NSE Clearing (NCL) vide circular dated June 12th 2023 has notified discontinuation of acceptance of securities as collateral through approved custodians. NSE Clearing (NCL) accepts equity securities/government securities/units of mutual funds/corporate bonds (approved securities) in demat form as collaterals towards margin and security deposit requirement of clearing member.
SEBI has provided a framework for margin obligations to be given by way of pledge / Re-pledge in Depositary System. NCL has prescribed the procedure to accept securities as collateral wherein
Clearing Member can pledge their own securities towards membership /margin deposits
- The existing facility of approved custodians
- Direct pledge in favor of NCL
- Pledge -re-pledge mechanism provided by NSDL and CDSL
It is proposed to discontinue the services of approved custodians for the purpose of pledging securities as collateral with NCL towards security or margin deposits. Accordingly:
- No fresh securities shall be permitted to be pledged to NCL accounts towards security /margin deposit in any segment through custodian with effect from July 01st , 2023.
- The existing securities already pledged through custodians shall be revalued daily and release of the pledge shall be permitted as per the existing process.
- Members having existing pledge through custodians shall need to release the same latest by September 30th, 2023.
- Clearing Member can continue to pledge their own securities towards membership /margin deposits through direct pledge in favour of NCL or through pledge -re-pledge mechanism provided by NSDL and CDSL.