Sebi permits transfer of bourses' excess contribution from core SGF

Sebi has given the green light for transfer of excess contribution by exchanges, from core settlement guarantee fund (SGF) of one clearing corporation to another, in an inter-operable scenario.

This comes following requests made by the stock exchanges.

“It has been decided to allow transfer of excess contribution made by exchanges from the core SGF of one clearing corporation to the core SGF of another, in an inter-operable scenario,” the regulator said in a circular.

However, stock exchanges and clearing corporations have been asked to ensure certain conditions.

Following the receipt of request from an exchange in this regard, the clearing corporation that receives such a request will transfer directly such excess contribution of the exchange, in its core SGF to the core SGF of another clearing corporation, under intimation to that bourse.

Explaining further, Sebi said that suppose exchange ‘A’ requests to transfer its excess contribution from core SGF of clearing corporation ‘B’ to core SGF of clearing corporation ‘C’, then after receipt of such request from ‘A’, ‘B’ will transfer directly the excess contribution of ‘A’ from core SGF of ‘B’ to core SGF of ‘C’, under intimation to exchange ‘A’.

In addition, the clearing corporations have to ensure compliance with requirements of minimum required corpus of core SGF, as prescribed by Sebi.

In 2014, the Securities and Exchange Board of India (Sebi) had  put in place a new layer of safety net in form of ‘core settlement guarantee fund’ to mitigate risks from possible default in institutional trades.