The Securities and Exchange Board of India (SEBI) has issued crucial updates for recognized Clearing Corporations. These updates focus on the contribution to the Core Settlement Guarantee Fund (Core SGF) and the default waterfall mechanism for Limited Purpose Clearing Corporations (LPCCs).
If the Core SGF is utilized within a calendar month, contributors must immediately replenish the fund to the MRC based on their individual usage. This replenishment is restricted to once every 30 calendar days, regardless of the number of defaults within this period. The 30-day period starts from the notice of default issued by the clearing corporation (CC) to market participants.
SEBI’s new guidelines aim to enhance the robustness and reliability of the Core SGF and default waterfall mechanisms for LPCCs. By involving participants directly in the contribution process and establishing clear timelines and procedures for fund replenishment and default handling, these updates are designed to strengthen the financial stability and integrity of the clearing system. Clearing corporations must promptly adapt to these changes to ensure compliance and safeguard market operations.
