The National Stock Exchange (NSE) on May 26, 2023, issued FAQ for Reporting of Bank Guarantees (BGs) created out of clients’ funds.
The following frequently asked questions (FAQ) are as stated:
• Whether the reporting is applicable to members who clear proprietary trades and do not deal with clients?
Yes, the reporting is applicable to all members who have placed Bank guarantees with NSE Clearing.
• Does a member have to report If BG is not placed with NCL as collateral?
Members who have not placed any BG with NCL need not report.
• Whether members have to report all the BGs across Clearing Corporations or specifically that of NCL?
Members need to report BGs that are placed with NCL only as collateral, and BGs placed with ICCL for which benefit has been provided at NCL.
• When a BG matures on Friday and is not released by NCL, should the BG amount be reported on Friday?
Bank guarantees which have expired need not be reported.
• If a member has given BG to NCL whether BG created out of client funds and Prop funds needs to be reported?
Yes, members need to report the total BG amount as collateral with NCL across all segments with the bifurcation of the Total BG amount (out of client funds) as collateral and total BG amount (out of prop funds)
• If a member is a Clearing Member in one segment and Trading Member in other segments, then how reporting should be done?
The reporting of BGs will be done only for those segments where the member is registered as Clearing Member with NCL. Where a member is a trading member in a particular segment, the Clearing member of that trading member is required to report such details.
[Circular No. 16/2023]
