Trading Settlement and Risk Management
Trading

An FPI client places order through a Trading Member (broker) on the Exchange. The settlement is done through a Clearing member/Custodian (DDP). India's Cash Segment follows T+2 Settlement Cycle. Securities are held in a segregated DEMAT form. All settlements are through Clearing Corporation (ICCL), thereby minimizing settlement risks (Funds/ Securities) to FPIs.

Trading on the BSE is available through multiple online systems and is conducted from Monday to Friday (except public holidays) between 9:15 a.m. and 3:30 p.m. for Equity Cash / Equity Derivatives and 9:15 a.m. to 5:00 p.m. for Currency Derivatives.

Settlement

Trades done in the securities in the Equity Cash Segment on BSE are settled through ICCL on a T+2 basis. A T+2 settlement cycle means that the transactions done on T day (trade day), the final settlement takes place on second business day (excluding Saturdays, Sundays and other settlement holidays) after the trade day.

Segment Initial Margin / Value at Risk ("VAR") Margin Mark to Market margin ("MTM") Margin Extreme Loss Margin ("ELM") / Exposure Margin Cross Margining Calendar Spread Margin Assignment Margin (options) Premium Margin (options)
Equity Cash - - -
Equity Derivatives
Currency Derivatives -


Risk Management

  • Core Settlement Guarantee Fund ("Core SGF"): ICCL has created a Core SGF available to meet settlement obligations.
  • Stress Test: ICCL carries out stringent stress tests for assessing the adequacy of liquidity arrangements and for adequacy of margins.
  • Limited Liability: Limited liability for non-defaulting members is subject to a maximum cap of INR 1 Million (approx. USD 15,000)
  • Recovery & Resolution: INR 1 Billion (approx. USD 15 Million) is maintained separately for covering operational cost for 1 year, legal cost, regulatory cost and other liabilities.
  • The policy on composition and contributions to be made to the Core SGF, investment policy for Core SGF and the Default Waterfall for each segment along with the quantum of resources is available in each layer of the default waterfall.


Core Settlement Guarantee Fund

As per present guidelines:

  • ICCL's contribution to Core SGF should be at least 50%.
  • The Stock Exchange's contribution to Core SGF should be at least 25%.
  • The clearing member's primary contribution to Core SGF should not be more than 25%.
Currently, ICCL has decided to not collect any contribution from clearing members towards Core SGF. Hence, ICCL's skin in the game is approximately 75%.

Default Waterfall

The default waterfall gives the hierarchy in which funds would be apportioned in case of a default by clearing members. ICCL maintains a dedicated Default Waterfall for each segment, effectively ring fencing each segment of ICCL from defaults in other segments.

Features

  • Limited Liability: Limited liability for non-defaulting members is subject to a maximum cap of INR 1 Million.
  • Exposure towards CCP: ICCL has decided to currently keep the Clearing Members' contribution to default fund as "Nil"
  • Insurance: ICCL has subscribed to a unique insurance policy of USD 60 Million applicable across all segments