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    Nse Clearing & Settlement

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    Chetna Kochhar
    National Stock Clearing Corporation of India (NSCCL) handles clearing and settlement for trades on the National Stock Exchange of India. For equity trades, NSCCL uses a multilateral netting system to determine members' net obligations to deliver or receive funds and securities by T+1, which are settled on T+2. Institutional trades use custodians, who must confirm trades by 1pm on T+1. Derivatives trades use a T+1 settlement cycle, with daily marking-to-market of futures positions and netting of options premiums.

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    © All Rights Reserved
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    Nse Clearing & Settlement

    Uploaded by

    Chetna Kochhar
    127 views3 pages
    National Stock Clearing Corporation of India (NSCCL) handles clearing and settlement for trades on the National Stock Exchange of India. For equity trades, NSCCL uses a multilateral netting system to determine members' net obligations to deliver or receive funds and securities by T+1, which are settled on T+2. Institutional trades use custodians, who must confirm trades by 1pm on T+1. Derivatives trades use a T+1 settlement cycle, with daily marking-to-market of futures positions and netting of options premiums.

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    Nse Clearing & Settlement

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    National Stock Clearing Corporation of India (NSCCL) handles clearing and settlement for trades on the National Stock Exchange of India. For equity trades, NSCCL uses a multilateral netting system to determine members' net obligations to deliver or receive funds and securities by T+1, which are settled on T+2. Institutional trades use custodians, who must confirm trades by 1pm on T+1. Derivatives trades use a T+1 settlement cycle, with daily marking-to-market of futures positions and netting of options premiums.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    127 views3 pages

    Nse Clearing & Settlement

    Uploaded by

    Chetna Kochhar
    National Stock Clearing Corporation of India (NSCCL) handles clearing and settlement for trades on the National Stock Exchange of India. For equity trades, NSCCL uses a multilateral netting system to determine members' net obligations to deliver or receive funds and securities by T+1, which are settled on T+2. Institutional trades use custodians, who must confirm trades by 1pm on T+1. Derivatives trades use a T+1 settlement cycle, with daily marking-to-market of futures positions and netting of options premiums.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 3

    Clearing & Settlement (National Stock Exchange of India)

    National Stock Clearing Corporation of India (NSCCL) carries out clearing and settlement of
    trades executed on NSE. NSCCL is the legal counter-party to all deals on NSE's F&O segment
    and guarantees settlements.
    Equity Segment
    In the Equity Segment there are two categories of clearing members: trading clearing members
    and custodians.
    A multilateral netting procedure is adopted to determine the net settlement obligations
    (delivery/receipt positions) of the clearing members. Accordingly, a clearing member would
    have either pay-in or pay-out obligations for funds and securities separately. In the case of
    securities in the Trade for Trade Surveillance segment and auction trades, obligations are
    determined on a gross basis i.e. every trade results into a deliverable and receivable obligation of
    funds and securities. Members pay-in and pay-out obligations for funds and securities are
    determined by 2.30 p.m. on T + 1 day and are downloaded to them so that they can settle their
    obligations on the settlement day (T+2).
    CP Code:
    All institutional trades including FII trades are to be settled by Custodians. Trades which are for
    settlement by Custodians are indicated with a Custodian Participant (CP) code and the same is
    subject to confirmation by the respective Custodian. Custodians procure a CP code for their
    clients from NSCCL. While placing the order request with the trading/clearing member FIIs shall
    specify to the member the CP code provided to them by their appointed Custodian. The
    custodian is required to confirm settlement of these trades on T + 1 day by the cut-off time 1.00
    p.m. Non-confirmation by custodian devolves the trade obligation on the member who had input
    the trade for the respective client.
    Settlement Cycle
    NSCCL follows a T+2 rolling settlement cycle. For all trades executed on the T day, NSCCL
    determines the cumulative obligations of each member on the T+1 day and electronically
    transfers the data to Clearing Members (CMs). All trades concluded during a particular trading
    date are settled on a designated settlement day i.e. T+2 day. In case of short deliveries on the
    T+2 day in the normal segment, NSCCL conducts a buy in auction on the T+3 day and the
    settlement for the same is completed on the T+4 day, whereas in case of W segment there is a
    direct close out. For arriving at the settlement day all intervening holidays, which include bank
    holidays, NSE holidays, Saturdays and Sundays are excluded. The settlement schedule for all the
    settlement types in the manner explained above is communicated to the market participants vide
    circular issued during the previous month.

    Shortages Handling
    On the settlement day NSCCL accepts pay-in of securities made by members through
    depositories and identifies the shortages. The members are debited by an amount equivalent to
    the securities not delivered and valued at a valuation price. This is known as valuation debit. For
    all such short deliveries NSCCL conducts a buying-in auction on the day after the pay-out day
    (T+3 day) through the NSE trading system. If the buy-in auction price is more than the valuation
    price, the CM is required to make good the difference. All shortages not bought-in are deemed
    closed out.
    Securities Settlement
    The final obligation for securities pay-in is downloaded to the members and custodians on the
    T+1 day. The members / custodians make available the required securities in the settlement pool
    accounts with the depository participants on the pay-in day by 10.30 a. m. To facilitate this
    members are required to open pool accounts with depository participants of both the
    depositories, NSDL and CDSL.
    Funds Settlement
    NSCCL has empanelled 13 clearing banks namely Axis Bank Ltd., Bank of India, Canara Bank,
    Citibank N.A, HDFC Bank, Hongkong & Shanghai Banking Corporation Ltd., ICICI Bank, IDBI
    Bank, IndusInd Bank, Kotak Mahindra Bank, Standard Chartered Bank, State Bank of India and
    Union Bank of India. Every Clearing Member is required to maintain and operate clearing
    accounts with any of the empanelled clearing banks at the designated clearing bank branches.
    The clearing accounts are to be used exclusively for clearing & settlement operations.
    Inter-Institutional Deals
    Trading in this market segment is available for institutional investors only in respect of securities
    where the FII limits have been reached. In order to ensure that the overall FII ceiling limits are
    not violated, trading members are allowed to enter sell orders in this market segment only for
    their FII clients.
    Eligible clients
    Only FII's are permitted to place sell orders.
    Buy orders can be placed by FII's, DFI's, Banks, Mutual Funds and Insurance Companies,
    Pension Funds registered under PFRDA and such other institutions as may be approved from
    time to time.

    Equity Derivatives Segment


    Types of Clearing Members
    1. Trading Member Clearing Member (TM-CM)
    A Clearing Member who is also a TM. Such CMs may clear and settle their own
    proprietary trades, their clients' trades as well as trades of other TM's & Custodial
    Participants
    2. Professional Clearing Member (PCM):
    A CM who is not a TM. Typically banks or custodians could become a PCM and clear
    and settle for TM's as well as of the Custodial Participants.
    3. Self Clearing Member (SCM):
    A Clearing Member who is also a TM. Such CMs may clear and settle only their own
    proprietary trades and their clients' trades but cannot clear and settle trades of other TM's.

    CP Code
    An FII may select a TM-CM or a PCM for the clearing and settlement of transactions
    executed in the segment. The Clearing Member would procure a CP code from NSCCL.
    While placing orders with the Trading / clearing member the FII should specify the CP
    code based on which the clearing member would accept the trade for clearing and
    settlement.
    Settlement cycle
    The settlement of trades is on T+1 working day basis. The following settlements are
    conducted:
    MTM settlement for futures
    The positions in the futures contracts for each member are marked-to-market to the daily
    settlement price of the futures contracts at the end of each trade day.
    Premium settlement for options
    The premium payable position and premium receivable positions are netted across all
    option contracts for each CM at the client level to determine the net premium payable or
    receivable amount, at the end of each day.
    Final exercise settlement on expiry for options and futures final settlement.

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