Securities and Exchange Board of India

17.08.2021

Capital Market

Penalty for repeated delivery default

MANU/SDER/0010/2021

1. SEBI had stipulated delivery default norms vide Circular SEBI/HO/CDMRD/DRMP/CIR/P/2021/35 dated March 23, 2021. It is felt that there is a need to put in place a suitable deterrent mechanism to address instances of repeated delivery defaults. This is expected to further strengthen the delivery mechanism and ensure market integrity.

2. In view of the above, in consultation with Clearing Corporations (CCs), the following has been decided:

2.1. In the case of repeated default by a seller or a buyer, for each instance of repeated default, an additional penalty shall be imposed, which shall be 3 % of the value of the delivery default.

2.2. Repeated Default shall be defined as an event, wherein a default on delivery obligations takes place 3 times or more during a six months period on a rolling basis.

2.3. The penalty levied shall be transferred to Settlement Guarantee Fund (SGF) of the Clearing Corporation.

3. The circular shall be effective after one month from the date of issuance of the circular.

4. This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

5. This circular is available on SEBI website.

Tags : Penalty Delivery Default

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