SEBI Clears Corporations In IFSCs By Amending Norms Relating To Net Worth Requirement. Here are all the details:
1. Clause 5 of SEBI (IFSC) Guidelines, 2015 prescribes net worth requirements for, inter alia, Clearing Corporations operating in IFSC.
2. Following the notification of Securities Contracts Regulations 2018 (SECC Regulations, 2018), when it is prescribed, inter alia, that every recognized Clearing Corporation will maintain a minimum net worth of one hundred crore rupees or capital as determined under Regulation 14(3)(a) and 14(3)(b), whichever is higher, SEBI issued a notice SEBI/HO/DRMNP/CIR/2019/55 captioned ‘Risk-based capital and net worth requirements for Clearing Corporations under Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018’ on April 10, 2019.
3. The above circular lays down the methodology to determine the minimum capital/net worth requirements for clearing corporations.
4. Keeping in mind the above Clause 5(2) of SEBI (IFSC) Guidelines, 2015 is being amended and shall now read as under:
- Every applicant seeking recognition as a clearing corporation shall have, in the form of liquid assets, a minimum net worth equivalent of fifty crore rupees.
- Every recognized clearing corporation, on commencement of operations, shall have at all times, in the form of liquid assets, a minimum net worth equivalent of fifty crore rupees or capital as determined in accordance with the aforementioned SEBI circular dated April 10, 2019, as amended from time to time.
- Further, every recognized clearing corporation shall enhance, over a period of three years from commencement of operations, its net worth, to be maintained in the form of liquid assets, to a minimum equivalent of one hundred crore rupees or capital as determined in accordance with aforementioned SEBI circular dated April 10, 2019 as amended from time to time.
5. The Clearing Corporations will frequently review their net worth requirement to ensure that the net worth does not fall below the prescribed limit. A certificate, signed by the Managing Director of the Clearing Corporation, will be submitted to SEBI within 15 days from the end of every quarter. The first submission will be made applicable for the April – June 2019 quarter.
6. In rare cases where the net worth of Clearing Corporation falls below the prescribed limit, it will inform SEBI inter alia mentioning the reason(s) behind the same and the measure(s) it intends to adopt in order to re-attain the prescribed net worth.
7. This circular is being issued conferring to the powers allowed to be exercised under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities, to regulate the securities market and to promote their development.