NATIONAL SECURITIES CLEARING CORPORATION LIMITED DEPARTMENT : NSCCL CORPORATE BOND CLEARING Download Ref No : NSE/CMPT/20223

Date :March 06, 2012

Circular Ref. No : 01/2012 All Members/Custodians

Sub: Clearing and Settlement of OTC trades in Commercial Paper (CPs) and Certificate of Deposit (CDs) We draw your attention to the provisions mentioned in the circular reference no. SEBI/IMD/DF/8/2012 dated March 05, 2012 issued by Securities and Exchange Board of India (SEBI) regarding Clearing and Settlement of OTC trades in Commercial Paper (CPs) and Certificate of Deposit (CDs) through Clearing Corporations. The copy of circular issued by SEBI is enclosed.

You are requested to take note of the provisions of the circular. For clarification and queries in this regard kindly contact Mr.Bhavin Desai, Mr. Amogh Dongare and Mr. Sijo Eluvathingal For National Securities Clearing Corporation Ltd,

Nagendra Kumar Asst. Vice President [email protected]

Telephone No 022-26598169/ 26598241

Fax No 022-26598183

Email id [email protected]

Regd. Office : Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051

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NATIONAL SECURITIES CLEARING CORPORATION LIMITED CORPORATE BONDS SETTLEMENT Circular No. 532 Ref No. NSE/CMPT/13525

November 23, 2009

Dear Members / Custodians Sub : Clearing and Settlement of trades in Corporate Bonds With reference to SEBI circular SEBI/IMD/DOF-1/BOND/Cir-4/2009 dated October 16, 2009, RBI Circular RBI/2009-10/184 IDMD No.1764 /11.08.38/2009-10 dated October 16, 2009 & in continuation to NSE circular no 464 dated October 20, 2009 regarding Clearing and Settlement of trades in Corporate Bonds through Clearing Corporations, members are requested to please note the procedure for Clearing and Settlement for Corporate Bonds. Item 1 PARTICIPANT REGISTRATION Item 2 SETTLEMENT SCHEDULE Item 3 SETTLEMENT PROCEDURE Item 4 REPORTS For any further clarifications members may contact the following officials of the Clearing Corporation: Ms. Meghana Mukadam, Mr. Sanjay Das, Mr. Samir Naringrekar and Ms. Deepa Menon Phone Nos. 26598169 / 70 / 26598239 Fax Nos: 26598376 Email : [email protected], [email protected] Yours faithfully, For National Securities Clearing Corporation Ltd.

Rana Usman Assistant Vice President

Item 1 PARTICIPANT REGISTRATION 1.1 Eligibility All the entities (participants) desirous of settling trades in corporate bonds through NSCCL shall register with NSCCL. These entities inter-alia include those specified in the SEBI circular for mandatory clearing and settlement of corporate bond trades through the Clearing Corporation viz., mutual funds, foreign institutional investors/ sub-accounts, venture capital funds, foreign venture capital investors, portfolio mangers, and RBI regulated entities as specified by RBI. Entities carrying out settlement on behalf of participants shall also be registered as participants. 1.2 Registration Procedure All entities desirous of carrying out clearing and settlement of trades in corporate bonds through NSCCL shall be required to submit following documents as a part of registration procedure: Agreement • Participants carrying out clearing and settlement for themselves to execute the Corporate Bond Settlement Agreement as per format specified in Annexure I. • Participants carrying out clearing and settlement on behalf of other participants i.e., custodians to execute the Corporate Bond Settlement Agreement as per format specified in Annexure II. The agreement shall be required to be executed on Rs.100 franked document and signed and stamped on all pages. Submission of account details Participants shall also submit the details of their bank and DP account, through which the pay-in and payout shall be done, to the Clearing Corporation in the specified format as per Annexure III. Application for FIMMDA platform Participants desirous of availing the facility of viewing online status of transactions, receiving online alerts, messages etc may submit the application form for the FIMMDA platform. The platform may be used by the participants for reporting trades in corporate bonds and marking the trades for clearing & settlement by NSCCL. The format for application form for the FIMMDA platform is specified in Annexure IV. 1.3 Activation by NSCCL On submission of necessary documents as per 1.2 above, the participants / custodians,

shall be provided login id and password for login in the FIMMDA platform for reporting and clearing and settlement. Entities that have signed the undertaking and provided bank and depository account details as enumerated in 1.2 above shall be provided the details of NSCCL’s Bank Account and Depository Account which shall be used for carrying out settlements. All the registered participants shall be eligible to carry out clearing & settlement of Corporate Bond trades through NSCCL Item 2 SETTLEMENT SCHEDULE The settlements of corporate bond trades shall be carried out between Monday to Friday for three settlement cycles viz., T+0, T+1 and T+2. The indicative cut-off timings for settlements are as under: Details

Timings upto

T+0 settlement Intimation of intention to settle upto Settlement timings upto

2:00 pm 3:00 pm

T+1 and T+2 settlements Intimation of intention to settle upto Settlement timings upto

10:00 am 11:00 am

To start with, the exchange calendar followed for settlement holidays in the Capital Market Segment shall be applicable for the purposes of determining holidays for settlement of corporate bond trades through NSCCL. Item 3 SETTLEMENT PROCEDURE 3.1 Settlement of Corporate Bond Transactions All trades in corporate bonds available in demat form which are reported on any of the platforms provided by NSE viz., FIMMDA, NSE-WDM and NSE web site shall be eligible for settlement through NSCCL. In order to facilitate settlement of corporate bond trades through NSCCL, both buy and sell participants shall be required to explicitly express their intention to settle the corporate bond trades through NSCCL. Where trades are reported on the FIMMDA reporting platform the participants can directly express their intent to settle on the platform in the clear & settle screen.

The trades will be settled at participant level on DVP I basis i.e., on gross basis for securities and funds. The settlements shall be carried out through the bank and DP accounts specified by the participants. On the settlement date, during the pay-in, participants shall be required to transfer the securities to the Depository account specified by NSCCL and transfer the funds to the bank account specified by NSCCL within the stipulated cut-off time. On successful completion of pay-in of both securities and funds, the securities / funds shall be transferred by NSCCL to the depository / bank account of the counter-party. 3.2 Custodian Trades The participants desirous of clearing and settling the trade through a custodian may do so by specifying the custodian details. Custodian may be specified either for a participant wherein all the trades for such participant shall be eligible for settlement by custodian or for a trade wherein only that trade shall be eligible for settlement by custodian. In order to facilitate settlement of trades identified for settlement by custodian, through NSCCL, the custodian shall be required to explicitly express its intention to settle such trades through NSCCL. The settlement of trade in such case shall take place through the custodian’s bank and DP account as specified by the custodian. 3.3 Failure of Settlement Obligation of Corporate Bond Transactions If either of the participants / custodians fails to honor their pay-in obligation, either fully or partially, by stipulated time then the transaction shall be cancelled and shall not be considered for settlement. Further the securities / funds received towards the pay-in obligation shall be returned back to the respective participants / custodians. Item 4 REPORTS Participants who are registered on the FIMMDA platform shall be able to download below mentioned reports from the platform: 1. 2. 3. 4. 5.

Trade Transaction Obligation Settlement Status Pre Settlement Intimation Market Data

Custodians who are registered on the FIMMDA platform shall be able to download below mentioned reports from the platform: 1. Obligation 2. Settlement Status 3. Pre Settlement Intimation

Without prejudice to the above, the Participant as a seller or a buyer agrees to deposit the securities in the NSCCL designated depository account or deposit the funds in the NSCCL designated bank account in order to facilitate delivery of the securities to the buyer or funds to the seller as the case may be.

CORPORATE DEBT INSTRUMENT SETTLEMENT AGREEMENT THIS AGREEMENT is entered into on this ____ day of ______ Two Thousand and ______ at Mumbai between National Securities Clearing Corporation Limited, a company incorporated under the Companies Act, 1956 and having its registered office at Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai 400 051, (hereinafter referred to as “NSCCL”) of the One Part and ……….., Mr./Ms./M/s. ______________________, an individual/ a partnership firm / a body corporate, registered/ incorporated under the provisions of the Indian Partnership Act, 1932 / Companies Act, 1956, having his /her / its office / registered office at ________________________, hereinafter referred to as “Participant” (which expression shall, unless repugnant to the context or meaning thereof, be deemed to mean and include his/her heirs, executors and administrators / the partners of the said firm for the time being, the survivor or survivors of them and the heirs, executors and administrators of such last survivor / its successors and legal representatives, as the case may be) of the Other Part.

5.

Where the buyer deposits the funds, the seller has a right to receive the funds if the seller has deposited the securities in the NSCCL designated depository account. If the seller fails to deposit the requisite securities or the buyer fails to deposit the required funds within the stipulated time, then the buyer or the seller shall have the right to receive the return of funds or securities deposited as the case may be.

WHEREAS: NSCCL, a 100 % subsidiary of NSEIL, has decided to provide settlement services for transactions executed in Corporate Debt Instrument and Participants desired to enter into an agreement with NSCCL stipulating the terms and conditions subject to which NSCCL shall settle such transactions.

6.

TERMINATION This Agreement shall commence on the date set forth above. This Agreement may at any time during its Term, be terminated by either party by a written 60 days notice to the other party without prejudice to the rights, liabilities, interests and obligations that have accrued to the parties prior to the date of such termination and shall be without prejudice to any other rights or remedies the terminating party may have under this Agreement or at law or in equity.

7.

REPRESENTATIONS AND WARRANTIES NSCCL represents and warrants that it will provide the said services only if both the parties perform their obligations for each transaction executed.

The Participant is desirous of utilizing the services of NSCCL and NSCCL has agreed to offer its services subject to the terms and conditions contained herein. Now this Agreement witnesseth and it is hereby agreed by and between the parties as follows: 1.

SETTLEMENT SERVICES NSCCL agrees to provide the settlement services in the manner as set forth in Schedule A (the ‘Services”). Schedule A is attached to this Agreement and forms part and parcel of this Agreement. The parties agree that NSCCL may specify such other procedure from time to time for rendering the Services as it may deem fit.

NSCCL does not guarantee performance of the transactions settled by it. Performance of the transactions shall be the sole responsibility of the respective parties and NSCCL is not a counter party to any transaction settled by it.

For the purpose of this Agreement, Corporate Debt Instrument shall include Corporate Bonds, Commercial Paper, Certificates of Deposit and such other instruments whether listed or not as specified by NSCCL from time to time. 2.

3.

CONSIDERATION The Participant shall pay to the NSCCL such consideration for the services rendered by NSCCL as may be mutually agreed upon between them.

NSCCL shall hold the securities or funds deposited by the Participant as a trustee. Except as provided in this Agreement, NSCCL makes no other representations or warranties, express or implied. 8.

OBLIGATIONS OF NSCCL NSCCL agrees to provide settlement services in the manner as set forth in Schedule A for Corporate Debt Instrument transactions executed. Where NSCCL receives the funds and/or securities from a Participant as the case may be, NSCCL agrees to ensure the return of such funds or securities should there be a failure on the part of the counterparty Participant in meeting its obligations. If funds and/or securities as the case may be received from the counterparty Participants, then NSCCL shall ensure that by the end of stipulated hours, NSCCL transfers the securities from its designated depository account to the buying Participant’s account and transfer funds from its designated bank account to the selling Participant’s account. Provided that NSCCL shall not be responsible for any losses/consequences arising out of Corporate Debt Instrument transactions or any dispute, difference or claim arising out of settlement services provided by NSCCL

4.

RIGHTS OF THE PARTICIPANT AS A BUYER / SELLER Where the seller deposits the securities, the buyer has right to receive the securities, provided the buyer has deposited the funds in the NSCCL designated bank account

OBLIGATIONS OF THE PARTICIPANT Participant agrees to abide by the procedures as may be stipulated by NSCCL for the purpose of facilitating settlement of Corporate Debt Instrument transactions. Page 1 of 3

CONFIDENTIALITY NSCCL acknowledges that it or its employees may, in the course of performing its responsibilities under this Agreement, be exposed to or acquire information which is confidential to the Participant. Any and all non-public information of any form obtained by NSCCL or its employees in the performance of this Agreement shall be deemed to be confidential information of the Participant. NSCCL agrees to hold such information in strict confidence and will not copy, reproduce, sell, assign, license, market, transfer or otherwise dispose of, give or disclose such information to third parties or to use such information for any purposes whatsoever other than the provision of services to the Participant or as contemplated by this Agreement and will advise each of its employees who may be exposed to such confidential information of its obligations to keep such information confidential. Confidential information shall not include information which is (i) in or becomes part of the public domain other than by disclosure by NSCCL in violation of this Agreement, (ii) demonstrably known to NSCCL previously, (iii) independently developed by NSCCL outside of this Agreement or (iv) rightfully obtained by NSCCL from third parties. This provision shall survive termination or expiration of this Agreement. Notwithstanding anything to the contrary herein, NSCCL may disclose confidential information required to be disclosed by it by applicable law or regulation, or pursuant to an order of a court or regulatory, self-regulatory or legislative body of competent jurisdiction, or in connection with any regulatory report, audit, inquiry or other request for information from a regulatory, selfregulatory or legislative body of competent jurisdiction. In the event NSCCL receives a request to disclose any confidential information under such order or otherwise, NSCCL will (a) promptly notify the

Participant; (b) consult with the Participant on the advisability of taking steps to resist or narrow such request; and (c) if disclosure is required or deemed advisable, cooperate with the Participant in any attempt that it may make to obtain an order or other reliable assurance that confidential treatment will be accorded to designated portions of the confidential information.

9.

NO-LIABILITY The Participant agrees that NSCCL shall not be responsible for any services rendered under this Agreement and accordingly no right vests with the Participant for making any claim or any damages whatsoever. NSCCL shall not be responsible for any mistake or error in the transaction settled by it or failure of the systems of the Reserve Bank of India or of any other depository or regulatory authority. In no event shall NSCCL be liable for special, indirect, incidental or consequential damages, regardless of the form of action (including negligence or strict liability), whether or not such party is advised or might have anticipated the possibility of such damages. This provision shall survive termination or expiration of this Agreement.

10.

NOTICE Any notice required or permitted to be given under this Agreement shall be given in writing and shall be effective from the date delivered by registered or certified mail, by hand or courier to the addresses set forth on the first page of this Agreement. Notice can also be sent by e-mail.

11.

AMENDMENT The rights and obligations of the parties are governed by this Agreement. This Agreement may be amended, altered, modified, varied or added to from time to time only by a written instrument duly signed by both the parties to this Agreement.

12.

13.

ASSIGNMENT Neither party shall assign, sub-license, charge or otherwise encumber any of its rights or obligations under this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed except that NSCCL may assign this Agreement or any of its rights or obligations hereunder to any third party or to any other entity which succeeds to all or substantially all of NSCCL assets and business without the Participant’s prior consent. Any attempted assignment in violation of this shall be null and void.

14.

DISPUTES NSCCL and the Participant shall make every effort to resolve amicably any disagreement or dispute arising between them under or in connection with this Agreement by direct informal negotiations. All disputes, differences or questions, arising out of this Agreement including the interpretation of the terms herein or in regard to the obligations, failure or breach of any terms thereof by any of the parties and/or compensation/damages payable under this Agreement or of any matter whatsoever arising under this Agreement which have not been settled shall be referred to arbitration under the provisions of the Arbitration and Conciliation Act, 1996 of India to two arbitrators, one to be appointed by each of the parties and the arbitrators appointing an Umpire. The decision or award so given by the arbitrators or the Umpire as the case may be shall be final and binding on the parties hereto.

15.

GOVERNING LAW AND JURISDICTION This Agreement shall be subject to and construed and interpreted in accordance with the laws of India and each of the party hereby submits to the exclusive jurisdiction of the Courts in Mumbai. This provision shall survive termination or expiration of this Agreement.

16.

ENTIRE AGREEMENT This Agreement contains the entire agreement of the parties with respect to its subject matter and supersedes all existing and all other oral, written or other communications between the parties concerning this subject matter hereof. This Agreement may be modified only by an amendment signed by both parties in hardcopy format. This provision shall survive termination or expiration of this Agreement.

17.

HEADINGS The headings to the clauses of this Agreement are for ease of reference only and shall not affect the interpretation or construction of this Agreement.

18.

GENERAL The invalidity or unenforceability of any provision of this Agreement shall not affect the other provisions hereof, all of which shall remain enforceable in accordance with their terms. This provision shall survive termination or expiration of this Agreement.

19.

EXECUTION OF AGREEMENT This Agreement is executed in two original counterparts. Each of which is an original in itself and both of which together however shall constitute one and the same agreement.

TAXES The parties shall be liable for payment of any and all Central, State and local taxes to the Authorities independently. However, nothing contained herein shall prevent NSCCL from effecting such deductions at source as required by law or regulations.

Date: _______________________________ NATIONAL SECURITIES CLEARING CORPORATION LTD. By: ________________________________ ___________________________________ Name and Title Authorized Signatory Date: ______________________________

________________________(PARTICIPANT) By: ________________________________ ___________________________________ Name and Title Authorized Signatory Page 2 of 3



SCHEDULE A About Us The National Securities Clearing Corporation Ltd. (NSCCL), a wholly owned subsidiary of NSE, was incorporated in August 1995. NSCCL commenced clearing operations in April 1996. NSCCL has been a pioneer and possesses several years of experience in clearing & settling trades pertaining to spot & derivatives market in India. NSCCL has successfully brought about an upgradation of the clearing and settlement procedures and has brought Indian financial markets in line with international markets. Corporate Debt Instrument Settlement NSCCL present a centralised clearing and settlement mechanism for enabling timely and smoother transaction closure and completely eliminate the operational risk for counterparties. The salient features are:  Active follow up with each of the participants for settlement of transaction.  All reported transactions through FIMMDA, NSE-WDM and NSE web site are eligible for settlement and shall be picked up from reporting systems.  Alerts, messages, emails and online transaction status to participants at various stages of activity.  Every reported transaction where both the parties have entered into MOU with NSCCL and intend to settle through NSCCL to be taken up for settlement  Delivery and receipt of Corporate Debt Instrument /funds to and from NSCCL accounts  No separate bank / DP account required for participants.  There shall be no netting and each transaction shall be settled separately.  Archival mechanism



In case of cancelled deals, the Corporate Debt Instrument or funds will be returned back to the respective participant. A view is provided to the participant in respect of settlement statuso Settlement success o Settlement failure o Settlement pending

Post Settlement  All the transaction during a day will be reported on the web site.  All historical transaction will be provided to the participant by way of report.  Reports such aso Obligation (pay-in detail) o Trade transaction (Trade details) o Settlement status  All these reports can be downloaded by the participant at any time.

Settlement framework The settlement activity is grouped as under:  Pre-settlement  Settlement  Post settlement Pre-settlement  Transactions reported on NSE-WDM, NSE website and FIMMDA ready for settlements.  Participant should choose to settle through NSCCL through front end.  An alert confirming the same will be generated and sent to both participants.  Participants may modify selected fields of the transactions. The confirmation for the same is sent to intimate both participants about the modifications.  The confirmation status will be reflected for each transaction like ‘Buyer confirmed’, ‘Seller confirmed’, ‘Unconfirmed’ and ‘Fully confirmed’. Only ‘Fully confirmed’ will be settled through NSCCL. Settlement activity  Active follow-up with obligated participants for funds and Corporate Debt Instrument in respect of transactions to be settled through NSCCL.  On receipt of Corporate Debt Instrument an alert will be sent to sell and buy participants for confirmation of receipt of Corporate Debt Instrument in NSCCL Beneficiary a/c. (BO a/c)  On receipt of funds an alert will be sent to buy and sell participants for confirmation of receipt of funds in NSCCL Bank a/c  On matching of the above the Corporate Debt Instrument and funds will be swapped to the respective participants and alerts for the same will be sent respectively.  In case the transaction details do not match, an alert will be sent to the respective participants.  If the confirmation from participants is not received by cut-off time then the respective deals shall be deemed to be cancelled.  In case participants have opted for settlement through NSCCL, but both Corporate Debt Instrument and funds are not transferred to NSCCL Beneficiary A/c and NSCCL bank A/c respectively, the deal will be deemed to be cancelled.  In case of buy transaction, if a participant has transferred his funds respective to its deal, but the counter participant has failed to deliver Corporate Debt Instrument, the transaction will be deemed to be cancelled.  In case of sell transaction, if a participant has delivered Corporate Debt Instrument respective to its deal, but the counter participant has failed to pay the funds, the transaction will be deemed to be cancelled. Page 3 of 3

Format of Letter providing Bank & DP details for settlement of Corporate Debt Instruments

(On participant’s Letter head) Date: The Manager, NSCCL - Corporate Bond Settlements, 4th Floor, NSE Exchange Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex Bandra (E), Mumbai - 400 051

Sub: Bank & DP details for settlement of Corporate Debt Instruments Dear Sir/ Madam, We are interested in carrying out the clearing and settlement of our trades in corporate bond through National Securities Clearing Corporation Ltd (NSCCL). In this regard, please find below the details of our Bank and DP account : Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Particulars

To be filled by the Participant

Participant Code Participant Name Contact Person E-mail id of contact person Address for Communication with Pin Code Phone / Mobile Number of Contact Person (with STD Code) Fax Number (with STD Code) Bank Name Bank Branch Bank IFSC Code (RTGS) Bank Account no. Depository (NSDL / CDSL) DP Name DP ID Client ID

* Please attach attested copies of recent Bank & DP statements along with this letter

We undertake that the above mentioned bank and DP accounts shall be used for the purpose of making pay-ins and receiving payouts for settlement of corporate debt instrument deals through NSCCL. Yours sincerely,

Authorized Signatory Name: Designation:

To: The Manager, NSCCL - Corporate Bond Settlements, 4th Floor, NSE Exchange Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex Bandra (E), Mumbai - 400 051 Dear Sir / Madam, Sub: CBRICS Corporate Bond Reporting and Settlement Platform (Participant Application Form) We would like to register as a participant for your trade reporting platform. Please find below our details: Company Name: _______________________________________________________ _______________________________________________________ _______________________________________________________ Office Address: _______________________________________________________ _______________________________________________________ _______________________________________________________ Contact Person: _______________________________________________________ Contact No: Landline ________________________________________________ Mobile ________________________________________________ E-Mail ID: ________________________________________________________

We hereby authorize NSCCL to act upon the instructions sent through the interface and we shall be solely responsible for any errors pertaining to data entry from our end. Please advise us the account details allotted to us for this purpose at the above mentioned address. Yours sincerely,

Authorised Signatory Name: Designation: