BSE tweaks base minimum capital norms

The amount is to be maintained at exchange and not with clearing corporation

Asia's oldest exchange has moved to ensure that the Base Minimum Capital(BMC) of its brokers are maintained with the exchange and not with the clearing corporation.

Base minimum capital is a risk management measure by which brokers are required to deposit a certain amount of capital with the exchange against which they are not allowed to take exposure. Currently, the amount is blocked from the collateral that the broker maintains with BSE's clearing corporation- ICCL(Indian Clearing Corporation Limited).

"Exchange, with ICCL, has initiated the process of segregating and taking over the collateral towards BMC from the collaterals maintained with ICCL. In the initial phase, the cash equivalent component of BMC collateral, to the extent possible, will be segregated from the collateral deposits maintained with ICCL and kept separately with the Exchange. Any shortfall in BMC collateral taken over by the Exchange, will be blocked from the collateral deposits of trading member maintained with ICCL," said a BSE notice dated 26th September.

Any future deposits towards maintenance of BMC are to be maintained at the exchange, it said.

The exchange noted that there are also brokers whose shortfall in BMC is blocked from the amounts they have given as collateral to the clearing corporation. They have been asked to ensure that at the time of renewals of fixed deposits or bank guarantees given as collateral to the clearing corporation, or depositing of additional collateral; such amounts (to the extent of the shortfall) are deposited with the exchange.

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