Brief Overview:
Pre-funding in CCIL’s Securities Segment has been introduced to mitigate settlement risk. Opting for pre-funding helps bypass the margin requirement and prevent liquidity shortages and help minimize systemic risk.
This optional pre-funding facility (Facility) for outright trades will be effective 7th July 2025.
Technical details:
Key procedural compliances under the Facility are:
1) Members may choose and notify CCIL of their decision to be ‘Opt-in’ members or will be considered as ‘Opt-out’ by default.
2) In case members chose to ‘Opt-in’, the trades will be exempted from margin computation.
3) Securities contributions are made electronically using Value Free Transfer (VFT) functionality in RBI’s eKuber system.
4) All fund contributions will be done either through member’s RTGS Settlement/Current Account with RBI or designated settlement bank (DSB) to CCIL’s RTGS Settlement/Current Account with RBI or DSB.
5) Contributions towards prefunding will be distinctly held from any other collateral contribution.
6) Withdrawal feature as regards cash/securities contributed towards prefunding is available.
JC Takeaway:
Prefunding facility is intended to maintain the integrity of the settlement process by ensuring the availability of requisite resources prior to settlement execution. Also, CCIL can better manage liquidity knowing that collateral equivalent to the exposures is already available.
It enhances counterparty risk mitigation, facilitates timely and orderly settlement of trades, and brings the settlement framework in line with internationally recognized standards and practices in financial market infrastructure.
For further details, please see:
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