Hyderabad, Aug 20: The Hyderabad Stock Exchange (HSE) has completed all formalities, as stipulated by SEBI, to operate the Trade Guarantee Fund (TGF). According to exchange officials, the exchange is now waiting for the final nod from the market regulator.

According to HSE executive director M Subrahmanyam, SEBI is expected to approve the proposal for TGF within a month's time. The exchange has been vigorously following SEBI for its approval to implement the trade guarantee fund as it is also a prerequisite for inter-connected market system.

However, earlier this year, the market regulator had expressed doubts with regard to HSE's TGF operation methods, including the corpus fund of Rs 2 crore, which was considered inadequate by SEBI to cover trading activities.

While claiming that the fund's corpus was adequate, the HSE official said that the liability in respect of top 10 members at the rate of 20 per cent on their net pay-in (which is the largest pay-in for one year period), would amount to only about Rs 23 lakh. ``As the corpus fund has already generated an interest amount of about Rs 30 lakh, the corpus need not be disturbed,'' he said.

Besides, the exchange plans to collect recurring contribution from the members, based on their turnover, at the rate of Rs 2.50 for every Rs 1 lakh of turnover. ``Thus, the corpus for the TGF would be sufficient to cover trading activities,'' said Subrahmanyam.

The Hyderabad Stock Exchange has also decided to cover all the 180 members, who participate in on-line trading, under stock brokers' insurance policy for a sum of Rs 10 lakh each, against bad deliveries due to forgery, fraud, counterfeit, lost and stolen securities, etc. ``To subscribe to the insurance policy, each member will have to pay a premium of Rs 5,000, which will be debited in one instalment to their respective bank accounts,'' he said. ``However, if a member wants a higher indemnity limit, he will have to pay separately for the difference in the premium, '' he added. Subrahmanyam feels that the insurance policy will also help the exchange in successfully managing the Trade Guarantee Fund.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.