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Introduction
Securities Segment – Member Common Collateral
Purpose of SGF or Member Common Collateral (with effect from 27th November, 2023):
The margins towards members' Outright and Repo trades in Securities Segment are being drawn out of Securities Segment SGF. The said SGF is also utilised towards margin requirements in other segments such as Forex (USD/INR), CLS, Forex Forward and Rupee Derivatives are also drawn out of Securities Segment SGF.
CCIL has introduced Clearing Member structure in its Securities Segment from March, 2020. In terms of the same members are required to maintain distinct collateral towards their own (proprietary) trades and Constituent trades. Clearing members can contribute cash / securities towards individual constituent and group of constituents. A Clearing Member who has contributed SGF for a group of Constituents shall report to CCIL, the value (in Rupees) of the margin allocated by it for each of the Constituents in that group.
The margins towards constituent trades are drawn out of the Constituent collateral contribution by the concerned clearing member.
As stated above the margins for Forex Settlement, Forex Forward, CLS and Rupee Derivatives Segments are drawn out of Securities Segment SGF. Hence Securities Segment member membership becomes pre requisite for becoming a member of CCIL in any other segment. Over period of the growth of the markets has necessitated a need to delink the SGF from a particular business segment and put in place a common structure across segments.
Further, the Clearing Member structure has provided a flexibility wherein members can choose a different Clearing Member in different segments, Flexibility is also provided so that a member in Securities Segment can be a Constituent in other segment or vice versa.
In order to achieve the above with effect from 27th November, 2023, CCIL has introduced the
'Member Common Collateral'(MCC) structure. With this collateral contribution MCC shall not be tagged to a specific segment and member / constituent active in segments which are eligible for collateral utilisation from MCC can contribute collateral to the MCC. The operational process flow for cash/ security deposit as well as for withdrawal shall remain the same as is hitherto followed for SGF and the Collateral Work Flow Process has been notified to members and available on our web site under Notifications dated 27th October, 2023.
Composition
Members shall contribute cash and eligible securities to MCC. Members are required to maintain a minimum of
10% of their Securities Segment margin requirements in the form of cash contributions to MCC. Members have the option to maintain their entire contribution in the form of Cash.
The balance contribution can be held in the form of eligible Government of India Securities / Treasury Bills as notified by CCIL from time to time.
The cash : securities ratio towards margin requirement in Forex Forward and Rupee Derivatives Segment is 95:5 i.e. minimum
5% of margin requirement in respective segment needs to be maintained in cash.
No minimum cash contribution / ratio is prescribed towards Forex Settlement (USD/INR) and CLS Segment.
Work Process
The securities contributed towards MCC are accepted in CCIL's Constituent Subsidiary general Ledger account maintained with Public Debt Office of Reserve Bank of India. The securities are transferred from members' SGL / CSGL account to the above referred CSGL Account of CCIL on a Value Free basis using the
eKuber System of Reserve Bank of India.
The cash is transferred by members to CCIL's bank account wherein the concerned member settles the funds obligations. Members settling at RBI transfer the cash to CCIL's RTGS Settlement Account whereas the members settling through Settlement Bank shall transfer the cash contribution to CCIL's account with respective Settlement Bank.
The refund of securities / cash are effected by CCIL from its CSGL account / RTGS Settlement account with RBI or its funds account with settlement banks.
Minimum cash collateral contribution of Rs. 1,00,000/- needs to be maintained by a member at all times during currency of its membership.
Members desirous of making cash / securities contributions to MCC are required to initiate a value free transfer / funds transfer and intimate CCIL about the same using the eNotice System or a physical notice of deposit in a prescribed format (in case of non-availability of eNotice) within the cut off time prescribed for the purpose.
The URL for accessing eNotice System is :
https://enotice.ccilindia.com/ERCS/#
Members desirous of making cash / securities withdrawal from MCC are required to initiate a withdrawal request using eNotice System or a physical notice of withdrawal (in case of non-availability of eNotice) within the cut off time prescribed for the purpose. The securities refund can be effected on the day of notice or Notice + 1 business day as requested by member. All cash withdrawals are on Notice +1 business day basis.
CCIL has issued detailed Collateral Work Flow Procedure for MCC and the same is amended periodically. Members are required to follow the latest applicable notification. The link for one such notification issued on 27th October 2023 is as under :
Members shall refer to applicable Notifications issued in this regard available on at following URL :
https://www.ccilindia.com/Pages/SEC_Notifications.aspx
Corporate Actions and Benefits
All corporate actions on member SGF holdings are serviced through the RTGS System of Reserve Bank of India and net banking system(s) of settlement banks. Relative funds are remitted to the RTGS Settlement / Current Account of concerned members with separate individual electronic advices to members
SGF – Cash – Interest Payment
All corporate actions on Member's MCC holdings are serviced through the RTGS System of Reserve Bank of India and net banking system(s) of settlement banks. Relative funds are remitted to the RTGS Settlement / Current Account of concerned members with electronic advices to members.
MCC – Cash – Interest Payment
Members are entitled for interest on their cash collateral contribution utilised towards margin requirement in each of the segments, based on the applicable interest payment rules. The rules for such interest payment are laid down as per CCIL's Regulations and notifications issued in this regard. The interest is paid on a quarterly basis at a rate notified by CCIL.
Part V of the above notification covers the rule for payment of interest on cash – MCC.
MCC – Securities – Interest Payment
Periodic coupon payments received in respect of Members' security contributions towards MCC (held in the form of dated securities) are passed on to concerned Members by CCIL immediately upon receipt of relative interest from Reserve Bank of India. The interest is paid to members' RTGS Settlement account or current account with RBI / settlement bank as recorded with CCIL.
MCC – Securities – Redemptions
Redemption proceeds of matured securities / treasury bills are treated as concerned members' additional cash contribution to MCC.
List of Eligible Securities
CCIL prescribes a list of securities at periodic interval that are eligible for collateral contributions by members towards the MCC. The said list is available under Risk Management tab on our web site.