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Brief Overview:
A circular regarding the orderly winding down of critical operations and services of clearing corporations (“CCs”) has been issued by the Securities and Exchange Board of India (“SEBI”).
Technical Details:
1) Two main reasons of winding down of the CCs being,
(a) Voluntary - CC is solvent but wishes to wind down its operations.
(b) Involuntary- Wind down as a result of:
(i) losses due to default by clearing members;
(ii) losses due to other factors; and
(iii) regulatory actions.
In either case, prior approval of SEBI is required.
2) CCs to put in place a board approved policy framework including standard operating procedure (“SOP”) to ensure orderly winding down of operations and services.
3) It shall inter alia cover –
(a) operational modalities relating to transfer/close out of positions, collateral,
(b) details on infrastructure and systems,
(c) details of key employees etc.
The same is required be reviewed periodically & published on its website within 90 days.
4) Distribution of assets will be subject to the SOP and SEBI guidelines.
5) Clearing Members of exiting CC to either become members of another CC or close-out their open positions.
6) Lastly, SEBI to issue directions to CCs for orderly winding down of their critical operations and services. We are tracking this and will keep you posted!
For further details, please see:
For any queries / clarifications, please feel free to ping us and we will be happy to chat:
● Ms. Smrithi Nair (smrithi.nair@jclex.com)
● Ms. Mahak Saboo (mahak.saboo@jclex.com)