SEBI allows bullion as collateral for clearing members

Sub: Bullion as collateral  [SEBI/HO/CDMRD/DRMP/CI/P/2016/112]

1.  Vide  Circular  No.  CIR/CDMRD/DRMP/01/2015 dated  October  01,  2015 SEBI had   specified   comprehensive risk   management   framework   for   national   commodity  derivatives  exchanges  including  norms  on  collateral  that  can  be  accepted by Exchanges from their members.
2.  After analysing the representations received regarding bullion as collateral, it has  been  decided  to  modify  the  condition  –  “Total  commodities  collateral  for any  clearing  member  shall  not  exceed  15%  of  the  total  liquid  assets  of  the clearing  member ”, prescribed  in  paragraph  2  (Liquid  Assets)  of  Annexure  I  of the  above-mentioned  circular, as  follows  –  “Total commodities  collateral  for any  clearing  member  shall  not  exceed  30%  of  the  total  liquid  assets  of  the  clearing  member,  out  of  which  non-bullion  collateral  shall  not  exceed  15%  of the total liquid assets of the clearing member”.
3.  It is reiterated that exchanges shall make necessary arrangements to enable timely   liquidation   of   collaterals   accepted   by   them   and   may   stipulate concentration limits for collateral at member level/across all members as may be   necessary   based   on   their   risk   perception,   capability   to   hold   and  arrangements for timely liquidation.
4.  The exchanges are advised to bring the provisions of this circular to the notice of their members and also to disseminate the same on their website.

5.   This  circular  is  issued  in  exercise  of  the  powers  conferred  under  Section  11(1)  of  the  Securities  and  Exchange  Board  of  India  Act,  1992,  to  protect  the interests of investors in securities and to promote the development of, and to regulate the securities market.
6.  This circular is available on SEBI website at

Securities and Exchange Board of India


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