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Sebi tweaks framework for clearing firms on liquid assets as collateral
Capital markets regulator Sebi has tweaked guidelines for accepting liquid assets as collateral by clearing corporations (CCs) and put in place prudential norms for exposure of such entities in a bid to strengthen the risk management framework.
Clearing corporations accept liquid assets with applicable haircuts to meet the requirements for initial margins and mark to market losses among others.
In its circular, the regulator said that units of growth plan of overnight mutual fund schemes would be accepted as cash equivalent by CCs with a haircut of 5 percent and for other plans of overnight mutual fund schemes, the hair cut of 10 percent would continue to be applicable.
Overnight mutual funds invest only in overnight securities having maturity of one day.
Further, equity shares with impact cost of up to 0.1 percent for an order value of Rs 1 lakh and traded for 99 percent of days over the period of previous six months would be accepted as part of other liquid assets, it said.
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