Sebi re-examines settlement guarantee fund after a decade
SGF) which is created to meet contingencies arising on account of failure of payment by any broker member of a stock exchange.
Besides reviewing the fund size, the regulator is exploring a possible change in the methodology used to compute the fund requirement. The subject was discussed at the last meeting of the risk management review committee of the Securities and Exchange Board of India (Sebi), a person familiar with the proposal told ET.
The move is believed to be part of an overarching countercyclical regulatory stance to tighten rules when the going is good.
«Different models to calculate the SGF are being looked at to capture future risks in a better way. If a more robust methodology is chosen, the fund size and contributions towards it would rise, though there is no plan to seek contribution from exchange members,» said a source.
Unlike in some markets where members also chip into the SGF, in India, the SGF corpus is formed with contributions from stock clearing corporations and exchanges.
Currently, the combined SGF of the NSE and the BSE is around ₹7,000 crore. This is based on the August 2014 framework given by Sebi.
Since then, trading volumes in the equity market have grown several times: as against an average daily of ₹19,041 crore in the cash market in 2014, it's ₹1,20,933 crore now; in the same period, volumes in futures and options have surged from ₹2.79 lakh crore to ₹391 lakh crore.
The number of foreign portfolio investors registered with Sebi has risen, accounting for a net inflow of
