Interoperability among Clearing Corporations: Revision of criteria for entering the risk-reduction Mode
Summary
This circular withdraws the previous requirement for stock brokers to enter risk-reduction mode at 85% collateral utilization. It establishes a new threshold where stock brokers must be mandatorily placed in risk-reduction mode upon 90% utilization of their available collateral. Stock Exchanges and Clearing Corporations are directed to implement these changes by updating infrastructure, notifying members, and reporting to SEBI.
Text
Para 5.5(2) of the SEBI circular CIR/MRD/DRMNP/CIR/P/2018/145 shall stand withdrawn from the date of issuance of this circular.
Provisions of Para 7 on “Risk Reduction Mode” of the SEBI circular CIR/MRD/DP/34/2012 would be the criteria for the Stock Exchanges to determine the stock brokers which would be admitted to the risk-reduction Mode.
Stock brokers shall be mandatorily put in risk-reduction mode when 90% of the stock broker’s collateral available for adjustment against margins gets utilized on account of trades that fall under the margining system.
Take necessary steps to put in place requisite infrastructure and systems for implementation of the circular, including necessary amendments to the relevant bye-laws, rules and regulations.
Bring the provisions of this circular to the notice of their members and also disseminate the same on its website.
Communicate to SEBI, the status of implementation of the provisions of this circular.
This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992.
Source: SecMarx — Interoperability among Clearing Corporations: Revision of criteria for entering the risk-reduction Mode. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.