SEBI Revises SGF Norms for Commodity Derivatives CCs

Circular No. HO/47/16/14(1)2026-MRD-POD1/I/7115/2026; Dated: 16.03.2026

The Securities and Exchange Board of India (SEBI) has revised the coverage norms for the Core Settlement Guarantee Fund (SGF) applicable to Clearing Corporations (CCs) operating in the commodity derivatives segment.

The revision is aimed at enhancing ease of doing business while ensuring continued market safety and resilience.

1. Revised Stress Testing Requirement

Under the revised framework, Clearing Corporations are required to:

• Calculate credit exposure by assuming the simultaneous default of at least three clearing members and their associates
• Identify such members based on those generating the highest credit exposure under stress-testing scenarios

2. Shift in Risk Coverage Approach

The updated norm reflects a refined risk-based approach, ensuring that:

• SGF adequacy is assessed against extreme but plausible stress scenarios
• Exposure calculations consider clustered or correlated defaults, rather than isolated failures

3. Implications for Clearing Corporations

Clearing Corporations must:

• Strengthen their stress-testing models
• Ensure that the Core SGF is adequately funded to cover exposures arising from the defined default scenario
• Continuously monitor risk concentrations among clearing members and their associates

4. Objective of the Revision

The revised norms aim to:

• Enhance the robustness of the clearing and settlement framework
• Ensure adequate risk coverage under adverse market conditions
• Promote operational efficiency and ease of compliance
• Maintain investor protection and systemic stability

Overall, the measure balances risk management rigor with regulatory efficiency, strengthening the resilience of commodity derivatives markets.

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