Declaration of Default
A Trading Member may be declared a defaulter by direction/circular/notification of the relevant authority of the trading segment if:
- he is unable to fulfill his obligations; or
- he admits or discloses his inability to fulfill or discharge his duties, obligations and liabilities; or
- he fails or is unable to pay within the specified time the damages and the money difference due on a closing-out effected against him under these Bye Laws, Rules and Regulations; or
- he fails to pay any sum due to the Exchange or to submit or deliver to the Exchange on the due date, delivery and receive orders, statement of differences and securities, balance sheet and such other clearing forms and other statements as the relevant authority may from time to time prescribe; or
- if he fails to pay or deliver to the Defaulters' Committee all monies, securities and other assets due to a Trading Member who has been declared a defaulter within such time of the declaration of default of such Trading Member as the relevant authority may direct; or
- if he fails to abide by the arbitration proceedings as laid
down under the Bye Laws, Rules and Regulations.
Without prejudice to the foregoing, if a Trading Member is either expelled or declared a defaulter by any other recognised Stock Exchange on which he is a Member or if the registration certificate is cancelled by SEBI, the said Trading Member shall be expelled from the Exchange.
Failure to Fulfill Obligations
The relevant authority may order a Trading Member to be declared a defaulter if he fails to meet an obligation to a Trading Member or constituent arising out of Exchange transactions.
Insolvent a Defaulter
A Trading Member who has been adjudicated an insolvent shall be ipso factor declared a defaulter although he may not be at the same time a defaulter on the Exchange.
Trading Member's Duty to Inform
A Trading Member shall be bound to notify the Exchange immediately if there be a failure by any Trading Member to discharge his liabilities in full.
A Trading Member guilty of accepting from any Trading Member anything less than a full and bona fide money payment in settlement of a debt arising out of a transaction in securities shall be suspended for such period as the relevant authority may determine.