Carry Forward, Automated Lending & Borrowing and Continuous Net Settlement in the Rolling Settlement
Summary
SEBI circular SMD/Policy/Cir-43/2000 outlines the implementation framework for Carry Forward, Automated Lending & Borrowing, and Continuous Net Settlement in rolling settlement. The document details the operational mechanics of these trading mechanisms, including position holding periods and settlement timelines. It further establishes eligibility criteria for stock exchanges and mandates risk containment measures.
Text
There would be carry forward session at the end of each trading day and, the investor would have a choice of carrying forward a position for 1, 2, 3, 4 or 5 trading days.
The ALBM session would be held everyday and would involve lending and borrowing for 1, 2, 3, 4 or 5 working days.
The CNS would be available only in the Compulsory Rolling Settlement segment.
In the CNS process, the short deliveries of the seller are marked to the closing price of the day and the corresponding amount is debited to the delivering member.
Compulsory buy-in or close-out would be effected in the event of failure to deliver.
The Exchanges which have already implemented the MCFS or Automated Lending and Borrowing Mechanism (ALBM) as prescribed by SEBI in account period settlement would be eligible to implement CFRS and ALBRS respectively.
The other Exchanges would seek the prior permission of SEBI for introduction of CFRS or ALBRS. The exchanges would have to seek prior permission of SEBI for the introduction of CNS.
For obtaining such permissions the exchange must demonstrate that it has a well designed software, well established governance structure and administrative infrastructure for monitoring and enforcing the margining system and surveillance capability.
Source: SecMarx — Carry Forward, Automated Lending & Borrowing and Continuous Net Settlement in the Rolling Settlement. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.