SEBI Revises SGF Norms for Commodity Derivatives CCs

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  • Last Updated on 19 March, 2026

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SEBI SGF norms

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.

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied