Bank Guarantees (BGs) created out of clients’ funds

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.... Guarantees (BGs) created out of clients' funds 1. Currently Stock Brokers (SBs)/ Clearing Members (CMs) pledge client's funds with Banks which in turn issue Bank Guarantees (BGs) to clearing corporations for higher amounts. This implicit leverage exposes the market and especially the client's funds to risks. Pursuant to discussions with various stakeholders, it has been decided to impl....

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....orporations shall put in place periodic reporting mechanisms for SBs/CMs. 4. Stock exchanges and clearing corporations are directed to submit the following data to SEBI on fortnightly basis (starting from June 01, 2023): Collateral data as on < Date > at < Name of the clearing corporation > Name of the SB/CM Nature of the entity (SB/CM/SCM) Total BG amount as collateral Total ....

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.... to the extent as stated hereinabove: a. SEBI circular MRD/DoP/SE/CIR-11/2008 dated April 17, 2008 on 'Collateral deposited by clients with SBs'; b. SEBI circular MIRSD/ SE /Cir-19/2009 dated December 03, 2009 on 'Dealings between a client and a stock broker'; c. SEBI circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016 on 'Enhanced supervision of stock b....