Introduction
The Clearing Corporation of India Limited (CCIL) offers guaranteed Clearing and Settlement (acts as a Central Counter party – CCP) for transactions in Money, Government Securities, Foreign Exchange and Derivatives markets. As a central counterparty, it mitigates the counterparty risk in the system through robust margining processes. As a part of the risk management mechanism CCIL collects initial margin, market to market margin etc. based on the risk management process for each segment. Margins are required to be maintained by every member for its own trades as well as trades reported on behalf of its constituents.
CCIL commenced Central Counterparty (CCP) settlement in its Securities Segment in April, 2002, CCP settlement for other segment were introduced in later years.
CCIL instituted a Settlement Guarantee Fund (SGF) for its Securities Segment and Forex Settlement Segment. The Securities Segment SGF comprises of members' contribution in Cash (INR) and eligible Government India Securities and Treasury Bills. The Forex Settlement Segment - SGF comprised of members' contribution in US Dollars.
CCIL also collects Cash (INR) and repo eligible securities towards initial margin and borrow limit in Tri party Repo.
The Securities Segment SGF is also utilised towards margin requirement in Forex Forward, Rupee Derivatives, Forex (USD/INR), Continuous Linked Settlement Segments.
Keeping in view the optimum use of common collateral in multiple segments, the collateral contribution to Securities Segment SGF is now made Segment Agnostic (the collateral contribution shall be in a common pool) with effect from 27th November, 2023. Members of any segment can now contribute collateral to such common pool for itself and its constituents. This common pool is identified as 'Member Common Collateral (MCC)'. The Forex Settlement Segment – SGF shall be referred as FX Collateral from the above date.
In addition to the above, CCIL has established six Default Funds. Members contribute Cash and eligible government of India securities / treasury bills towards the Default Funds as per the applicability.
The acceptance, maintenance, refund of collateral collected as above and handling of life cycle events is managed by Collateral Management team of CCIL.
The whole gamut of collateral operations is under the aegis of RBI's CSGL Guidelines / other notifications, directives, CCIL's Bye laws, Rules and Regulations and various notifications issued in this regard.