Review of Norms regarding Regaining Matched Book for Commodity Derivatives Segment
Summary
SEBI revises Alternatives 3 and 4 for regaining matched books in the Commodity Derivatives Segment to adjust compensation and penalty rates. Clearing Corporations are mandated to implement an automated system for these tools within six months of the circular's issuance. The remaining provisions from the earlier September 2016 circular continue to prevail alongside these immediate updates.
Text
it has been decided to revise the Alternatives ‘3’ and ‘4’ in terms of compensation and penalty applicable on tear-up of positions as under: Alternative 3: Voluntary tear-up at last mark-to-market price along with compensation equal to 10% of last mark-to-market price and penalty equal to 1% of last mark-to-market price (to be credited to SGF); Alternative 4: Partial tear-up (pro-rata against members/clients having opposite positions) at last mark-to-market price along with compensation equal to 8% of last mark-to-market price and penalty equal to 1% of last mark-to-market price (to be credited to SGF).
The other provisions with regard to regaining of the matched book prescribed by the earlier circular dated September 01, 2016, shall continue to prevail.
CCs shall have an automated system to implement all such tools. CCs shall put in place such system, and also conduct testing of the same, within six months from the date of issuance of this circular.
Source: SecMarx — Review of Norms regarding Regaining Matched Book for Commodity Derivatives Segment. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.