Fise Decides To Have Separate Trade Guarantee Funds

The Federation of Indian Stock Exchanges (Fise) has decided to have separate trade guarantee funds (TGFs).

While the integrated stock market system (ISMS) will have a trade guarantee fund to meet any shortfall in payments in trades between two different stock exchanges, separate trade guarantee funds will operate from each of the regional bourses.

Senior Fise sources yesterday said the fact that regional stock exchanges may choose to have different settlement cycles necessitated the setting up of regional trade guarantee funds. While the TGF operated by ICMS will be solely used for the purpose of meeting any shortfall between members of two different stock exchanges, the regional TGFs will be used to settle monetary disputes between members of the same regional bourse.

 

Further, the ICMS fund will not be centrally located and portions of the same will be placed with each of the regional exchanges to settle disputes arising out of default in payments.

The corpus of the trade guarantee fund is yet to be decided and Fise officials indicated the association was awaiting a Sebi directive in this regard. It was also learnt that the market-regulator has ruled that funding of a disputed trade can be carried out only through the interests accrued by the fund, and not from the principle amount.

There, however, is another plan which envisages that the separate trade guarantee funds will be clubbed together and a central clearing corporation will be set up. "This will result out of harmonisation of processes once the markets consolidate," said a source.

3 distinct group of shares to be introduced

Fise has decided to introduce three distinct group of shares for trading. The groups are A, B and C. The A group will roughly constitute 60 scrips. The selection would be based on the existing composition of the BSE Sensex stocks and also from Nifty, the 50-scrip index of the National Stock Exchange.

While the B group will constitute the Crisil-500 stocks excluding those which are already in the A group, the C group will comprise the rest of the scrips which are available for trading in all the 13-member stock exchanges of Fise.