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NSE acts to check bad paper menace

The National Stock Exchange has accepted the recommendations of R Chandrasekaran Committee constituted by Securities and Exchange Board of India to study the problems and recommend suitable measures to overcome the prevailing problems like circulation of forged, stolen and counterfeit certificates and transfer deeds.

The board of directors of the NSE has considered the various recommendations of the committee and has decided to incorporate an appropriate clause in the listing agreement to enable implementation.

The SEBI has accepted the recommendations of the Chandrasekaran Committee which also details the role of the stock exchanges in the system.

According to the committee recommendations, the SEs are required to provide written standards and procedures for processing and clearing the securities.

Necessary provisos for any diciplinary action against erring companies and members of the exchanges as are warranted by the programme are to be incorporated. In order to maintain the uniformity of minimum standards across all exchanges, the SEBI will issue guidelines to the SEs in due course of time.

The NSE introduced the pre-verification of share certificates at the clearing house. The exchange has also built a comprehensive database of lost and stolen shares. The incidence of bad paper has reduced substantially after these measures have been put in place.

The adoption of the Chandrasekaran Committee recommendations and suitable amendments to the listing agreement would further facilitate minimising the menace of bad paper and enabling smooth functioning of the capital markets.

UNI

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