Articles and Bye-laws of Gauhati Stock Exchange

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A PROJECT REPORT ON

Articles and Bye-laws of the Gauhati Stock Exchange

SUBMITTED BY

SHUVOBROTO BHATTACHARYYA DEPARTMENT OF BUSINESS ADMINISTRATION, ASSAM UNIVERSITY, SILCHAR JUNE, 2010

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DECLARATION

I, Shuvobroto Bhattacharyya, hereby declare that the project report namely, “Articles and Bye-laws of the Gauhati Stock Exchange” prepared by me is an original work, is the result of independent research carried out by me in partial fulfillment of the MBA program of Assam University, Silchar. To the best of my knowledge and belief, this research is an original piece of my work and is the sheer outcome of my efforts and has not been submitted to any other University or Institution for the award of any degree or diploma.

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ACKNOWLEDGEMENT

At the very outset, I take the opportunity to convey my heartiest gratitude to those persons whose cooperation, suggestions and support paved the way for the accomplishment of my work successfully. I am extremely grateful to Shri R.C. Choudhury, the General Manager of The Gauhati Stock Exchange Limited, Guwahati for giving me the golden opportunity to pursue my summer internship programme in this esteemed organization. I extend my warm thanks to all the members of this office, who have extended their kind support whatever & wherever needed. I also extend my gratitude to the Department of Business Administration, Assam University because it is the endeavor of the faculty that has given me such a scope. Last but not the least, I am immensely grateful to my family members, who not only rendered sustained help, moral and encouragement but also provide me the necessary motivation for this work.

With regards Shuvobroto Bhattacharyya

it has been my endeavor to gather information from the brokers and other trading staffs also. All efforts have been made so that the information gathered is free from any biasness. Shuvobroto Bhattacharyya MBA 3rd Semester Assam University Silchar .5 PREFACE This project has been carried out while working as summer trainee in The Gauhati Stock Exchange Limited. Every endeavor has been made so that the result remains meaningful as well as fruitful. Besides gathering information from the institutional guide. Further. Guwahati. Many interesting facts have come out in course of investigation. I solemnly declare that all information furnished in this project is true to the best of my knowledge. All efforts have been made to know the Articles and Bye-laws of the Gauhati Stock Exchange.

Data has been collected from the internal source of the organization. . To understand the Articles in a better way.C. Further information is gathered from the records. Internet and staff of the company. To understand the trends of trade in the stock market in the last few years.Choudhury (d) To have an idea about the various Articles and Bye-laws of the Gauhati Stock Exchange To gather some knowledge about the Bye-laws of trading on Exchange. Descriptive research type Methodology: Data Source: For the collection of data secondary source has been used.6 EXECUTIVE SUMMARY Title of the project: Articles and Bye-laws of the Gauhati Stock Exchange Name of the organization: Organizational Guide: Objective of the study: (a) (b) (c) The Gauhati Stock Exchange Sri R.

23 17 .4 Research Methodology 2.2 3.2 Research Objective 2.6 Limitation of the Study SECTION C – Analysis of the topic 3.23 SECTION D – Bye-laws of trading on the exchange 4.2 Historical Background of Stock Exchanges 1.1 3.13 Registration and De-registration of Approved Users 24 .12 Trading Facility 4.11 11 .30 24 24 24 24 24 25 25 25 25 25 25 26 26 .13 10 .11 Daily official list 4.6 Eligibility to trade 4.4 Restrictions on trading 4.3 Introduction History Regulatory Framework related with Trade Practices in Securities Market 20 .5 Data Source 2.1 Introduction 2.19 19 .9 Management of the ATS 4.3 About the Organization 2 .15 14 14 14 14 15 15 16 .2 Alteration or cancellation of Exchange Holidays 4.8 Trading during good behavior 4.13 14 .1 Introduction of Stock Exchange 1.10 Prices 4.3 Scope of Research 2.7 Permission to trade through trader workstations 4.1 Trading days 4.12 12 .3 Trading Segments 4.Research Design 2.7 CONTENTS SECTION A – Introduction 1.5 Trading Sessions 4.20 SECTION B .

17 Maintenance of Relevant Records 4.26 Suspension of Trading 4.40 41 .15 Loss of access to ATS 4.21 Order validation 4.8 4.24 Transactions not allowed 4.18 Trade management 4.27 Use of technology 26 26 27 27 28 28 28 29 29 29 30 30 30 32 – 38 39 .14 Operational Parameters for Trading 4.19 Trading Member Liable for Trades 4.16 Loss of closing out-Trading member’s responsibility 4.25 Transactions in Government Securities and Debentures 4.23 Types of Transactions Allowed 4.20 Trades Irrevocable 4.42 SECTION E – Articles of Association SECTION F – Conclusion SECTION G – Bibliography .22 Matching Rules 4.

National Stock Exchange BSE .Trader Work Station CRSS .Compulsory Rolling Settlement Segment CC – Clearing Corporation NSCCL – National Securities Clearing Corporation SAT .9 List of Abbreviation GOI – Government of India GSE –The Gauhati Stock Exchange Limited IPO – Initial Public Offerings NSE .BSE On Line Trading (System) TWS .Securities Appellate Tribunal .Bombay Stock exchange CDSL – Central Depository Services (India) Limited NSDL – National Securities Depositories Limited SEBI – Securities and Exchange Board of India SBTS – Screen Based Trading System WAP – Wireless Application Protocol BOLT .

10 Section A Introduction .

formed for the purpose of facilitating the buying and selling of securities by the public and institutions at large and regulating its day to day operations. It also facilitates for the issue and redemption of securities and other financial instruments including the payment of income and dividends. where members of the organisation gather to trade company stocks or other securities. The members may act either as agents for their customers. There are 24 recognized stock exchanges in India. Out of the 23 remaining stock exchanges. stock exchanges in India are operating now with due recognition from Security and Exchange Board of India (SEBI)/ the Government of India under the securities contracts (Regulation) Act. or National Stock Exchange (NSE) or both. out of which one has not commenced its operations. or as principals for their own accounts. It is a place where already issued securities of companies are bought and sold by investors.11 Stock Exchanges in India 1. Of late however. 1956. either corporation or mutual organisation. Members of these stock exchanges are now working as sub brokers of BSE / NSE brokers. Stock Exchanges are an organized marketplace. Securities listed on the stock exchange(s) have following advantages:√ The stock exchange(s) provides a fair market place √ It exchanges liquidity √ There is continuous reporting of their prices √ Full information is available on the companies √ Rights of investors are protected List of Stock Exchanges in India . the trading volumes are recorded. Most of the regional stock exchanges have formed subsidiary companies and obtained membership of Bombay Stock Exchanges (BSE). Traditionally a stock exchange is an association of its members or stock brokers.1 Introduction Exchange of Stock A Stock Exchange is the single most important institution in the secondary market for providing a platform to the investors for buying and selling of securities through its member.

The shares of the Commercial Banks. mercantile bank & the Bank of Bombay were some of the prominent shares traded. there was business conducted in Mumbai in shares of the East India Company. Shri Premchand Roy Chand designed & developed the procedure to be followed while dealing in shares. The Exchange was established with 318 members.2 Historical Background of Stock Exchanges Earliest records of securities trading in India are available from the end of the eighteenth century.P inaugurated the Brokers hall. In 1874. which were considered as securities for buying. The leading broker. M. In January 1899. Mr. the Dalal Street became the permanent place for meeting the brokers to conduct their business.12 • • • • Bombay Stock Exchange National Stock Exchange Interconnected Stock Exchange Regional Stock Exchanges o Ahmedabad Stock Exchange o Bangalore Stock Exchange o Bhubaneshwar Stock Exchange o Calcutta Stock Exchange o Cochin Stock Exchange o Coimbatore Stock Exchange o Delhi Stock Exchange o Guwahati Stock Exchange o Hyderabad Stock Exchange o Jaipur Stock Exchange o Ludhiana Stock Exchange o Madhya Pradesh Stock Exchange o Madras Stock Exchange o Mangalore Stock Exchange o Meerut Stock Exchange o OTC Exchange Of India o Pune Stock Exchange o Saurashtra Kutch Stock Exchange o Uttar Pradesh Stock Exchange o Vadodara Stock Exchange 1. Mumbai did not have to look back as it started riding high in the ladder of growth. It was the American civil war that helped Indian to establish broking business. That was the foundation of the Stock Exchange. selling\ & exchange. The brokers organized an association on 9th July 1875 known as “Native share 7 stock Brokers Association” to protect the stock & interest of the native brokers. The Stock Exchange. . the Companies Act was passed & that heralded the commencement of the joint stock companies in India. Mumbai. In 1850. Before 1850. James M.Maclen.

dealers and jobbers in stocks. (ii) It will protect and support the character and status of brokers. shares and like securities and to further the interest of both brokers and the public dealing in Guwahati and elsewhere in Assam and in India in stocks. 1988. In 1994. At new building the present location was constructed and was occupied on 1st December 1930. GSE contributed almost ten percent of the total resources mobilized by reliance through numerous trances. Those were the heydays of the Indian stock market and the GSE really took off like anything. In 1956. the Parliament of India passed the Security Contract (Regulation) Act. like Premier Cryogenics and Prag Bosimi saw their IPOs oversubscribed eight times through GSE. which brought an end to the open out cry system of trading securities which was in vogue for 150 years. in shares.13 After the 1st World War. shares and like securities. Even local companies. Now the trading in securities is done using screen based trading system through duly authorized members of the exchange. 1. 1.3. the regulation of business in securities and stock exchanges became an exclusively Central Govt.1 Company’s Objective: . In 1928 the present premises were acquired surrounded by Dalal Street. In the eighties when the Reliance tapped the investor market to raise resources. It was incorporated on 29 November 1983 and it was recognized by the Government of India on 1 May 1984. of India.3. the stock exchange was housed properly at an old building near the Town Hall. debentures. 1. as an interim board under control of the Ministry of Finance. It was very vibrant and progressive. derivatives and other like securities and future and option transactions in any of such securities on the stock exchange. (GSE) is located in Guwahati. and introduced Screen Board Trading (SBT) system. National Stock Exchange (NSE) came into existence. In 1992 the SEBI Act came into existence.2 Achievements of the Gauhati Stock Exchange Limited:- . subject following adoption of the constitution of India.3 About the Organiation The Gauhati Stock Exchange Ltd. In 1992 Over the Counter Exchange of India (OTCEI) came into existence where securities of small companies are listed.GSE has some organizational objective. Bombay Samacher Marg and Hamman Street. 1995. India. To regulate the security market. It was the fourth Stock Exchange in India to computerize. BSE’s one line trading system was launched on March 14. In 1950. which are: (i) It has a mission to regulate and control the transactions of business in stocks. Govt. Assam. SEBI was initially established on October 12.

4 Departments of GSE: ● Personal Cell ● Accounts Cell ● Listing Cell ● Depository Participants Operation ● System Cell ● Investors Service Cell ● Market Surveillance Department ● Member’s Security Cell . redress their grievances and depart various information of interest of them. In future. GSE has been rendering services to the investors of the North East Region. Include the investment cult by increasing investors’ population in the region through various investors’ awareness programmes. 1. Primary Market offerings. the GSE member can operate the trading from any corner of the country.14 Though this stock exchange is situated at a remote corner of the country. Fully computerized with system integration (LAN & WAN) controlled by SYSTEM DEPARTMENT. the GSE has been able to achieve some mile stones. It has separate Investors Protection Fund. Investors Service Fund and Settlement Guarantee Fund for full protection to the investing public. WAN connectivity through RF (MAIN) / ISDN LINE (BACKUP)/ LEASED LINE FOR ONLINE TRADING in National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) (Mumbai). In spite of various location and infrastructural bottlenecks.3. 1.3. Develop an investor’s base for mobilizing fund to some industries set up in this region. • • • • • • • • • • • Increase its membership from 21 to 200 at one point of time. Setup investors service cell to provide service to investors. Investor Services Education Programme Training Programmes on Capital Markets. thus it is providing employment opportunities. Depository & Derivatives. conferences etc. it will help chanallising net saving into capital market. Distribution of mutual fund products. which in turn will help installation of more industries. solving employment in the long run. seminars. It will increasing investment climate which will install confidence into enterprises to come in a big way to put up industrial units in our region.3 Services Offered by GSE: • • • • • • • Access to Cash market in NSE & BSE Access to derivatives market in NSE Depositary Participant (DP) services in CDSL. Implement a strict margin system thereby managing he risk of the brokers effectively. Now days.

17.. 2007……………………………………………………….84 2008……………………………………………………….58 2009……………………………………………………….18.514.15 ● Training Institution – which is coming very shortly (by next month itself) 1..592.3..16.762.209.5 Financial Results of the organization : - Profit/loss for the year ended: Rs.53 Section B Research Design .651.873.

the trends of trade with the passage of time can also be known from the analysis. 2. there is a possibility of including few less accurate or appropriate information in the report. scope of the study. it is discussed in detail about the assigned topic. . Besides that. research design and limitation of the study are described. And also. So. the various rules regulating trading and settlement have also been discussed here. (d) To understand the trends of trade in the stock market in the last few years. the Articles and Bye-laws of Gauhati Stock Exchange have been analyzed. Here information has been gathered from the related sources to analyze them in a suitable order. research methodology used i. data source. 2. The secondary data has been taken through the help of internet to get the figures required for the research purpose. Moreover..e.16 2. (b) To gather some knowledge about the Bye-laws of trading on Exchange.5 Limitations of the study: A portion of the study has been conducted with the help of different data collected from secondary sources. 2.2 Research Objective:(a) To have an idea about the various important Articles and Bye-laws of the Gauhati Stock Exchange. 2. some data have also been analyzed to know the market movement in a better way.4 Data Source: The source of information is both primary and secondary. 2. objective of the study.4 Research Methodology:The research conducted in the above case is an Analytical one. (c) To understand the settlement process in a better way. It gives an idea about the various courses of conduct made in the stock market in trading and settlement part.3 Scope of Research:- In this study.1 Introduction : In this chapter.

the time limit of the training is only 8 weeks. Section C Analysis of the topic .17 Secondly. the time period is also a limitation for the project. Hence. within such a small time it is very uphill task to prepare a project on such an important and wide subject.

1956. regulations. Guwahati” and are for the sake of brevity and convenience.18 3. 1957{hereinafter referred to as “SCRR”}. 1992. and the Securities and Exchange Board of India Act. norms and circulars issued by the Government of India and/or SEBI there under from time to time and in case of any inconsistency between these Bye-laws and any of the said enactments then the specific enactments shall prevail. has made the following Bye-laws which have been approved by the Securities and Exchange Board of India. herein referred to as “these Byelaws”.1 Introduction: BYE-LAWS PREAMBLE In exercise of the powers conferred under the Securities Contracts (Regulation) Act. . and the Securities and Exchange Board of India Act. directives. guidelines. orders. the Securities Contracts (Regulation) Rules. 1956. 1956{hereinafter referred to as “SCRA”}.. These Bye-laws came into force from the date of their publication in the Gazette of India as per he provisions of the Securities Contracts (Regulation) Act. Guwahati. 1992 {hereinafter referred to as “SEBI Act”}as amended from time to time and the rules. These Bye-laws shall at all times be read subject to the provisions of the Securities Contracts(Regulation) Act. The Gauhati Stock Exchange Ltd. These Bye-laws are known as “The Bye-laws of The Gauhati Stock Exchange. 1957. the Securities Contracts(Regulation) Rules.

1956 (1 of 1956).1 Who can be a Member: ◙ Individual ◙ Corporate entity Conditions for eligibility for becoming a member: The selection criteria for individual members and directors in case of corporate members are:Qualifications for individuals – 1. Either matriculate or has the 10 plus 2 years qualification. 6. a majority of the directors of such company are shareholders of such company and also members of that stock exchange. Generally. Not compounded with his creditors. Citizenship of India. provided that the Governing Board may in suitable case relax this condition. 5. and 3. 3. . 7. such company is formed in compliance with the provisions of Section 12 of the said Act. 2. the directors of such company. 1992. such company undertakes to comply with such financial requirements and norms as may be specified by SEBI for the registration of such company under sub-section (1) of section 12 of SEBI Act. 1956 shall be eligible to be elected as a member of a stock exchange if1. Not been convicted of an offence involving fraud or dishonesty. shall also be eligible to be elected as a member of a Stock Exchange if1. who are members of that stock exchange. Conditions for getting corporate membership of the stock exchange:A company as defined in the Companies Act. have ultimate liability in such company: A company as defined in the Companies Act. Not been at any time expelled or declared a defaulter by any other Stock Exchange. 2. 2.19 3. preference is given to professionally qualified persons. Not been adjusted bankrupt or insolvent. 8. Minimum age of 21 years.1. such company is formed in compliance with the provision of selection 322 of the said Act. 4. Not engaged as principal or employee in any business other than of securities.

It allows faster incorporation of price sensitive information into prevailing prices. 3.10 lakh is to be kept by all the Trading Members and the same is not available for adjustment towards margin obligations. the directors of the company are not disqualified for being members of a stock exchange under the provisions of the Act and the Director of the company had not held the offices of the Director in any company which had been a member of the stock exchange and had been declared defaulter or expelled by the stock exchange. This diverted liquidity from other exchanges and in the very first year of its operation. big or small. and transparency. Today India can boast that almost 100% trading takes place through electronic order matching. Cash & Cash Equivalent) towards their contribution to TGF. NSE became the leading stock exchange in the country.2 Trading Members Capital: . Trading members can deposit additional capital in form of cash & non-cash equivalents. as well as on fraud resulting in improved operational efficiency. to trade with one another simultaneously.1. (ii) TRADE GUARENTEE FUND (TGF): Trading Members are also required to deposit with the Exchange a sum of Rs. liquidity. It enables market participants. improving the depth and liquidity of the market. This was time consuming and inefficient. AC will be available for adjustment towards margins. TGF will be available for adjustment towards margins (i. . NSE introduced a nation-wide online fully-automated screen based trading(SBTS) where a member can punch into the computer quantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds a matching sale or buy order from a counter party. thus increasing the informational efficiency of markets. from members without revealing their identity. which helps to resolve disputes by logging in the trade execution process in entirety.The trading members are required to maintain the under mentioned capitals with the Exchange: (i) BASE MINIMUM CAPITAL (BMC): BMC of Rs. thus providing equal access to everybody. SBTS electronically matches orders on a strict price/time priority and hence cuts down on time. In order to provide efficiency. 3. irrespective of their geographical locations. for taking trading exposure). and 4. This imposed limits on trading volumes and efficiency.e. It also provides a perfect audit trial. impacting the fortunes of other exchanges and forcing them to adopt SBTS also. The Trading Members are allowed to deposit cash/FDRs/Bank Guarantee (i.10 lakhs towards his contribution to the Trade Guarantee Fund(TGF). not less than two directors of the company are persons who possess a minimum two years’ experience(a) in dealing in securities.e. It provides full anonymity by accepting orders. or as investment consultants.2 HISTORY: The trading on stock exchanges in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. (iii) ADDITIONAL CAPITAL (AC): For availing higher trading limits.20 3. or (b) as portfolio managers. cost and risk of error.

Later the Exchange obtained permission from SEBI for expansion of its BOLT network to locations outside Mumbai. (b) the Companies Act. NSE carried the trading platform further to the PCs at the residence of investors through the Internet and to handheld devices through Wireless Application Protocol (WAP) for convenience of mobile investors. and (d) the Depositories Act. The trading in securities at the exchange is conducted in an anonymous. which provides for regulations of transactions in securities through control over stock exchanges. The buyers and sellers of securities do not know the names of each other. Talking about BSE. allotment and transfer of securities. It had switched over to a fully automated computerized mode of trading known as BOLT (BSE On Line Trading) System w. the memberbrokers enter orders for purchase or sell of securities from Trader Work Stations (TWSs) installed in their offices instead of assembling in the trading ring. It provides for direct and indirect control of virtually all aspects of securities trading and the running of stock exchanges and aims to prevent undesirable transactions in securities. 1956 It was enacted to prevent undesirable transactions in securities by regulating the business dealing therein and by providing for certain other matters connected therein. The member-brokers of the Exchange were permitted to open trading terminals only within the city limits of Mumbai till 1996. which governs the trading of securities in India. Through the BOLT system. (c) The SEBI Act. 1995. environment and the counterparty identity are not revealed.f. This is the principal Act. This made a huge difference in terms of equal access to investors in a geographically vast country like India. which sets out the code of conduct for the corporate sector in relation to issue. 1956. and disclosures to be made in public issues. 1956.21 Technology was used to carry the trading platform from the trading hall of stock exchanges to the premises of brokers. Securities Contracts (Regulation) Act.3 Regulatory Framework related with Trade practices in Securities Market The four main legislations governing the securities market are: (a) the Securities Contracts (Regulation) Act.e. 1992 which establishes SEBI to protect investors and develop and regulate securities market. 1996 which provides for electronic maintenance and transfer of ownership of dematerialized securities. It gives Central Government regulatory jurisdiction over: . the exchange had an open outcry trading till March 1995. March 14. 3. where member-brokers used to assemble in a trading ring for doing transactions in securities.

sub-brokers. SEBI. share transfer agents. 1992 under the powers conferred by section 29 of SEBI Act. portfolio managers. SEBI has been obligated to protect the interest of the investors in securities and to promote and development of. bankers to an issue. as required by sub-section (3) of the Section 30 of the Securities Contracts (Regulation) Act. as it thinks fit. As a condition of recognition. The Central Government has made Securities Contracts (Regulation) Rules. SECURITIES 1957 CONTRACT (REGULATION) RULES. trustees of trust deeds. custodians of securities. a stock exchange complies with conditions prescribed by Central Government. has powers for:(a) regulating the business in stock exchanges and any other securities markets. merchant bankers. specify in this behalf. (b) registering and regulating the working of stock brokers. The powers under the SC®R. Organized trading activity in securities takes place on a specified recognized stock exchange. in particular. by notification. unless they hold a certificate granted by SEBI. sell and deal in securities. and (c) regulating the securities market. 1956 for carrying out the purpose of the Act. 1957. investment advisers and such other intermediaries who may be associated with securities markets in any manner. SEBI (STOCK BROKERS & SUB-BROKERS) RULES. SEBI Act. (b) promoting the development of the securities market. and (c) Listing of securities on stock exchanges. (c) registering and regulating the working of the depositories. 1992. 1957 are exercisable by SEBI. participants. foreign institutional investors. registrars to an issue. . 1992 The Central Government has made SEBI (Stock-brokers and Sub-brokers) Rules. The stock exchanges determine their own listing regulations which have to conform to the minimum listing criteria set out in the Rules. (b) contracts in securities. SECURITIES AND EXCHANGE BOARD OF INDIA ACT.22 (a) stock exchanges through a process of recognition and continued supervision. These rules provide these provide the definition of a Stock-broker and a Sub-broker and specify that they shall not buy. 1992 To ensure effective regulation of the market. 1992 was enacted to establish SEBI with statutory powers for: (a) protecting the interests of the investors in securities. and to regulate the securities market by such measures. credit rating agencies and such other intermediaries as SEBI may. underwriters.

Based on the report of the investigating officer. The Regulations prohibits an insider from dealing (on his own behalf or on behalf of others) in securities on the basis unpublished price sensitive information. including an investor.23 SEBI (INSIDER TRADING) REGULATIONS. SEBI can take any of the following actions: (a) directing the insider not to deal in securities in any particular manner. after 16th December 1999). These regulations empower SEBI to investigate into violations committed by person. Any person aggrieved by an order of SEBI. Rules and Regulations made thereunder. market intermediaries and professional firms. 1995 This act enables SEBI to investigate into cases of market manipulation and fraudulent and unfair trade practices. (b) prohibiting the insider from disposing of any of the securities acquired in violation of these regulations. SEBI (PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICES RELATING TO SECURITIES MARKETS) REGULATIONS. SEBI. analysts. In this regard. unfair trade practices relating to securities. misleading statements to induce sale or purchase of securities. on receipt of the report from the investigating officer may issue directions for ensuring due compliance with the provisions of the Act. who are insiders. The regulations specifically prohibit market manipulation. buying/selling/dealing in securities. 1992 Insider trading is prohibited and is considered an offence vide SEBI (Insider Trading) Regulations. through an investigation officer in respect of conduct and affairs of any person dealing. The directions may be issued for the following purposes: . The regulations also requires initial and continual disclosure of shareholding by directors or officers. In order to strengthen insider-trading regulations. 1992. SEBI can initiate action for suspension or cancellation of registration of an intermediary. on and after the commencement of the securities laws (Second Amendment) Act. issuer or an intermediary associated with the securities market. and substantial shareholders (holding mare than 5% shares/voting rights) of listed companies.. communicating such information and also counseling any other person to deal in securities of any company on the basis of such information. SEBI has proposed a code of conduct for listed companies.e. its employees. 1999 (i. SEBI can conduct investigation upon information received by it. (c) restraining the insider to communicate or counsel any person to deal in securities. under these regulations may prefer an appeal to a Securities Appellate Tribunal (SAT) jurisdiction in the matter.

24 (a) directing the person concerned not to deal in securities in any particular manner. (b) requiring the person concerned to call upon any of its of its officers. in the circumstances specified in Regulation 11. for restoring the status-queue ante. initiate action for suspension or cancellation of registration of an intermediary holding a certificate of registration under section 12 of the Act. in such manner as SEBI may deem fit. SEBI may. other employees or representatives to refrain from dealing in securities in any particular manner. (d)directing the person concerned to dispose of any such securities acquired in any such contravention of these regulations. . (c) prohibiting the person concerned from disposing of the securities acquired in contravention of these regulations. and without prejudice to its power under Regulation 12.

25 Section D Bye-laws of trading on the exchange .

. The days on which the ATS of the exchange shall be available for trading and securities other than mock trading shall be called as Trading Days 4. The Governing Board or the Managing Director may admit securities for dealing on the respective trading segments of the exchange. as may be decided by the Governing Board/Relevant Authority and as may be specified in the relevant regulations from time to time. 4. debt market. (ii)Keep the ATS of the exchange available for trading on any day not withstanding that such day had earlier been declared as Exchange Holiday. futures and options market and other segments. as may be eligible under the Securities Contracts (Regulation) Act. 4.1 Trading days The exchange shall be open on all days except on such exchange holidays as the exchange authority may declare in advance. 1956. or as may be specified by SEBI.26 The Bye-laws relating to trading on the exchange of the Gauhati Stock Exchange are: 4. as may be provided in the Bye-laws relating to risk management. (iii)Close trading on the ATS of the exchange for one day.2 Alteration or cancellation of Exchange Holidays In exceptional circumstances and for reasons to be recorded in writing the Managing Director may at any time: (i) Alter or cancel any of the exchange holidays fixed in accordance with the Bye-laws. government securities market. from time to time impose such restrictions on trading in such securities or on such trading member.3 Trading Segments The trading segment of the exchange may include cash market.4 Restrictions on trading The Governing Board or Managing Director or the Relevant Authority may. money market.

4.7 Permission to trade through trader workstations No person shall be permitted to trade through the TWS connected to the ATS unless such person complies with the requirements prescribed in the relevant Regulations or with such requirements as the Governing Board or Managing Director or Relevant Authority may prescribe from time to time.9 Management of the ATS The management of the ATS shall be under the charge of the employees of the exchange or such other agency authorized by the exchange on this behalf. 4.6 Eligibility to trade Managing Director or the Relevant Authority may.27 4. 4.8 Trading during good behavior A person shall be allowed to trade on the ATS of the exchange only during good behavior and shall be bound to observe the provisions contained in the rules. 4. Bye-laws and Regulations of the exchange. grant permission to the trading member of the exchange or their authorized persons or approved users to trade through the TWS connected to the ATS of the Exchange. subject to the provisions contained in this bye-laws. in its / his absolute discretion.11 Daily official list . to be recorded in writing for internal records. at any time. as may be prescribed in the relevant Regulations from time to time. refuse any person to trade on the ATS and may. 4. as may be provided in the relevant Regulations from time to time. extend or otherwise alter the timings of the trading sessions for any particular trading day. withdraw or terminate the right of trading of any such person for any reason whatsoever. The Governing Board or Managing Director or the Relevant Authority may. at his / its discretion. The Governing Board or Managing Director or the Relevant Authority may reduce. No price of any transaction done on the exchange shall be recorded unless it is made in the regular course of trading on the ATS.5 Trading Sessions The Governing Board or Managing Director or the Relevant Authority may prescribe different trading sessions on the ATS of the exchange and also decide on the timings and operational requirements for the same. The trading member shall be solely responsible for all the transactions done by or through the respective TWSs on the exchange . 4.10 Prices Prices of the transactions in securities dealt in on the ATS of the exchange shall be recorded daily in the manner .

supply.12 Trading Facility Transactions on the ATS of the exchange ay be effected through order driven. retransmit. remisiers. show or make available to any other person or reprocess . subject to the following conditions: (i) The appointment of users by a trading member and approval thereto by the Exchange shall be subject to such terms and conditions and submission of applications in such forms as the Relevant Authority may prescribe from time to time. authorized persons and approved users of a trading member for failure to comply with the applicable provisions of the Rules. subject to a compliance with such terms and conditions as the Exchange may prescribe from time to time and as may be specified in the relevant regulations which may. 4. its facilities and software and the information provided on the ATS and no such claim shall lie against the exchange at any time. (ii) The Exchange may.28 The daily official list of prices shall be issued by or under the authority of the exchange. de-register sub-brokers. for such acts of . and the concerned trading member shall continue to be liable for acts of commissions and / or omissions and / or loss / damage consequent to the de-registration. right or interest in the ATS of the Exchange. Bye-laws and Regulations.13 Registration and De-registration of Approved Users Trading members shall allow only their sub-brokers. A trading member shall not by himself or through any person on his behalf publish. revisers. The permission to use the ATS may be given to a trading member. The exchange at its discretion may provide the ATS to its trading members and their sub brokers. include payment of such deposits and / or charges. at its discretion. authorized persons and / or approved users to operate the TWS approved by the Exchange. quote driven( trough market makers or through jobbers) and or other such systems as the Exchange may provide for training and as ay be specified in the relevant regulations from time to time. authorized persons and authorized users. or may be made available on the official website of the exchange. No trading member shall have any title. 4. as may be in force from time to time. which shall be on a nondiscriminatory basis. store or use the facilities of the ATS. inter alia. Such daily official list of the prices may be published or provided in such media as may be decided by the exchange from time to time. as may be provided in the relevant regulations from time to time.

remisier. (iii) The Relevant Authority shall have the right to disallow any person from being registered as a sub-broker. (iv) Fixation of tick sizes (v) Determination of the types of trades permitted for a trading member and for a security. which may affect smooth operation of trading in securities keeping inn view the public interest. an approved person or an approved user by more than one trading member. (vi) Specifications of different order books. order conditions and other details related to orders and trades and other matters. the Exchange may. etc. and without any guarantee. remisiers. Such operational parameters may include: (i) Determination of functional details of the TWS including the system design.16 Loss of closing out-Trading member’s responsibility . (v) The Relevant Authority shall have the power to prescribe different levels of usage on the ATS. undertake on behalf of the trading member to close-out the outstanding transactions of the trading member on a valid request received from such trading member. remisier. and may allow registration with such conditions. provision for order entry. types of orders. by the sub-brokers. (ii) Limits on the spread between bid and offer rates (iii) Fixation of market lots and /or minimum quantity of securities which may be offered to be bought or sold.29 commissions and / or omissions and / or loss / damage committed by such person/s upto the time of de-registration by the Exchange. user infrastructure. as may be deemed necessary by the Relevant Authority. provisions for enquiry on the TWS. at its discretion. an authorized person or approved user of member. an authorized person or an approved user. subject to such terms and conditions as the Exchange may impose from time to time. without assigning any reason whatever. 4. 4. 4. user interface and system operations.15 Loss of access to ATS In the event of a failure or malfunctioning of a trading member’s TWS and / or loss of access to the ATS.14 Operational Parameters for Trading The Managing Director or Relevant Authority may prescribe from time to time in the relevant Regulations the operational parameters regarding transactions in securities on the ATS of the Exchange. (iv) No person shall be appointed at any time as a sub-broker.

19 Trading Member Liable for Trades A trading member shall be liable for all the trades executed on the ATS arising out of orders entered into the system by him. Bye-laws and Regulations of the Exchange. . 4. remisiers. either directly or indirectly.18 Trade management Trading may be allowed on the ATS in such securities as may be admitted to dealings on the Exchange and for such categories of trading members. employees and other persons deployed by such trading members. 4. market types. settlement periods and for such trading hours. The trading member shall be solely responsible for all the acts of commission and / or omission of authorized persons or approved users. in relation to performance of obligations arising therefrom connected therewith and incidental to such acts of commission and / or omission. sub-brokers.21 Order validation Orders placed on the ATS shall be subject to such validation checks relating to quantity or value etc.17 Maintenance of Relevant Records A trading member shall maintain the relevant records relating to the orders received from his client or modifications there of. that the trades are required to be annulled on account of fraud or willful misrepresentation or the material mistake in the trade. as may be specified in the chapter relating to compliance from time to time. as may be prescribed in the relevant Regulations from time to time. trade types. after hearing the other trading member /s to the trades. If the Governing Board or Managing Director is satisfied. 4. The Exchange may. 4..20 Trades Irrevocable Trades executed on the ATS are irrevocable and locked-in and shall be cleared and settled in accordance to the Rules.30 The trading member shall be fully accountable for the closing out transactions affected by the exchange on his behalf and shall indemnify the exchange against any loss or cost arising out of or incidental to such close out of transactions. however. 4. as the Managing Director or Relevant Authority may specify from time to time or as may be provided in the Regulations from time to time.22 Matching Rules The Exchange may from time to time specify in the relevant Regulations the rules or principles to be applied for matching orders on the ATS of the Exchange. 4. by a notice annul the trades on an application by a trading member in that behalf. which may vary for the different order books.

31 4. Transactions in Government Securities and in bearer and registered debentures shall be made through the ATS of the Exchange or through any other automated trading mechanism established with the approval of the relevant Regulatory authority. and the delivery of such Government Securities and bearer and registered debentures shall be made in physical form or in demat form.e delivery of securities and payment of funds on such dates. 4. or deals affected to manipulate or subvert the fair price of a security or orders of two or more clients matched by a trading member within his office or as may be transacted on a trade for trade basis directly between the buyer and the seller and whose settlement maybe done through the clearing agency or directly between the buying trading member and selling trading member.24 Transactions not allowed Transactions having any of the following characteristics shall not be allowed and shall be liable to be excluded from the purview of the Settlement Guarantee Fund: Transactions for carry over of securities from one settlement to another between two or more trading members. whether done on the ATS or not. which date shall not be more than such number of days following the date of the transaction as may be specified by SEBI from time to time. negotiated deals. or any other similar . 4. delivery of securities and payment of funds on the prescribed date. as may be notified by the Exchange from time to time. the following types of transactions in securities may be allowed by the Governing Board or Relevant Authority from time to time: For spot delivery contract as defined in the SCRR For hand delivery. as may be notified by SEBI / Exchange / Clearing Agency from time to time. price rigging.26 Suspension of Trading The Exchange shall intimate to the other stock exchanges immediately about suspension of trading in any security by it for market manipulation. as may be prescribed by SEBI and / or any other regulatory authority from time to time. cross deals. 4. structured deals. financing or financial deals.25 Transactions Debentures in Government Securities and Transactions in Government Securities and in bearer and registered debentures admitted to dealings on the Exchange may be for spot delivery or for rolling statement or for hand delivery. that is. For rolling statement. i. following the date of such transaction.23 Types of Transactions Allowed Save as otherwise provided.

software..32 reason. Section E Articles of Association . etc. Where information about suspension of trading in any security for reasons such as market manipulation. security and integrity of the ATS provided by the Exchange so as not to endanger or harm in any way the interest of investors and / or of the Exchange. to ensure safety.27 Use of technology The Exchange shall from time to time specify necessary norms and requirements relating to use of technology. if allowed for trading without notice to the issuer. the Exchange shall ipso facto suspend trading in such security. network. price rigging or any other similar reason is received by the Exchange from any other stock exchange. 4. which may include equipment.

. 1. which shall not be later than 3 months from the date of publication of the order under sub-section (7) of section 4B of the SCRA.33 1. 1. - 2. 1956 (hereinafter referred to as "SCRA"). unless the context otherwise requires.2 This Scheme shall have effect on its publication under sub-section (4) of Section 4B of the Securities Contracts (Regulation) Act.1 “Due Date" means the date. 2005 (hereinafter referred to as "this Scheme"). Definitions In this Scheme.3 The Gauhati Stock Exchange Limited (herein after referred to as “GSE”) shall be corporatised and demutualised in accordance with this Scheme on and from the Appointed Date as may be notified by the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) in respect of GSE under Section 4A of the SCRA: Provided that the activities specified in the respective clauses of this Scheme shall be implemented as per the time schedule specified in those clauses. Title and Commencement 1. as may be determined by the Council of Management of GSE.1 This Scheme shall be called The Gauhati Stock Exchange Limited (Corporatisation and Demutualisation) Scheme. 2.

for the purpose of its re-registration. the Memorandum and Articles of Association. "Trading Member" means a stock broker of GSE and registered with SEBI as such under the SEBI (Stock Brokers and Sub-Brokers) Regulations. the Depositories Act. Gauhati – 781 001 and recognised as a stock exchange by the Central Government under the SCRA. as a company limited by shares under section 12 of the Companies Act. and which shall be re-registered as a company limited by shares. 1956. Byelaws and Regulations. having its principal place of business at Saraf Building Annexe. 3. Road. in accordance with section 32 of the Companies Act. A.5 2.1 Re-registration GSE shall re-register itself. the SCRA. 10/. Rules. Memorandum and Articles of Association.T. 3.2 "Gauhati Stock Exchange Limited" (GSE) means the company limited by guarantee registered under the Companies Act. Rules.2 The Members. 1956. Bye-laws and Regulations of GSE shall have the same meanings respectively assigned to them in the above mentioned Acts. 2. 3. 1956. the Companies Act.6 "Shareholder" means a person who holds any equity share(s) of GSE. 1996. 2. "Member" means a person who is a member of GSE on the day preceding the date of re-registration.3 2. shall each subscribe to and pay for 1.4 "Governing Board" means the Board of Directors of GSE. 1956. as may be identified by the Council of Management of GSE.7 Words and expressions used and not defined in this Scheme but defined in the SEBI Act. prior to Due Date.34 2. as per the register of members maintained by it. in the name and style of “Gauhati Stock Exchange Limited”. in pursuance of clause 3 of this Scheme.each for cash at par. 1992. 2. 4.000 fully paid up equity shares of Rs. 1992. Governing Board . the Rules and Regulations made under these Acts.

shall be constituted in accordance with the provisions of the Articles of Association of GSE in force from time to time: Provided that – (i) the representation of Trading Members does not exceed one-fourth of the total strength of the Governing Board. by the Due Date: Provided that the allotment to a Member suspended by GSE shall be held in abeyance till the suspension continues. subject to the condition that the representatives of the Members do not exceed one-fourth of the total strength of the Governing Board. shall be entitled to 1. 6. 4. 5.2. and the offer. offer.000 fully paid-up equity shares of the face value of Rs. 5.2 The Governing Board. Listing of Shares GSE may at any time list its securities on any recognized stock exchange.2) or his nominee. SEBI may nominate directors on the Governing Board as and when deemed fit. on and from the Due Date. 7. as the case may be. 7. and the remaining directors are appointed in the manner as may be specified by SEBI from time to time.each for cash at par of GSE.2 GSE shall allot the equity shares to the entitled Members as referred to in clause 5. is an ex-officio director.3 Notwithstanding anything contained in clause 4. shall become a Trading Member on the Due Date.1 Allotment of Shares Every Member (other than the Members who have subscribed under clause 3. 4.1 Trading Rights A Member. who is registered as a stock broker on the day preceding the Due Date. issue and allotment of equity shares of GSE pursuant to this clause shall not be considered as being an invitation. by whatever name called.1 or their nominees. 5.1 The first Governing Board on re-registration shall comprise of Directors as are named as first directors in the Articles of Association of GSE. issue or allotment to the public. as the case may be. and (ii) the Chief Executive. 10/. 5. .3 The invitation to subscribe to.35 4.

a person desirous of becoming a Trading Member shall be admitted if he complies with requirements and brings in specified fees and deposits as specified in the Rules.8 Trading Members shall be bound by all obligations and liabilities towards their clients and constituents. shall become a Trading Member on being registered as a stock broker under the SEBI (Stock Brokers and Sub-Brokers) Regulations. Bye-laws and Regulations of GSE. the Trading Members shall have uniform rights and privileges. 7. It shall not be necessary for a person to be a Shareholder. direction. who is not registered as a stock broker on the day preceding the Due Date. SEBI. notification. etc. direction. etc. GSE and other authorities or other persons arising out of or under any act. omission or contract or law.6 7.9 7. notification. omission or contract or law. follow uniform standards in terms of capital adequacy. 7. in order for him to be a Trading Member.5 7. Trading Members on the Due Date shall continue to have the same rights and privileges in respect of their clients and constituents and other members arising out of or under any act. 7. etc. order. deposits. 7. as had accrued to them while being Members on or before the Due Date.36 7. in order for him to be a Shareholder. 1992 within 3 months from the Due Date. Bye-laws and Regulations of GSE. fees. irrespective of mode of acquisition of trading rights by that person: Provided that different standards may be followed for admission of a person as a Trading Member who has acquired trading rights by way of transmission. Irrespective of the date or mode of acquisition of trading rights. order. 7. 8. Shareholding Rights .3 After the Due Date.4 GSE shall. while being Members on or before the Due Date.2 A Member.7 A Trading Member may surrender his trading rights to GSE in the manner specified in the Rules. for the purpose of admitting any person as a Trading Member.10 It shall not be necessary for a person to be a Trading Member.

37 8.3 The Memorandum and Articles of Association. On and from Due Date. Bye-laws and Regulations on or before the Due Date. 9.1. 9. Rules. no Shareholder. 10. subject to the prior approval of SEBI. who is a Trading Member. shall have voting rights (taken together with voting rights held by him and by persons acting in concert with him) exceeding 5% of the voting rights in GSE. Bye-laws and Regulations of GSE may be amended after the Due Date in accordance with the applicable laws. apply to it on and from the Due Date. Rules. recognised under the SCRA.1 Memorandum and Articles of Association.3 On and from the Appointed Date. the clearing and settlement functions in relation to trading on GSE shall be carried out by the clearing and settlement mechanism as used by GSE at present or in such other manner as the Governing Board may determine. 9.1 GSE shall ensure that at-least 51% of its equity shares are held by public other than shareholders having trading rights in the manner and within the period prescribed in sub-section (8) of Section 4B of the SCRA. Bye-laws and Regulations of GSE on the day preceding the Due Date shall. 8. 10. . transfer the duties and functions of its clearing house to a Clearing Corporation.1 Transfer of Clearing and Settlement Functions GSE shall. provided that no such amendment is inconsistent with any provision of this Scheme.2 GSE shall incorporate the provisions of this Scheme appropriately in its Memorandum and Articles of Association. GSE shall ensure that public. within two years of the Due Date. The Memorandum and Articles of Association. Rules.2 8. other than shareholders having trading rights. 9. etc.2 Until the duties and functions of the clearing house are transferred as provided in clause 10. 10. unless contrary to or inconsistent with or excluded by this Scheme. continuously hold at least 51% of equity shares.

Without prejudice to the generality of the provisions in 11. GSE shall not use its assets and reserves as on the date of publication of this Scheme or the proceeds from disposal of such assets or the proceeds from disposal of successive species of assets acquired from the proceeds of disposal of such assets for any purpose other than discharging the current liabilities outstanding as on the date of publication of this Scheme or the business operations of stock exchange.1. 11. GSE shall report compliance with the provisions of this Scheme in such manner as may be required by SEBI from time to time. Utilisation of Assets and Reserves GSE shall not do anything contrary to the provisions of section 4B (3) of the SCRA. SEBI may.1 11.1 Compliance with this Scheme GSE shall ensure compliance with the provisions of this Scheme at all times and shall not do anything contrary to the provisions of this Scheme. at the written request of GSE. 12.2 13. Removal of Difficulties If any difficulty arises in giving effect to the provisions of this Scheme. 12. relax any of the provisions of this Scheme .2 12.38 11.

39 Don’t be led by market rumours or get into shady transactions. Do not sign blank Delivery instruction slip(s) while meeting security payin obligation Section G Conclusion .

indemnity insurance. And after this trading. on-line position monitoring etc. and the rules of supply and demand are applicable and also subject to Government regulation.40 Conclusion: Stock market is a place where the savers and the users if their funds come together in the market for finance. SEBI has developed the rules and regulations to protect the common investors from market failures by fixing margins. . limits the turnover. the accounts of all those investors need to be settled within a specified time limit. In the trading. several transfers of funds and securities take place between various investors. capital adequacy of brokers.

41 Section G Bibliography .

google.R.com (website) ◙◙ www. Stock market Analyst .nseindia.com (website) ◙◙ BSE’s CERTIFICATION ON SECURITIES MARKET (BCSM) ◙◙ Securities Market (Basic) Module Work Book ◙◙ Research Methodology.bseindia.42 ◙◙ www.com (website) ◙◙ www. Kishore) ◙◙ Sandipan Bhattacharjee .Methods and Techniques (by C. Kothari) ◙◙ Financial Management (by Ravi M.

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