Bullions to Be Accepted As Collateral by Exchanges

SEBI had specified comprehensive risk management framework for national commodity derivatives exchanges including norms on collateral that can be accepted by Exchanges from their members. Now SEBI has decided to modify the condition - “Total commodities collateral for any clearing member shall not exceed 15% of the total liquid assets of the clearing member”, prescribed in paragraph 2 (Liquid Assets) of Annexure I of the above mentioned circular, as follows – “Total commodities collateral for any clearing member shall not exceed 30% of the total liquid assets of the clearing member, out of which non-bullion collateral shall not exceed 15% of the total liquid assets of the clearing member”

Exchanges shall make necessary arrangements to enable timely liquidation of collaterals accepted by them and may stipulate concentration limits for collateral at member level/across all members as may be necessary based on their risk perception, capability to hold and arrangements for timely liquidation.