Sebi permits transfer of bourses’ excess contribution from core SGF of one clearing corp to another

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Sebi permits transfer of bourses' excess contribution from core SGF of one clearing corp to another


Markets regulator Sebi on Friday allowed transfer of excess contribution made by stock exchanges from core settlement guarantee fund (SGF) of one clearing corporation to another one in inter-operable scenario.

This comes following requests made by the stock exchanges.

“It has been decided to allow transfer of excess contribution made by stock exchanges from core SGF of one clearing corporation to the core SGF of another clearing corporation, in inter-operable scenario,” Sebi said in a circular.

However, stock exchanges and clearing corporations have been asked to ensure certain conditions.

Following receipt of request from an exchange in this regard, the clearing corporation which receives such request would transfer directly such excess contribution of the exchange, in its core SGF to the core SGF of another clearing corporation, under intimation to that bourse.

Explaining further, Sebi said suppose exchange ‘A’ requests to transfer its excess contribution from core SGF of clearing corporation ‘B’ to core SGF of clearing corporation ‘C’ then after receipt of such request from ‘A’, ‘B’ would transfer directly the excess contribution of ‘A’ from core SGF of ‘B’ to core SGF of ‘C’, under intimation to exchange ‘A’.

In addition, the clearing corporations would have to ensure compliance with requirements of minimum required corpus of core SGF as prescribed by Sebi.

In 2014, the Securities and Exchange Board of India (Sebi) had put in place a new layer of safety net in form of ‘core settlement guarantee fund’ to mitigate risks from possible default in institutional trades.

The core fund was created within the existing SGF against which no exposure was given and which was readily and unconditionally available to meet settlement obligations of clearing corporation in case of clearing members failing to honour settlement obligation.





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