The National Commodity Clearing Limited (NCCL) on October 14, 2024, issued a circular regarding Pre- Conditions for porting positions and collaterals of a non-defaulting client/CP/TM in case of a default by a clearing member.
The following has been stated: -
•The SEBI circular dated July 20, 2021, outlines the default management process for porting positions and collateral of non-defaulting trading members/clients/custodial participants in case of a clearing member default.
Key Pre-Conditions for Porting:
•Non-defaulting parties must have alternative trading/clearing arrangements with other registered members.
•Defaulting CM must provide a prescribed declaration to NCCL within specified timelines.
•Confirming CM/TM must accept proposed positions and collateral.
•NCCL invokes collateral given by defaulting CM.
•Client-specific collateral cannot be ported and must be re-pledged.
•Confirming CM/TM ensures sufficient collateral availability.
•Failure to meet these conditions may result in closing non-defaulting parties' positions, with losses adjusted from their collaterals
[Circular No. NCCL/RISK-057/2024]
