Liquid Assets

Members may submit deposit in the form of cash by making the required amount available in their respective clearing bank account and sending an authorization to the Clearing Corporation for debiting the said amount from their clearing account. The same can be provided through a web based facility called Collateral Interface for Members (CIM) which enables the members to log in through internet. Members shall log in through specific user-ids and passwords into CIM. To obtain a Login User ID, members are required to send their request to the Clearing Corporation in the format provided.

A member who has authorised the Clearing Corporation to debit his clearing account as above shall ensure due performance of the commitment. Non-fulfillment of such obligation will be treated as a violation and/ or non-performance of obligations and shall attract consequences, penalty and/ or penal charges as applicable to violations.

Bank fixed deposits (FDRs) issued by approved banks and deposited with NSE Clearing.

Members are permitted to submit fixed deposit receipts as collateral towards liquid assets. The FDR should be issued either in favour of: "Custodian Name” (as the case may be) - A/c Member Name" in case to be deposited with approved custodians namely HDFC Bank Ltd., Stock Holding Corporation of India Limited and ICICI Bank Ltd or "NSE Clearing A/c Member Name" in case to be deposited with the Clearing Corporation.

Members need to ensure following before submitting FDRs to approved custodians or NSE Clearing as the case may be:

• Members have to issue a letter to NSE Clearing/approved custodians as per the formats specified.
• Members have to submit a letter given by approved banks issuing the FDR to NSE Clearing/ approved custodians as per formats specified.
• The FDR should have validity for a minimum period of 3 months in case of margin deposit and for a minimum period of 12 months in case of security deposit.
• The minimum value of FDR that may be accepted is Rs.1 lakhs.
• The FDR should be issued by any of the branches of approved banks and should be payable in the cities of: Mumbai, New Delhi, Chennai, Kolkata, Ahmedabad and Hyderabad.

Reminder letters

Reminder letters are downloaded on a monthly basis through the extranet in respect of the Fixed deposits those are due for renewal in the following month. Path for the letter is FTP//REPORTS. Further, the file naming convention for the same is : FD_ABC/BC__DDMMYYYY.DAT.

Renewal letters

Renewals of the FDRs are the sole responsibility of the members. In case of renewal of FDRs, the members are required to furnish the renewal documents strictly in the prescribed formats.

Electronic FDRs

Member can additionally provide FDR’s in electronic formats with banks empanelled for issuance of E-FDRs

The FDR issued in electronic form should have validity for a minimum period of 7 days in case of margin deposit and for a minimum period of 12 months in case of security deposit.

Units of mutual funds shall be accepted as in dematerialized form as collaterals towards liquid assets under the Margin Pledge -Re Pledge facility provided by NSDL and CDSL.  A deed of pledge is required to be executed with the NSE Clearing in specified formats. The Clearing Corporation may revise the list of approved mutual fund scheme and the haircuts from time to time. Members who have deposited mutual funds units which have been discontinued from the list of approved scheme, shall be required to take due care to replace such units.

Valuation  

The mutual funds units are valued based on the Net Asset Value of the mutual fund unit. The value of the mutual fund unit is reduced by such haircut as may be prescribed by the Clearing Corporation from time to time to arrive at the collateral value of the mutual fund unit. The hair cut applicable shall be the VaR margin rate for the respective mutual fund scheme. Only the value net of applicable haircuts and exit load shall be considered as the value of the mutual funds pledged.

Applicable Haircut on Mutual Funds

1. Debt Funds
   1. Growth Plans -5%
   2. Other Debt Plans-10%
2. Gilt Funds -10%
3. Other Mutual Fund- Minimum of VaR or 9%

Bank Guarantees (BGs) in favour of NSE Clearing from approved banks in the specified format.

Clearing Members may opt for giving bank guarantee in the specified formats, either for specific segment or for any of the clearing segment , from any approved banks towards liquid assets.

In case the bank guarantee does not strictly conform to the above-mentioned conditions, the same shall not be accepted by the Clearing Corporation

Electronic Bank Guarantee

NSE Clearing Ltd. (NCL) in collaboration with National E-Governance Service Limited (NeSL) provides the facility for accepting Electronic Bank Guarantees(E-BG).

Members can approach banks empanelled by NCL for issuance of E-BG. (The list of Banks eligible of issuance of E-BG is provided in annexure 1)

The bank guarantee shall be strictly in the format prescribed by NCL. (Existing format for BG in physical form shall continue for E-BG)

Electronic SFMS Message

Members are required to ensure that Banks issuing BG in favour of Clearing Corporation send e-messages through SFMS for all new issuance/renewals of the BG. Members shall ensure that SFMS message is sent by the issuing bank before the new/renewal BG is submitted to Clearing Corporation. The exposure towards new issuance/renewals of the bank guarantees shall be provided only after receipt of the SFMS message by Clearing Corporation

The acceptance of the bank guarantees by the clearing corporation shall be subject to the bank-wise and member-wise limits as are stipulated from time to time.

Members are advised to check their applicable limit before getting their bank guarantees issued.

Reminder letter

Reminder letters are downloaded on a monthly basis through the extranet in respect of the Bank Guarantees those are due for renewal in the following month. Path for the letter is FTP//REPORTS. Further, the file naming convention for the same is: BG_ABC/BC__DDMMYYYY.DAT

Renewal of Bank Guarantees

Members are required to ensure that the renewal of the bank guarantee is submitted to the Clearing Corporation in the prescribed format well in advance before the date of expiry of the bank guarantee.

• Member/ custodians desirous of providing G-Sec / T-Bills shall enter into an agreement with NSE Clearing as per the format.

  Download Format of Agreement for constituent sgl account (.zip)

• NSE Clearing shall prescribe list of G-Sec/T-Bills that shall be eligible for acceptance as collateral from time to time.
• G-sec/T-bill shall be accepted as collateral only in electronic form. Members/custodians desirous of providing G-Sec/T-Bills as collateral shall put a request in CIM. NSE Clearing shall confirm the transaction entered on the NDS, based on the information received from Members/custodians.
• The details of NSE Clearing - SGL-II account is as follows:

  Name of the Account	National Securities Clearing Corporation Limited
  Member ID	BYA00168
  SGL – II A/c No.	SG020168

• For release of G-Sec / T-bills, members/ custodians shall put a request in CIM. The release of G-Sec/T-Bill shall be processed only at end of day. The G-sec/T-bill released by NSE Clearing shall be entered on NDS under Settlement-Transfer Order-Clearing Agency Withdrawal. Member/custodian shall ensure that such transactions are approved on NDS at their end.
• G-Sec/T-Bill shall be valued daily based on previous day's MTM prices as specified by CCIL.
• Haircut as prescribed by NSE Clearing shall be applied on the value of G-Sec/T-bill provided as collateral by members/ custodians. The value after applying the hair cut shall be added to the cash component of the liquid assets of the member / custodian.
• Periodic coupon / redemption payments received on the G-Sec/T-Bills provided by member/ custodian shall be passed on to member / custodians by NSE Clearing immediately upon receipt of relative interest/redemption payment from Reserve Bank of India.

Procedure for collateral allocation

• While depositing Cash, FDR, BG or Government Securities provided through the SGL/CSGL route (Hereinafter referred to as “Other forms of collateral”), the Clearing Members (CMs) shall allocate these collaterals into proprietary account of CM, and/or proprietary account of any Trading Member (TM) clearing through the CM, and/or account of any of the clients (including Custodial Participants (CPs)) clearing through the CM, and/or of any of the clients trading through the TM who in turn is clearing through the CM, segment-wise
• The benefit for the other forms of collateral deposited shall be provided by Clearing Corporation only after receiving the allocation of the same from the CM

Change of allocation

CMs shall be permitted to change the allocation of other forms of collateral deposited with NSE Clearing (including change to another segment where the member is CM). CMs to ensure that the value allocated to any TM/CM/client does not exceed the value of actual collateral received from that TM/CP/client (excluding the securities collateral through margin pledge mechanism and repledge to NSE Clearing). However, such change of allocation shall be permitted subject to adequacy of available collateral with NSE Clearing after the change vis-à-vis the margin obligation of CM/TM/CP/Client.

Withdrawal/ Maturity of collateral

Other forms of collateral shall be released only if sufficient amount is available as unallocated collateral. Accordingly, CMs shall ensure that sufficient amount is unallocated prior to placing release request for other forms of collateral

In case of collateral provided in the form of BGs and FDRs; the value of the matured BG/FDR shall be reduced from CM’s collateral as per the existing process. Due to this, the CMs may go into risk reduction mode because of reduction in the collateral limits.

Corporate Bonds shall be accepted in demat form as collateral towards liquid assets under the Margin Pledge -Re Pledge facility provided by NSDL and CDSL. The list of eligible corporate bonds along with the market wide acceptable quantity shall be disseminated by the Clearing Corporation on monthly basis.

The corporate bonds shall be valued on daily basis on closing price of the bond listed under cash or debt segment of Exchange or the valuation using yield from sovereign yield curve plus published by FBIL and credit spread published by FIMMDA, whichever is lower. A hair cut of 15% shall be applied on the value of corporate bond. The value of the corporate bonds shall be reduced by such haircut.

The total value of corporate bonds provided as noncash portion of the liquid assets shall not exceed 10% of the total liquid assets of the respective clearing member.