SEBI Panel Examines Regulatory Measures for Clearing Corporations to Strengthen Balance-Sheets
The Securities and Exchange Board of India (SEBI) is considering a proposal to cap the dividend payout by clearing corporations, which play a crucial role in the securities markets. The move aims to strengthen the balance-sheets of these corporations and ensure their stability in the face of growing trading volumes.
SEBI Panel Examines Regulatory Measures for Clearing Corporations
The proposal was discussed in a recent meeting of the committee constituted by SEBI to strengthen the balance-sheets of clearing corporations. Clearing houses bear the risks on behalf of exchanges and serve as legal counterparties for clearance and settlement of trades.
A senior SEBI official has suggested a regulatory ceiling on dividend payout by clearing corporations, two persons familiar with the ongoing deliberations told ET.
Proposals Examined by the Panel
The panel headed by R.S.Gandhi, former deputy governor of the Reserve Bank of India, is examining several proposals, including directly crediting the interest earned by a clearing corporation from investments of the cash collateral in treasury bills and government securities to the settlement guarantee funds (SGF).
Currently, the income from these risk-free investments goes into the books of the clearing corporations. The panel is also considering exchanges sharing a bigger slice of the transaction charges collected from member brokers with clearing corporations.
Market Impact and Details
- The proposal to cap dividend payout by clearing corporations aims to strengthen their balance-sheets and ensure their stability in the face of growing trading volumes.
- The panel is also considering directly crediting the interest earned by clearing corporations from investments of cash collateral in treasury bills and government securities to the SGF.
- Exchanges sharing a bigger slice of transaction charges collected from member brokers with clearing corporations is another proposal being examined by the panel.
- The panel is also considering framing a uniform rule for calculation of SGF across exchanges.
Key Takeaways
- The SEBI panel is considering a proposal to cap the dividend payout by clearing corporations to strengthen their balance-sheets.
- The panel is also examining proposals to directly credit interest earned by clearing corporations from investments of cash collateral to the SGF.
- Exchanges sharing a bigger slice of transaction charges collected from member brokers with clearing corporations is another proposal being considered.
FAQs
What is the purpose of the SEBI panel’s proposal to cap dividend payout by clearing corporations?
The proposal aims to strengthen the balance-sheets of clearing corporations and ensure their stability in the face of growing trading volumes.
How will the proposal to directly credit interest earned by clearing corporations from investments of cash collateral to the SGF affect the clearing corporations?
The proposal will allow clearing corporations to utilize the interest earned from investments of cash collateral in a more flexible manner.
Will the proposal to cap dividend payout by clearing corporations affect the financials of clearing corporations and SGFs?
The proposal aims to strengthen the balance-sheets of clearing corporations and ensure their stability in the face of growing trading volumes, which may not necessarily affect the financials of clearing corporations and SGFs.
Conclusion
The SEBI panel’s proposal to cap dividend payout by clearing corporations and other regulatory measures aims to strengthen the balance-sheets of these corporations and ensure their stability in the face of growing trading volumes. The proposal is part of a broader effort to strengthen the securities markets and ensure their stability.
As the proposal is still under consideration, it is essential for stakeholders to stay informed and adapt to any changes that may arise. The proposal’s impact on the securities markets and clearing corporations will be closely watched in the coming months.
