The Bombay Stock Exchange (BSE) on April 27, 2023, was notified regarding the Segregation and Monitoring of Collateral at the Client Level and Penalty mechanism for Short Allocation with reference to SEBI circular no SEBI/HO/MRD2_DCAP/CIR/2021/0598 dated July 20, 2021.
The members’ mare requested to note the following:
• Minimum client margin collection requirement less client collateral value in the segment (only where client margins are greater than client collateral value) shall be considered short allocation. For this purpose, minimum client margin collection will mean margins required to be collected on an upfront basis, excluding margins that can be collected by T+1/T+2.
• Client collateral value in the segment for this purpose shall be collateral value allocated by the CM to the client in the segment + value of securities repledged at Clearing Corporation for that client in the segment (value shall be after applying all prudential norms of Clearing Corporation other than 50:50 requirement)
• Such monitoring of short allocation shall happen intraday at the time of peak margin snapshot and at the end of the day.
• While assessing the intraday/EOD short allocation, Clearing Corporation will check for availability of excess collateral (allocation and value of pledged securities over and above minimum margin) in other segments for the same TM-UCC (whether with same clearing member or otherwise) or CP. Clearing Corporation shall reduce such excess collateral available in other segments from the intraday/EOD short allocation before calculating the applicable penalty.
• The maximum amount of short allocation across all snapshots and EOD shall be considered as short allocation. The same shall be provided after considering excess collateral in other segments, if any.
• In case of false reporting, a penalty as applicable on false margin reporting will be applicable.
• Clearing Corporation shall compute the revised short allocation amount after adjusting for the aforementioned reporting and be considered for levying the penalty.
The above changes including the penalty for intra-day short allocation shall be applicable from the trade date of May 02, 2023.
[Notice No. 20230427-28]
