Outsourcing of activities, Business Continuity Plan (BCP) and Disaster Recovery (DR) and Cyber Security and Cyber Resilience framework - Limited Purpose Clearing Corporation (LPCC)
Summary
This circular permits the establishment of a Limited Purpose Clearing Corporation (LPCC) for repo transactions in debt securities and outlines its operational framework. It allows the LPCC to outsource core IT infrastructure, Business Continuity Plans, Disaster Recovery, and Cyber Security functions to existing Clearing Corporations. The document mandates specific risk management protocols, liability structures, and compliance requirements for both the LPCC and the participating Stock Exchanges and Clearing Corporations.
Text
SEBI Board permitted setting up of a Limited Purpose Clearing Corporation (LPCC) for clearing and settling repo transactions in debt securities.
The LPCC has been permitted to enter into outsourcing agreements with existing Clearing Corporations for using their core and critical IT support infrastructure / activities.
For the purpose of execution of repo in corporate bonds, LPCC shall enter into necessary agreements with the Stock Exchanges and their associated Clearing Corporations for continuity purposes.
The LPCC has been permitted to have arrangements with any of the existing Clearing Corporations for the purposes of putting in place a BCP and DR mechanism, and Cyber Security.
Stock Exchanges and Clearing Corporations, who enter into agreements with the LPCC, are directed to take necessary steps to put in place systems for implementation of the circular.
The LPCC is permitted to enter into outsourcing agreements with existing Clearing Corporations for the purpose of using their core and critical IT support infrastructure / activities.
For the purpose of execution of repo in corporate bonds, the LPCC shall enter into necessary agreements with Stock Exchanges and their associated Clearing Corporations (CCs) for continuity purposes.
The LPCC would define risk management parameters... separate bank and demat account would be opened by the LPCC for margin blocking, collateral management, pay-in and pay-out.
The LPCC shall enter into outsourcing agreements with at least two existing CCs (Service Providers) so that there is complete redundancy and business continuity in place.
The LPCC shall have the overall responsibility in respect of all the outsourced activities / operations.
For any dispute vis-a-vis the investors / participants / constituents with respect to clearing and settlement, the LPCC shall be liable.
For any dispute with respect to trading in repo, the respective Stock Exchange shall be liable.
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Source: SecMarx — Outsourcing of activities, Business Continuity Plan (BCP) and Disaster Recovery (DR) and Cyber Security and Cyber Resilience framework - Limited Purpose Clearing Corporation (LPCC). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.