Interoperability among Clearing Corporations: Revision of criteria for entering the risk-reduction Mode

Last updated: 26 March 2020
Quick Summary
The Securities and Exchange Board of India (SEBI) has revised the criteria for when clearing corporations must place stock brokers into a risk-reduction mode. Previously, this was triggered at 85% collateral utilisation. This circular withdraws that provision and clarifies that the original criteria from a 2012 SEBI circular will now apply. Specifically, stock brokers will be mandatorily placed in risk-reduction mode when 90% of their available collateral for margin adjustments is utilised.

CIRCULAR SEBI/HO/MRD2/DCAP/CIR/P/2020/45 March 23, 2020 To All Recognized Stock Exchanges and Clearing Corporations except Commodity Derivatives Exchanges/ Clearing Corporations and Stock Exchanges/ Clearing Corporations in International Financial Services Centre Dear Sir/ Madam Sub-Int
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FAQ :

The circular revises the criteria for when stock brokers are mandatorily placed into a risk-reduction mode by clearing corporations.

Previously, stock brokers were mandatorily subjected to risk-reduction mode upon utilisation of 85% of their available collateral.

Stock brokers will now be mandatorily put into risk-reduction mode when 90% of their available collateral for margin adjustments is utilised.

The provisions of Para 7 on 'Risk Reduction Mode' of the SEBI circular dated December 13, 2012, will be used.

They are directed to implement the necessary infrastructure, amend bye-laws, inform their members, and report implementation status to SEBI.

 

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Notification No : SEBI/HO/MRD2/DCAP/CIR/P/2020/45
Published in Corporate Law
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