and above

3. Trading in derivative instrument help meet you following objectives. *

• Hedging

• Wealth creation through speculation

• Arbitrage

• Operating in an Efficient Market

• Appropriate Price Discovery

222  

• Price Stability

4. The Indian Financial System is efficient and robust. 5- Strongly Agree, 1- Strongly Disagree

1 2 3 4 5

5. Inefficient Derivative Markets would highly impact the Indian Financial System. 5- Strongly Agree, 1- Strongly Disagree

1 2 3 4 5

6. Indian Derivative Markets are efficiently regulated. 5- Strongly Agree, 1- Strongly Disagree

1 2 3 4 5

7. Derivative Trading is better than Badla Trading. 5- Strongly Agree, 1- Strongly Disagree

1 2 3 4 5

8. Derivative Trading has resulted in exposure to high risk. 5- Strongly Agree, 1- Strongly Disagree

1 2 3 4 5

9. Over The Counter (OTC) trades are risker than Exchange regulated trades. 5- Strongly Agree, 1- Strongly Disagree

1 2 3 4 5

223  

10. One of the factors contributing to the recent sub- prime crisis and financial meltdown was due to the Over The Counter (OTC) trades in derivative products. 5- Strongly Agree, 1- Strongly Disagree

1 2 3 4 5

11. What could be the factors from the following which may lead to financial crisis? * You may choose multiple factors.

• Introduction of Exotic and complex derivatives products

• Lack of regulation in Derivative Markets.

• Lack of regulation in Cash Market

• Greed

• Improper use of derivative instruments

• Inadequate understanding on the use of derivative instruments

• Human Nature

• Lack of regulation in OTC derivatives market

• All of the above

• Other

12. What could be the factors from the following which may have lead the financial crisis due to derivatives trading in the past? * You may choose multiple factors.

• Introduction of Exotic and complex derivatives products

• Lack of regulation in Derivative Markets.

• Lack of regulation in Cash Market

• Greed

• Improper use of derivative instruments

• Inadequate understanding on the use of derivative instruments

• Human Nature

• Lack of regulation in OTC Derivatives Market

• All of the above

224  

13. Which factors have helped India tide the recent financial crisis (2007) in the world? * You may choose multiple factors.

• Conservative Banking regulations

• Conservative Derivative Regulatory Structure

• Conservative Monetary and Fiscal Policies

• Our limited Exposure to World Markets

• All of the above

• Other

• Do not agree with the statement

14. Do you think Indian Derivative Markets are efficient?

• Yes

• No

• Maybe

15. Please state the factors in either case.

16. Following factors help regulate the derivatives market efficiently.

• High Margins

• Maintenance of High Net worth by brokers/ traders

• Periodic Audits and Reporting

• Adequate awareness generation of dynamics of derivative trading

• Monitoring of high volume/ value trades

• Monitoring Speculative tendencies

• Ensuring basic compliance for competent Market Participants

• Periodic Training to Market Participants

• All of the above

• Other

225  

17. Do you think a need to establish a separate Derivative Exchange?

• Yes

• No

• Maybe

18. Do you think a need to establish a centralized clearing corporation for all exchanges?

• Yes

• No

• Maybe

19. Derivative Trades under exchanges are well regulated. 5- Strongly Agree, 1- Strongly Disagree

1 2 3 4 5

20. Innovation in Derivative Products would lead to an efficient market. 5- Strongly Agree, 1- Strongly Disagree

1 2 3 4 5

Name of the Bank/ Institution (Optional)

THANK YOU

226  

Appendix 3

Questionnaire for derivative stock brokers

I am an Assistant Professor at Symbiosis Institute of Management Studies pursuing Doctoral

programme under the aegis of Symbiosis International (Deemed) University, Pune,

Maharashtra, India. The title of my thesis is ‘An Analytical study of the present regulatory

structure for Indian Derivatives Market’. In this regard a questionnaire has been drafted to

collect primary data from the stakeholders in the derivative market. You being an expert and

knowledgeable in the above mentioned area of study, are hence requested to kindly fill the

questionnaire for a more comprehensive analysis of the topic and to validate data collected

through secondary research. I assure you that the data collected would be kept confidential

and would be used for academic purposes only. This gesture of help on your part would be

thankfully appreciated in the interest of academic research promotion. Please spare few

minutes to complete the following questionnaire. Please tick the appropriate answer. Please

rate the parameters between 1-5 for an appropriate answer, if the question desires. 5- Strongly

Agree, 4- Agree, 3- Neither Agree nor Disagree, 2- Disagree, 1- Strongly Disagree. It is

purely an academic exercise. Data would be kept confidential.

1. Do you trade in derivatives?

• Yes

• No

2. If yes, please tick the appropriate response:

• Stock Index Futures

• Stock Index Options

• Futures on Individual Stocks

• Options on Individual Stocks

• Interest Rate Futures

• Currency Futures

• Any Other

3. What is your turnover from derivatives trading?

• Less than 1 crore

• 1-2 Crores

227  

• 2-3 Crores

• 3-10 Crores

• Above 10 Crores

• Any Other

4. Does derivative instruments form a major portion of your financial portfolio?

• Yes

• No

5. Which other instruments do you trade in?

• Shares

• Bonds

• Money Markets

• Commodities

• Currency

• Any other

6. Are you aware of the regulations governing derivatives trading?

• Yes

• No

• Maybe

7. Do you receive notifications or updates on derivative trading from Exchanges and SEBI frequently?

• Yes

• No

• Maybe

8. Do you have to be qualified in trading in derivative instruments?

• Yes

• No

• Maybe

228  

9. Were you trained in trading of derivative instruments?

• Yes

• No

• Maybe

10. Do you undergo training in derivatives trading from time to time?

• Yes

• No

• Maybe

11. If yes, how frequently?

• Quarterly

• Semi Annually

• Annually

• More than a year

12. Who trains you in derivatives trading?

• SEBI

• NSE

• BSE

• MCX/ NCDEX

• Any Other

13. Are you aware of broker's rights incase of default by Exchange or any other financial intermediary?

• Yes

• No

14. Do you sensitize your investors on the risk of derivatives trading?

• Yes

• No

229  

15. If yes, then how?

16. Which are the statutory regulatory clauses are you concerned with closely and need to comply with without exception?

17. What percentage of your customers/ clients of yours, trade in derivative instruments?

• Less than 10%

• 10%-20%

• 20%-30%

• 30%-40%

• Above 40%

18. How would you categorize them in terms of investment capacities?

• High Net Worth

• Medium

• Small

19. How much do you charge your investors?

• Less than 10%

• 10%-20%

• 20%-30%

• 30%-40%

20. How much margin do you extend to your investors?

230  

• Less than 1 Crore

• 1-2 Crore

• More than 2 Crore

21. What interest do you charge for the money lent?

• Less than 1%

• 1%-2%

• 2%-4%

• Above 4%

• Risk Free

• LIBOR/ MIBOR

22. The above interest charged is:

• Per day

• Per week

• Per month

• Quarterly

• Semi- annually

• Annually

23. How many clients trade in futures?

• Less than 10

• 10-20

• 20-30

• 30-40

• Above 40

24. How many clients trade in options?

• Less than 10

• 10-20

• 20-30

• 30-40

• Above 40

231  

25. Derivative instruments are fully useful to hedge risks. 5- Strongly agree, 1- Strongly Disagree

1 2 3 4 5

26. How are Derivative instruments useful/ not useful to hedge risks? Suggest changes, if required. Please state in brief.

27. Derivative Instruments help in earning wealth. 5- Strongly agree, 1- Strongly Disagree

1 2 3 4 5

28. How are Derivative Instruments useful/ not useful in earning wealth? Please state in brief.

29. Do you have an international exposure in trading in derivative instruments?

• Yes

• No

30. If yes, please tick the appropriate choice:

• Stock Index Futures

• Stock Index Options

• Futures on Individual Stocks

• Options on Individual Stocks

• Interest rate Futures

• Currency Futures

232  

• Any other

31. What is the percentage of exposure in terms of total portfolio?

• 5%-10%

• 10%-15%

• 15%-20%

• Above 20%

32. What percentage do you earn on trading in futures and options?

• 1%-2%

• 2%-4%

• 4%-6%

• 6%-8%

• Above 8%

33. What is the percentage of exposure in derivatives in terms of value (in Rs.)?

• Less than 50 Crores

• 50-100 Crores

• 100-150 Crores

• 150-200 Crores

• Above 200 Crores

34. Do you finance your requirement from Banks and other Financial Institutions?

• Yes

• No

35. If yes, what is the percentage of your borrowing vis-a vis your own contribution?

• Less than 10%

• 10%-20%

• 20%-30%

• 30%-40%

• Above 40%

233  

36. Investors usually trade in derivatives for:

• Hedging

• Speculating

• Arbitrage

• Loss covering

37. Indian Banks and Financial Institutions are efficient. 5- Strongly agree, 1- Strongly disagree

1 2 3 4 5

38. Indian Banks and Financial Institutions operational functions need overhauling. 5- Strongly agree, 1- Strongly disagree

1 2 3 4 5

39. Do you interact with international brokers?

• Yes

• No

40. Do you face any operational difficulties while executing derivative transactions?

• Yes

• No

41. Please mention difficulties, if any.

42. Indian derivative markets are transparent and investor friendly. 5- Strongly agree, 1- Strongly disagree

1 2 3 4 5

234  

43. Indian derivative markets are operated differently from international derivative markets. 5- Strongly agree, 1- Strongly disagree

1 2 3 4 5

44. Indian derivative markets are influenced by international players. 5- Strongly agree, 1- Strongly disagree

1 2 3 4 5

45. Indian regulatory bodies are efficient. 5- Strongly agree, 1- Strongly disagree 1 2 3 4 5

46. How many new products were added in the last two years?

• None

• 1-2

• 2-4

• Above 4

47. How many products were innovated to their present structure?

• None

• 1-2

• 2-4

• Above 4

48. Technology in derivative markets is efficient and robust. 5- Strongly agree, 1- Strongly disagree

1 2 3 4 5

49. The periodicity of turnover reporting to exchange is:

• Daily

• Weekly

235  

• Fortnightly

• Monthly

50. The periodicity of audit by regulatory authorities (Exchange and SEBI) is:

• Daily

• Weekly

• Fortnightly

• Monthly

• Quarterly

• Semi- annually

• Annually

51. The periodicity of submission of compliance reports to regulatory authorities (Exchange and SEBI) is:

• Daily

• Weekly

• Fortnightly

• Monthly

• Quarterly

• Semi- annually

• Annually

52. Do you have a mechanism to monitor an efficient/ high achiever trader?

• Yes

• No

53. Do you have position limits?

• Yes

• No

54. Do you benchmark your actual gains and losses against strategic planned reports?

• Yes

• No

236  

55. Do you speculate?

• Yes

• No

56. What is the success rate on your speculation?

• 90%-100%

• 75%-90%

• 50%-75%

• Below 50%

57. Does your front, middle and back offices operate separately by different individuals?

• Yes

• No

58. When do you recognize 'inception profits'?

• Immediately on occurrence

• During the life of the deal

• After the deal

59. Do you interact with your clients for 'risk awareness' before selling your products to them?

• Yes

• No

60. There is a need to establish a separate derivative exchange. 5- Strongly agree, 1- Strongly disagree

1 2 3 4 5

61. There is a need to establish a centralized clearing corporation for all exchanges. 5- Strongly agree, 1- Strongly disagree

1 2 3 4 5

237  

62. Government role in derivative exchange could be enhanced. 5- Strongly agree, 1- Strongly disagree

1 2 3 4 5

63. Please suggest any measures to strengthen Indian Derivatives Market, if needed.

THANK YOU.

238  

Appendix 4

L C Gupta Committee Report on Regulatory Compliance of Derivative Markets:

Constitution of the Committee on Derivatives Chairman: 1. Dr. L.C. Gupta, Director Society for Capital Market Research and Development, 32 Raja Enclave Pitampura, DELHI-110 034.

Member-Secretary:

2. Mr. O.P. Gahrotra, Sr. Executive Director, Securities & Exchange Board of India Mittal Court, "B" Wing, Nariman Point, MUMBAI-400 021.

Other Members:

3. Dr. Ajay Shah, Indira Gandhi Institute of Dev. Research Gen. Vaidya Marg, Goregaon (East), MUMBAI-400 065.

4. Mr. B.G. Daga, Chief General Manager, Unit Trust of India New Marine Lines, MUMBAI-400 020.

5. Mr. Balaji Srinivasan, Jardine Fleming, Amerchand Mansion 16, Madame Cama Road, MUMBAI-400 001.

6. Mr. D.C. Anjaria, Asian Capital Partners 38, Jolly Maker Chambers II 3rd Floor, Nariman Point, MUMBAI-400 021.

7. Ms. D.N. Raval, Executive Director (Legal), Securities & Exchange Board of India Mittal Court, "B" Wing, Nariman Piont MUMBAI-400 021.

8. Mr. Dennis Grubb, Price Waterhourse LLP, 128 T.V. Industrial Estate, Worli, MUMBAI-400 025.

9. Mr. L.K. Singhvi, Sr. Executive Director, Securities & Exchange Board of India, Mittal Court, "B" Wing, Nariman Point, MUMBAI-400 021.

10. Mr. M.G. Damani, President, The Bombay Stock Exchange, Dalal Street, Fort, MUMBAI-400 001.

11 Mr. M.R. Mayya, 1/19 Kadri Park, Irla, S.V. Road, Vile Parle, MUMBAI-400 056.

12. Mr. Marti Subrahmanyam, Professor New York University,NYU, Saloman Centre,N.Y., 10012-1118, U.S.A.

13. Prof. P.G. Apte, Indian Instt. of Management, Bannerghatta Road, BANGALORE-560076.

239  

14. Mr. Percy Mistry, Oxford International, Oxford Centre, 10, Shroff Lane Colaba Causeway, Colaba, MUMBAI-400 005.

15. Dr. Prasanna Chandra, Indian Institute of Management, Bannerghatta Road, BANGALORE-560 076.

16. Mr. Pratip Kar, Executive Director, Securities and Exchange Board of India, Mittal Court, "B" Wing, Nariman Point MUMBAI-400 021.

17. Prof. R. Vaidyanathan, Indian Instt. of Management, Bannerghatta Road, BANGALORE-560076.

18. Mr. R. Ravi Mohan, Credit Rating Information Services of India, 301 A, Neelam Centre, Worli, MUMBAI-400 025.

19. Dr. R.H. Patil, Managing Director, National Stock of India Ltd., Mahindra Towers, "A" Wing, 1st Floor,RBC, Worli, MUMBAI-400 018.

20. Mr. Ramachandra, Bangalore Stock Exchange Ltd., No. 51, 1st Cross, J.C. Road, BANGALORE-560 027.

21. Mr. S.S. Sodhi, Delhi Stock Exchange Assn. Ltd., Gate A, West Plaza,I.G. Stadium, Indraprastha Estate, NEW DELHI-110 002.

22. Mr. Uday Kotak, Kotak Mahindra Finance Ltd., Bakhtawar, 2nd Fl., Nariman Point, MUMBAI-400 021.

23. Mr. V.K. Agarwal, Forward Market Commission, "Everest", 3rd Floor, 100 Marine Lines, MUMBAI-400 002.

24. Mr. Vallabh Bhansali, Enam Financial Services Ltd., Ambalal Doshi Marg, 24 BD Rajabahadur Compound, MUMBAI-400 023.

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Executive Summary

The Committee strongly favours the introduction of financial derivatives in order to provide

the facility for hedging in the most cost-efficient way against market risk. This is an

important economic purpose. At the same time, it recognises that in order to make hedging

possible, the market should also have speculators who are prepared to be counter-parties to

hedgers. A derivatives market wholly or mostly consisting of speculators is unlikely to be a

sound economic institution. A soundly based derivatives market requires the presence of both

hedgers and speculators.

1. The Committee is of the opinion that there is need for equity derivatives, interest rate

derivatives and currency derivatives. In the case of equity derivatives, while the

Committee believes that the type of derivatives contracts to be introduced will be

determined by market forces under the general oversight of SEBI and that both

futures and options will be needed, the Committee suggests that a beginning may be

made with stock index futures.

2. The Committee favours the introduction of equity derivatives in a phased manner so

that the complex types are introduced after the market participants have acquired

some degree of comfort and familiarity with the simpler types. This would be

desirable from the regulatory angle too.

3. The Committee's recommendations on regulatory framework for derivatives trading

envisage two-level regulation, i.e. exchange-level and SEBI-level. The Committee’s

main emphasis is on exchange-level regulation by ensuring that the derivative

exchanges operate as effective self-regulatory organizations under the overall

supervision of SEBI.

Since the Committee has placed considerable emphasis on the self-regulatory competence of

derivatives exchanges under the over-all supervision and guidance of SEBI, it is necessary

that SEBI should review the working of the governance system of stock exchanges and

strengthen it further. A much stricter governance system is needed for the derivative

exchanges in order to ensure that a derivative exchange will be a totally disciplined market

place.

241  

4. The Committee is of the opinion that the entry requirements for brokers/dealers for

derivatives market have to be more stringent than for the cash market. These include

not only capital adequacy requirements but also knowledge requirements in the form

of mandatory passing of a certification programme by the brokers/dealers and the

sales persons. An important regulatory aspect of derivatives trading is the strict

regulation of sales practices.

5. Many of the SEBI's important regulations relating to exchanges, brokers-dealers,

prevention of fraud, investor protection, etc., are of general and over-riding nature and

hence, these should be reviewed in detail in order to be applicable to derivatives

exchanges and their members.

6. The Committee has recommended that the regulatory prohibition on the use of

derivatives by mutual funds should go. At the same time, the Committee is of the

opinion that the use of derivatives by mutual funds should be only for hedging and

portfolio balancing and not for speculation. The responsibility for proper control in

this regard should be cast on the trustees of mutual funds. The Committee does not

favour framing of detailed SEBI regulations for this purpose in order to allow

flexibility and development of ideas.

7. SEBI, as the overseeing authority, will have to ensure that the new futures market

operates fairly, efficiently and on sound principles. The operation of the underlying

cash markets, on which the derivatives market is based, needs improvement in many

respects. The equity derivatives market and the equity cash market are parts of the

equity market mechanism as a whole.

8. SEBI should create a Derivatives Cell, a Derivatives Advisory Committee, and

Economic Research Wing. It would need to develop a competence among its

personnel in order to be able to guide this new development along sound lines.

Regulatory Framework for Derivatives:

The Guiding Principles

Regulatory objectives

1. The Committee believes that regulation should be designed to achieve specific, well-

defined goals. It is inclined towards positive regulation designed to encourage healthy

activity and behaviour. It has been guided by the following objectives :

242  

a. Investor Protection: Attention needs to be given to the following four

aspects:

i. Fairness and Transparency: The trading rules should ensure that trading

is conducted in a fair and transparent manner. Experience in other

countries shows that in many cases, derivatives brokers/dealers failed to

disclose potential risk to the clients. In this context, sales practices adopted

by dealers for derivatives would require specific regulation. In some of the

most widely reported mishaps in the derivatives market elsewhere, the

underlying reason was inadequate internal control system at the user-firm

itself so that overall exposure was not controlled and the use of derivatives

was for speculation rather than for risk hedging. These experiences

provide useful lessons for us for designing regulations.

ii. Safeguard for clients' moneys: Moneys and securities deposited by

clients with the trading members should not only be kept in a separate

clients' account but should also not be attachable for meeting the broker's

own debts. It should be ensured that trading by dealers on own account is

totally segregated from that for clients.

iii. Competent and honest service: The eligibility criteria for trading

members should be designed to encourage competent and qualified

personnel so that investors/clients are served well. This makes it necessary

to prescribe qualification for derivatives brokers/dealers and the sales

persons appointed by them in terms of a knowledge base.

iv. Market integrity: The trading system should ensure that the market's

integrity is safeguarded by minimising the possibility of defaults. This

requires framing appropriate rules about capital adequacy, margins,

clearing corporation, etc.

a. Quality of markets: The concept of "Quality of Markets" goes well beyond

market integrity and aims at enhancing important market qualities, such as

cost-efficiency, price-continuity, and price-discovery. This is a much broader

objective than market integrity.

b. Innovation: While curbing any undesirable tendencies, the regulatory

framework should not stifle innovation which is the source of all economic

243  

progress, more so because financial derivatives represent a new rapidly

developing area, aided by advancements in information technology.

2. Of course, the ultimate objective of regulation of financial markets has to be to

promote more efficient functioning of markets on the "real" side of the economy, i.e.

economic efficiency.

3. Leaving aside those who use derivatives for hedging of risk to which they are

exposed, the other participants in derivatives trading are attracted by the speculative

opportunities which such trading offers due to inherently high leverage. For this

reason, the risk involved for derivative traders and speculators is high. This is

indicated by some of the widely publicized mishaps in other countries. Hence, the

regulatory frame for derivative trading, in all its aspects, has to be much stricter than

what exists for cash trading. The scope of regulation should cover derivative

exchanges, derivative traders, brokers and sales-persons, derivative contracts or

products, derivative trading rules and derivative clearing mechanism.

In the Committee's view, the regulatory responsibility for derivatives trading will have to be

shared between the exchange conducting derivatives trading on the one hand and SEBI on the

other. The committee envisages that this sharing of regulatory responsibility is so designed as

to maximize regulatory effectiveness and to minimize regulatory costs.

Major issues concerning regulatory framework

a. The Committee's attention had been drawn to several important issues in

connection with derivatives trading. The Committee has considered such issues,

some of which have a direct bearing on the design of the regulatory framework.

They are listed below :

a. Should a derivatives exchange be organized as independent and separate from an

existing stock exchange?

b. What exactly should be the division of regulatory responsibility, including both

framing and enforcing the regulations, between SEBI and the derivatives

exchange?

244  

c. How should we ensure that the derivatives exchange will effectively fulfill its

regulatory responsibility.

d. What criteria should SEBI adopt for granting permission for derivatives trading to

an exchange?

e. What conditions should the clearing mechanism for derivatives trading satisfy in

view of high leverage involved?

f. What new regulations or changes in existing regulations will have to be

introduced by SEBI for derivatives trading?

Should derivatives trading be conducted in a separate exchange?

4. A major issue raised before the Committee for its decision was whether regulations

should mandate the creation of a separate exchange for derivatives trading, or allow

an existing stock exchange to conduct such trading. The Committee has examined

various aspects of the problem. It has also reviewed the position prevailing in other

countries. Exchange-traded financial derivatives originated in USA and were

subsequently introduced in many other countries. Organizational and regulatory

arrangements are not the same in all countries. Interestingly, in U.S.A., for reasons of

history and regulatory structure, futures trading in financial instruments, including

currency, bonds and equities, was started in early 1970s, under the auspices of

commodity futures markets rather than under securities exchanges where the

underlying bonds and equities were being traded. This may have happened partly

because currency futures, which had nothing to do with securities markets, were the

first to emerge among financial derivatives in U.S.A. and partly because derivatives

were not "securities" under U.S. laws. Cash trading in securities and options on

securities were under the Securities and Exchange Commission (SEC) while futures

trading was under the Commodities Futures Trading Commission (CFTC). In other

countries, the arrangements have varied.

The Committee examined the relative merits of allowing derivatives trading to be conducted

by an existing stock exchange vis-a-vis a separate exchange for derivatives. The arguments

for each are summarised below.

245  

Arguments for allowing existing stock exchanges to start futures trading:

a. The most weighty argument in this regard is the advantage of synergies arising

from the pooling of costs of expensive information technology networks and the

sharing of expertise required for running a modern exchange. Setting-up a

separate derivatives exchange will involve high costs and require more time.

b. The recent trend in other countries seems to be towards bringing futures and cash

trading under coordinated supervision. The lack of coordination was recognized as

an important problem in U.S.A. in the aftermath of the October 1987 market

crash. Exchange-level supervisory coordination between futures and cash markets

is greatly facilitated if both are parts of the same exchange.

Arguments for setting-up separate futures exchange:

a. The trading rules and entry requirements for futures trading would have to be

different from those for cash trading.

b. The possibility of collusion among traders for market manipulation seems to be

greater if cash and futures trading are conducted in the same exchange.

c. A separate exchange will start with a clean slate and would not have to restrict the

entry to the existing members only but the entry will be thrown open to all

potential eligible players.

Recommendation

1. From the purely regulatory angle, a separate exchange for futures trading seems to be a

neater arrangement. However, considering the constraints in infrastructure facilities, the

existing stock exchanges having cash trading may also be permitted to trade derivatives

provided they meet the minimum eligibility conditions as indicated below :

2. The trading should take place through an online screen-based trading system, which also

has a disaster recovery site. The per-half-hour capacity of the computers and the network

should be at least 4 to 5 times of the anticipated peak load in any half hour, or of the

actual peak load seen in any half-hour during the preceding six months. This shall be

reviewed from time to time on the basis of experience.

3. The clearing of the derivatives market should be done by an independent clearing

corporation, which satisfies the conditions listed in a later chapter of this report.

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4. The exchange must have an online surveillance capability which monitors positions,

prices and volumes in realtime so as to deter market manipulation. Price and position

limits should be used for improving market quality.

5. Information about trades, quantities, and quotes should be disseminated by the exchange

in realtime over at least two information vending networks which are accessible to

investors in the country.

6. The Exchange should have at least 50 members to start derivatives trading.

7. If derivatives trading is to take place at an existing cash market, it should be done in a

separate segment with a separate membership; i.e., all members of the existing cash

market would not automatically become members of the derivatives market.

8. The derivatives market should have a separate governing council which shall not have

representation of trading/clearing members of the derivatives Exchange beyond whatever

percentage SEBI may prescribe after reviewing the working of the present governance

system of exchanges.

9. The Chairman of the Governing Council of the Derivative Division/Exchange shall be a

member of the Governing Council. If the Chairman is a Broker/Dealer, then, he shall not

carry on any Broking or Dealing Business on any Exchange during his tenure as

Chairman.

10. The exchange should have arbitration and investor grievances redressal mechanism

operative from all the four areas/regions of the country.

11. The exchange should have an adequate inspection capability.

12. No trading/clearing member should be allowed simultaneously to be on the governing

council of both the derivatives market and the cash market.

13. If already existing, the Exchange should have a satisfactory record of monitoring its

members, handling investor complaints and preventing irregularities in trading.

3.9 The next section will elaborate how the regulatory responsibilities placed on the

derivative exchange and the SEBI are to be carried out in a detailed manner.

Division of Regulatory Responsibility

Two levels of regulation

The task entrusted to the Committee is to develop the "regulatory framework for derivatives

trading". Such regulatory framework really comprises two distinct levels, viz.(1) a derivatives

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exchange's own operational rules and regulations and (2) SEBI rules and regulations with

which the exchange and its members must comply. The Committee feels that since the

Securities Contracts (Regulation) Act, 1956 and the Rules framed there under, SEBI

Act and various Rules and Regulations regarding stock exchanges and brokers/dealers

are of general and over-riding nature, they could be reviewed and designed to be

applicable equally to derivatives exchanges also.

Emphasis on exchange-level regulation

A crucial pre-condition for the success of derivatives trading is that the derivatives exchange

should be capable of acting as an effective self-regulator on its own. In the Committee's

opinion, the derivatives exchange, being in day to day touch with the market, will be in a

position to spot a problem and take prompt corrective action. As a statutory body, SEBI

will first have to enquire, collect all the facts and go through a certain statutory

procedure before acting. In addition, the regulatory costs can also be minimized by

shifting the administrative and compliance costs as much as possible to the exchanges

which are the beneficiaries from the business opportunity provided. These

considerations have led the Committee to emphasize that a derivatives exchange should

be designed, right from the start, as a competent and effective regulating organization

in every possible way.

Governance of derivative exchange

The Committee was informed about the regulatory concerns regarding the working of

governance system in many stock exchanges and took note of reported problems in this area.

The Committee regards this as important matter in the context of introducing derivatives. The

Committee recommends that SEBI should review its own experience of the present stock

exchange governance system in terms of how far the system has been able to ensure the

functioning of stock exchanges as effective self-regulatory organizations and what further

improvements, if any, are needed. As most of the regulatory responsibility in regard to

derivatives trading has to be carried out by the exchanges themselves and any slackness in

this regard can be disastrous, it is necessary to ensure that a proper governance structure is in

place. If necessary, SEBI may lay down a separate governance structure for exchanges which

are allowed to have derivatives trading.

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Most of the new regulations required for derivatives trading are exchange-level

regulations. Such regulations have necessarily to be very detailed and highly technical.

It will require the formulation of detailed rules, regulations and bye-laws and the creation of a

really effective monitoring and enforcement mechanism, covering all aspects of the

exchange's operation. The exchange-level regulations include entry requirements for

derivatives traders/members, design of derivatives contracts, broker-client relationship

including sales procedures and risk disclosure to clients, trading and reporting procedures,

internal risk control systems, margining, clearing, settlement and dispute resolution. In the

Committee's opinion, a derivatives exchange must necessarily be consciously designed to

play the role of effective self-regulator. This is so important that if there is any doubt in the

exchange's ability in this regard, SEBI should not allow it to conduct derivatives trading. The

role of SEBI will be to provide over-all supervision and guidance to the exchange and to

act as the regulator of last resort.

The Committee is of the view that all the above regulations have to be much stricter for

derivatives trading than the existing regulations for cash trading. Another demanding

requirement is that derivatives trading, clearing, settlement, margining, reporting and

monitoring, all involve the application of most modern on-line screen-based systems which

should be designed to be both fool-proof and fail-proof.

The Committee also feels that every derivative trader/member (not just 10 per cent of

them) should be inspected by the derivative exchange annually, both to provide

guidance in the initial years and to check compliance. This is particularly important at the

initial stage of derivatives trading. The derivative exchange should be required to have a

strong inspection department. Its staff should be given specialised training for the purpose.

SEBI's Regulatory Responsibility

SEBI should approve the rules, bye-laws and regulations of the derivative exchange and

should also approve the proposed derivative contracts before commencement of

trading. Any change in the rules, bye-laws and regulations of the Derivative Exchange

would need prior approval of SEBI.

The Committee feels that SEBI need not be involved in framing exchange-level rules but

it should evaluate them, identify deficiencies and suggest improvements. Its regulatory

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staff should have a thorough understanding of the theory and practice of financial derivatives

so that it can provide guidance and can evaluate various kinds of derivative products. SEBI's

overseeing function cannot be delegated. SEBI will have to acquire the necessary expertise

by training its own people and recruiting some specialised personnel. SEBI will function as

an overseeing authority. It would have to be closely involved in guiding this new and

complex development along right lines. It would have to ensure a successful launch of futures

trading in India by providing appropriate guidance and over-all supervision of the process.

Such success will be beneficial for the country's economy and will bring credit to SEBI.

SEBI's obligation to oversee the functioning of derivatives exchange is bound to be a

demanding task in terms of new knowledge and understanding required by its staff.

Regulatory review of Derivative Contract

In most countries regulatory approval is required for new derivatives contracts to be traded.

The regulatory authority has to determine whether such trading would be in public interest. In

U.S.A., the Commodities Trading Futures Commission, before granting its approval to a new

contract, has to be satisfied that the contract would serve an economic purpose, such as

making fairer pricing possible or making hedging possible. Providing an arena for

speculation is not regarded as enough to show that a futures contract would serve an

economic function. According to the information provided to the Committee by courtesy of

Price Waterhouse LLP under USAID's FIRE Project, more than 90 per cent of countries with

established derivatives markets use a contract review procedure as a threshold test to permit a

new derivatives contract to trade on an authorised derivative exchange.

The Committee suggests that before starting trading in a new derivatives product, the

derivatives exchange should submit the proposal for SEBI's approval, giving (a) full details

of the proposed derivatives contract to be traded (b) the economic purposes it is intended to

serve (c) its likely contribution to the market's development and (d) the safeguards

incorporated to ensure protection of investors/clients and fair trading. SEBI officers should be

in a position to provide effective supervision and constructive guidance in this regard.

SEBI Derivative Cell, Advisory Council and Economic Research Wing

In view of what has been said above, the Committee recommends the following steps to be

taken by SEBI :

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a. SEBI should immediately create a special Derivatives Cell because derivatives

demand special knowledge. It should encourage its staff members to undergo

training in derivatives and also recruit some specialised personnel.

b. A Derivatives Advisory Council may also be created to tap the outside expertise

for independent advice on many problems which are bound to arise from time to

time in regard to derivatives.

c. SEBI should urgently consider the creation of an Economic Research Wing.

Complex economic questions arise about derivatives, e.g. their effect on cash

market volatility and price discovery. Many such questions have been raised from

time to time in other countries. Administrative persons are unlikely to have the

time to study and analyse data. They can be usefully assisted by the Economic

Research Wing. SEBI, as the country's capital market authority, should be

regularly conducting studies of critical problems affecting the market and

collecting data.

4.12 The division of regulatory responsibility at two levels as suggested above by the

Committee, is aimed at securing the triple advantages of (a) permitting desirable

flexibility, (b) maximising regulatory effectiveness and (c) minimising regulatory cost.

SPECIAL ENTRY RULES FOR DERIVATIVES

BROKERS/DEALERS

No automatic entry for existing stock brokers

The Committee feels that the derivatives market will have to be subjected to more stringent

requirements than is the case with present cash markets. This implies that when an existing

exchange decides to start derivatives trading, the members of the existing cash market will

not automatically become members of the derivatives market. Only those who satisfy the

stricter eligibility conditions of the derivatives market will be admitted to derivatives trading.

Capital adequacy

The experience of Indian exchanges has been that the credibility of the broker firm’s balance

sheet figures of networth is questionable and that, in any case, a broker’s or dealer’s stated

networth is very often not available to meet the claims payable to the exchange. Hence, for

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effectively ensuring capital adequacy, principal reliance has to be placed on the capital and

margins actually deposited by the brokers/dealers with the exchange. Taking note of the

above, the views of the Committee regarding capital adequacy requirements for derivatives

brokers/dealers are presented below:

Guiding considerations

The absolute amount of minimum capital adequacy requirement for derivative

brokers/dealers has to be much higher than for cash market. Further, if a broker/dealer is

involved both in cash and futures segments, or in several exchanges, the capital adequacy

requirement should be satisfied for each exchange/segment separately. A decision on

minimum capital adequacy requirement involves balancing the need for ensuring market’s

integrity against the need for having sufficient participation of brokers/dealers and sufficient

competition. Too high a requirement may keep most Indian firms out of the derivatives

market.

Clearing and Non-clearing members

In order to somewhat ease the constraint on participation in the derivatives market due to

high capital adequacy requirements, the Committee recommends that consideration may be

given to a two-level system of members, viz., Clearing Members and Non-Clearing

Members, as found in several countries, an example being the Singapore International

Monetary Exchange. Under such a system, networth requirement for the Clearing Members is

higher than for the Non-Clearing members. The Non-Clearing members have to depend on

the Clearing Members for settlement of trades. The Clearing Member has to take

responsibility for the non-clearing member’s position so far as the Clearing Corporation is

concerned. The Clearing Member thus becomes the guarantor for the Non-Clearing members.

In a sense, a Clearing Member has a number of satellite traders for whom he takes financial

responsibility towards the Clearing Corporation. The advantage of the two-level system is

that it can help to bring in more traders into derivatives trading, thus enhancing the market’s

liquidity.

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Networth and initial margin

The Committee recommends that the Clearing Members of the derivatives exchange should

have a minimum net worth of Rs. 300 lakh as per SEBI’s definition and shall make a

deposit of Rs.50 lakh with the Exchange/Clearing Corporation in the form of liquid assets,

such as Cash, Fixed Deposits pledged in the name of the Exchange, or other securities. Bank

Guarantee in lieu of such deposit may also be accepted. The Clearing Corporation can permit

clearing members to clear the trades of non-clearing trading members. The regulations for the

non-clearing trading members shall be specified by the Derivatives Exchange/Division. The

Committee further recommends that the requirement of minimum networth and deposit in

case of Option writers will need to be still higher.

Certification Requirement

The broker-members, sales persons/dealers in the derivatives market must have passed a

certification programme which is considered adequate by SEBI.

Registration with SEBI

Brokers/dealers of Derivatives Exchange/Division should be required to be registered as such

with SEBI. This would be in addition to their registration as brokers/dealers of any stock

exchange. SEBI may require registration of sales persons working at Derivatives brokerage

firms.

CLEARING CORPORATION

Importance of separate Clearing Corporation

6.1 In the Committee’s view, the clearing mechanism should be organised as separate and

independent entity, preferably in the form of a Clearing Corporation. Clearing Corporation

should become a legal counterparty to all trades and be responsible for guaranteeing

settlement for all open positions. Hence, if any Clearing Member defaults, settlement for

other Clearing Members would not be affected. This would protect the reputation of the

Exchange and would minimise the default risk of trading/clearing members as the risks

arising from insolvency of any individual Clearing Member are shouldered effectively by the

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Clearing Corporation. The credibility of the Clearing Corporation, therefore, will have to be

assured.

6.2 The Clearing Corporation will collect initial (i.e. upfront) margin to which the exposure

limits of the broker/dealer would be linked, as explained later. The Clearing Corporation will

enforce the "mark-to-market margin" system. In case of failure of a clearing/trading member,

the Clearing Corporation should have recourse to disable the Clearing/trading member from

trading in order to stop further increase in his exposure.

6.3The requirements for capital adequacy and upfront margin should be set taking into

account the volatility of the underlying market. For this purpose, normally, daily volatility (as

measured by standard deviation of average return from one-day holding periods) is taken into

account. Such daily volatility in India for major stock indices is around 1.3-1.4 per cent

compared to just around 1 per cent for the S&P 500 Index in U.S.A. In addition, we have to

take into account two more facts, viz., first, the collection of daily mark-to-market margin

may take more than one day because electronic funds transfer facility is not yet universal in

India; and second, the worst scenario possibility, i.e. largest 1-day or 2-day fluctuation

experienced over the last few years.

6.4 Since market volatility changes over time, the Committee feels that the Clearing

Corporation should continuously analyse this problem and may modify the margin

requirements to safeguard the market. The dual objective has to be guaranteeing its own

solvency and avoiding unnecessary tying up of members’ capital.

6.5The Committee recommends that the Clearing Corporation should be an independent

corporation. Its Governing Board should be immune to any interference or direct/indirect

pressure by trading interests. For this reason, there is no need to have the representation of

trading interests on its Governing Board.

6.6The Committee feels that ideally an independent centralised Clearing Corporation for the

stock exchanges would be most effective arrangement. However, since this may be difficult

to achieve in the immediate future, it should remain as the ultimate goal to be achieved.

Efforts should continue to be made in this direction. Until such an independent centralised

entity is created, the Committee recognises that existing Clearing Corporations/Houses may

continue to be used by existing exchanges provided the following conditions are satisfied:

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1. the Clearing Corporation/House becomes counterparty to all trades or provides

unconditional guarantee for settlement of all trades; and

2. the Exchange agrees to participate in the Central Clearing Corporation as and

when that entity comes up.

The Committee strongly urges SEBI to take the initiatives with potential promoters to set up

a national-level Clearing Corporation.

Maximum exposure limit

6.7 Apart from the minimum networth requirement, there should be a maximum exposure

limit computed on gross basis for each broker/dealer. Such exposure limit should be linked to

the amount of deposits/margins kept by a broker/dealer as deposit with the Clearing

House/Clearing Corporation in the prescribed liquid assets. It was strongly represented to the

Committee, as mentioned earlier, that, in Indian context, the minimum networth requirement

has not proved adequate.

Mark-to-market margins

6.8 The Committee feels that even the system of mark-to-market margins on daily basis will

not be adequate for safeguarding the market’s integrity unless the margins are actually

collected before the start of the next day’s trading. Even a day’s delay in actual collection of

mark-to-market margin can pose a serious threat to the market’s integrity. The Committee

noted that electronic funds transfer (EFT) was not yet pervasive in India. If the mark-to-

market margins cannot be collected before the start of next day’s trading, the networth

requirement and initial deposit with the exchange would have to be higher. The Committee

recommends that the aim should be to collect mark-to-market margins before the next day’s

trading starts. For this purpose all derivatives dealers/brokers should be required to be

connected to Electronic Funds Transfer Facility. The capital adequacy requirement for

derivatives trading should be finally decided after taking into account both the extent of

volatility and the time taken for funds transfer from dealers/members to the exchange.

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Cross-margining

6.9 At the initial stage of derivatives market in India, the Committee does not favour cross-

margining which takes into account a dealer’s combined position in the cash and derivative

segments and across all stock exchanges. The Committee recognises that cross-margining is

logical and would economise the use of a trading member’s capital, but a conservative

approach would be more advisable until the reliability of systems has been fully established.

The systems capability has to emerge before adopting sophisticated systems.

Margin Collection from clients

6.10 In the Committee’s view, collection of initial and mark-to-market margins by brokers

from their clients should be insisted upon in the case of derivatives trading. In other words,

margin collection from clients should not be left to the discretion of brokers/dealers. SEBI

should require derivatives exchanges to ensure, through systems of inspection, reporting, etc.,

that margins are actually collected from all clients without exception, including financial

institutions. This is necessary because of the high leverage and consequently higher risk

involved in derivatives trading. Two indirect methods of ensuring this should also be

adopted, viz. (1) exposure limits for dealers/traders in relation to upfront initial margin

deposited with the exchange should be fixed on gross basis and (2) brokers/dealers should be

required to disclose to the exchange the trading done on their own behalf separately from

trading on clients’ behalf at the time of order entry. The trading volume should also be

divided into sales and purchases.

Safeguarding client’s money

The Committee further recommends that the Clearing Corporation should segregate the

upfront/initial margins deposited by Clearing Members for trades on their own account from

the margins deposited with it on client account. The Clearing Corporation shall not utilise the

margins deposited with it on client account for fulfilling the dues which a Clearing Member

may owe to the Clearing Corporation in respect of trades on the member’s own account. The

principle which the Committee would like to advocate regarding client moneys is that these

should be regarded as held in trust for client purpose only and should not be allowed to be

diverted to any other purpose. Such moneys are sacrosanct as they usually represent the

client’s hard earned savings.

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The following process may be adopted by the Clearing Corporation for segregating the

margin money held against a broker’s own position from that held against the client position.

At the time of opening a position, the dealer/broker should indicate whether the position is for

the client or for the broker himself. On all client positions, both buy or sell, margins should

be collected on gross basis (i.e. on buy and sell positions separately without netting them).

Similarly, when closing a position, the Clearing Corporation would have to be informed by

the Clearing Member whether it was a client position or Member’s own position. In case of a

Clearing Member default, the margin paid by such Member on his own account only would

be allowed to be used by Clearing Corporation for realising its own dues from the Member.

There should be an independent Investor Protection Fund for the Derivative

Division/Exchange which should be available to compensate clients in case of Member

default.

SEBI approval for clearing corporation

6.13 The Committee feels that a clearing corporation must have SEBI approval for

functioning as such. To be eligible for such approval, it should satisfy the following

conditions:

1. The clearing corporation must perform full novation, i.e. the clearing corporation

should interpose itself between both legs of every trade, becoming the legal

counterparty to both or alternatively should provide an unconditional guarantee

for settlement of all trades.

2. The clearing corporation should have the capacity to monitor the overall position

of members across both cash and derivatives markets for those members who are

participating in both.

3. The level of initial margin required on a position should be related to the risk of

loss on the position. The concept of "value at risk" should be used in calculating

required levels of initial margin. The initial margin should be large enough to

cover the one-day loss that can be encountered on the position on 99% of the days.

These capital adequacy norms should apply intra-day, so that there is no instant of

time where the good funds deposited by the member to the clearing corporation

are smaller than the value at risk of the position at that point in time. The clearing

corporation should have intra-day monitoring software to ensure that this

condition is met at every single instant within the day. "Good funds" here are

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defined as the initial margin and the mark to market margin available with the

clearing corporation.

4. In the event of unusual positions of a member, the clearing corporation should

charge special margin over and above the normal margins.

5. The clearing corporation must establish facilities for electronic funds transfer

(EFT) for swift movement of margin payments. In situations where EFT is

unavailable, the clearing corporation should collect correspondingly larger initial

margin to cover the potential for losses over the time elapsed in collection of mark

to market margin. For example, if two days elapse in moving funds, then the value

at risk should be calculated based on the prospective two-day loss.

6. In the event of a member default in meeting its liabilities, the Clearing

Corporation/House should have processing capability to require either the prompt

transfer of client positions and assets to another member or to close-out all open

positions.

6.14 The clearing mechanism is the centre-piece of a derivatives market, both for

implementing the margin system and for providing trade guarantee. Hence, the arrangements

must require SEBI approval. The policy should be to nudge the system towards a single

national clearing corporation for all stock exchanges.

REGULATION OF SALES PRACTICES AND DISCLOSURES FOR DERIVATIVES

Why derivatives sales practices need regulation

The Committee has identified broker-client relationship and sales practices for derivatives as

needing special regulatory focus. The potential risk involved in speculating (as opposed to

hedging) with derivatives is not understood widely. In the case of pricing of complex

derivatives contracts, there is a real danger of unethical sales practices. Clients may be fooled

or induced to buy unsuitable derivatives contracts at unfair prices and without properly

understanding the risks involved. Many widely reported legal disputes between broker-dealer

and the client have arisen in U.S.A. on some such ground. That is why it has become a

standard practice in other countries to require a "risk disclosure document" to be provided by

broker/dealer to every client in respect of the particular type of derivatives contracts being

sold.

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Also, derivatives brokers/dealers are expected to know their clients and to exercise care to

ensure that the derivative product being sold by them to a particular client is suitable to his

understanding and financial capabilities. Derivatives may tempt many people because of high

leverage, which is a double-edged instrument, having, at the same time, the potential of high

profitability on the margin money invested and high risk. The concept of "know-your-client"

needs to be implemented and every broker/trader should obtain a client identity form, as

suggested in Model Rules for Derivatives Exchanges, being formulated by the Committee

separately.

Options and their complexity

The risk and complexity vary among derivative products. While some derivatives are

relatively simple, many others, specially options, could be highly complex and would require

additional safeguards from investors’ viewpoint. In due course, a derivatives exchange may

decide to introduce options on stock index or on individual stocks. Options are a more

complex derivative product than index futures because evaluating the fairness of option

premium is a complex matter, not being apparent. Regulations in the U.S.A. clearly recognise

the greater complexity of options by requiring stricter supervision over sales of options

contracts.

In order to give some idea in this regard, the Committee enquired into sales practice

regulations relating to derivatives in U.S. in order to learn from the experiences of U.S.

regulatory authorities. The U.S. authorities have recognised that derivatives, based on options

trading strategies, could be highly complex. Hence, there is a special regulatory regime for

options. This is instructive for Indian authorities. In order to give a concrete idea about what

the regulation of sales practices, particularly for complex type of derivatives, may involve,

some special features found in the U.S. are enumerated below:

a. The options trading rules of a derivative exchange require heightened suitability

standards. Such rules prohibit brokers-dealers from recommending to any client

any options transaction unless they have reasonable grounds to believe that the

entire recommended transaction is not unsuitable for the customer on the basis of

information furnished after reasonable inquiry concerning the customer’s

investment objectives.

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b. In addition, the rules prohibit brokers-dealers from recommending opening

options transaction unless they have a reasonable basis for believing that the

customer has such knowledge and financial experience that he or she can be

expected to be capable of evaluating, and financially able to bear, the risks of the

transaction.

c. The broker-dealer must seek to obtain and verify specific categories of

information about its customers including, but not limited to, their net worth,

annual income and investment experience and knowledge. A separate approval

also may be required for trading in particular types of options strategies and types

of options contracts, such as foreign currencies.

d. In addition, the approval of account opening must be in writing and can be made

only by a senior options supervisor who must ensure that investors are offered an

explanation of the special characteristics and risks applicable to the trading of

options.

e. The derivatives exchange also requires that all the supervisory and sales personnel

pass a general securities examination that includes options materials. People

selling or supervising the sale of options on debt securities or foreign currency

also must pass a separate interest rate options or foreign currency examination.

f. The exchange also requires the brokers-dealers to keep a current customer

complaint log for all options-related complaints which include: (a) the name of the

complainant; (2) the date when the complaint was received; (3) the sales person

servicing the account; (4) a description of the complaint; and (5) a record of the

action taken.

g. In addition, the broker-dealer firm is required to submit all sales literature and

educational material to the exchange for pre-use approval.

h. The disclosure document about options should contain information describing the

mechanics and risks of options trading, transaction costs, margin requirements and

tax consequences of margin trading. The broker-dealer must provide a copy of this

document at or prior to the time such customer’s account is approved for

standardized options trading.

i. There are also special trading rules applicable to the options markets. These rules

include separate surveillance procedures, front-running prohibitions and position

limits.

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Exchange’s responsibility

The Committee recommends that attention be given to proper supervision of sales

practices for derivatives from the very beginning. It should be the responsibility of the

Derivatives Exchange, as a self-regulatory organisation, to take the necessary steps in

this regard under the general oversight of SEBI. Risk Disclosure to the client is an

important aspect of the regulation of sales practices. In connection with entry

requirements for derivative brokers/dealer, the Committee has earlier recommended

that, not only derivatives brokers/dealers, but also sales persons working for derivatives

brokers should have passed a certification programme. If sufficient attention is not paid

to this initially, we may have a situation analogous to a large number of ill-trained

drivers whom it becomes difficult to control later.

Basically, the regulation of derivatives sales practices aims at enforcing strictly the "know

your customer" rule and requires that every client trading in derivatives should be registered

with the derivatives broker. Data base on clients should be available with the broker.

Customers should be given a risk disclosure document prior to their registration by the

derivatives broker.

Sales to corporate clients

In the case of corporate clients, banks, financial institutions and mutual funds, they should be

allowed to trade derivatives only if and to the extent authorised by their Board of

Directors/Trustees. Such authorisation should specify the scope of permissible derivative

trading, i.e. the purposes or objectives for which derivatives trading may be undertaken, (e.g.

hedging etc.), over-all limits for derivative exposure, the authority level for giving approval

in this regard, the type of derivatives contracts (e.g. futures, forwards, options, swaps) and

broad derivative category (e.g. derivatives on interest rate, exchange rate, equities and

commodities). Derivatives broker/dealer may execute orders for such clients only if the

orders are supported by the necessary authorisation of the client’s Board of

Directors/Trustees.

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Accounting and disclosure requirements

The accounting treatment and disclosure requirement about an organisation’s involvement in

derivatives trading is important so that shareholders and investors can know how such

involvement fits into the organisation’s objectives and affects its revenues, financial position

and risk profile. The Committee was informed that a Study Group on Derivatives constituted

by the Institute of Chartered Accountants of India is examining the accounting and disclosure

norms for derivatives trading by corporate bodies.

Mutual Funds as clients

The SEBI (Mutual Fund) Regulations presently prohibit the use of derivatives by mutual

funds. The Committee is of the opinion that mutual funds need hedging facility. They will be

among the most important users of equity hedging through stock index derivatives. Hence,

the regulatory prohibition should be removed. The soundness of the derivatives market

depends on the presence of both hedgers and speculators. A derivatives market consisting

wholly or mostly of speculators is unlikely to be a healthy market. It is, therefore, all the

more important that the regulatory prohibition on the use of derivatives for hedging by

mutual funds should be withdrawn immediately.

Mutual funds should be allowed to use financial derivatives for hedging purposes (including

anticipated hedging) and portfolio re-balancing within a policy framework and rules laid

down by their Board of Trustees who should specify what derivatives are allowed to be used,

within what limits, for what purposes, for which schemes, and also the authorisation

procedure. The responsibilities of the trustees of mutual funds as per SEBI regulations should

be re-defined to cover this aspect.

At this stage, the Committee does not consider it advisable to frame detailed SEBI

regulations about the use of derivatives by mutual funds as this would stifle the development

of ideas. The Committee prefers that the responsibility for proper control in this regard

should be placed on the trustees of mutual funds. This would help evolution of practices on

sound lines without creating a strait jacket.

Further, what has been said earlier about internal control, accounting treatment and disclosure

of derivatives trading by corporate clients should apply to mutual funds also. The offer

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documents of mutual fund schemes should disclose whether the scheme permits the use of

derivatives and the details in this regard. Also the income and balance sheet of each mutual

fund scheme would have to disclose the impact of derivatives trading and of any open

position in this regard.

Concluding observations

1. There is no doubt that equity derivatives and other financial derivatives have some

definite positive uses and serve an economic purpose, as clearly recognised in

economic literature. They represent a financial innovation of considerable

significance. They can be helpful in making financial markets more efficient and

enhancing economic efficiency in general.

2. At the same time, derivatives trading inherently involves high leverage. For this

reason, it can be a temptation to inadequately capitalised traders or speculators.

Also some users may not fully understand derivatives and use them

inappropriately. The regulatory system has to be designed to minimise these

possible dangers.

3. In drawing up a regulatory framework for derivatives, the Committee has kept in

view not only the need for allowing adequate flexibility in order to permit the

derivatives market to develop in India but also the need for strict watch so that the

development is along sound lines.

USES OF EQUITY DERIVATIVES

Brokers 67

Mutual funds 10

Banks & financial institutions 14

FIIs 12

Merchant banks 09

Total 112

Survey findings about potential for financial derivatives in India

The Committee made an assessment of the nature of felt-need and interest in the various

types of financial derivatives among potential market participants through a Questionnaire-

based survey. The survey covered all types of potential players in the derivatives market,

263  

such as mutual funds, other financial institutions, commercial banks, investment bankers and

stockbrokers. Out of about 300 Questionnaires sent out by the Committee in May 1997, the

number of replies received was 112, comprising 67 brokers and 45 others. The break-up of

our sample is as follows:

In addition, the Committee held a full day session to interact with groups representing each of

the above categories of interests. A total of about 35 persons attended the group-wise

discussions.

The survey clearly revealed that there was wide recognition of the need for all the three major

types of financial derivatives, viz., equity derivatives, interest rate derivatives and currency

derivatives. The results of the survey are summarised in Table 2.1 given at the end of this

chapter.

Interestingly, the survey findings showed that stock index futures ranked as the most popular

and preferred type of equity derivative, the second being stock index options and the third

being options on individual stocks. Considerable interest exists in all the three types of equity

derivatives mentioned above. The fourth type, viz. individual stock futures, was favoured

much less. It is pertinent to note that the U.S.A. does not permit individual stock futures.

Only one or two countries in the world are known to have futures on individual stocks. Stock

Index Futures are internationally the most popular forms of equity derivative.

The difference in relative preferences among the various financial derivative types is shown

more sharply when we look at answers to the question: Which of the derivative products

should be introduced first? The respondents who placed stock index futures as first

represented 65% of the sample, compared to 39 per cent who placed stock index options as

first (see Table 2.1).

The survey also showed that there exists widespread demand for hedging facility, as indicated

by the finding that nearly 70% of the respondents in our sample indicated that they would like

to use the various types of equity derivatives for hedging purpose. On the other hand, about

39% of respondents would like to participate in the derivatives market as dealer/speculator,

64% as broker and only about 36% as option writer. Many of the respondents would like to

participate in more than one capacity.

264  

In terms of contract duration of Stock Index futures and options, the 3 months duration was

the most favoured, as may be expected. As regards the choice between the American and

European types of options, the former was favoured overwhelmingly.

As regards expectations of growth of stock index futures and options trading in India, about

33% of respondents expected it to grow very fast, 41% expected it to grow moderately and

the remaining 16% expected slow growth of trading. On the whole, the survey findings are

very positive about the need and prospects of equity derivatives trading in India.

Popularity of Stock Index Futures

There are many reasons for the wide international acceptance of stock index futures and for

the strong preference for this instrument in India too compared to other forms of equity

derivatives. This is because of the following advantages of stock index futures:

Institutional and other large equityholders need portfolio hedging facility. Hence, index-

based derivatives are more suited to them and more cost-effective than derivatives based on

individual stocks. Even pension funds in U.S.A. are known to use stock index futures for risk

hedging purposes.

Stock index is difficult to be manipulated as compared to individual stock prices, more so in

India, and the possibility of cornering is reduced. This is partly because an individual stock

has a limited supply which can be cornered. Of course, manipulation of stock index can be

attempted by influencing the cash prices of its component securities. While the possibility of

such manipulation is not ruled out, it is reduced by designing the index appropriately. There

is need for minimising it further by undertaking cash market reforms, as suggested by the

Committee later in this chapter.

Stock index futures enjoy distinctly greater popularity, and are, therefore, likely to be more

liquid than all other types of equity derivatives, as shown both by responses to the

Committee’s questionnaire and by international experience.

Stock index, being an average, is much less volatile than individual stock prices. This implies

much lower capital adequacy and margin requirements in the case of index futures than in the

case of derivatives on individual stocks. The lower margins will induce more players to join

the market.

265  

In the case of individual stocks, the positions which remain outstanding on the expiration date

will have to be settled by physical delivery. This is an accepted principle everywhere. The

futures and the cash market prices have to converge on the expiration date. Since Index

futures do not represent a physically deliverable asset, they are cash settled all over the world

on the premise that the index value is derived from the cash market. This, of course, implies

that the cash market is functioning in a reasonably sound manner and the index values based

on it can be safely accepted as the settlement price.

Regulatory complexity is likely to be less in the case of stock index futures than for other

kinds of equity derivatives, such as stock index options, or individual stock options.

Cash and futures market relationship

The objective of SEBI is to make both derivatives market and cash market fair, efficient and

transparent. Economically, it is important to realise that equity cash market and equity

derivatives market are of one piece. Their sound development is inter-related closely. The

Committee has kept this objective in view and would like to ensure that the new derivatives

market is developed along sound lines. This objective can best be achieved by separating

cash market and futures market and thereby regulating them effectively. At present, almost

90 per cent of the trading volume in the cash market does not settle in deliveries of the stock.

The great bulk (over 85 per cent) of such trading is in 5 scrips only. The Committee noted

that several earlier committees on stock exchange reforms, including the G.S. Patel

Committee (1984-85), had expressed concern at the small percentage of deliveries in Indian

exchanges. They had also lamented the illiquidity of a majority of listed shares and the

practice of switching of positions from one exchange to another due to different exchanges

having different settlement cycles.

The Committee hopes that some of the speculative transactions, which are presently

conducted in the cash market, would be attracted towards the proposed derivatives market.

The Committee recognizes that an efficient cash market is required for an efficient futures

market. The Committee also recognizes the danger that if the cash market behavior is erratic

or does not reflect fundamentals, a futures market, based on such a cash market, will fail to

give a correct indication of future spot prices and its usefulness for price discovery will be

reduced.

266  

The Committee is of the opinion that the following revisions could lead to a further

strengthening of the underlying cash market:

a. uniform settlement cycle among all the stock exchanges moving towards rolling

settlement cycles to prevent the cash market from effectively being used as an

unregulated futures market;

b. strengthening of administrative machinery of the existing stock exchanges wherever

necessary to tighten the exchange’s regulatory oversight; such tight supervision being

essential for successful derivatives trading.

c. speeding up dematerialisation of securities without which options on individual

securities should not be allowed as non-dematerialised securities involve settlement

delays and problems; allowing options without dematerialisation is likely to make the

options market manipulable; and

d. taking steps to encourage more delivery based transactions in a greater number of

securities.

The Committee is of the view that arbitrage transactions between the index futures market

and the cash market for equities is likely to have a beneficial effect on the functioning of the

cash market in terms of price discovery, broadening of liquidity and over-all efficiency.

Strengthening the influence of fundamental factors

The Committee thought of ways to ensure that fundamental factors adequately enter into the

price discovery process in the cash market and, through it, in the futures market. In this

connection, the Committee noted that it was important in the case of futures markets, whether

commodity futures or other futures, to assist the price discovery process by promoting the

dissemination of all relevant market information about the "real" factors, such as supplies,

demand, prospects, etc. In regard to stock index futures, the Committee feels that there are

two important ways of promoting its linkage to fundamental factors. First, there must be a

requirement that average P/E ratio of the index used for futures trading should be made

available by the exchange concerned on daily basis as essential market information. Second,

the arbitrage between the index futures market and the cash market for the shares composing

the index should be facilitated by requiring such shares to be traded in the depository mode

and also by making available the facility of stock borrowing so that short-selling is rendered

possible.

267  

Strategic uses of stock index futures

It was represented to the Committee by mutual funds and other financial institutions that they

were handicapped in their investment strategy because of the non-availability of portfolio

hedging facility in India. They need derivatives, not for generating speculative profits, but for

strategic purposes of controlling risk or restructuring portfolios. Given below are some

practical examples from a presentation made before the Committee by some institutional

representatives :

i. Reducing the equity exposure in a mutual fund scheme: Suppose that a balanced

mutual fund scheme decides to reduce its equity exposure from, say, 40% to 30% of

the corpus. Presently, this can be achieved only by actual selling of equityholdings.

Such selling entails three problems: first, it is likely to depress equity prices to the

disadvantage of the Scheme and the whole market; second, it cannot be achieved

speedily and may take some months, and third, it is a costly procedure because of

brokerage, etc. The same objective can be achieved through index futures at once, at

much less cost and with much less impact on the cash market. The scheme may

immediately sell index futures. The actual sale of equityholdings may be done

gradually depending on market conditions in order to realise the best possible prices.

As unloading of holdings progresses, the index futures transaction may be unwound

by an opposite transaction to the same extent.

ii. Investing the funds raised by new schemes: When a new scheme is floated, the

money raised does not get fully invested for considerable time. Suitable securities at

reasonable prices may not be immediately available in sufficient quantity. Rushing to

invest the whole money is likely to drive up prices to the disadvantage of the scheme.

Timing is important in the case of equity schemes. If the scheme is launched to take

advantage of low equity prices, such advantage may be lost due to delay in acquiring

suitable securities as the market situation may change. The availability of stock index

futures can take care of this entire problem.

iii. Partial liquidation of portfolio in case of open-ended fund: In the case of an open-

ended scheme, repurchases may sometimes necessitate liquidation of a part of the

portfolio but there are problems in executing such liquidation. Selling each holding in

proportion to its weight in the portfolio is often impracticable. Some of the holdings

may be relatively illiquid. Rushing to the cash market to liquidate would drive down

268  

prices. The price actually realised may be different from the price used in NAV

computation for repurchase. The timing of liquidation may not be right because of

market depression. Stock Index Futures can help to overcome these problems to the

advantage of unitholders.

iv. Preserving the value of portfolio during times of market stress: There are times

when the main worry is the possibility that the value of the entire equity portfolio may

fall substantially if, say, event "X" occurs. Sale of Stock Index Futures can be used to

insure against the risk. Such insurance is specially important if the accounts closing

date is nearby because the yearly results will get affected if the risk materialises.

Stock index futures can neutralise such risk.

v. International investors: The buying and selling operations of FIIs presently cause

disproportionate price-effect on the Indian equities market because all transactions are

through the cash market only. This is an important factor making the Indian equities

market highly volatile from day to day. The FIIs' buying/selling is aimed at either

increasing or reducing their exposure to the Indian equities market. In other words,

what the FIIs buy/sell is a "piece" of the whole Indian equities market. If stock index

futures are available, this can be carried out with greater speed and less cost and

without adding too much to market volatility. The FII flows show sudden changes

from time to time. While trying to maximise the net inflow of FII portfolio

investment, its disturbing effects on the cash market for Indian equities can possibly

be minimised if the facility of stock index futures is available. The availability of such

a hedging device is likely to increase the international investors' appetite for Indian

equities.

Phasing needed

The Committee believes that the types of equity derivatives to be introduced in India should

ultimately be left to the market forces under over-all general supervision of SEBI. It is likely

to be an evolutionary process, as has been the case in other countries. The experience in other

countries also shows that only a small proportion of new futures contracts prove to be

successful and survive for long. The market decides which ones will succeed.

The consensus in the Committee was that stock index futures would be the best starting

point for equity derivatives in India. The Committee has arrived at this conclusion after

careful examination of all aspects of the problem, including the survey findings and

269  

regulatory preparedness. The Committee would favour the introduction of other types of

equity derivatives also, as the derivatives market grows and the market players acquire

familiarity with its operations. Other equity derivatives include options on stock index or on

individual stocks. There may also be room for more than one stock index futures. It is bound

to be a gradual process, shaped by market forces under the over-all supervision of SEBI. One

member of the Committee, i.e. Mr. P.S. Mistry, formally dissociated himself from the

consensus mentioned above by favouring the introduction of options contracts before the

introduction of futures.

The enabling legal changes

It is understood that the Central Government is already considering the legal action required

in order to enable the use of stock index derivatives by expanding the definition of

"securities" under Section 2(h)(iia) of the Securities Contracts (Regulation) Act, 1956, by

declaring derivatives contracts based on index of prices of securities and other derivatives

contracts to be securities. The Committee recommends that this should be done expeditiously.

The Committee also recommends that the notification issued by the Central Government in

June 1969 under Section 16 of the SC(R) A be amended so as to enable trading in futures and

options contracts. The prohibition of trading in options on securities has already been

withdrawn by the Securities Laws Amendment Act with effect from January 25, 1995.

Table 2.1

ANALYSIS OF REPLIES TO THE COMMITTEE’S QUESTIONNAIRE

ADDRESSED TO POTENTIAL PLAYERS IN THE FINANCIAL

DERIVATIVE MARKET IN INDIA

Q. No.

Question Number and percentage of affirmative replies

(Total respondents=112)

Number % to total

1a. Which risks are of most concern in your operations?

• Systematic risk 96 85.71

270  

• Interest rate risk 35 32.25

• Exchange rate risk 27 24.11

• Default risk 71 63.39

• Asset-liability mismatch 23 20.54

• Any other 11 9.82

1c. Are you handicapped because index-based futures and options are not available in India?

85 75.89

2a. Is there a need for having

• Stock Index Futures 98 87.50

• Stock Index Options 92 82.14

• Futures on Individual Stocks 71 63.39

• Options on Individual Stocks 90 80.36

• Interest rate futures 68 60.71

• Currency futures 67 59.82

2b. Which of the above do you favour most?

• Stock Index Futures 73 65.28

• Stock Index Options 45 40.18

• Futures on Individual Stocks 22 19.64

• Options on Individual Stocks 32 28.57

• Interest rate futures 21 18.75

• Currency futures 14 12.5

3a. In which of the following would you like to participate?

• Stock Index Futures 92 82.14

• Stock Index Options 82 73.21

• Futures on Individual Stocks 61 54.46

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• Options on Individual Stocks 78 69.64

• Interest rate futures 43 38.39

• Currency futures 37 33.04

3b. Which of the derivative products mentioned above should be introduced first?

• Stock Index Futures 73 65.18

• Stock Index Options 44 39.29

• Futures on Individual Stocks 14 12.5

• Options on Individual Stocks 15 13.39

• Interest rate futures 13 11.61

• Currency futures 7 6.25

4a. In the case of the first four products mentioned in the previous question will you like to participate as:

• hedger 78 69.64

• dealers/speculators 44 39.29

• broker 72 64.29

• option writer 40 35.71

• any other 6 5.36

4b. Which derivative product is likely to be the most popular in India?

• Stock Index Futures 63 56.25

• Stock Index Options 40 35.71

• Futures on Individual Stocks 23 20.54

• Options on Individual Stocks 38 33.93

• Interest rate futures 8 7.14

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• Currency futures 7 6.25

5a. Which derivative product are needed most in India for improving stock market efficiency?

• Stock Index Futures 66 58.93

• Stock Index Options 47 41.96

• Futures on Individual Stocks 35 31.25

• Options on Individual Stocks 36 32.14

• Interest rate futures 6 5.36

• Currency futures 2 1.79

6a. Do you expect that the trading in Stock Index Futures and Options in India will

• Grow very fast 37 33.03

• Grow moderately 46 41.07

• Grow slowly 18 16.07

• Not grow much 2 1.79

• Can’t say anything 2 1.79

7a. What contract maturity period would interest you for trading in:

• Stock Index Futures and Options

3 months 93 83.04

6 months 70 62.50

9 months 37 33.04

12 months 35 31.25

• Futures and Options on Individual Stocks

3 months 88 78.57

6 months 60 53.57

9 months 27 24.11

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12 months 31 27.68

8a. In case of Options do you favour:

• American 79 70.54

• European 30 26.79

Note: Questions 2b, 3b and 4c expected respondents to tick against one type only but some

respondents ticked more than one, resulting in double counting. Hence, the percentages add

to more than 100. This does not, however, vitiate the relative comparison among the

derivative types.

274  

Appendix 5 List of Registered Custodian of Securities

Sr. No. Name of Custodian Contact Address Registration

Valid Until 1. The Royal Bank Of

Scotland N.V. (Formerly ABN Amro Bank N.V.)

Custodian Services, 1st Floor, Brady House, 14 Veer Nariman Road, Fort, Mumbai - 400 001. Tel. 022 - 66585908 Fax.- 022 – 22812589

October 31, 2012

2 Axis Bank Limited

Solaris ‘C’ Wing, 9th Floor, Saki Vihar Road, Opp. L & T Gate No. 6, Powai, Mumbai – 400072. Tel No.: 022-40754264/83; Fax No.: 022-40754261/62

April 25, 2013

3 BNP Paribas 62, Homji Street, Fort, Mumbai – 400 001 Phone: 022-66501300 Fax: 022-22642004

January 31, 2013

4. Citibank N. A. Citibank, N.A., Securities & Fund Services Trend House, 3rd Floor, ‘G’ Block, Plot No. 60, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 Tel. No. 022-40296300 Fax no. 022-26532202

October 31, 2012

5 DBS Bank Ltd. India

3rd Floor, Fort House 221, Dr. D.N.Road, Fort , Mumbai - 400 001. Tel.- 022- 5638 8888, Fax.- 022 – 56388899

October 31, 2012

6. Deutsche Bank AG Domestic Custodial Services DB House, Hazarimal Somani Marg, Fort Mumbai-400 001. Tel.No.: 022 - 56584600 Fax : 022 – 22075975

October 31, 2012

7. Edelweiss Custodial Services Limited

14th Floor, Express Towers, Nariman Point, Mumbai-400021 Phone: 022-22864400 Fax: 022-40040793

August 17, 2013

8. HDFC Bank Ltd. Custody Services, Lodha –I Think Techno Campus, Building -Alpha, 8th Floor, Opposite Crompton Greaves, Kanjur Marg (East),

October 31, 2012

275  

Mumbai – 400 042. Tel.No. – 022-30752800 Fax.- 022-25799861/25799862

9. Hongkong and Shanghai Banking Corporation Limited

Custody and Clearing, Plot No. 139-140 B, Western Express Highway, Sahar Road Junction, Vile Parle (East),, Mumbai – 400 057. Tel.No. – 022 – 40357000, Fax.- 022 – 40357469

October 31, 2012

10. ICICI Bank Limited.

Securities Markets Services, Empire Complex, 1st Floor, E7/F7 Senapati Bapat Marg, Lower Parel, Mumbai – 400 013, Tel.No. – 022 – 66672071/2005. Fax.- 022 – 66672740/2779

October 31, 2012

11 IL&FS Securities Services Ltd.

IL&FS House, Plot No. 14, Raheja Vihar, Chandivli, Andheri East, Mumbai 400 072 Tel.No.: 022 – 2857 0965 Fax : 022- 2857 0948/49

October 31, 2012

12 JPMorgan Chase Bank, N.A.

6th Floor, Paradigm Towers, Wing B, Mindspace, Malad, Mumbai - 400 064. Tel.- 022- 66506000 Fax.- 022- 66492504/05

October 31, 2012

13. Kotak Mahindra Bank Limited

Kotak Infiniti, 6th Floor, Zone IV, Custody Services Unit Building No. 21, Infinity Park, Off Western Express Highway, General A K Vaidya Marg, Malad (E), Mumbai 400 097 Tel.- 02266056825/66056933/ 66056898 Fax.- 022-67259060

October 31, 2012

14. Orbis Financial Corporation Ltd.

4A Technopolis, Sector 54, Golf Club Road, Gurgaon - 122 002 Tel.-0124 –4546565 Fax.- 0124- 4546500

June 16, 2011

15. SBI-SG Global Securities Services Pvt. Ltd (Formerly SBI Custodial Services Pvt. Ltd.)

12th Floor, State Bank Bhavan, Madam Cama Road, Mumbai 4000 21 Phone: 022-22833008/22855821 Fax: 022-22855822

November 19, 2012

276  

16. Standard Chartered Bank

Custodial Services 23-24, Mahatma Gandhi Road Fort, Mumbai - 400 001. Tel.No: 022 – 2204 4444 Fax : 022 - 2285 3857/8

October 31, 2012

17. State Bank of India

Depository Participant & Global Custodial Services, Division (DP&GCS), Mumbai Main Branch, Mezzanine Floor, Post Box No. 13, Mumbai Samachar Marg, Fort, Mumbai - 400 001. Tel. No.: 022 – 22691088/22690749 Fax No.: 022 - 22624643

October 31, 2012

18. Stock Holding Corporation of India Limited

Centre Point , Unit No. 301, 3rd Floor, Dr. B. Ambedkar Road, Opposite Bharatmata Cinema, Parel, Mumbai 400 012. Tel.: 022 61779400-09

October 31, 2012

19 The Bank of Nova Scotia (Only for Gold and Gold related instrument)

Mittal Tower, “B” Wing, Nariman Point, Mumbai 400 021 Tel.-022 – 883411-15, Fax.- 022- 22881078

October 31, 2012

List of entities where in-principle approval has been granted

Sr. no. Name of Entity Contact Address Approval Valid

Until 1. India Infoline Ltd.

Building No. 75, Nirlon Complex,

Off Western Express Highway,

Goregaon (East),

Mumbai 400 063

Phone:022-66775900

Fax: 022-66489000

June 04, 2010

2. Globe Capital market Ltd.

609-Ansal Bhawan,

16-K.G.Marg,

New Delhi – 110001

December 03, 2010

277  

Phone : 011-30412345

Fax: 011-23720883 3. Quant Transactional

Services Private Limited

612-617, 6th Floor, Maker Chambers IV

Nariman Point

Mumbai 400 021

Phone : 022-40880100

Fax : 022-40880249/40880250

June 29, 2012

Note: The in –principle approval is valid upto one year within which the entities are required to satisfy the conditions mentioned in their respective approvals. Some of the general conditions inter-alia are as given below:

a. Confirm the fulfillment of networth criteria as per the Regulation on the basis of audited financials.

b. File documents evidencing presence of necessary vaults for safe custody of securities, computer systems capability, software to support custody operations required to effective discharge of your activities as custodian of securities.

c. Undergo a system audit prior to commencement of operations. (The scope of the audit to be defined in consultation with SEBI.)

d. Confirm the presence of adequate and competent persons who have the experience, capacity and ability of managing the business of the custodian of securities before the commencement of business.

278  

Appendix 6

List of Mutual Funds

Name of the Asset Management Company Website

Axis Asset Management Company Ltd. www.axismf.com

Baroda Pioneer Asset Management Company Limited www.barodapioneer.in

Birla Sun Life Asset Management Company Limited www.birlasunlife.com

BNP Paribas Asset Management India Private Limited www.bnpparibasmf.in

BOI AXA Investment Managers Private Limited www.boiaxa-im.com

Canara Robeco Asset Management Company Limited www.canararobeco.com

Daiwa Asset Management (India) Private Limited www.daiwafunds.in

Deutsche Asset Management (India) Pvt. Ltd. www.dws-india.com

DSP BlackRock Investment Managers Private Limited www.dspblackrock.com

Edelweiss Asset Management Limited www.edelweissmf.com

Escorts Asset Management Limited www.escortsmutual.com

Franklin Templeton Asset Management (India) Private Limited www.franklintempletonindia.com

Goldman Sachs Asset Management (India) Private Limited www.gsam.in

HDFC Asset Management Company Limited www.hdfcfund.com

HSBC Asset Management (India) Private Ltd. www.assetmanagement.hsbc.com/in

ICICI Prudential Asset Mgmt.Company Limited www.icicipruamc.com

IDBI Asset Management Ltd. www.idbimutual.co.in

IDFC Asset Management Company Limited www.idfcmf.com

India Infoline Asset Management Co. Ltd. www.iiflmf.com

Indiabulls Asset Management Company Ltd. www.indiabullsmf.com

ING Investment Management (India) Pvt. Ltd. www.ingim.co.in

279  

JM Financial Asset Management Private Limited www.jmfinancialmf.com

JPMorgan Asset Management India Pvt. Ltd. www.jpmorganmf.com

Kotak Mahindra Asset Management Company Limited(KMAMCL) www.kotakmutual.com

L&T Investment Management Limited www.lntmf.com

LIC NOMURA Mutual Fund Asset Management Company Limited www.licnomuramf.com

Mirae Asset Global Investments (India) Pvt. Ltd. www.miraeassetmf.co.in

Morgan Stanley Investment Management Pvt.Ltd. www.morganstanley.com/indiamf

Motilal Oswal Asset Management Company Limited www.motilaloswal.com/assetmanagement/

Peerless Funds Management Co. Ltd. www.peerlessmf.co.in

PineBridge Investments Asset Management Company (India) Pvt. Ltd. www.aiginvestments.co.in

PPFAS Asset Management Pvt. Ltd. amc.ppfas.com

Pramerica Asset Managers Private Limited www.pramericamf.com

Principal Pnb Asset Management Co. Pvt. Ltd. www.principalindia.com

Quantum Asset Management Company Private Limited www.QuantumAMC.com

Reliance Capital Asset Management Ltd. www.reliancemutual.com

Religare Asset Management Company Private Limited www.religaremf.com

Sahara Asset Management Company Private Limited www.saharamutual.com

SBI Funds Management Private Limited www.sbimf.com

Sundaram Asset Management Company Limited www.sundarammutual.com

Tata Asset Management Limited www.tatamutualfund.com

Taurus Asset Management Company Limited www.taurusmutualfund.com

Union KBC Asset Management Company Private Limited www.unionkbc.com

UTI Asset Management Company Ltd www.utimf.com

280  

Appendix 7

List of Merchant Bankers

A.K. Capital Services Ltd

Abans Securities Ltd.

Ajcon Global Services Ltd.

Akasam Consulting Pvt. Ltd.

Allbank Finance Ltd.

Almondz Global Securities Ltd (Formerly Allianz Securities Ltd)

Alpen Capital India Pvt. Ltd.

Altius Finserv Pvt. Ltd. (Formerly Upvan Securities Pvt., Ltd.

Anand Rathi Advisors Limited

Andhra Bank

Antique Capital Markets Pvt. Ltd.

Arihant Capital Markets Ltd

Aryaman Financial Services Limited

Ashika Capital Ltd

Asit C. Mehta Investment Interrmediates Ltd

Atherstone Capital Markets Limited

Axis Bank Ltd.(Formerly Uti Bank Ltd.)

Bajaj Capital Ltd

Bank Of Maharashtra

Barclays Bank Plc

Barclays Securities (India) Pvt. Ltd.

Basan Financial Services Ltd.

Batlivala & Karani Securities India Pvt Ltd

Birla Capital And Financial Services Limited

Bnk Securities Pvt. Ltd.

Bnp Paribas

Bob Capital Markets Ltd

Brics Securities Ltd

Canara Bank

Centbank Financial Services Ltd.

281  

Central Bank Of India

Centrum Capital Limited (Formerly Centrum Finance Ltd)

Choice Capital Advisors Pvt. Ltd.

Cil Securities Ltd

Citibank N A

Citigroup Global Markets India Pvt. Ltd.

Clsa India Ltd

Collins Stewart Inga Pvt Ltd.(Formerly Inga Advisors Pvt. Ltd.)

Comfort Securities Ltd

Corporate Professionals Capital Pvt. Ltd.

Corporate Strategic Allianz Pvt Ltd

Credit Agricole Corporate And Investment Bank (Formely Known As Calyon Bank)

Credit Suisse Securities (India) Pvt Ltd

D & A Financial Services Pvt. Ltd.

Daiwa Capital Markets India Private Limited

Dalmia Securities Pvt. Ltd.

Darashaw & Company Private Ltd (Formerly Badar Financ

Dbs Bank Ltd

Deutsche Bank

Deutsche Equities India Private Limited

Development Credit Bank Ltd.

Dolat Merchant Banking And Financial Services Pvt. Ltd.

Dsp Merrill Lynch

Edelweiss Financial Services Ltd

Elara Capital (India) Private Limited

Emkay Global Financial Services Limited (Formerly Emkay Share And Stock Brokers

Limited)

Enam Securities Pvt Ltd (Formerly Enam Financial Consultants Pvt Ltd)

Equirus Capital (P) Ltd

Ernst & Young Merchant Banking Services Pvt. Ltd.(Formerly Ind Global Corporate

Finance Pvt Ltd)

Escorts Securities Ltd

Fedex Securities Ltd

282  

Fiduciary Euromax Capital Markets Pvt. Lt.D (Formerly Known As Fiduciary Shares

And Stocks Pvt. Lt.D

First Global Finance Pvt Ltd

First Overseas Capital Ltd (Lloyds Capital Management Ltd)

Firstcall India Equity Advisors Pvt. Ltd.

Firstrand Bank Ltd.

Fortress Capital Management Services Pvt Ltd

Fortune Financial Services (India) Ltd

Global Trustcapital Finance Pvt. Ltd.

Goldman Sachs(India) Securities Pvt. Ltd.

Gsfs Capital & Securities Ltd

Guiness Merchant Bankers Pvt. Ltd.

Hdfc Bank Ltd

Hem Securities Ltd.(Formerly Hem Financial Services Ltd)

Hongkong And Shanghai Banking Corporatio

Hsbc Securities And Capital Markets (India) Pvt Ltd

Hdfc Bank Ltd

Hem Securities Ltd.(Formerly Hem Financial Services Ltd)

Hongkong And Shanghai Banking Corporatio

Hsbc Securities And Capital Markets (India) Pvt Ltd

Icici Bank Ltd

Icici Securities Ltd

Icici Securities Primary Dealership Limited

Idbi Bank Ltd.(Formerly Industrial Development Bank Of India)

Idbi Capital Market Services Ltd

Idfc Capital Limited (Formely Known As Idfc-Sski Ltd.)

Idfc Limited

Ifci Financial Services Ltd

Il&Fs Capital Advisors Ltd.

Imperial Corporate Finance & Services Pvt Ltd

Indbank Merchant Banking Services Ltd

India Capital Markets Private Limited

India Infoline Ltd.(Formerly India Infoline Securities Pvt Ltd)

283  

Indiabulls Securities Limited (Formerly Orbis Sec Ltd And Gpf Securities Pvt Ltd)

Indian Overseas Bank

Ing Vysya Bank Ltd. (Erstwhile The Vysya Bank Ltd.)

Integrated Enterprises (India) Ltd (Integrated Advisory Serv

Intensive Fiscal Services Pvt Ltd

Inter Corporate Financiers & Consultants Ltd.

Inventure Merchant Banker Services Pvt. Ltd.

Investec Capital Services (I) Pvt. Ltd.

Jefferies India Private Limited

Karn Merchant Bankers Ltd.

Karur Vysya Bank Ltd, The

Karvy Investor Services Ltd

Keynote Corporate Services Ltd

Khambatta Securities Limited

Kifs Securities Ltd (Formely Known As Kifs Securities Pvt. Ltd)

Kim Eng Securities India Pvt. Ltd.

Kjmc Corporate Advisors (India) Ltd (Formerly Known As Kjmc Global Markets (I)

Ltd.)

Kkr Capital Markets India Pvt. Ltd.

Kotak Mahindra Capital Company Ltd

Ladderup Corporate Advisory Pvt. Ltd.

Lazard India Private Ltd ( Lazard Credit Capital Ltd.)

Lkp Securities Ltd (Formerly Lkp Shares And Securities Ltd)

Lodha Capital Markets Ltd

Lsi Financial Services Pvt. Ltd.

Macquarie India Advisory Services Pvt Ltd

Mape Advisory Group Pvt Ltd

Master Capital Services Ltd

Mata Securities India Private Ltd

Mefcom Capital Markets Ltd

Meghraj Capital Advisors Pvt. Ltd. (Formerly Meghraj Sp Corporate Finance Pvt. Ltd.)

Mehta Integrated Finance Ltd

Microsec Capital Ltd(Formerly Microsec India Ltd)

284  

Morgan Stanley India Company Pvt Ltd

Mpa Financial Services Limited

Munoth Financial Services Ltd

Networth Stock Broking Ltd.

Nexgen Financial Solutions Pvt. Ltd.

Nirbhay Capital Services Pvt Ltd

Nomura Financial Advisory And Securities (India) Pvt. Ltd.

O3 Capital Global Advisory Pvt. Ltd.(Formerly Ozone Capital Advisory Pvt. Ltd.)

Onelife Capital Advisors Pvt. Ltd.

Oriental Bank Of Commerce

Peerless Securities Ltd.

Pioneer Investcorp Ltd.

Pioneer Money Management Limited

Pl Capital Markets Pvt Ltd

Pnb Investment Services Ltd.

Pnr Securities Ltd

Prime Securities Ltd

Pug Securities Pvt. Ltd.

Puneet Advisory Services Pvt Ltd

Punjab National Bank

Quant Investment Services Pvt. Ltd.

Quintessence Enterpriese Pvt. Ltd.

R R Investors Capital Services Pvt. Ltd.(Formerly R R Financial Consultants Ltd)

Rabo India Securities Private Limited

Rbs Equities (India) Ltd.

Rbsa Capital Advisors Llp

Real Growth Securities Pvt. Ltd.

Reliance Investment Banking Services Ltd.(Formerly Reliance Securities Limited)

Religare Capital Markets Limited

Rothschild (India) Private Ltd, Formerly Rothschild (India) Private Ltd, Formerly N M

Rothschild And Sons (India) Pvt Ltd

Saffron Capital Advisors Pvt Ltd

Sal Securities Pvt. Ltd.

285  

Sbi Capital Markets Ltd

Scsi Ventures Advisors Pvt. Ltd.

Sicom Ltd

Smc Capitals Limited

Smifs Capital Markets Ltd

Sobhagya Capital Options Ltd.

Spa Capital Advisors Limited

Spark Capital Advisors (India) Pvt Ltd

Srei Capital Markets Ltd

Standard Chartered Securities (India) Ltd. (Formerly Known As Standard Chartered-

Stci Capital Markets Limited)

State Bank Of Bikaner And Jaipur

State Bank Of Hyderabad

Stellant Capital Advisory Services Pvt. Ltd.

Sumedha Fiscal Services Ltd

Syndicate Bank

Tamilnad Mercantile Bank Ltd

Tarragon Capital Advisors (India) Pvt. Ltd.

Tata Securities Limited (Formerly Tata Capital Markets Limited)

Taurus Corporate Advisory Services Ltd.

The Catholic Syrian Bank Ltd

The Dhanlakshmi Bank Limited

The Federal Bank Ltd

Tipsons Consultancy Services Pvt. Ltd.

Trust Investment Advisors Pvt Ltd

Ubs Securities India Pvt. Ltd.

Uljk Securities Pvt. Ltd.

Unicon Capital Services Pvt. Ltd.

Union Bank Of India

United Bank Of India

V.B. Desai Financial Services Ltd

Value Line Advisors Pvt Ltd.(Formerly S B & T Finance Private Ltd)

Vc Corporate Advisors Pvt. Ltd. (Formerly Eccentric Capital Pvt Ltd.)

286  

Vertex Securities Ltd ( Formely Known As Transwarranty Capital Pvt Ltd)

Vijaya Bank

Violet Arch Capital Advisors Private Limited

Vivro Financial Services Pvt Ltd

Vls Securities Limited

Yes Bank Ltd.

287  

Appendix 8

List of Portfolio Managers

A. K. Wealth Management Private Limited

ABN Amro Bank N.V.

Accuracap Consultancy Services Private Limited

Acumen Capital Market (India) Limited

ADA Sustainable Investment Services Private Limited

Aditya Birla Money Limited

Alankit Assignments Ltd.

Alchemy Capital Management Private Ltd

Alfaccurate Advisors Pvt. Ltd.

Allegro Capital Advisors Pvt Ltd

Almondz Global Securities Limited

Ambit Capital Private Ltd

AMJ Stock Brokers Private Limited

Anand Rathi Financial Services Ltd.

Angel Broking Ltd.

Antique Stock Broking Limited

Anvil Wealth Management Pvt Ltd

Aries Stocktrades Pvt. Ltd.

Ashika Stock Broking Limited

Ashwani Gujral Investment & Portfolio Management Pvt. Ltd.

Asit C Mehta Investment Interrmediates Ltd.

Ask Investment Managers Private Limited

Aten Portfolio Managers Private Limited

Atlas Integrated Finance Ltd

Aum Capital Market Private Limited

Auroch Investment Managers Private Limited

Avant Garde Wealth Management Pvt. Ltd.

Avendus Capital Private Limited

Avendus Pe Investment Advisors Private Limited

Axis Asset Management Company Limited

288  

Axis Bank Ltd (Uti Bank Ltd.)

Axis Equities Pvt. Ltd.

Banhem Securities Pvt. Ltd.

Banyan Capital Advisors Private Limited

Banyan Tree Advisors Private Limited

Barclays Bank Plc

Barclays Securities (India) Private Limited

Bay Capital Investment Managers Private Limited

Bellwether Capital Private Limited

Benchmark Asset Management Company Private Limited

Birla Sun Life Asset Management Company Limited

Bma Wealth Creators Ltd

Bnp Paribas Asset Management India Private Limited

Bnp Paribas Investment Services India Pvt Ltd

Boi Axa Investment Managers Private Limited

Bonanza Portfolio Limited

Brics Securities Limited

Calibre Financial Services Ltd

Canara Robeco Asset Management Company Limited

Capstocks And Securities (India) Private

Care Portfolio Managers Private Limited

Cd Research (P) Ltd

Centrum Broking Limited

Centrum Broking Private Ltd

Cholamandalam Securities Limited

Chona Financial Services Private Ltd.

Concept Securities Private Limited

Consortium Securities Pvt. Ltd.

Convexity Solutions And Advisors Private Limited

Credit Suisse Securities (India) Private Limited ("Cs India")

Daiwa Asset Management (India) Private Limited

Dalal & Broacha Stock Broking Pvt. Ltd.

Dalmia Securities Pvt Ltd

289  

Derivium Tradition Securities (India) Pvt. Ltd.

Destimoney India Services Private Limited

Deutche Asset Management India Private Limited

Deutsche Bank Ag

Deutsche Investments India Private Limited

Dhfl Venture Capital India Private Limited

Doha Brokerage And Financial Services Ltd

Dsp Blackrock Investment Managers Private Limited

Dsp Merrill Lynch Limited

Dutt Capital Advisors Private Limited

Dynamic Equities Private Limited

Edelweiss Asset Management Limited

Edelweiss Global Wealth Management Limited

Elite Wealth Advisors Limited

Enam Asset Management Co.Pvt.Ltd

Envision Capital Services Pvt.Ltd.

Equirus Securities Private Limited

Equity Intelligence India Pvt. Ltd.

Escorts Securities Limited

Estee Advisors Pvt Ltd.

Eureka Portfolio Management Services Pvt. Ltd.

Exclusive Securities Limited

Geojit Bnp Paribas Financial Services Limited

Gepl Capital Private Limited

Ghalla Bhansali Stock Brokers Private Limited

Globe Capital Market Ltd.

Goldmine Stocks Pvt. Ltd.

Harmoney Wealth Advisory Services India Pvt Ltd

Hdfc Asset Management Company Ltd

Hdfc Bank Ltd.

Hedge Equities Ltd

Hornic Investments Private Limited

Hsbc Asset Management (India) Pvt. Ltd.

290  

Icici Prudential Asset Management Company Ltd.

Icici Securities Limited

Icici Securities Primary Dealership Ltd.

Idbi Capital Market Services Ltd

Idfc Investment Advisors Ltd.

Iifl Wealth Management Limited

Il&Fs Portfolio Management Services Limited.

Il&Fs Investment Managers Limited

Impetus Wealth Managment Pvt Ltd

India Capital Markets Pvt. Ltd.

India Infoline Ltd

Indiabulls Securities Ltd.

Indianivesh Securities Private Limited

Indiareit Fund Advisors Private Limited

Indsec Securities And Finance Ltd.

Ing Investment Management (India) Pvt Lt

Ing Vysya Bank Limited

Inventure Growth & Securities Limited

J.J. Bhabhera Share Brokers Pvt. Ltd.

Janak Merchant Securities Pvt Ltd

Jasper Financial Services Private Limited

Jeetay Investments Pvt Ltd

Jm Financial Asset Management Pvt. Ltd.

Jm Financial Services Pvt Ltd

Karma Capital Advisors Pvt. Ltd.

Karvy Stock Broking Ltd.

Kb Capital Markets Pvt. Ltd.

Keynote Capitals Limited

Khandwala Securities Ltd

Kifs Securities Pvt. Ltd.

Kisan Ratilal Choksey Shares And Securities Pvt. Ltd.

Kkr India Financial Services Private Limited

Kotak Mahindra Asset Management Company Ltd

291  

Kotak Mahindra Bank Limited

Kotak Securities Ltd

Kumar Share Brokers Limited

Kunvarji Finstock Pvt. Ltd

L&T Capital Company Ltd

L&T Investment Management Limited

Laburnum Capital Advisors Private Limited

Lic Nomura Mutual Fund Asset Management Company Ltd

M/S Jhp Securities Private Limited

Majortrend Capital Pvt Ltd

Mangal Keshav Securities Limited

Marwadi Shares & Finance Ltd.

Master Portfolio Services Ltd

Mf Global Sify Securities India Private Ltd

Microsec Capital Limited

Milestone Capital Advisors Private Limited

Millennium Finance Ltd.

Miv Investment Services Pvt. Ltd.

Moneybee Securities Private Limited

Morgan Stanley India Financial Services Private Limited

Motilal Oswal Asset Management Company Limited

Multi Act-Equity Consultantancy Pvt Ltd

Munoth Financial Services Ltd

Narnolia Securities Ltd.

Neminath Portfolio Management Services Private Limited

New Horizon Wealth Management Private Limited

Nine Rivers Capital Holdings Private Limited

Nirmal Bang Securities Private Limited

Nj Advisory Services Private Limited

Novastar Fund Advisors Private Limited

Ohm Portfolio Equi Research Pvt Ltd.

Onelife Capital Advisors Pvt Ltd.

Oxus Investments Pvt Ltd

292  

P N Vijay Financial Services Pvt Ltd

P.C.S Securities Limited

Pace Stock Broking Services Pvt Ltd

Parag Parikh Financial Advisory Services

Paterson Securities Limited

Peerless Securities Limited

Pioneer Wealth Management Services Limited

Pnb Gilts Ltd.

Prabhudas Lilladher Pvt. Ltd.

Pramerica Asset Managers Private Limited

Prime Broking Company (India) Ltd.

Primus Investment Advisors Private Limited

Principal Pnb Asset Management Co Pvt Ltd

Quant Capital Advisors Private Limited

Quantum Advisors Pvt.Ltd.

Quantum Securities Pvt Ltd

Quest Investment Advisors Pvt. Ltd.

R. Wadiwala Securities Private Limited

Ratnabali Capital Markets Limited

Reliance Capital Asset Management Ltd

Reliance Wealth Management Limited

Religare Asset Management Company Ltd.

Revelation Portfolio Management Pvt. Ltd.

Rgam Corporation Pvt Ltd

Right Horizons Portfolio Management Private Limited

Sai Soft Securities Ltd

Satco Securities & Financial Services Ltd.

Sbi Funds Management Pvt Ltd

Sbicap Securities Limited

Securities Investment Management Private Limited

Shah Investor'S Home Ltd

Sharekhan Limited

Shcil Services Ltd

293  

Shriram Insight Share Brokers Limited

Shroff Securities Private Limited

Ski Capital Services Ltd.

Sks Capital & Research Pvt. Ltd.

Soldiers Field Investments Private Limited

Somayajulu & Co Ltd

Span Caplease Pvt. Ltd.

Spfl Securities Ltd.

Sskm Corporate Advisory Pvt. Ltd.

Standard Chartered - Stci Capital Markets Limited

Standard Chartered Bank

State Bank Of India

Stci Primary Dealer Limited

Sugal & Damani Share Brokers Ltd.

Sumedha Fiscal Services Limited

Sundaram Asset Management Company Ltd.

Sunidhi Securities & Finance Limited

Surefin Financial Consultants Pvt. Ltd

Suresh Rathi Securities Private Limited

Sushil Finance Consultants Ltd.

Sykes & Ray Equities (I) Ltd.

Systematix Shares And Stocks (India) Limited

Tata Asset Management Limited

Tata Capital Ltd.

Tata Securities Ltd.

Taurus Asset Management Co. Ltd.

Tcg Advisory Services Private Limited

The Hongkong And Shanghai Banking Corpor

Trustline Holding Pvt. Ltd.

Trustline Securities Limited

Twin Earth Securities Private Limited

Unicon Securities Private Limited

Unifi Capital Private Limited

294  

Uti Asset Management Company Pvt Ltd

Value Prolific Investments & Consulting Private Limited

Valuequest Investment Advisors Pvt. Ltd.

Ventura Securities Limited

Vls Securities Limited

Way2Wealth Brokers Private Ltd.

Wealth Advisors (India) Private Limited

Wealth Management Advisory Services Ltd.

Wealth Managers (India) Private Limited

Wegmans Financial Services Ltd.

White Stone Financial Advisors Private Limited

Yes Bank Ltd.

Zen Wealth Management Services Limited

 

295  

Appendix 9 List of Derivative Members at BSE TM 278 ABN Amro Asia Equities (India) Ltd. Dara Kapadia Sanjay Dameja 2854363, Ext. 366/343 2027770 83/84, 8th Floor, Sakhar Bhawan, Behind Oberoi, Nariman Point, Mumbai TCM 754 Ajaya S.Jain Ajaya Jain Mr.Ajaya Jain 2677205/212 2677202 311, Gundecha Chambers, Nagindas Master Road, Fort, Mumbai-23 TCM 150 Alchemy Share & Stockbrokers Pvt.Ltd. Aswin Kedia/ Lashit Sanghvi:,Madhukar Pai: Mr. Madhukar Pai 2033565 2033575 Navsari Building, 4th floor, 240, D.N. Road, Fort, Mumbai-1 TM643 Alliance Finstock Ltd. Sandeep Bhatia Sandeep Bhatia 2672588, 26237466, 2657452/67 2623310/ 2671034 Currimjee Bldg.,3rd Flr.,111, M.G. Road, Fort, Mumbai-23 TM 91 Alpic Securities Ltd. Vipul Dalal/ Vijay Paranjpe: Praveen Darji 2317831 to 5 2317839 63, New Excelsior Talkies Building, 6th Floor, Wallace Street, Fort, Mumbai-1 TM 29 Amit Nalin Securities Pvt.Ltd. Amit Dalal/ Nalin Dalal: Amitt Dlal 2650661/ 2656922 2653200 20, Rajabahadur Mansion, 3rd Floor Hamam Street, Fort Mumbai TCM 25 Amu Shares & Securities Ltd. Ashok Chheda/ Arvind Shah: Yatin Satra 2653410/ 2656989, 2679221 2655299 4,Crescent Chambers,Gd. Floor, Homi Modi Cross Street No. 2, Fort, Mumbai-23 TCM 30 Anand Rathi Financial Services Ltd. Sunil Sarda/Amit Rathi S.S. kakani 2690333-35 2610033/34 109, Podar Chambers, S.A. Brelvi Road, Fort, Mumbai TCM 28 Angel Securities Ltd. Nilkanth Nagarkar, Lalit T Thakker Sanjeev Dhami, Deepak Mahirishi 6555560/70 6555558 Harikesh, Gr.Floor, Corner of Waterfield, 30th Road, Bandra(W), Mumbai-50 TCM 32 Anvil Share & Stock Broking Pvt.Ltd. Anuj Seth Himanshu Gandhi Himanshu Gandhi 2650150/ 2650154 2658423 19, Bank Street Cross lane, Fort, Mumbai 23 TM 771 Apex Stock Brokers Pvt.Ltd. Munish P.Doshi,Pravin A.Mehta Ruchir 2657318/ 2657316 2335081 719,7th floor, P.J.Towers, Dalal Street, Mumbai TM 18 Ashok C.Samani Ashok Samani Ashok Samani 2653689 2655461 1207B, 12th Floor, P J Towers,Dalal Street,Mumbai-1 TCM 3 Asit C.Mehta Investment Interrmediates Ltd. Deena Mehta T.S.Natrajan 2831230/ 2851155/ 2700115/6/7 2700118 67, Podar Chambers, 3rd floor, S.A. Brelvi Road, Fort , Mumbai-1 TCM 74 Babubhai Purshottamdas Stock Brokers Pvt.Ltd. Ashok Thakkar: Mr. Rajeev Menon, Nilesh Dhanani 2700601-603 2700601 (telefax) First Floor, Kama Building, Dalal Street TCM 721 Bajaj Share & Stock Brokers Pvt.Ltd. Rajkamal Bajaj Mr.Anil Desai 2656290/# 2655889/ 6290 2653599 24B, Raja Bahadur Compound, 1st Floor, Hammam Street, Fort, Mumbai-23 TCM 164 Bakliwal Financial Services (India) Pvt.Ltd. Rahul Bakliwal/ Vijay Pahade: Atul Manot 2619533/2700153/2700228, 2619533 108, 1st Floor, Commerce House, Nagin Das Master Road, Fort,Mumbai. TM 56 Bang Equity Broking Pvt.Ltd. Kishore Bang / Ajay Karia Rakesh Bhandari 2624415/16/18 2650109 38 B, Khatau Building, 2nd Floor, Alkesh Dinesh Modi Marg, Fort, Mumbai-23 TCM 736 Batlivala & Karani Securities India Pvt.Ltd. Thanmal Dugar: Mr.Mukarram 2672182/ 2674990/48 2691829 III rd Flr,Union Bank Bldg,Fort, Mumbai-01 TM 58 Bhagirat Merchant Stock Broking Pvt.Ltd. B.Subodh: Jatin Shah 2621618/2621526/2661220 2621526 24B,Rajabahadur Compound, 3rd Floor, Hamam Street, Fort, Mumbai-23 TCM 381 Bhagwandas Gordhandas Financial Pvt.Ltd. Kirit Shah Kirit 2657373/2656363/2651817 FAX:2654913 4th floor,Cama Bldg.,Dalal Street, Fort, Mumbai 400 023. TM 51 BHH Securities Pvt.Ltd. Sharad Harlalka Uday Shetty 2655729/2658650, 2693512 2650259 634, Rotunda Building, B.S. Marg, Fort, Mumbai-1. TCM 191 BLB Ltd. C.R. Bagri/ BR Bagri B.R. Bagri/ Shailendra Singh 2654418/22 011-3274343,3272728 011-3285758 4318/3, Ansari Road, Dariya Ganj, New Delhi/ 13, Rajabahadur Mansion, 32, Ambalal Doshi Marg, Mumbai-1 TM 71 BNR Capital Services Pvt.Ltd. B.N.Rathi/ P.N. Rathi: Srivallabh Vyas 2670029, 2675155 2618723 303,Veena Chambers, 21, Dlal Street,

296  

Fort, Mumbai TM 576 BRICS Securities Ltd. Ketan Shah: Navneet Munot 2816361, 281449, 2883595 2834404, 2026723 807/808, Raheja Centre, Free Press Journal Marg, Nariman Point, Mumbai-21 TCM 49 Brijmohan Sagarmal Capital Services Pvt.Ltd. Brijmohan Sagarmal Vinod K. Agarwal 2650329, 2657670 2657663 412, Stock Exchange Tower,Fort, Mumbai TCM 798 Centrum Broking Pvt.Ltd. Pashupati Advani / Sangita Advani Mr Navin 2671533 ext:113 2624369 52,Bhupen Chambers, 9, Dalal Street, Fort, Mumbai TCM 81 Century Consultants Ltd. Anand Krishnan Johri, Mudit Lal -- 2631701/702, 2631703/704 -- 22, Mumbai Mutual Chambers, 19/21 A.Doshi Marg, Fort, Mumbai-23 TM 209 Churiwala Securities Pvt.Ltd. Gaurishanker B Churiwala Alok C Churiwala Pooja A Churiwala Alok C Churiwala 2670035, 2671713 2674614 304/305 COMMERCE HOUSE, N.M.Rorad, Fort,Mumbai. TM 369 Classic Share & Stock Broking Services Ltd. Kartik K Parikh, Kaushik Shah 2652360, 2650963 2652348 P M 1, Mezzanine Floor, Rotunda Building, B S Marg, Mumbai TCM 152 CLSA India Ltd. H Nemkumar, Shivram Ranganath Shivram Ranganath Sandeep Bhat, Rajendra Mehta, Shivram Ranganath 2841348 2845551 8 /F Dalamal House, Nariman Point, Mumbai 400 021 TM 497 Credit Suisse First Boston (India) Securities Ltd. Abhijit Phadnis, K R Bharat Abhijit Phadnis, G Mohan, Ravi Kandpal, Jayashree Ramaswamy 230 6203, 230 6240, 230 6206, 230 6205 285 1949 284 6262 285 1949 285 1949 35/39, Free Press House, 215, Free Press Journal Marg, Nariman Point, Mumbai-21. TCM 162 Dalal & Broacha Stock Broking Pvt.Ltd. Priyakant Dalal / Nailesh Dalal Mr. Krunal Damania 2876173/2822992/2851333 2870092 506-507, Maker Chamber No. V, Nariman Point, Mumbai-21. TCM 530 Dalmia Securities Pvt.Ltd. Narain Prasad Dalmia: Anil Bhav Singha 2624370/75, 2670010 522, P.J Towers, Dalal Street, Mumbai-23 TM 161 Darashaw & Co.Pvt.Ltd. K. Mehta: Mrs. Mehta, Navnit Aggarwal 2655119/2654249, 2704233, 2704232 2632709 808, The stock Exchange Towers, B.S. Marg, Fort, Mumbai TM 712 Dhanki Securities Pvt.Ltd. Amar Dhanki: Mr.Jatin 2835052/ 2652562/ 2656925 2826176 R-401,Rotunda Bldg, B S Marg, Mumbai-400001 TCM 350 Dharamshi Broking Pvt.Ltd. Kalpraj D.DharamshiI Raichand H. Dharamshi Hina K Dharamshi Atul R Thakker Hinesh B.Lodaya 4155312 4155316 4155323 4147026 4147062 4147011, 4602289 2B,Grease House, Zakaria Bunder Road, Sewree(W), Mumbai: 400015. TCM 6 Dimensional Securities Pvt.Ltd. Ajit Surana Tapas Shah 2663420/2662611 2665645 7A, 3rd Floor, Mustafa Building, Sir. P.M. Road, Fort, Mumbai TM 132 Dipan Mehta Share & Stock Brokers Pvt.Ltd. Dipan Mehta Dipan Mehta 674277/ 2662448 2655292 Engineers Prmises, 1st Floor, 93/95, B.S. Marg, Mumbai-23. TCM 173 Dolat Capital Market Pvt.Ltd. Pankaj D Shah, Harendra .D. Shah, Rajendra D Shah Pankaj D Shah 6390334-40 6395414 A/19, Bhagwati House Veera Desai Road Andheri (W) Mumbai-400059 TCM 130 DSP Merrill Lynch Ltd. Jayesh Ghiya Jayesh Ghiya 2328000, 2328484/54/70/69 2048518 Maftlal Centre, 10th Flr., Nariman Point, Mumbai-21 TCM 185 Emkay Global Financial Services Ltd. Prakash Kacholia Krishna Kumar Kalwa Prakash Kacholia 4606693 to 96 4904597 Cwing 4th Floor, Phoenix Centre, Senapati Bapat Marg, Lower Parel, Mumbai TCM 509 Enam Securities Pvt.Ltd. ManekBhansali/ Nimish Shah:, Rajiv Vikas Mopara # 2656082/ 2655532/35 26662012A & 2B Hari Chambers, 58, Shahid Bhagat Singh Road, Mumbai-23 TM 775 Evergreen Broking Pvt.Ltd. Vikas Mittal: Mr.Amit Sharma 8493425/26 2620638/ 2700390 8402669 40,Yashoda Filmcity Road, Goregaon (E), Mumbai-63 TCM 192 Express Securities Pvt.Ltd. Vinod Bansal: Vinod Bansal 2814980 2043239 127, Maker ChambersIII, 12th Floor, Nariman Point, Mumbai-21 TCM 725 Falcon Brokerage Pvt.Ltd. Sanil Doshi / Nitish Vakharia (Rishu Shah) Mr Manish Natwani #2692857/58 2692860 Ballard House, 2nd Floor, Adi Vardhman Road, Ballard Estate, Mumbai TCM 129 First Global Stockbroking Pvt.Ltd. Mr. Hiren Shah Shankar Sharma & Devina Mehra Shankar Sharma 2652661 2652702 No.2,Crescent Chambers,4th Flr.,Tamarind Lane,Fort, Mumbai-1 TCM

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144 Gandhi Securities & Investment Pvt.Ltd. Dhanesh Gandhi/ Rajesh Kansara/ Kjetan D. Gandhi Rajesh Kansara/ Ketan Gandhi #2650923/2653177 2650933 66, Tamarind Lane, Fort, Mumbai-1 TCM 328 Geojit Financial Services Ltd. Mr. A P Kurian Mr. C J George Lt Col A V Viswanadhan Mr. Punnoose George Mr. K V Shamsudheen Mr. B Chandrasekharan Dr. Susan Thomas Mrs. Shiny George Mr Satish Menon Mr Joseph M M Mr. Suprabhat Lala ( Cochin), Satish Menon (Mumbai) 0494 -371675, 022-6239200 6239300 0494 - 370921, 022 - 6237214 Geojit Securities Ltd 40/7997 Veekshanam Road Cochin - 682 035, "Saooli", Ist Floor 29, J P Road, Andheri (W) Mumbai - 400 053 TM 724 Gupta Equities Pvt.Ltd. Vivek Gupta: Gulamally Hussain 2655865/2692848 2043452 922-C, 9th Floor, P J Towers, Dalal Street Mumbai TM 270 H.T.Nanavati Securities Pvt.Ltd. Bina Nanavati, Niranjan Nanavati Prashant Jhaveri 2650449/ 7087 2652885 104, Vikas, 1st Floor, 11, Justice Vaidya Marg, Mumbai-1 TM 271 Harish Chandra Gutt & Co.Pvt.Ltd. Avinash B.Bhiday, Gopalswamy Bhaskar Avinash Bhiday 2661331/2662790 2662327 Bank of Maharashtra Bldg, 45/47, B.S. Marg, Fort, Mumbai - 400 023 TM 393 HDFC Securities Ltd. Girish J. Bhagat, Mohan Natrajan SNaren 4611700 4965066 Trade World "C" wing, 1stFlr. Kamala Mill Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400013. TM 248 Hem Securities Ltd. Dhiraj Jain /Abhay Kothari Bhavesh Anand Para 2619046/ 2666156 2625991 14-15, Khatau Bldg., 40, Bank Street, Fort, Mumbai CU 813 ICICI Limited Pankaj Bose -- 4906868/4906883/4/4924100 2882313 Custodial Services Dept., Zenith House, Keshavrao Khade Marg,Mahalaxmi,Mumbai - 34. TCM 103 ICICI Brokerage Services Ltd. Meher Baburaj/ Sharadkumar Bhatia: Sameer Kazi, Praveen Kumar 2886460/6470 2882313 41/44, Minoo Desai Marg, Colaba, Mumbai -5 TCM 84 IDBI Capital Markets Services Ltd. VP Singh: Gopikrishna Shenoy: Gopikrishna Shenoy 2160180/1/2,2154487,9820192618 2154256 Corporate Office, IDBI Tower, 13th Floor, WTC Complex, Cuffe Parade, Mumbai-05 TCM 623 IDFC-SSKI Securities Ltd. Shankar Valiya Shripal Makharia Hirendra Doshi 4982000 4982626 A206.Phoenix House, 2nd Floor, Senapati Bapat Marg, Lower Parel, Mumbai-13 TM 138 Ikab Securities & Investment Ltd. Anil Bagri/ Amit Bagri: Amit Bagri 2651348, 2310571, 2310578 2655195, 2310572 2nd Floor, Rajabahadur Compund, Bldg. No. 5, 43, Tamarind Lane, Fort, Mumbai-23 TM 766 IKM Investor Services Ltd. Rahul Malik/ Pramod Jain Dinesh Chandra Chaube 011-3272088/ 3272886, 022-2883627/32 022-2883627, 011-3269720, 011-3286908 156,Great Western Bldg.,Nagindas Master Road, Fort, Mumbai-23 or Jamna Bhawan, A-14/3, Asaf Ali Road, New Delhi-2 TM 125 IL&FS Investsmart Securities Ltd. Hemang H. Raja, Vimal R Bhandari Hemang 6533047, 6533333, 6533232 6533334 6533075 IL & FS Financial Centre,8 Flr, Plot C 22, G Block,Bandra Kurla Complex, Bandra East, Mumbai - 400051 PCM 807 Infrastructure Leasing & Financial Services Ltd. Ms. Chitra Bhaskar Mr. Sekhar Jain, Mr. Girish Palshikar 857 0982 857 0983 Plot No. 14, Raheja Vihar, Chandivali, Andheri (E), Mumbai-72 TM 275 Inventure Growth & Securities Ltd. Pravin Gala: J P Bohra 2674491/to 94 2705507 1012, P.J. Towers, Dalal Street, Mumbai-1 TM 202 J.G.A.Shah Share Brokers Pvt.Ltd. J.G.A. Shah/ Siddharth: Siddharth Shah 2657350/ 2651846 2656058 24B, Rajabahadur Compound, 3rd Floor, Hamam Street, Fort, Mumbai-23 TM 303 J.J.Bhabhera Share Brokers Pvt.Ltd. Jitendra J. Bhabhera Kalpesh Bhabhera 2671882/ 2676473 2677563 213, Veena Chambers, 21, Dalal Street, Fort, Mumbai-23 TCM 324 J.P.Morgan India Pvt.Ltd. Sarosh Irani Mr Khozu Arsiwalla Mr Rajendra Nair 2835841, 2826533 2826588 Amerchand Mansion, 16, Madame Cama Road, Mumbai-400 001 TM 165 Jacob Ballas Securities India Pvt.Ltd. Ravi Chand/ Rajesh Ajmera: Ravi P Cahnd 022- 2876374/77/78, 011- 4645502-04 022-2701941,011-4604083 C/o Ravi Raj Enterprises Pvt. Ltd., 1/7, Old Khatau Building, Cabin No 8, C-520, Defence Colony, New Delhi 24 TM 335 Jash Securities Pvt.Ltd. Prashant Kampani Richard Mascarenhas 2314118-21 2651327 22, Rajabahadur Mansion, 2nd Floor, B.S. Marg, Fort , Mumbai-1 TM 340 JCP Shares &

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Securities Pvt.Ltd. J C Parekh/ Dhirajlal: Mahesh Desai 2619055/ 8933, 2673580 2653253 22, Rajabahadur Mansion, 3rd Floor, B.S. Marg, Mumbai-1 TCM 295 JHP Securities Pvt.Ltd. Pankaj J.Patel, Jayantilal Patel Prashant Patel 6113364, 6113426, 6102336 8205689 21-28 Gokul Arcade, S. N. Road, Next To Garware House, Vileparle(E), Mumbai - 400057. 3-A, 1st Floor, 32/34, Churchgate House, Veer Nariman Road, Mumbai - 400 001. TM 400 JM Financial Institutional Securities Pvt.Ltd. SamirKoticha/ Rushabh Sheth Dheeraj Singhal, Amit Shah, Amar Rathi 4985670/2/3/4/5 4985666 Band Box House, Rear, 2nd Floor, 254/D, Dr. Sannie Besant Rd., Worli, Mumbai-25 TCM 89 Joindre Capital Services Ltd. Anil Mutha: Ashish 2690112-21, 2658661-5 2701062 32, Rajabahadur Mansion, Grd. Floor, B.S. Marg, Fort TM 353 K.Jayantilal Securities Pvt.Ltd. AprvaShah/ Kiran Shah: Apurva Shah 2650294/ 261199, 2632055 2656370 7/10 Botawala Bldg., Nr. Horniman Circle, 2nd Floor, Office No. 1, Fort Mumbai-23 TCM 352 K.M.Jain Stock Brokers Pvt.Ltd. Kalyan Mal Jain Madhulika Jain Anand Jain Anand Jain 233-4978, 270-2295 269-1631 814, P.J. Towers BSE, Dalal Street Mumbai - 400 023 India TCM 427 Kaji & Maulik Securities Pvt.Ltd. Himanshu Kaji / Nalin Kaji Deepak Jassani 2654350,51 2633016 501, P.J.Towers, Dalal Street, Fort, Mumbai-1 TCM 361 Kamal Kumar Jalan Securities Pvt.Ltd. KamalKumar Jalan Mukesh Jain 2657540/41/2317351 to 55 2678670 404, Rotunda Building, B.S. Marg, Fort, Mumbai TCM 391 Kantilal Chhaganlal Securities Pvt.Ltd. Jayesh Sheth: Amit Ajmera 2613700/ 2622400, 2654238,2677917-23 2651237 2 B, Fort Chambers, 2nd Floor, Hammam Street, Above Stock Exchange Post Office, Mumbai TM 354 Kantilal Mangaldas Sec. Pvt. Ltd. SushilParikh: Sushil Parikh: 2676500/ 282 2677447 100/104, DG Chambers, 2nd Flr, Nanik Motwani Marg, Mumbai-1 TM 343 Kaushik Shah Shares & Securities Pvt.Ltd. KaushikShah/ Saurvin Parekh: Saurin Parekh 2874860, 2844762 2824126 28, ITTS House, Sri Sai Baba Lane, Nr. Rythem House, Fort, Mumbai-23 TCM 120 Keynote Capitals Ltd. Suraj Saraogi, Nitin Kapadia Suraj Saraogi 22817689/90/2025230 2835467 608, Dalamal House, Nariman Point, Mumbai-21 TM 599 Khambatta Securities Ltd. Russi Khambatta / Nosir Khambatta Jatin 2664287/2659762 Fax 2654652 7/10,Horniman Circle,Botawalla Bldg.,Ground Floor, Fort, Mumbai - 400 001. TCM 385 Kisan Ratilal Choksey Shares & Securities Pvt.Ltd. Ramesh Choksey / Ashok Choksey Yuvraj/Bhavna 8304914, 8304923 8205311 17, Lumbini Palace, 4, V S Khandakar, Vile Parle(W), Mumbai-57 TCM 673 Kotak Securities Ltd. Manish Garg: Manish Garg 2308929/ 2027040/ 2826655 2826630 Bakhtawar, 1st Floor, 229, Nariman Point, Mumbai-21 TCM 405 Latin Manharlal Securities Pvt.Ltd. Latin Shah: Hitesh Shah 2618813/ 2614497 2620986 301B, Natwar Chambers, N.M. Road, Fort, Mumbai-1 TM 401 Libord Securities Ltd. YogeshKedia, Lalit Dangi , Nawal Agrawal Lalit Danga 2658108/09, 2679759 2659880 5/9,Beaumon Chambers, 2nd floor,Nagindas Master Road, Mumbai 400 023.& 104, M K Bhawan, 300, Shahid Bhagat Singh Road, Fort, Mumbai-1 TM 680 Libra Holdings Pvt.Ltd. Usha / Dushyant Sundaram: Mr. Murthy 2641870/72 FAX:2662520 5/9,Beaumon Chambers, 2nd floor, Nagindas Master Road, Mumbai 400 023. TM 408 LKP Securities Ltd. Contact: Mr. Janak Mehta JanakMehta 2659374/ 2663963 2694480/2624490 4th Floor, Bank of Maharashtra Bldg., 45/47, B.S. Marg, Mumbai-23 TCM 201 Maheshwari Equity Brokers Pvt.Ltd. G.S. Damani Nirmal Roongta 2853815, 2042514 2812252 601, Dalamal House, Nariman Point TCM 632 Maliram Makharia Finstock Pvt.Ltd. Ashish Makhria/Narayanan Bihani Vijay Kedia # 2093429/2093428 2013304 215, Rewa Chambers,31, New Marine Lines, Mumbai-20 TCM 499 Malti Securities Pvt.Ltd. Sushil Choksi / Bakul Bhagat Mr. Manoj B. Shah / Vishal Vayeda 2610727, 2611268, 2653088/90 2700678 405, Rotunda Building TM 697 Manashvi Securities Ltd. Vidyut Shah: Mr.Ashish 2823053/ 2852866/ 2832802 2854431 106,22 Back House, Mh chamber of Comm, Mumbai-01 TCM 491 Mangal Keshav Securities Ltd. Navneetlal Bhagat / Paresh Bhagat Mayank Bhagat #2654141 2651133 35, Ambalal Doshi Marg, opp. Hamam House, Fort, Mumbai TM

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413 Manjeetsingh H.Gandhi Mahesh Doshi Harsh Mahajan 2692841/42 2692840 18/19, Khatau Building, 8-10, Marine street, Fort, Mumbai TM 421 Manoj Javeri Stock Broking Pvt.Ltd. Manoj M.Javeri,Alok A.Jain Nimesh 2675557/ 5641 1117, 11th Floor, P.J. Towers,Dalal Street, Fort, Mumbai - 400 023 TM 779 Mansukh Stock Brokers Ltd. Vivek Aggarwal, Sanjay Gupta, Vivek Aggarwal # 0118-4513325/90, 9820162470 011-3739851 Office No. 5, 4th Floor, Fountain Chambers, 1-C, Nanabhai Lane, Fort, Mumbai-23 & House No 25 Sector 15A, Noida-201301 TCM 495 Manubhai Mangaldas Securities Pvt.Ltd. Pranav / Kayur Bhagat: Keyur Bhagat 6358535, 6358648-51 6345834 4th Floor, Heritage Plaza, Opp.Indian Oil Nagar, J. P. Road, Andheri (W), Mumbai-53 TCM 122 Mehta Equities Ltd. Rakesh Mehta & Mr. Jugal Maheshwari Suraj Saraogi 22817689/90/2025230 2835467 608,Dalamal House,Nariman Point,Mumbai-21 TM 486 Merwanjee Securities Ltd. Sandeep, Rajesh Pillai Sandeep Todi 2652551, 2826598/99, 2826488 2846070 305, Regent Chambers, Jamnalal Bajaj Marg, Nariman Point, Mumbai-21 TM 460 Milan Mahendra Securities Pvt.Ltd. Milan M. Shah/ Parag Shah: Hitesh Shah 2618813,2624498, 2624223 2676747 59, Bhupen Chambers, 4th Floor, 9 Dalal Street,Fort, Mumbai-1 TM 140 Millennium Equities (I) Pvt.Ltd. Kunal Dalal, Surendra Menon Savita Goel, Mr. Suresh Jaju 2659496 2659497 7/10, Botawala Building, 1st Floor, Nr.Horniman Circle, Mumbai-23 TM 423 MLR Securities Pvt.Ltd. Ml Damani, Suchita Damani, Ketan Mundra: Narottam Shah 2671487/ 2651370 2650423 4th Floor, Surya Mahal Building, Burjorjee Barucha Marg, Fort, Mumbai TCM 446 Motilal Oswal Securities Ltd. Motilal Oswal /Panda: Jeetendra Panda 2812500 2816161 81/81, Bajaj Bhawan Nariman Point, Mumbai TM 412 MSS Securities Pvt.Ltd. Ajit Sanghvi Ajit Sanghvi & Dhawal Khokhani 2655118, 2653268 2650397 22, Raja Bahadur Bldg., 2nd Floor, Above George Restaurant, M.S. Marg Fort, Mumbai TCM 450 Mukesh Babu Securities Ltd. Mukesh Babu, Meena Mukesh Dinesh Chandrani & Ami Gandhi 2834462, 2040533 2025167 111, Maker Chambers III, 223, Nariman Point, Mumbai-21 TM 669 Nangalia Stock Broking Pvt.Ltd. Girdhari Nangalia ,Umakant Nangalia Jeetu 2654423/2651493 2651493 5th floor, West Wing, P.J.Towers, Dalal Street, TM 536 Natverlal & Sons Stock Brokers Pvt.Ltd. DilipDalal: Dilip Dalal 2658737/38 2658739 Fairy Manor, 5th Floor, 13, Rustom Sidhwa Marg, Fort, Mumbai-1 TM 791 Niche Brokerage Pvt.Ltd. Yogesh Shah: Mr.Sanjay Patil 2095380/81, 2076231-33 2003994 3/E2, Court Chambers, 35, New Marine Lines, Mumbai-20 TCM 688 Nikko Stock Br. Pvt. Ltd. V.J. Chowdhary: Arvind 2656770/ 2656771 2653277 Room No. 410, Rotunda Builiding, Fort, Mumbai TCM 498 Nirmal Bang Securities Pvt.Ltd. Kishore Bhai Rakesh Bhandari 2652111, 2641234, 2702449/50 2702446 38-B/ 39, Khatau Bldg. , 2nd Floor, Alkesh Dinesh Mody Marg, Fort, Mumbai-23 TM 458 Ohm Stock Broker Pvt.Ltd. AmolParekh/ Uday Shah: Bhavesh Kamani 2853102/05/ 2853884 2828405 155A, Mittal Towers, Nariman Point, Mumbai-23 TM 163 Omega Equities Pvt.Ltd. V.D. Shah, D. P. Mallabh Savita Goel, Mr. Suresh Jaju 2659496 2659497 7/10, Botawala Building, 1st Floor, Nr.Horniman Circle, Mumbai-23 TM 24 Oracle Securities Pvt.Ltd. ArshadWaheda/ Altaf Waheda: Dinesh Kothari, Shakir Lakhpatwala 2672551/ 2612460 2626978 4A, Khatau Building, Alkesk Dinesh Modi Marg, Fort, Mumbai TM 579 Padmakshi Financial Services Ltd. Chetan Thakkar / Poorvi Chothani Ketan Thakkar #2655737 / 2656071 2164421 96/98, Maker Tower, 9th Floor, Cuffe Parade, Mumbai TM 551 Pankaj Mangaldas Securities Pvt.Ltd. Pankaj Mangaldas Thakkar, Atul M. Thakkar Jatin 2676119, 264 1840, 5144728 5144748 701, P. J Towers, Dalal Street, Mumbai-23 TM 559 Parag Parikh Securities Ltd. Shirishchandra Parikh, Parag S.Parikh, Rajiv Sampat Hiten 2616631/ 2671413 2623220 103, Veena Chambers, 21, Dalal Street, Fort, Mumbai - 400 023. TM 734 PAS Securities Pvt.Ltd. Premkumar Aggarwal: Mr.Rajesh 8787635/ 2650978/ 2650195 8787642 501,Unique Tower,Near kamath club, off:S V Road, Goregaon (W),Mumbai-62 TM 449 Patani Securities Pvt.Ltd. Mukesh Patani: Kiran Kotak 2651107/ 2651979 2652338

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11,Crescent Chambers, Tamarind lane, Next to Chhaya Restaurent, Mumbai. TM 740 Pawankumar Chaudhary Pawan Chowdhary: Pawan Chowdhary 2651922/ 2651671 Not yet 910, 9th Floor, Stock Exchange, Dalal Street Mumbai TM 567 Porecha Global Securities Pvt.Ltd. Sudhir C. Porecha, Dinesh C. Porecha, Samir S. Porecha Mr. Samir S. Porecha, Mr. Chetan Thacker, Mr. Manan D. Porecha 2650555, 2651119, 2651995 2703959 or 2663470 PG-14, Rotunda Building, Bombay, Stock Exchange, Ground Floor, Mumbai 400023. TCM 564 Prabhudas Lilladher Pvt.Ltd. Arun Seth/Dhiren Seth /Kajaria Vipul Shah 285150, 2825932 2871153 1011, Maker Chambers, V, Nariman Point, Mumbai-21 TM 160 Pragya Securities Pvt.Ltd. Dipak G Cholera Kishore Patel 5106655, 5149787 5951308 230, Kailash Plaza, Vallabh Baug Lane, Ghatkopar (East), Mumbai-77 TCM 430 Pranav Securities Pvt.Ltd. Pranav Shah: Pranav 2651337/1331/ 0674 FAX:2650678/4624 17,B- 1/2, 2nd floor, 8 Rajabahadur Mansion, Fort, Mumbai 400 001. TM 562 PRS Shares & Finance Pvt.Ltd. Arun Shah Hiren Gandhi 2653000 2653253 1007, Stock Exchange Towers, Dalal Street, TCM 585 R.B.K.Share Broking Ltd. Radheshyam Khandelwal Purshottam Khandelwal 2652646 2656897 1A, Ali Chambers, 1st Floor, Meadows Estate, Fort, Mumbai-23 TM 589 R.R.Chokhani Stock Brokers Pvt.Ltd. Hitesh Chheda/ Sanat Jain: Sandesh Mullukh 2677771/2 2624520 9/16, Fort Mansion, B S Marg, Mumbai-23 TM 744 Rajen Chandrakant Sheth Rajen Chandrakant: Mr.Khan 2650407/2651590 2657569 47, Tamarind lane, 2nd Rajabahadur Mansion,Fort, Mumbai-23 TCM 607 Ramesh M.Damani Ramesh M Damani Narottam Shah 2651370/2694905 2650423 4th Floor Surya Mahal Building, Burdoch Marg, Fort, Mumbai TM 722 Ramesh S.Damani Finance Pvt.Ltd. Ramesh S Damani: Mr Nilesh Sahoo 2654033/2652726 2655567 619, P.J. Towers, Dalal Street, Mumbai-23 TCM 141 Sanghavi Brothers Brokerage Ltd. Dhiren Sanghavi: Hiten Goti 2661060/2665460 2650785 7/10,Botawala Building, Ground Floor, Nr.Hornimon Circle, Bank Street, Mumbai-23 TCM 21 Sarvin Capital Pvt.Ltd. Ashok Chowdhary, Purshottam Nopany Purshottam Nopany 2651193/2632602 2884745 713, Maker Chamber 5, Nariman Point, Mumbai-1 TM 664 Satco Securities & Financial Services Ltd. Dilip Babani/ Ram Vatnani: Madhavan 6456677/77 6516783 1st Floor, Makhija Chambers, 196, Turner Road, Bandra (W), Mumbai-50 TM 534 Seema Securities Pvt.Ltd. Akhilesh Mittal,Rajesh Tiwari Hemant Miyani 9821112917, 2704408/09 723,P J Towers, Dalal Street, Mumbai-23 TCM 668 SG Asia Securities India Pvt.Ltd. Sujit Kadakia/ Mahendra Kewalraman: - John Mendonca 2886055 2886043/44 13th Floor, Makers Chamber IV, Nariman Point, Mumbai TM 648 Shailesh Shah Securities Pvt.Ltd. Shailesh D Shah PANKAJ D SHAH H.D.SHAH RAJENDRA D.SHAH Pankaj D Shah 6390334-40 6395414 A/19, BHAGAWATI HOUSE VEERA DESAI ROAD ANDHERI(W) MUMBAI - 400059 TM 748 Sharekhan Ltd. Shreyas Morakhia/ Tarun Shah: Ms Manali 4982000 ext 428/9821129605/2653257/ 1350 4982626 A/203, Phoenix house, Phoenix Mills Compound, Sena Pati Bapat Marg, Lower Parel, Mumbai-13 TM 769 Shreehari Shares & Stock Brokers Pvt.Ltd. Balkrishna Harlalka: Mr Rajkumar Harlalka 2811934/2810749 2810749 58,A,Lakshmi Bhavan, 3rd floor, D Road, Chuchgate,Opp. BCA Club, Mumbai -20 TM 454 Shri Brij Securities Pvt.Ltd. M. Biyani,Bharat H. Biyani Biyani 2650813/ 2656768 22-2662369 14/B, Khatau Bldg.Annexe,8, Marine Street, Mumbai-400022 TCM 135 Shriyam Broking Intermediary Ltd. Yogendra Chaturvedi/ Viraf Katrak Viraf Katrak, Mr. R. Sunderasan 2308500 2846585 712/715, Tulsiyani Chambers, Nariman Point, Mumbai-21 TM 777 SMK Shares & Stock Broking Pvt.Ltd. Shyamlal Khemka / Dinesh Khemka Parag 2678503/8504, 8784777-83 8784222 305-306,Unit Tower, II Gaiwadi Indl. Estate, S V Road, Near Kamat Club, Goregaon (W), Mumbai-62 TCM 692 SSJ Finance & Securities Pvt.Ltd. Rajkumar Singhal: Mr R K Vyas 2651360 2703067 1st Floor, Surya Mahal,5, Burjorji Baroacha Marg, Dalal Street, Fort, Mumbai TCM 767 Standard Chartered-STCI Capital Markets Ltd. Mohan Kumar Khanna: MrSiddarth Misra 4974990/91/93 4962582 4962581 2nd Floor, Indage

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House, Dr. Annie Baseant Road, Mumbai TCM 709 Stewart & Mackertich Wealth Management Ltd. Yogendra Shah/ N.U. Parekh: Mr.Srikant 2658027/2624411/ 2624422 2623364 4th flr,Common Wealth Bldg,82 Nagindas Master Rd,Mumbai-01 CU 812 Stock Holding Corporation of India Ltd. Himanshu Goel: Mr. Paritosh 2855150/ 2045483/4/5 9820154177 2850489(D) 2027211 Mittal Court, "B" Wing, 2nd Floor,224, Nariman Point, Mumbai-21 TCM 291 Sunidhi Consultancy Services Pvt.Ltd. Jayesh Parekh/ Bimal: Mahesh Desai 2619055/ 8933, 2673580, 2624356, 2332705/08 2653253 22, Rajabahadur Mansion, 3rd Floor, B.S. Marg, Mumbai-1 TM 727 Suresh Rathi Securities Pvt. Ltd. Suresh Rathi Lalit Mundra Sanjay Bindal V S Rathi # 2634026/ 2613625/ 2634026, 2671242 2671229 Parekh Vora Chambers N M Road, Fort Mumbai- 23 TCM 747 SVS Securities Pvt.Ltd. Mr. Subhash V Shah Mr. Reshad B Chesson Mrs.Chhaya S Shah Mr.Sanjay V Shah 270 54 71/72 266 49 11 266 23 84 32/B,Khatau Building, 2nd Floor,Alkesh Dinesh Modi Marg, Fort, Mumbai - 400 023 TM 662 SVV Share & Stock Brokers Pvt.Ltd. Sudha Vakharia: Dhawal 3440244/2655648 2656515 603A,P G Towers, Dalal Street, Fort, Mumbai-1 TM 189 Sykes & Ray Equities (India) Ltd. Yogesh Gupta / Anup Gupta Anup Gupta 2841811/2846020/2844647 2846021 1st Floor, Daulatram Mansion, Kitridge Road, Colaba, Mumbai-5 TCM 604 Tata Securities Ltd. Aashish Wakankar: Chetan Chitroda 266259, 9821052952 2650233, 2703268 Mehta House, 1st floor , Anderson Centre, Mumbai Samachar Marg, Mumbai 400 023 TM 718 Techno Shares & Stocks Ltd. Nikhil Mehta: Ms Swapna 2699038/2700952/53 2610041 1,Vikas Premises,G flr,11,Bank Street,Fort, Mumbai TCM 372 Triumph Sec. Ltd. Ketan Parekh/ Dhiren: Nimish Dedhia 2880410/11, 2826710 2880416 10, Shroff Lane, Oxford Centre, Colaba Causway, Colaba, Mumbai-5 TM 675 U.L.J.K.Securities Pvt.Ltd. Umesh Vora: Madhvi Vora 2650207/ 2651031 2651711 703, Stock Exchange Towers, Fort, Mumbai-23 TM 170 Unique Stockbro Pvt.Ltd. Vasantrai L. Popat,Ms. Sonal P. Popat ,Ashish V. Popat Aashish 408 04 44, 408 05 55, 408 06 66 407 80 18 61/8 Chandrabala, Road No. 25C,Sion (West), Mumbai - 400022 TM 790 V.J.Finsecurities Pvt.Ltd. Vijay Chouradia: Dinesh 2612460/ 2624332/ 4335/ 4341 2626978 4A. Khatau Building, Alkesh Dinesh Modi Marg, Fort, Mumbai TCM 464 Vijan Share & Securities Pvt.Ltd. Mohan Vijan: Mohan Vijan 2675431/ 2672749/ 2677506 2672799 117,Commerce House , N.M. Road, Fountain, Mumbai-1 TCM 701 Vikabh Securities Pvt.Ltd. Bharat Biyani, Vinod Biyani Deepak Ohja 2661675, 2666000 22-2662369 14/B, Khatau Bldg.Annexe8, Marine Street, Fort , Mumbai TCM 194 Wallfort Financial Services Ltd. Anil Jain Deepak Lahoti Ashok Bhardia Manoj Bharadia Deepak Lahoti 2611523 2611514 2704295 2704296 205,Gundechha Chambers. Nagindas Master Road Fort. Mumbai. TCM 753 Woodstock Securities Pvt.Ltd. Jugal: Savita Goel, Mr. Suresh Jaju 2659496 2659497 7/10, Botawala Building, 1st Floor, Nr.Hornimon Circle, Mumbai-23