April 26, 2024
NSE Clearing Limited has issued Circular Ref. No: 11/2024, dated April 25, 2024, introducing revised guidelines for the segregation and monitoring of collateral at the client level. These updates aim to enhance transparency and effectiveness in collateral management practices.
Key Highlights:
Scope and Effective Date: The changes outlined in Circular Ref. No: 11/2024 are based on Circular Ref. No: NCL/CMPL/61186 dated March 18, 2024. Effective from May 6, 2024, members are required to capture retention reason codes for the retention of collateral in the daily client collateral segregation file.
Background: The revised guidelines are in response to SEBI Circular no SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/187 dated December 12, 2023, and NSE circular NSE/INSP/60369 dated January 20, 2024, concerning operational guidelines and SOP on Upstreaming of clients’ funds by Stock Brokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs).
Reporting Requirements: Clearing Members are required to report across all clients on a daily basis, maintaining the existing mechanism. Justification reasons for retention of collateral are to be reported under specific data fields as detailed in the circular.
Retention Reason Codes: A list of retention reason codes and their descriptions is provided in Annexure 1 of the circular (Included in the blog as an image). These codes cover various scenarios such as delayed fund receipt, transit-related issues, cheque clearance, and others.
Reporting Format: Members are advised to make necessary changes in their back-office systems to comply with the revised guidelines. The reporting format for retention reasons in the collateral segregation file is detailed in Annexure 1, along with instructions for data reporting and field specifications.
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