SEBI has advised BSE to build an administrative mechanism to encourage members to hold capital cushions while operating in the Cash and Derivatives Segments. Accordingly, the following methodology, as advised by SEBI, is being followed by BSE:
- At the end of each calendar month, Members who have exceeded 90% of utilization of capital during the day for more than 7 days in the current month are identified.
- In the derivatives segment, the utilisation is monitored after considering initial margins, exposure margins and premium.
- The capital requirement to bring the utilisation to a level of 85% at the time of violating the trigger point of 90% on each of those occasions is noted for the Members. The highest of such amounts for the identified members during the month is called for as additional capital.
- The requirement is communicated to the members on the first day of the subsequent month.
- The Members are provided a time limit of three working days to provide the amount of additional capital in the form of Cash, FDRs and Bank Guarantees only.
- The additional capital so collected is retained with the Clearing House for a period of one calendar month.
- No benefit including exposure, margin etc is available to the Member on the amount of additional capital so collected.
- In case of non- payment of additional capital within the stipulated time limit a penalty as applicable for funds shortage is levied on the Member for the period of default.
- In case a Member is liable to provide additional capital in the subsequent month, the amount of additional capital shall be recomputed and the excess /deficit is refunded /called for.