Page 117 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Indian Financial System

Notes and settlement of securities, to promote and maintain short and consistent settlement cycles, to
provide a counter-party risk guarantee and to operate a tight risk containment system.

Clearing and Settlement

The NSCCL (National Securities Clearing Corporation Limited) carries out the clearing and
settlement of the trades executed in the CM segment of NSE (National Stock Exchange) and
operates constituent SGL for settlement trades in government securities.

Inter-region Clearing

The NSCCL (National Securities Clearing Corporation Limited) facilitates inter-region clearing.
It has Regional Clearing Centres at Delhi, Kolkata and Chennai and a Central Clearing Centre
at Mumbai. Members have the option of delivering or receiving the securities at a clearing
centre chosen by them.

Certificates Handled

To provide a level playing field to members irrespective of their location, the NSCCL (National
Securities Clearing Corporation Limited) moves securities in the normal pay-in and pay-out on
behalf of the Clearing Members from and to Regional Clearing Centres (RCC) and the Central
Clearing Centre (CCC) at Mumbai.

Pre-delivery Verification

The NSCCL (National Securities Clearing Corporation Limited) was the first to start pre-delivery
verification to detect bad papers such as fake and forged certificates or lost and stolen share
certificates.

Dematerialised Settlement

The only effective solution to the problem of fake/forged and stolen shares was dematerialised
trading and settlement. As SEBI made demat settlements mandatory in an ever-increasing number
of securities in a phased manner, the proportion of shares delivered in the dematerialised form
by the NSCCL (National Securities Clearing Corporation Limited) has increased.

Risk Management

The NSCCL has also incorporated risk containment measures. A risk group, constituted by the
NSCCL (National Securities Clearing Corporation Limited) identified additional areas of
perceived risk and intensified the monitoring of members' position having concentration in
certain high-risk securities that attract high volumes and volatility.
Also a structured exercise of requiring unusually high pay-in liability members to make advance
pay-in of funds has been put in place, in addition to offering facility of early pay-in of securities
in demat mode.

Securities Lending/Borrowing

The automated lending and borrowing mechanism of the NSCCL (National Securities Clearing
Corporation Limited) provides a facility to lend/borrow securities/funds at market-determined
rates. This facilitates timely delivery of securities and thereby improves the efficiency of the
system.

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