Dematerialisation requirement: securities may shift from trade-for-trade to rolling settlement when non-promoter holdings are dematerialised.
Shifting securities from Trade-for-Trade Settlement to Rolling Settlement is allowed once a company connected to both depositories demonstrates that at least 50% of other-than-promoter holdings are dematerialised via a certificate from its RTA or, if no RTA exists, from a practicing Company Secretary or Chartered Accountant; exchanges must also confirm absence of other grounds for continuation of TFTS and report the action in their development reports to the regulator.

Exit option for regional stock exchanges: conditions for asset retention, broker de registration and shareholder exit.
Guidelines permit de recognised or surrendering Regional Stock Exchanges to retain assets subject to conditions: transfer Investor Protection and Services Funds and the 1% security deposit to SEBI's Investor Education and Protection Fund (with refund conditions for the 1% deposit); transfer outstanding statutory dues to SEBI; brokers cease to be trading members with automatic SEBI registration cancellation and remain liable for registration fees payable until de recognition, recoverable by the exchange and transferrable to SEBI. Exchanges continuing as companies must drop 'stock exchange' from names; exclusive issuers must seek new listing or provide shareholder exit under delisting norms; exchanges must reserve funds to settle pending claims and liabilities.

Mandatory listing of close ended scheme units required; daily NAV publication and debt maturity alignment enforced by mutual funds.
Units of close ended mutual fund schemes must be mandatorily listed, listing fees treated as permissible expenses, in principle listing approval obtained and disclosed in the Scheme Information Document, and NAV computed and published daily. Close ended debt schemes may invest only in securities maturing on or before the scheme's maturity. Schemes with final observations but not launched must revise their Scheme Information Documents and file them before launch.

Listing and trading of warrants in QIP combined NCD warrant issues require specific listing relaxation and a set minimum contract value.
Permits combined issuance of Non-Convertible Debentures with warrants through QIP and allows NCDs and warrants to be listed and traded separately; NCDs do not require additional Rule 19(2)(b) relaxation due to relief under the debt listing regulations, whereas warrants require specific relaxation for listing and trading; the minimum contract value for trading NCDs and warrants is fixed and the amendments are effective immediately.

Issuance of NCDs with warrants: QIBs may subscribe combined or separately; listing of warrants requires rule relaxation.
Amendments permit issuance of Non Convertible Debentures with warrants under Qualified Institutions Placement: QIBs may subscribe to the combined offering or to either instrument where separate books are run. A company must obtain a listing rule relaxation for listing/trading of the warrants. The change is effected by inserting a clause allowing subscription to combined or individual instruments and by amending the Chapter's opening text to include NCDs with warrants; the amendments took immediate effect and require merchant banker compliance.

Security deposit maintenance requires exchanges to preserve issuer deposits and enforce or renew bank guarantees promptly.
Stock exchanges must ensure issuer companies maintain the required security deposit before opening subscription lists and keep it intact; they must recoup shortfalls from expired bank guarantees by obtaining cash or fresh/renewed guarantees, implement a tracking system with alerts at least one month before guarantee expiry, and invoke guarantees if issuers fail to restore deposits within the specified timeframe. Exchanges may not adjust the security deposit against any dues of the issuer and must implement these directions within the regulator-prescribed compliance period.

Cross margining facility extended across cash and derivatives, enabling client-level margin offsets and reduced spread margin benefits.
SEBI extends cross margining across exchange-traded equity cash and equity derivatives to all market participants, allowing offset of specified derivative and underlying cash positions (with prioritized matching and eligible replicated baskets) to reduce aggregate margin. A spread margin is levied on eligible offsetting positions and benefits are computed at client level in real time and passed to clients; institutional investors receive benefits after trade confirmation. Clients may use arbitrage and non-arbitrage accounts under a unique client code. Exchanges must update systems, rules, and agreements; in default exchanges may hold or liquidate cross-margined positions and apply proceeds across segments.

Dematerialisation requirement enables shift from trade for trade to rolling settlement upon certified demat status and no other grounds.
Exchanges may shift specified securities from Trade for Trade Settlement to Rolling Settlement only if at least half of non promoter holdings are dematerialised and the issuer furnishes a certificate from its Registrar and Transfer Agent (or, if no RTA, from a practicing Company Secretary/Chartered Accountant), and provided there are no other grounds for continuation of Trade for Trade Settlement; exchanges must report actions taken in the Monthly/Quarterly Development Report.

Dematerialisation requirement: shift from trade for trade to rolling settlement permitted if majority non promoter holdings are dematerialised and both depositories connected.
Companies with connectivity to both depositories may be shifted from trade for trade to rolling settlement if a majority of non promoter holdings are dematerialised, evidenced by a certificate from the Registrar and Transfer Agent or, if no RTA exists, from a practicing Company Secretary or Chartered Accountant, and if there are no other grounds to continue trade for trade treatment; stock exchanges must report such actions in their development reports.

Electronic contract notes expanded to equity derivatives, with mandated digital signature validity and standard messaging formats.
Extension of electronic contract notes to the equity derivatives segment permitting ECNs generated through Straight Through Processing to serve as valid legal documents, adopting IFN 515 and IFN 598 messaging formats, and requiring exchanges to amend bye-laws to permit standard pre-printed terms, allow digital signatures on ECNs, and prescribe a uniform issuance format; where necessary, standard terms absent from ECNs must be incorporated into Client Broker Agreements or Tripartite Agreements.

Time period for debt limit utilization reduced to 11 working days; custodians must notify their clients promptly.
The period for utilization of an allocated debt limit is amended to 11 working days from the date of allocation, where "working days" means working days of SEBI; custodians must notify their clients. This amendment supersedes the earlier 15 day timeframe to the extent stated and the circular is available on the regulator's website.

Securities Lending and Borrowing tenure extension with corporate-action adjustments to balance market functioning and risk.
The circular increases SLB contract tenure and prescribes corporate-action adjustments: dividends recovered from the borrower at reverse leg and passed to the lender; stock splits result in proportional position adjustments; other corporate actions cause transaction foreclosure from the day before the ex-date with pro-rata lending fee recovery and return to the borrower. SLB session timing is extended to normal trading hours. Exchanges must adopt common risk-management practices balancing commercial viability and adequate controls, may take margins in cash and prescribed cash equivalents, and must amend rules and systems to implement these requirements.

Net Asset Value applicability aligned with fund realisation for large mutual fund purchases, applying the closing NAV when funds clear.
Applicability of Net Asset Value (NAV) is modified for purchase applications in Income and Debt oriented mutual fund schemes (excluding liquid funds) so that for large subscriptions the closing NAV of the day on which funds are available for utilisation will apply, aligning NAV applicability with realisation of money and moving away from NAV based on application date; all other conditions of the earlier uniform cut-off timings circular remain unchanged.

Definition of related to promoter clarifies nominees, directors and employees as related, affecting board independence requirements.
Clause 49 is amended to explain related to any promoter: if the promoter is a listed entity, its directors (other than independent directors), employees and nominees are deemed related; if the promoter is an unlisted entity, its directors, employees and nominees are deemed related. The clarification affects the requirement that at least one half of the board be independent where the non executive chairman is a promoter or related to promoters. Applicability: at in principle approval for new listings and for existing listed entities by March 31, 2009, with stock exchanges required to update listing texts and report implementation to SEBI.

Secondary market requirement for foreign institutional investors: unlisted exchanges permit off-exchange purchases not constituting initial allotment; listed exchanges require on-exchange.
SEBI requires FIIs to acquire shares in infrastructure companies only via the secondary market: unlisted exchanges may accept FII purchases outside the exchange so long as they are not initial allotments, whereas listed exchanges require FIIs to transact through the exchange; issued under Section 11(1) of the SEBI Act for compliance by exchanges, depositories and custodians.

Internal audit requirement for brokers mandates independent practicing auditors and obliges exchanges to amend rules and report compliance.
Stock brokers, trading members and clearing members must carry out a complete internal audit on a half yearly basis by practicing chartered accountants, company secretaries or cost and management accountants without conflicts of interest. Stock exchanges are required to amend bye laws and rules for implementation, notify members and publish the provisions on their websites, and communicate implementation status to the regulator in the Monthly Development Report; other earlier provisions remain unchanged.

Dispatch deadline for mutual fund annual reports shortened and abridged schemewise reports must follow Board prescribed format.
Regulatory amendments shorten the deadline for dispatch of mutual fund annual reports and abridged schemewise annual reports to unitholders from six months to four months from the date of closure of the accounting period, and require that the abridged schemewise Annual Report mailed to unitholders be in the format prescribed by the Board.

Revised exposure margin deferred due to settlement disruption risk; exchanges must implement the change the following trading day under SEBI authority.
Applicability of the revised exposure margin for gross open positions in single stock futures and gross short open positions in stock options is deferred by one trading day to address potential payment and settlement disruptions, with implementation mandated under the regulator's statutory powers and communicated to exchanges and clearing houses.

Cross-border securities lending disapproval: foreign investors barred from lending shares abroad pending domestic mechanism revisions
SEBI disapproves of Foreign Institutional Investors lending securities acquired in the Indian market abroad and directs use of the exchange based securities lending and borrowing facility; custodians must inform their FII constituents of this disapproval while SEBI reworks the domestic lending and borrowing mechanism.

Valuation adjustments for debt securities expanded to allow wider discretionary yield adjustments so mutual funds reflect current market yields.
The circular expands the discretionary yield adjustments for valuation of rated and unrated debt securities held by mutual funds, with distinct treatment for instruments of up to two years and those over two years, increasing the allowable upward and downward adjustments and raising discretionary add ons over mandatory discounts for unrated instruments; other valuation provisions remain unchanged and the revisions take effect immediately to align net asset value with prevailing market yields.