Surrender of Membership
(Circular no. 658 with download reference no. NSE/MEMB/15689 dated September 08, 2010)
(Circular no. 50/2018 with download reference no. NSE/COMP/38805 dated September 04, 2018)
Trading Members are hereby informed that the norms for surrender of membership have been revised as follows:
- A Trading Member desirous of surrendering its membership of the Exchange shall send its request in writing in the prescribed format as per Annexure II. Download Annexure II - Formats of Application for Surrender of Membership (.doc)
- Trading Members shall, before submission of an application for surrender of membership, be required to comply with all the Pre-requisites for application of surrender as per follows:
- Cancellation of Sub-Brokers: All sub-brokers affiliated to the surrendering trading member should either cancel their registration or change their affiliation to any other trading member.
- Surrender of all connectivities: VSATs and leased lines connectivities at all the offices of the surrendering trading members should be surrendered prior to submission of the application for surrender of trading membership. In cases where the VSAT is used by the trading member for NSDL operations, such VSATs would have to be surrendered prior to submission of the application for surrender of trading membership. The Trading member may apply VSAT in the name of NSDL if they wish to continue their operations with NSDL.
- Clearance of all dues: The member is required to clear all the dues towards NSE and NSE Clearing as well as the obligations in respect of Arbitration awards, investor complaints, etc. However this provision would not be applicable to members who have applied for surrender as a result of their disablement due to non-compliance of capital adequacy requirements for continued admittance to the trading membership of the Exchange for more than 12 months from the date of disablement.
- In respect of an application for surrender from a Trading Member,
- who has been suspended/ disciplinary action taken by the Exchange /SEBI,
- in respect of whom any investigation/ action consequent to a default has been initiated by the Exchange /SEBI,
- who is falling within the category of “associates” as defined by SEBI,
- who owes dues to the Exchange/ NSE Clearing,
- against whom claims by investors of value of 10 lakhs or more are pending or any claim for any amount is pending for a period more than 6 months,
- against whom any other claim /complaint is pending which, in the opinion of the Exchange/ NSE Clearing, needs to be resolved by the concerned trading member,
- whose turnover fees liability to SEBI is still outstanding,
The Exchange shall have absolute discretion in dealing with such applications and if it decides to process/ accept the surrender application of such trading member, it may impose additional terms and conditions as it may deem fit.
- An application for surrender shall not be allowed to be withdrawn unless permitted by the Exchange at its discretion. However, once the request for surrender of trading membership is approved, whether communicated to the trading member or not, no withdrawal of surrender application will be permitted.
- No trading member, who has surrendered its trading membership, their partners (in case of partnership firm) and/ or dominant shareholders (in case of corporates) shall be eligible to be readmitted to the Trading Membership of the Exchange in any form for a period of one year from the date of cessation of trading membership (i.e. from the date of approval of surrender).
- The application of surrender of trading membership is subject to fulfillment of the following conditions :
- Submission of original SEBI registration certificate(s) on all segments on which the trading member is registered.
- Submission of proof of payment of SEBI turnover fees.
- Submission of an undertaking/ declaration that no investigation/Enquiry/Disciplinary action pending against the trading member or any of its shareholders/ directors.
- Submission of details of Directors and shareholders as on date of surrender application
- Penal charges, the interest on dues and late submission charges to the Exchange and/ or NSE Clearing in respect of such trading member shall be levied up to and including the date on which such dues/ interest/ charges are paid remitted to or appropriated /adjusted by the Exchange / NSE Clearing.
- In case, a Trading Member desires to withdraw the application for surrender and the Exchange in its discretion approves the same in writing, the application and levy of annual subscription, interest and penal charges shall be as if the Trading Member had not applied for the surrender of trading membership. All the costs related to the installation of new VSAT(s) will also be borne by the concerned Trading Member.
- A notice to public by way of a public notification in newspapers shall be made by the Exchange. The cost of public notification shall be incurred by the surrendering trading member at actuals. The time period (from the date of public notification) given to investors, public, etc. to lodge claims against the surrendering trading member will be as follows:
Trading Member Category Duration of Public Notification Trading members whose applications are with SEBI for registration, are SEBI registered but not enabled, enabled but have not traded at all 15 days Trading members who have traded during last 12 months preceding the date of receipt of surrender application 2 months
Trading members who have not traded during last 12 months preceding the date of receipt of surrender application
1 month Trading members who have not traded during last 24 months preceding the date of receipt of surrender application 15 days
- A letter shall be sent to SEBI seeking pending dues, if any, from member.
- On the expiry of period for receipt of investor claims and on receipt of intimation of dues amount, if any, from SEBI, the total amount payable by the member shall be appropriated against Trading Member’s deposits available with the Exchange / NSE Clearing and the Trading member will be intimated accordingly. Incase the amount payable exceeds the deposits, the trading Member would be intimated to bring in the requisite amount within 21 days of intimation. Upon the failure of the member to do so within 21 days of intimation, the case shall be referred to the relevant authority for further action.
- Upon the application for surrender being approved, the Exchange shall notify to all the Trading Members the fact of such approval. The concerned Trading Member, whose application has been approved, shall also be accordingly informed and also intimated of the terms and conditions subject to which their surrender has been approved.
- The interest free security deposits lying with Exchange/Clearing Corporation shall be refunded to the members after three years from the date of issue of public notification or on receipt of confirmation from SEBI regarding cancellation of registration whichever is later. Such refund shall subject to fulfillment of all dues under Rules/Regulations/Bye-Laws of the Exchange /NSE Clearing and circulars issued there under, including arbitration awards and valid investors/ other grievances/claims against them. In case the amount payable by the member exceeds the deposits, the trading Member would be intimated to bring in the requisite amount within 21 days of intimation. Upon the failure of the member to do so within 21 days of intimation, the case shall be referred to the relevant authority for further action.
- Upon acceptance/ approval of surrender of trading membership as aforesaid, the concerned Trading Members shall not be entitled to any rights or privileges accorded under the Bye-Laws, Rules and Regulations of the Exchange/ NSE Clearing, but shall continue to be liable to meet their liabilities/obligations under the Bye-Laws, Rules and Regulations of the Exchange/NSE Clearing.
- A Trading Member, whose public notification has been issued, has an option to seek substitution of the interest-free security deposits, details of which are as follows :
- Cash component of IFSD may be substituted with the FDRs
- Under this scheme, the Trading Members’ IFSD would be converted to FDRs with the clearing bank of the surrendering Trading Member in multiples of 5 FDRs of ₹ 1 lakh, 1 FDR of ₹ 5 lakhs and 1 FDR for the remaining amount of deposits, with the minimum retention of at least ₹ 5 lakhs in cash with the Exchange/NSE Clearing after fulfillment of all dues under Rules/Regulations/Bye-Laws of the Exchange/NSE Clearing and circulars issued there under, including arbitration awards and valid investors/other grievances/claims against them. The duration of the FDRs would be as per written request of the Member.
- Trading Members desirous of availing the said facility are required to submit their request as per Annexure II (C3) to this circular which shall be submitted along with their application for surrender.
- A minimum deposit component of ₹ 5 Lakhs in cash form will be retained by the Exchange/ NSE Clearing in order to meet any dues / obligations falling due immediately.
- Cash component of IFSD may be substituted with the FDRs
Refund of any part component of the deposits is subject to the Trading Member :
- Making payment to SEBI of all the turnover fees, interest payable thereon etc. as may be applicable to such trading members in respect of all the segments they have been admitted to.
- Obtaining confirmation of cancellation of registration from SEBI
- Redressing, to the satisfaction of the Exchange, all investors’ complaints and other grievances pending against the trading member.
- Making, in respect of arbitration proceedings, suitable arrangements to the satisfaction of the Exchange so as to meet any obligation that may arise out of awards that may be made against them.
The release/ refund of any component/ portion of a trading member’s IFSD or any other monies owing to a surrendering trading member shall be made through the Trading Member's account with their Clearing Bank. As an alternative, refund may be made to any another bank account of the trading member provided they furnish a No Objection Certificate from their Clearing Bank.
- FDRs furnished by the Trading Member in connection with surrender of trading membership shall be returned to the Trading Member after three years from the date of issue of public notification or on receipt of confirmation from SEBI regarding cancellation of registration whichever is later. Returning FDRs/Bank Guarantees shall be subject to fulfillment of all dues under Rules/Regulations/Bye-Laws of the Exchange /NSE Clearing and circulars issued there under, including arbitration awards and valid investors/ other grievances/claims against them. In case there are any un-discharged obligations on account of the member FDRs/ Bank Guarantees shall be returned after adjusting such liability from the proceeds of the FDR unless adequate money is deposited against such outstanding liability.
- Upon a Trading Member, whose surrender application has been received / approved by the Exchange, being subsequently declared a defaulter/ expelled by the Exchange, all the process applicable to that of a surrendered trading member shall cease ipso facto and the relevant process pertaining to a defaulter/ expelled trading member shall forthwith commence/ apply.
- Cessation of membership consequent upon surrender will become final and effective after refund of deposits provided all the terms and conditions stipulated by the Exchange/NSE Clearing are complied with in its entirety. Till cessation, a Trading Member whose application for surrender has been approved shall be subject to all the terms and conditions set forth herein or as may be stipulated/ decided in future from time to time. Approval of surrender of trading membership shall remain conditional upon due compliance by the concerned Trading Member with all their obligations under the Rules/Regulations/Bye-laws of the Exchange/NSE Clearing, and circulars issued there under, including arbitration awards and valid investors/ other grievances/claims against them.
- The Exchange, at its sole discretion, may waive, add, modify or relax one or more of the above requirements wherever it feels appropriate.