The Clearing Corporation of India Limited (CCIL) on November 07, 2023, notified regarding the Volatility Margin for the Forex Settlement Segment.
The following has been stated:
• The Volatility Margin (VM) when imposed, the exposure limits set for the Members may get reduced. Suppose the Exposure limit of any Member in a currency is inadequate to cover the outstanding trades accepted by the Clearing Corporation on account of the Member. In that case, it shall be the responsibility of the said Member to replenish the shortage as directed by Clearing Corporation.
• Contribution in INR Cash and GoI securities are permitted only towards Volatility Margin. The contributions towards credit and market risk factors shall continue to be in the form of USD funds.
• Members may exercise the option to contribute margins towards VM and to restore the original EL, in one of the following ways:
o One-time Request:
A member may give a standing instruction to the Clearing Corporation to block its unutilized available balance in the Member Common Collateral Securities Segment SGF towards VM when imposed.
o Adhoc Request:
A member may request temporary enhancement of limit, up to a maximum of the original EL, by appropriating the requisite value of margins towards VM from the unutilised available balance in the Member Common Collateral, for a settlement day.
o A member can contribute additional USD funds as margin contributions towards VM.
A detailed process note on the above subject has been attached to the document below.
This notification will be effective November 27, 2023.
[Notification No. CCIL/FX/USD-INR/23/55]
