Pro-account trading controls: mandate single authorized terminal location and client-code use, with immediate compliance required.
Members must limit placement of orders on the pro-account to a single specified location; terminals at other locations may place orders only by entering the appropriate client code. Members seeking pro-account access from multiple locations must submit an undertaking stating reasons, and exchanges may permit multiple locations after due diligence. Exchanges must implement these measures immediately, take disciplinary action for misuse, amend bye-laws and report implementation.

Corporate governance rules require listed companies to adopt the revised listing clause and submit periodic compliance reports by deadline.
SEBI revised Clause 49 of the Listing Agreement to strengthen corporate governance, requiring immediate application for new listings and phased implementation for existing listed companies within prescribed capital or net worth thresholds by the compliance deadline. Companies subject to the clause must submit quarterly compliance reports via their Compliance Officer or Chief Executive Officer; stock exchanges must verify pre listing compliance, obtain undertakings or escrow where appropriate, establish monitoring cells to gather quarterly reports, and submit consolidated compliance returns to SEBI within thirty days of each quarter end.

Unauthorized access to trading terminals barred; exchanges must enforce penalties and monitor subsidiaries to prevent illegal trading.
Exchanges with subsidiaries must prevent members/sub brokers from providing unauthorized access or terminals for illegal trading by exercising vigilance and surveillance; where such conduct is detected, exchanges are to initiate penal action including fines and suspension of trading rights of the subsidiary/sub broker and must report remedial steps to the regulator and include them in the Monthly Development Report commencing August 2003.

Authorized software compliance: members must submit affidavits confirming use of approved trading software and CTCL terminal controls.
SEBI directed exchanges to obtain affidavits from members and sub-brokers confirming exclusive use of authorized trading software, that any CTCL facility uses exchange-approved software without unauthorized modification, and that CTCL terminals are located, operated and not redistributed or extended via alternative connectivity contrary to exchange approvals. Members must further declare that orders are executed in clients' names/codes at instructed quantities and prices, contract notes accurately reflect executed trades, and constituent terminals are not used by unregistered intermediaries.

Offshore derivative instruments reporting required: revised one time and fortnightly formats with electronic submission and custodian confirmation.
Revised reporting requires a one time Annexure A report of outstanding offshore derivatives as on August 15, 2003, and fortnightly Annexure B reports of issuance, renewal, cancellation and redemption to be filed within three working days after each fortnight. Submissions must be Excel soft copies emailed to the specified SEBI addresses. The instructions take effect from the second fortnight of August 2003, supersede the prior format, and custodians must inform FII clients and submit compliance confirmation by the specified date.

Recordkeeping requirement for destroyed arbitration records clarified; exchanges must maintain certified register and amend rules accordingly.
The corrigendum amends the prior circular to require that brief particulars of destroyed arbitration records shall be entered in a register along with a certification of the date and mode of destruction. Exchanges must amend their bye-laws, notify member brokers and clearing members, publish the requirement on their websites for investor access, and report implementation status to SEBI in the Monthly Development Report for August 2003.

Settlement mode change: selected scrips to move from trade-for-trade into normal rolling settlement in phased transfers.
SEBI mandates that scrips which have established connectivity with both depositories be reclassified from the trade-for-trade settlement window into the normal rolling settlement regime; eligible companies listed for immediate transfer are to commence trading under normal rolling settlement forthwith, while additional scrips meeting connectivity are to be shifted in phased tranches by the respective stock exchanges according to the regulator's schedule.

Employee trading restrictions updated to align with insider trading regulations, shortening approval and cooling-off periods.
SEBI aligns employee trading rules with the SEBI (Insider Trading) Regulations: compliance officer approval for an access person's security transaction is valid for one week instead of ten calendar days, and the prohibition on profiting from matched purchase-and-sale transactions by employees is reduced from sixty days to thirty days; issued under Regulation 77 of the SEBI (Mutual Funds) Regulations, 1996.

Venture Capital Reporting: Revised format mandates quarterly submission of comprehensive fund and industry investment data within a short deadline.
SEBI requires registered venture capital funds to use a revised reporting format and to submit complete quarterly reports within three days after each calendar quarter end, providing cumulative funds raised by scheme across investor categories with percentage shares and an industry-wise break down of cumulative investments across specified sectors.

Prior approval for change in broker status required; defined circumstances, fee obligations and procedural filings now mandated.
Prior approval under Rule 4(c) is required for specified changes in broker status-change in designated/whole-time directors, change in control, conversion of business form, transfers, consolidation/merger/amalgamation, and surrender of registration. Exchanges must approve and forward applications to SEBI within one week with confirmations on absence of defaults, pending complaints or investigations, payment of applicable fees and prescribed turnover details; full fees and interest are payable where indicated and certain approvals permit a six-month period for fresh registration.

Employee stock option governance tightened; new disclosure, valuation and listing requirements and trust consolidation rules.
Amendments expand definitions, require a Compensation Committee and prescribed Disclosure Document, mandate disclosure of valuation method and, if intrinsic value is used, disclosure of the difference from fair value and its impact on profits and EPS. Schedule III prescribes fair value measurement and assumptions; Schedule IV prescribes pre grant disclosures. Repricing needs shareholder approval; listing rules require filings and in principle approvals, special IPO ratification and prospectus disclosures for pre IPO ESOS/ESPS shares; trust administration must be consolidated under AS21.

Mutual fund risk disclosure requirement: advertisements must show prominent market risk warnings and benchmark comparisons.
Mutual funds must include a clear market risk disclosure in advertisements with media specific prominence and legibility standards; sales and promotional materials (including fact sheets, research reports, newsletters, telemarketing scripts and press releases) are subject to the same standards. Performance advertisements must disclose benchmark returns for the same periods; money market scheme returns may be shown on short annualised horizons; exclusions of distribution taxes in reinvestment return calculations must be disclosed; dividend payout ads must note the consequent NAV reduction and taxes. Rankings must be current to the most recent quarter or applicable periodicity prior to publication or use.

Failure to pay regulatory fees triggers suspension of registration and potential enforcement under securities regulations.
Brokers must pay registration fees as required by Schedule III; failure permits the Board under Regulation 10(2) to suspend registration and stop brokers from dealing in securities. Non-compliance with registration conditions, including unpaid fees, may lead to enquiry and penalties under SEBI procedure regulations. A previously provided transitional facility for partial payment and undertakings was withdrawn; brokers who did not comply and whose collections are not stayed by court must pay outstanding fees and interest up to the stated financial year by the prescribed deadline or face enforcement under the SEBI Act and broker regulations.

Close out mark up: reduced treatment for high grade debentures, with existing mark up retained for other securities.
SEBI directs a differential close out mark up: debentures and bonds rated triple A or above are subject to a lower close out mark up while other debentures, bonds and equities remain subject to the existing higher mark up. Exchanges must amend bye laws and notify members and investors, publish the change on their websites, and report implementation status to SEBI, pursuant to powers under section 11(1) of the SEBI Act read with section 10 of the Securities Contracts (Regulation) Act to protect investor interests and regulate the market.

Broker inspections require expanded annual coverage with transparent selection and mandatory quarterly reporting and follow-up.
Stock exchanges must increase annual inspections of active brokers, including subsidiaries of other exchanges registered as brokers, adopt transparent selection criteria and an inspection policy, ensure comprehensive inspections with adequate follow-up and disciplinary action, and submit standardized quarterly reports in a two-part format detailing summary metrics and comprehensive broker level inspection records.

Consolidation of mutual fund schemes requires board approval, investor exit at prevailing NAV, and detailed investor disclosures.
Consolidation of mutual fund schemes is a change in fundamental attributes and requires approval by the Boards of the AMC and Trustees, and filing of the proposal, draft offer document and draft unitholder letter with SEBI. Unitholders must be offered an exit at prevailing NAV without exit load with specified disclosures including the new scheme's features, unit allocation illustration, percentages of NPAs and illiquid assets, and tax impact. AMCs must maintain dispatch records and file a report to SEBI detailing unitholder numbers and net assets pre- and post-consolidation.

Base minimum capital relief for low-turnover exchanges allows refund of excess capital subject to compliance.
SEBI permits exchanges with average daily turnover below Rs. 1 crore for any three consecutive months to maintain member BMC at Rs. 1 lakh and to refund excess BMC to members provided the member has been inactive for 12 months, has no pending investor complaints or arbitration cases, and has paid SEBI turnover fees with a No-Objection Certificate; exchanges may deduct amounts for investor claims, arbitration-related dues, administrative expenses and SEBI fees. If exchange turnover exceeds the threshold for one month, BMC must be restored to the earlier higher level and undertakings obtained; exchanges must amend bye-laws, notify members, publish the change and report implementation to SEBI.

Fund of Funds scheme expenses and manager accountability clarified; disclosure, investment and expense limits required.
The amendments define fund of funds schemes and require the CEO of the asset management company to ensure regulatory compliance, overall risk management, and that fund managers invest in the interest of unitholders. Fund managers must ensure investments meet scheme objectives. Fund of funds schemes must disclose that investors bear recurring expenses of the scheme plus expenses of underlying schemes, may not invest in other fund of funds, and may only hold non-scheme assets to meet disclosed liquidity requirements for repurchases or redemptions.

Cash composition requirement tightened for additional capital and margins, with stricter cash-equivalent and eligible securities valuation rules.
Regulator increases the required minimum cash composition of additional capital and margins and maintains that mark-to-market margins be collected in cash, bank guarantees and FDRs. Cash equivalents are defined to include specified FDRs, qualifying bank guarantees, government securities and units of liquid or government-securities mutual funds with prescribed haircuts; bank guarantees must be from banks meeting the net worth threshold and exchanges must cap any single-bank exposure of guarantee funds. Eligible non-cash securities for additional capital/margins are Group I equities and mutual fund units subject to VaR-based haircuts and daily valuation; base minimum capital securities are Group I shares subject to a standard haircut and weekly valuation.

Reduced exposure for rolling settlements now extends for additional settlement cycles and imposes tiered exposure limits and collateral conditions.
Where a trading member's settlement shortage exceeds the base minimum capital or where shortages exceed 20% of BMC on six occasions within three months, trading is to be suspended and securities pay-out withheld. After full recovery, the member may trade at a reduced gross exposure according to cumulative shortage bands; the reduced level must be maintained for ten rolling settlements and is restored if shortages over the subsequent ten rolling settlements stay below 20% of BMC. Immediate restoration is allowed upon deposit of equivalent funds-shortage collateral retained for ten rolling settlements, with no interest or exposure benefit; collateral forms accepted include cash, fixed deposit receipts and bank guarantees. Penal interest on outstanding amounts is set at not less than 0.07% per day. Exchanges must amend rules, notify members and report implementation.