Only strong bank FDs, guarantees may be used to settle trades

banks could be chosen for accepting fixed deposits and guarantees that back the trading and settlement in the equity market, according to a proposal under discussion between Sebi and institutions such as stock exchanges and clearing houses.

The idea is being explored to strengthen the market ecosystem amid a surge in trading volumes and faster turnaround of securities and money in the wake of shorter settlement cycles.

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The plan, yet to be finalised, would entail laying down a minimum capital or net worth and a floor credit rating criteria that banks will have to meet.

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