Sebi eases rules for clearing members on bullion as collateral

Clearing members of commodity derivatives bourses can now keep a higher quantum of bullion as collateral, with the market regulator Sebi tweaking rules in this regard.
Following representations from market participants, Sebi today allowed clearing members to have up to 30 per cent of their total liquid assets as commodities collateral.
"Total commodities collateral for any clearing member shall not exceed 30 per cent of the total liquid assets of the clearing member, out of which non-bullion collateral shall not exceed 15 per cent of the total liquid assets of the clearing member," the regulator said in a circular.
With the revised limit, clearing members will be allowed to keep more quantum of bullion as collateral with the exchanges concerned.

Prior to the revision, clearing members were permitted to have only up to 15 per cent of their total liquid assets as commodities collateral.
The commodity exchanges will have to make necessary arrangements to enable timely liquidation of collaterals accepted by them and may stipulate concentration limits for collateral at member level as may be necessary based on their risk perception, capability to hold and arrangements for timely liquidation.