TaxTMI 
TaxTMI 
Core Settlement Guarantee Fund, Default Waterfall and Stress Test for Limited Purpose Clearing Corporation (LPCC)
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....R/MRD/DRMNP/33 /2017 dated April 26, 2017, clearing members were permitted to bring their contribution towards Core Settlement Guarantee Fund, in the form of Central Government Securities, in addition to Cash and Bank Fixed Deposits. Also, norms relating to contribution by a non-defaulting member in the Default waterfall of Clearing Corporations were modified vide Circular No. SEBI/HO/MRD2/DCAP/CIR/P/2020/01 dated January 03, 2020. 2) Further, vide Circular no. SEBI/HO/MRD/DRMNP/CIR/P/2019/55 dated April 10, 2019, granular norms related to computation of risk-based capital and net worth requirements for Clearing Corporations were prescribed. 3) Based on consultation with various stakeholders, SEBI notified the Securities Contracts (Regula....
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....14, following Clause 8A shall be inserted: "Contribution to Core SGF of LPCC 8A) At any point of time, the contributions of various contributors to Core SGF shall be as follows: a. Issuer contribution: Contribution of Issuers of Debt securities to Core SGF shall be equivalent to 0.5 basis points of the issuance value of debt securities per annum based on the maturity of debt securities, to be collected upfront, in the manner specified by the Board. b. Clearing Member (CM) primary contribution: CMs contribution to Core SGF shall be risk based and equivalent to deficit in MRC post contribution by Issuers. The said contribution by CMs shall be subject to the following conditions: * that no exposure shall be available on Core SGF co....
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....ecoupment of Core SGF of LPCC 14A) Requisite contributions to Core SGF by various contributors (as per clauses 7 and 8A), except upfront contribution by Issuers (as per clause 8A.a) and annual contribution of profits by LPCC (as per clause 8A.c), for any month shall be made by the contributors before start of the month. In the event of usage of Core SGF during a calendar month, contributors shall, as per usage of their individual contribution, immediately replenish the Core SGF to MRC. However, such contribution towards replenishment of Core SGF by the members would be restricted to only once during a period of 30 calendar days regardless of the number of defaults during the period. The period of 30 calendar days shall commence from the....
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....ays regardless of the number of defaults during the period. The period of 30 calendar days shall commence from the date of notice of default by LPCC to market participants. (ii) LPCC shall have relevant regulations/provisions for non-defaulting members to resign un-conditionally within the abovementioned period of 30 calendar days, subject to member closing out/settling any outstanding positions, paying the capped additional contribution and any outstanding dues to SEBI. No further contribution shall be called from such resigned members. (iii) The maximum capped additional contribution by non-defaulting members shall be lower of 2 times of their primary contribution to Core SGF or 10% of the Core SGF on the date of default. (iv) In ca....
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....rcular dated April 10, 2019 shall not be applicable to LPCC. All other provisions of the said Circular dated April 10, 2019, including the aforesaid newly inserted clauses 3.1.1A and 3.1.2A shall be applicable to LPCC. 10) The provisions of this Circular shall be effective from the date of grant of recognition to LPCC by SEBI. 11) LPCC shall: a) take necessary steps to put in place systems for implementation of the circular, including necessary amendments to the relevant bye-laws, rules and regulations; b) bring the provisions of this circular to the notice of their members and also disseminate the same on its website; c) make the following details available on its website: i. Policy on composition and contributions to be made to ....