IND SEBI Clearing Firms Collateral

On May 29, IND SEBI revised norms for acceptable collateral.

  • IND SEBI revised norms for acceptable collateral, exposure of clearing corporations.
  • Follows IND SEBI Jul. 2023 consulted on prudential norms for exposure, see #179848.
  • Also follows IND SEBI Oct. 2023 issued master circular for stock exchanges, #188261.
  • Collateral Revisions
  • Units of growth plan of overnight mutual fund schemes shall be accepted as cash equivalent by clearing corporations (CCs) with a haircut of 5%, and for other plans of overnight mutual fund schemes, the haircut of 10% shall continue to be applicable.
  • Equity shares with impact cost of up to 0.1% for order value of INR 1 lakh and traded for 99% of days over the previous 6 months shall be accepted as other liquid assets.
  • Prudential Norms for Exposure
  • For the purpose of monitoring exposure, CCs shall consider various types of exposures.
  • Including CCs’ own funds or core settlement guarantee fund corpus invested/deployed in fixed deposits, overnight and liquid mutual fund units, T-bills, government securities.
  • CCs’ exposure through members, warehouse service providers, subsidiaries, or others.
  • Circular also stipulates criteria for selection of banks, single bank exposure limits, restrictions on exposure to own group instruments, and exemption from norms.
  • Effectiveness
  • The provisions of this circular shall come into force with effect from Aug. 1, 2024.
  • CCs shall make necessary amendments to relevant bye-laws, rules and regulations.
  • Jul. 2024 IND ICCL Eligible Securities
  • On Jul. 10, 2024, IND ICCL stated it shall only accept equity securities towards collateral requirements which fulfil the prescribed criteria as approved securities.
  • In addition, it said a list of approved securities, the acceptable quantity of these securities and applicable hair cut is updated monthly on IND ICCL's website.
  • Non-compliant equity securities will not be accepted after Aug. 1, 2024, with monthly decreasing valuations for existing unapproved securities starting from that date.
  • It also introduced changes in haircut for mutual funds, including haircut in respect of units of growth plans of overnight mutual fund schemes (OMFS) shall be 5%.
  • Haircut in respect of units of mutual fund schemes other than units of OMFS or liquid mutual fund schemes or government securities mutual fund schemes (by whatever name called) shall be VaR Margin based on 6σ, subject to a minimum of 9%.
  • IND ICCL said the above revised haircut shall be applicable from Aug. 1, 2024.
  • In Jul. 2024, IND NSE issued circulars on eligible securities as collateral, see #219395.

Entity Types B/D; Depo
Reference Nt 20240710-11, 7/10/2024; Cir SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/65, 5/29/2024
Functions Actuarial and Valuation; Compliance; Financial; Legal; Risk; Treasury
Countries India
Products Clearing; Custody; Equity; Mutual Funds; Securities
Regions AP
Rule Type Final
Rule Date 5/29/2024
Effective Date 8/1/2024
Rule Id 214024
Linked to Rule :219395
Reg. Last Update 7/10/2024
Report Section International

Last substantive update on 07/14/2024