Eligibility Criteria - Membership

Where the applicant is a partnership firm, the applicant shall identify a Dominant Promoter Group as per the norms of the Exchange at the time of making the application. Any change in the shareholding of the partnership firm including that of the said Dominant Promoter Group or their sharing interest shall be effected only with the prior permission of NSE/SEBI.

Dominant Promoter Norms (.doc)

A Limited Liability Partnership as defined in the Limited Liability Partnership Act, 2008 (6 of 2009), shall be eligible to be admitted as a member of a Stock Exchange if:

• such 'limited liability partnership' undertakes to comply with such financial requirements and norms as may be specified by the Securities and Exchange Board of India for the registration of such limited liability partnerships under sub-section (1) of section 12 of the Securities and Exchange Board` of India Act, 1992 (15 of 1992);
• the designated partners of the 'limited liability partnership' are not disqualified from being members of a stock exchange under sub-rule (1) of rule 8 [except sub-clauses (b) and (f) thereof] or sub-rule (3) of rule 8 [except sub-clauses (a) and (f) thereof] of the Securities Contracts (Regulation) Rules, 1957 and the designated partners of the 'limited liability partnership' had not held the offices of Directors in any company or body corporate or partner in any firm or 'limited liability partnership', which had been a member of the stock exchange and had been declared defaulter or expelled by the stock exchange

Corporations, Companies or Institutions or subsidiaries of such Corporations, Companies or Institutions set up for providing financial services;

A Company as defined in the Companies Act, 1956 (1 of 1956), shall be eligible to be admitted as a member of a Stock Exchange provided:

• such company is formed in compliance with the provisions of Section 12 of the said Act;
• it undertakes to comply with such other financial requirements and norms as may be specified by the Securities and Exchange Board of India for the registration of such company under sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
• The directors of such company are not disqualified for being members of a stock exchange under clause (1) of rule 8 [except sub-clauses (b) and (f) thereof] or clause (3) of rule 8 [except sub-clauses (a) and (f) thereof] of the Securities Contracts (Regulation) Rules, 1957 and the directors of the company had not held the offices of the directors in any company which had been a member of the stock exchange and had been declared defaulter or expelled by the stock exchange

Dominant Promoter Norms (.doc)

The following persons are eligible to become PCMs of NSE Clearing provided they fulfill the prescribed criteria:

• SEBI Registered Custodians; or
• Banks recognised by NSE/NSE Clearing for issuance of bank guarantees

Further to Circular No: 648 with Download No: NSE/MEMB/11148 dated August 19, 2008, the eligibility membership criteria for banks in the Currency Derivatives segment is as follows:

Banks authorized by the Reserve Bank of India under section 10 of the Foreign Exchange Management Act, 1999 as AD Category - I bank are permitted to become trading and clearing members of the currency futures market of the recognized stock exchanges, on their own account and on behalf of their clients, subject to fulfilling the following minimum prudential requirements:

Minimum net worth of ₹ 500 crores.

Minimum CRAR of 10 per cent.

Net NPA should not exceed 3 per cent.

Made net profit for last 3 years.

The AD Category - I banks which fulfill the prudential requirements are required to lay down detailed guidelines with the approval of their Boards for trading and clearing of currency futures contracts and management of risks.

AD Category - I banks which do not meet the above minimum prudential requirements and AD Category - I banks which are Urban Co-operative banks or State Co-operative banks can participate in the currency futures market only as clients, subject to approval therefore from the respective regulatory Departments of the Reserve Bank.

BMC for Commodity Derivatives segment will be as follows:

Note:

• Cash and cash equivalent in ratio of 1:3
• NO Exposure on BMC

• Any entity desirous of becoming trading member, self clearing member and/or clearing member / Professional Clearing member of Debt segment shall seek registration under SEBI (Stock Broker and Sub-Broker) Regulations, 1992. However, for an interim period of six months from the date of aforesaid SEBI circular or till the application for registration as per amended SEBI (Stock Broker and Sub-Broker) Regulations,1992 is refused by the Board or till cessation of membership, whichever is earlier, the transitional provisions shall be:

1. Institutional market of debt segment: Any existing registered trading member and/or clearing member/self clearing member in  derivative segment or currency derivatives segment desirous of trading or clearing trades in Debt segment shall be permitted to trade or clear trades.

2. Retail market of debt segment: Any existing registered stock broker/trading member and /or clearing member/self clearing desirous of trading or clearing trades in Debt segment shall be permitted to trade or clear trades.

• Institutions such as scheduled commercial banks, primary dealers, pension funds, provident funds, insurance companies, mutual funds and any other investors as may be specified by sectoral regulators from time to time, can trade on the Debt segment either as clients of registered trading members or directly as trading member on proprietary basis only (i.e own-account trades only). Such institutions desirous of trading on own account only shall be given trading membership under SEBI (Stock Broker and Sub-Broker) Regulations, 1992 as proprietary trading member.
• The Base Minimum Capital (BMC) for membership in Debt Segment shall be in line with Exchange circular no-827 (Download Ref No-NSE/MEM/23082) dated March 28, 2013, regarding “Requirement of Base Minimum Capital".
• Existing members who have complied with the BMC requirements will be eligible to participate in the debt segment.
• Existing members proposing to take Self Clearing / Clearing / Professional Clearing membership in Debt segment shall be required to deposit Rs. 1 lakh in cash as IFSD towards NSE Clearing Limited (formerly known as National Securities Clearing Corporation Limited) (NSE Clearing). However no deposit shall be payable in case a CM / SCM clears and settles trades only on gross basis for both securities and funds, where no settlement guarantee is provided by the NSE Clearing Limited (formerly known as National Securities Clearing Corporation Limited).
• In case of existing members who are already a Self Clearing / Clearing / Professional Clearing member in any other segment and are paying fee of Rs. 50,000/ to SEBI, shall not be required to pay Rs. 50,000/- , separately for Self Clearing / Clearing / Professional Clearing membership in Debt segment.
• New members obtaining membership on the debt segment will be required to comply with BMC requirement as stated by SEBI and there shall be no separate deposit requirement for National Stock Exchange of India Limited (NSE) apart from the BMC.
• All new members who obtain Self Clearing / Clearing / Professional Clearing membership in Debt segment shall be required to deposit Rs. 10 lakhs with NSE Clearing and no exposure shall be provided against this deposit. No deposit shall be payable in case a CM / SCM clears and settles trades only on gross basis for both securities and funds, where no settlement guarantee is provided by the National Securities Clearing Corporation Limited.
• New members obtaining Self Clearing / Clearing / Professional Clearing membership in Debt segment shall be required to pay a fee of Rs.50,000/- every year till their registration is in force. For the first financial year, the fee is required to be paid along with application for registration and for subsequent financial years before June 1st of that financial year.

At any point of time the applicant has to ensure that either the proprietor/one designated director/partner or the Compliance Officer of the applicant entity should be successfully certified either in Securities Market (Basic) Module or Compliance Officers (Brokers) Module or the relevant module pertaining to the segments wherein membership of the Exchange has been sought.i.e.

• Capital Market (Dealers) Module
• Derivatives Market (Dealers) Module
• National Institute of Securities Markets (NISM) Series I � Currency
• Derivatives Certification Examination

The above norm would be a continued admittance norm for membership of the Exchange.

The Exchange may specify such standards for investor service and infrastructure with regard to any category of applicants as it may deem necessary, from time to time.

SEBI vide circular No. CIR/MRD/DRMNP/36/2012 dated December 19, 2012 has enhanced the requirement of BMC for trading members with a view to realign the BMC requirements with the risk profiles of the stock brokers / trading members in cash / derivative segment of the stock exchange. The revised BMC requirements as prescribed by SEBI vide their aforesaid circular are given below:-

The Base Minimum Capital primarily shall be blocked from NSE deposits of Capital Market segment. In case the NSE deposits of Capital Market segment are not enough to cover the BMC requirement, NSE deposits of Futures & Options segment and Currency Derivatives segment shall also be utilised towards the same.

The amount blocked towards BMC will not be allowed for taking exposure on trades.

Explanation (.pdf)

Further to the capital and network requirements, No entity shall be admitted as a member/partner or director of the member if

• It has been adjudged bankrupt or a receiver order in bankruptcy has been made against him or he has been proved to be insolvent even though he has obtained his final discharge;
• it has compounded with his creditors for less than full discharge of debts;
• it has been convicted of an offence involving a fraud or dishonesty;
• it is engaged as a principal or employee in any business other than that of Securities, except as a broker or agent not involving any personal financial liability or for providing merchant banking, underwriting or corporate or investment advisory services, unless he undertakes to severe its connections with such business on admission, if admitted;
• it has been at any time expelled or declared a defaulter by any other Stock Exchange or he has been debarred from trading in securities by an Regulatory Authorities like SEBI, RBI etc;
• it incurs such disqualification under the provisions of the Securities Contract (Regulations) Act, 1956 or Rules made there-under so as to disentitle such persons from seeking membership of a stock exchange;
• it incurs such disqualification consequent to which NSE determines it to be not in public interest to admit him as a member on the Exchange, provided that in case of registered firms, body corporates and companies, the condition from (will apply to, all partners in case of partnership firms, all directors in case of companies; NSE may from time to time modify / expand the scope of activities that could be considered as relevant experience for the above purpose.

Disclaimer - The Exchange reserves the right to accept or reject any application or amend the terms & conditions without assigning any reasons whatsoever. The number of members to be admitted shall be at the sole discretion of the Exchange.