The Securities and Exchange Board of India vide its notification dated 17th August 2021 has imposed additional penalties for repeated delivery default in order to strengthen the delivery mechanism and ensure market integrity.
Sebi, in consultation with clearing Corporations (CCs), has decided that in the case of repeated defaults by a seller or a buyer, for each instance of repeated default an additional penalty shall be imposed. Which shall be 3 % of the value of the delivery default.
Repeated Default shall be defined as an event, wherein a default on delivery obligations takes place 3 times or more during a six months period on a rolling basis and the penalty levied shall be transferred to Settlement Guarantee Fund (SGF) of the Clearing Corporation.
Earlier in March, SEBI had fixed a penalty of 4 per cent of the settlement price plus replacement cost on delivery default in agricultural commodities sellers.
While in non-agricultural commodities, the penalty for delivery default by sellers will be at 3 per cent of settlement price plus replacement cost.
The new framework will be effective after one month from the date of issuance of the circular.
