Sebi to exempt bourses from giving 25% profit to SGF

Markets regulator Sebi today decided to exempt the stock exchanges from transferring 25 per cent of their annual profit to the core Settlement Guarantee fund (SGF) of clearing corporations.
However, in case of any shortfall in the corpus, stock exchanges, along with clearing corporations, would replenish the Core SGF immediately.
After a meeting of its board here, Sebi said it has decided to do away with the requirement of transfer of 25 per cent of profits by stock exchanges.
Currently, stock exchanges credit 25 per cent of their profits every year to the Fund of the recognised clearing corporations, which clears and settles trades executed on the bourses.

"However, there will be a mandate that stock exchanges, along with clearing corporations, shall replenish the Core SGF immediately, in case of any shortfall in the corpus.Such a review will take place on a monthly basis or earlier as and when required," it said in a statement.
Accordingly, Securities Contracts Regulation (Stock Exchanges and Clearing Corporations) Regulations, 2012 would be amended.

The board has considered the recommendations of the expert panel, constituted under the chairmanship of eminent banker K V Kamath and and observations of the Sebi's Risk Management Review Committee.
The panel, set-up by Sebi in November 2012, was entrusted with the task to look into the issue of transfer of profits by stock exchanges to the core SGF of clearing corporations as well define liquid assets of such corporations for the purpose of calculation of networth.

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Leading stock exchange BSE has hailed the Sebi's decision of exempting bourses from transferring a quarter of their profits to SGF of clearing corporations.
"BSE welcomes the Sebi decision of exempting the contribution from stock exchanges of 25 per cent profit to settlement guarantee funds of clearing corporation in line with Kamath committee recommendation," the exchange spokesperson said.