The Securities and Exchange Board of India (SEBI) vide Circular dated 3rd January 2020, amends the guidelines pertaining to Core Settlement Guarantee Fund and Default Waterfall for Clearing Corporations.
The following provisions are amended under the Guidelines.
Through this amendment Clause 14 which related to “Further Contribution to/ Recoupment of Core SGF,” has been modified.
The requisite contributions to Core settlement guarantee fund (SGF) by various contributors for any month will be made by the contributors before start of the month, In the event of usage of Core SGF during a month, the contributors shall, as per usage of their individual contribution, immediately replenish the Core SGF to minimum required corpus.
However, such contribution towards replenishment of Core SGF by the members would be restricted to only once during a period of 30 calendar days regardless of the number of defaults during the period. The period of 30 calendar days shall commence from the date of notice of default by Clearing Corporation to market participants. In case there is failure on part of some contributor(s) to replenish its contribution, same shall be immediately met, on a temporary basis during the month, in the following order:
By Clearing Corporations (CC)
By Stock Exchanges (SE)
With regard to contribution by a non-defaulting member in the ‘default waterfall’ of clearing corporations, Sebi has stated that such corporations need to call for the capped additional contribution only once a month regardless of the number of defaults during the period. The maximum capped additional contribution by non-defaulting members shall be lower of 2 times of their primary contribution to Core SGF or 10% of the Core SGF of the segment on the date of default in case of equity or debt segments. The maximum capped additional contribution by non-defaulting members shall be lower of 2 times of their primary contribution to Core SGF or 20% of the Core SGF of the segment on the date of default in case of derivatives segment.
Click here to read the Notification.
