Sebi asks clearing corps, bourses to deposit penalty levied on margin money shortfall in Core SGF

To bring uniformity in depositing penalties levied on clients for short collection or non collection of margins in the commodity derivatives segment, Sebi Friday asked clearing corporations and exchanges to deposit such penalties in Core SGF.

Earlier, the regulator had asked to deposit such penalties in Investor Protection Fund (IPF) but Sebi noted that while a few clearing corporations and exchanges are crediting the penalties to IPF, others are crediting the same to Core SGF.

Core Settlement Guarantee Fund (SGF) is a fund which is available to meet settlement obligations of clearing corporation in case clearing members fail to honour settlement obligation.

Accordingly, "it is hereby clarified that all penalties levied on short-collection/non-collection of margins... shall be credited to Core SGF only," the regulator said in a circular.

In futures market, members or brokers are required to collect the margin money from clients, which is later deposited with the exchange.

Margin money refers to the minimum amount of capital that must be available in the account to trade futures contracts.