MANU/SPRL/0228/2015
Ministry : Securities and Exchange Board of India
Department/Board : SEBI
Press Release No. : 225/2015
Date : 01.09.2015
Committee on Clearing Corporations.
The Report of the Committee on Clearing Corporations, chaired by Shri K V Kamath, was placed before the SEBI Board in its meeting held on August 24, 2015. The Board took note of the report and approved the proposal to seek public comments on the recommendations of the Committee.
The "Committee on Clearing Corporations" was constituted in November 2012 with the following broad terms of reference:
a) The viability of introducing a single Clearing Corporation (CC) or interoperability between different CCs
b) Investment by a recognized CC and the manner of utilization of profits of CCs
c) To examine and review the existing regulation of transfer of profits every year by the recognized Stock Exchanges to the fund of recognized CC
d) To define 'the liquid assets' of CCs for the purpose of calculation of Net worth of a clearing corporation
e) Any other matter that Committee considers relevant or incidental thereto - The issue of Transfer of Depositories' profits to their Investor Protection Fund (IPF) was referred to the Committee.
The main recommendations of the Committee are as follows:
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On interoperability / viability of single Clearing Corporation, the committee recommended that at this juncture, maintaining separate clearing corporations for each exchange would be prudent. However, SEBI may keep the interoperability option open and consider the proposal for implementation when ground conditions are met, which, inter alia, include clear intent of the participants coming together and having a suitable framework in place to the satisfaction of SEBI.
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On investments by Clearing Corporations, the committee recommended that Clearing Corporations may be permitted to invest in Fixed Deposits and Central Government Securities. However, Clearing Corporations may not be permitted to invest in instruments like Non-convertible debentures (NCDs), Commercial Papers (CPs), Money Market Mutual Funds, etc as these instruments may carry credit/liquidity risks.
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As the requirement of Core Settlement Guarantee Fund (SGF) has already been met, it was recommended that the requirement, under Regulation 33 of SECC Regulations, 2012, to transfer twenty five per cent of its profits by every recognised stock exchange to the Fund, as specified in Regulation 39, of the recognised clearing corporation, may no longer be required. However, Risk Management Review Committee of SEBI may review the stress test model used to determine the Minimum Required Corpus of Core SGF before making such departure.
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The 'liquid assets' of clearing corporations for the purpose of calculation of its Net worth, shall comprise Fixed Deposits/Central Government Securities. Other instruments like NCDs, CPs, money market mutual funds, etc. may carry credit/liquidity risks and hence, may not be considered towards calculation of liquid assets in net worth of CC.
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With regard to transfer of profits by Depositories, it was recommended that Depositories may transfer five per cent or such percentage as may be prescribed by SEBI from time to time, of their profits from depository operations every year to the IPF since the date of amendment of SEBI (Depositories and Participants) (Amendment) Regulations, 2012 requiring transfer of profits.
The report of the Committee is placed on the SEBI website.
Public comments are invited on the recommendations made in the report. Comments may be emailed to Ms. Yogita Jadhav, Assistant General Manager, at yogitag@sebi.gov.in and to Mr. Ramaneesh Goyal, Assistant Manager, atramaneeshg@sebi.gov.in by September 24, 2015