Review of Stress Testing Methodology for Positions with Early Pay-in
Summary
SEBI amends the stress testing norms for Clearing Corporations to address high stress loss figures on positions with early pay-in. The amendment permits CCs to use the lower of 'margin exemption granted' or 'value of early paid-in goods' as margins supporting such positions. This circular is issued under Section 11(1) of the SEBI Act and becomes effective immediately upon issuance.
Text
following clause stands inserted at end of Part-B provided under Annexure to the SEBI Circular SEBI/HO/CDMRD/DRMP/CIR/P/2018/111 dated July 11, 2018:- 'h) While calculating the residual losses as per 'd' and 'f' above, for positions on which early pay-in are given by the clients/brokers, and margin exemption are granted on such positions, CCs are permitted to consider the 'margin exemption granted' or 'value of early paid-in goods', whichever is lower, as 'margins supporting those positions'.'
The circular shall be effective from date of issuance of the Circular.
This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Review of Stress Testing Methodology for Positions with Early Pay-in. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.