SEBI Directs Participants’ Contribution to ‘Core Settlement Guarantee Fund’ of Limited Purpose Clearing Corporation

Circular No. SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/83; Dated: 19.06.2024

Earlier, SEBI prescribed guidelines for contributions to the Core Settlement Guarantee Fund (SGF) of Limited Purpose Clearing Corporation (LPCC) and its default waterfall. SEBI now directs the contribution of participants who desire direct participation, not through a clearing member, to SGF, subject to a certain condition.

The condition states that no exposure shall be available on the Core SGF contribution of any participant (exposure-free collateral of participants available with CC can be considered towards Core SGF contribution of participants) and that required contributions of individual participants must be pro-rata based on the risk they bring to the system.

Further, LPCC must have the flexibility to collect primary contributions, including the flexibility to collect the participant’s primary contribution upfront or staggered over a period of time.

If LPCC does not seek contribution from participants or seeks staggered contribution, the remaining balance must be met by LPCC to ensure the adequacy of the total Core SGF corpus at all times. Such LPCC contribution must be available to LPCC for withdrawal as and when further contributions from participants are collected or received.

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