Suspension & Expulsion
The Exchange may expel or suspend and/or fine under censure and/or warn and/or withdraw any of the membership rights of a Trading Member if it be guilty of contravention, non-compliance, disobedience, disregard or evasion of any of the Bye Laws, Rules and Regulations of the Exchange or of any resolutions, orders, notices, directions or decisions or rulings of the Exchange or the relevant authority or of any other committee or officer of the Exchange authorised on that behalf or of any conduct, proceeding or method of business which the relevant authority in its absolute discretion deems dishonourable, disgraceful or unbecoming of a Trading Member of the Exchange or inconsistent with just and equitable principles of trade or detrimental to the interests, good name or welfare of the Exchange or prejudicial or subversive to its objects and purposes.
A Trading Member shall be deemed guilty of misconduct for any of the following or similar acts or omissions namely:
- Fraud: If it is convicted of a criminal offence or commits fraud or a fraudulent act which in the opinion of the relevant authority renders it unfit to be a Trading Member;
- Violation: If it has violated provisions of any statute governing the activities, business and operations of the Exchange, Trading Members and securities business in general;
- Improper Conduct: If in the opinion of the relevant authority it is guilty of dishonourable or disgraceful or disorderly or improper conduct on the Exchange or of willfully obstructing the business of the Exchange;
- Breach of Rules, Bye Laws and Regulations: If it shields or assists or omits to report any Trading Member whom it has known to have committed a breach or evasion of any Rule, Bye-law and Regulation of the Exchange or of any resolution, order, notice or direction there under of the relevant authority or of any committee or officer or the Exchange authorised in that behalf;
- Failure to Comply with Resolutions: If it contravenes or refuses or fails to comply with or abide by any resolution, order, notice, direction, decision or ruling of the relevant authority or of any committee or officer of the Exchange or other person authorised in that behalf under the Bye Laws, Rules and Regulations of the Exchange;
- Failure to Submit to or Abide by Arbitration: If it neglects or fails or refuses to submit to arbitration or to abide by or carry out any award, decision or order of the relevant authority or the Arbitration Committee or the arbitrators made in connection with a reference under the Bye Laws, Rules and Regulations of the Exchange;
- Failure to Testify or Give Information: If it neglects or fails or refuses to submit to the relevant authority or to a committee or an officer of the Exchange authorised in that behalf, such books, correspondence, documents and papers or any part thereof as may be required to be produced or to appeal and testify before or cause any of its partners, attorneys, agents, authorised representatives or employees to appear and testify before the relevant authority or such committee or officer of the Exchange or other person authorised in that behalf;
- Failure to Submit Special Returns: If it neglects or fails or refuses to submit to the relevant authority, within the time notified in that behalf, special returns in such form as the relevant authority may from time to time prescribe together with such other information as the relevant authority may require whenever circumstances arise which in the opinion of the relevant authority make it desirable that such special returns or information should be furnished by any or all the Trading Members;
- Failure to submit Audited Accounts: If it neglects or fails or refuses to submit its audited accounts to the Exchange within such time as may be prescribed by the relevant authority from time to time.
- Failure to Compare or Submit Accounts with Defaulter: If it neglects or fails to compare its accounts with the Defaulters' Committee or to submit to it a statement of its accounts with a defaulter or a certificate that it has no such account or if it makes a false or misleading statement therein
- False or Misleading Returns: If it neglects or fails or refuses to submit or makes any false or misleading statement in its clearing forms or returns required to be submitted to the Exchange under the Bye Laws, Rules and Regulations
- Vexatious Complaints: If it or its agent brings before the relevant authority or a committee or an officer of the Exchange or other person authorised in that behalf a charge, complaint or suit which in the opinion of the relevant authority is frivolous, vexatious or malicious
- Failure to Pay Dues and Fees: If it fails to pay its subscription, fees, arbitration charges or any other money which may be due from it or any fine or penalty imposed on it.
A Trading Member shall be deemed guilty of un-businesslike conduct for any of the following or similar acts or omissions namely:
- Fictitious Names: If it transacts its own business or the business of its constituent in fictitious names or if he carries on business in more than one trading segment of the Exchange under fictitious names;
- Fictitious Dealings: If it makes a fictitious transaction or gives an order for the purchase or sale of securities the execution of which would involve no change of ownership or executes such an order with knowledge of its character
- Circulation of Rumours: If it, in any manner, circulates or causes to be circulated any rumours
- Prejudicial Business: If it makes or assists in making or with such knowledge is a party to or assists in carrying out any plan or scheme for the making of any purchases or sales or offers of purchase or sale of securities for the purpose of upsetting the equilibrium of the market or bringing about a condition in which prices will not fairly reflect market values
- Market Manipulation and Rigging: If it directly or indirectly, alone or with other persons, effects series of transactions in any security to create actual or apparent active trading in such security or raising or depressing the prices of such security for the purpose of inducing purchase or sale of such security by others
- Unwarrantable Business: If it engages in reckless or unwarrantable or un-businesslike dealings in the market or effects purchases or sales for its constituent's account or for any account in which it is directly or indirectly interested such that the purchases or sales are excessive in view of its constituent's or his own means and financial resources or in view of the market for such security
- Compromise: If it connives at a private failure of a Trading Member or accepts less than a full and bona fide money payment in settlement of a debt due by a Trading Member arising out of a transaction in securities
- Dishonoured Cheque: If it issues to any other Trading Member or to its constituents a cheque which is dishonoured on presentation for whatever reasons
- Failure to Carry out Transactions with Constituents: If it fails, in the opinion of the relevant authority, to carry out its committed transactions with its constituents
A Trading Member shall be deemed guilty of unprofessional conduct for any of the following or similar acts or omissions namely:
- Business in Securities in which Dealings not Permitted: If it enters into dealings in securities in which dealings are not permitted
- Business for Defaulting Constituent: If it deals or transacts business directly or indirectly or executes an order for a constituent who has within its knowledge failed to carry out engagements relating to securities and is in default to another Trading Member, unless such constituent shall have made a satisfactory arrangement with the Trading Member who is its creditor
- Business for Insolvent: If without first obtaining the consent of the relevant authority, it directly or indirectly is interested in or associated in business with or transacts any business with or for any individual who has been bankrupt or insolvent even though such individual shall have obtained his final discharge from an Insolvency Court
- Business without Permission when under Suspension: If without the permission of the relevant authority, it does business on its own account or on account of a principal with or through a Trading Member during the period it is required by the relevant authority to suspend business on the Exchange
- Business for or with Suspended, Expelled and Defaulter Trading Members: If without the special permission of the relevant authority, it shares brokerage with or carries on business or makes any deal for or with any Trading Member who has been suspended, expelled or declared a defaulter
- Business for Employees of other Trading Members: If it transacts business, directly or indirectly, for or with or executes an order for a authorised representative or employee of another Trading Member without the written consent of such employing Trading Member
- Business for Exchange Employees: If it makes a speculative transaction in which an employee of the Exchange is directly or indirectly interested
- Advertisement: If it advertises for business purposes or issues regular circulars or other business communications to persons other than its own constituents, Trading Members of the Exchange, Banks and Joint Stock Companies or publishes pamphlets, circular or any other literature or report or information relating to the stock markets with its name attached
- Evasion of Margin Requirements: If it willfully evades or attempts to evade or assists in evading the margin requirements prescribed in these Bye Laws and Regulations
- Brokerage Charge: If it willfully deviates from or evades or attempts to evade the Bye Laws and Regulations relating to charging and sharing of brokerage
The Exchange shall require a Trading Member to suspend its business when it fails to provide the margin deposit and/or meet capital adequacy norms as provided in these Bye Laws, Rules and Regulations and the suspension of business shall continue until it furnishes the necessary margin deposit or meets the capital adequacy requirements. The relevant authority may expel a Trading Member acting in contravention of this provision.
The relevant authority may require a Trading Member to suspend its business in part or in whole:
- Prejudicial Business: When in the opinion of the relevant authority, the Trading Member conducts business in a manner prejudicial to the Exchange by making purchases or sales of securities or offers to purchase or sell securities for the purpose of upsetting equilibrium of the market or bringing about a condition of demoralisation in which prices will not fairly reflect market values, or
- Unwarrantable Business: When in the opinion of the relevant authority, the Trading Member engages in unwarrantable business or effects purchases or sales for its constituent's account or for any account in which it is directly or indirectly interested such that the purchases or sales are excessive in view of its constituent's or its own means and financial resources or in view of the market for such security, or
- Unsatisfactory Financial Condition: When in the opinion of the relevant authority, the Trading Member is in such financial condition that it cannot be permitted to do business with safety to its creditors or the Exchange
The suspension of business as above shall continue until the Trading Member has been allowed by the relevant authority to resume business on its paying such deposit or on its doing such act or providing such thing as the relevant authority may require.
The suspension of a Trading Member shall have the following consequences namely:
- Suspension of Membership Rights: The suspended Trading Member shall, during the terms of its suspension, be deprived of and excluded from all the rights and privileges of membership including the right to attend or vote at any meeting of the general body of Trading Members of the relevant segment, but it may be proceeded against by the relevant authority for any offence committed by it either before or after its suspension and the relevant authority shall not be debarred from taking cognisance of and adjudicating on or dealing with any claim made against it by other Trading Members
- Rights of Creditors Unimpaired: The suspension shall not affect the rights of the Trading Members who are creditors of the suspended Trading Member
- Fulfillment of Contracts: The suspended Trading Member shall be bound to fulfill contracts outstanding at the time of its suspension
- Further Business Prohibited: The suspended Trading Member shall not during the terms of its suspension make any trade or transact any business with or through a Trading Member, provided that it may, with the permission of the relevant authority, close with or through a Trading Member, the transactions outstanding at the time of its suspension
- Trading Members Not to Deal: No Trading Member shall transact business for or with or share brokerage with a suspended Trading Member during the terms of its suspension except with the previous permission of the relevant authority.
The expulsion of a Trading Member shall have the following consequences namely:
- Trading Membership Rights Forfeited: The expelled Trading Member shall forfeit to the Exchange its right of trading membership and all rights and privileges as a Trading Member of the Exchange including any right to the use of or any claim upon or any interest in any property or funds of the Exchange but any liability of any such Trading Member to the Exchange or to any Trading Member of the Exchange shall continue and remain unaffected by its expulsion
- Office Vacated: The expulsion shall create a vacancy in any office or position held by the expelled Trading Member
- Rights of Creditors Unimpaired: The expulsion shall not affect the rights of the Trading Members who are creditors of the expelled Trading Member
- Fulfillment of Contracts: The expelled Trading Member shall be bound to fulfill transactions outstanding at the time of his expulsion and it may with the permission of the relevant authority close such outstanding transactions with or through a Trading Member
- Trading members Not to Deal: No Trading Member shall transact business for or with or share brokerage with the expelled Trading Member except with the previous permission of the relevant authority
Updated on: 02/01/2023
