Sebi issues norms for contribution to LPCC's core settlement guarantee fund

Markets regulator Sebi on Thursday came out with fresh guidelines pertaining to the contributions by various entities towards core

settlement guarantee fund of Limited Purpose Clearing Corporation (LPCC).

A core settlement guarantee fund (SGF) is a corpus used for settlement of trades during defaults and all intermediaries -- stock exchanges, clearing corporations and brokers -- contribute towards it.

LPCC is an entity established to undertake the activity of clearing and settlement of repo transactions. A well-functioning repo market contributes to the development of the debt securities market by way of boosting liquidity.

In its circular, Sebi said that the contribution of participants, who desire direct participation and not through a clearing member to core SGF, is risk-based and equivalent to a deficit in minimum required corpus (MRC) post contribution by issuers and clearing members.

Such contributions by participants should be subject to certain conditions. These include ..