RIFM

RAJ INSTITUTE OF FINANCE & MARKETING

ONE DAY CRASH COURSE IN FINANCIAL MARKETS

Introduction

Today everyone is talking about investment and share trading. We all want
some additional income to meet our varied financial requirements. We also want to grow
our savings rapidly. And for this we need some exposure to the various financial
instruments available to us. In this fast world everyone is busy in his business or
profession. So we needed the help from expert and experienced investment professionals
and share analyst. Demand for expert share traders is growing day by day. So a genuine
training course is needed to cater to the needs of the aspirants who want to become real
experts of share markets.

RIFM imparts the world class training to produce highly sought after trading
professionals. We provide a right blend of theory and practical enabling our students to
face the share trading world right from the day one after completing the course. Our
course delivery is unique in presentation and lucid in style. Throughout the course you
would get trained by the real professionals of the share market having years of trading
experience. In short, this course is going to bring a revolutionary change in your life.

IPO

The benefit of the industrial development of a country should go to the ordinary people.
And the industry should get investment from the ordinary people along with other
financially strong entities. Thus risk and reward both would be distributed among a large
number of investors. This is what true public participation in the industrial development
of a country. After government approval, a company brings the Initial Public Offer to
get investments from financial institutions, HNI’s and ordinary people. Against our
investment amount we get shares allotted to us directly from the company. This is called
the Primary Share Market.

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Financial Markets

Once we get shares during IPO, we may want to sell them to others. Or we may want to
buy shares allotted to others during IPO. Thus we need Secondary Markets to carry out
these transactions. These markets are called Stock Markets or Stock Exchanges. Shares
allotted during IPO must be listed in stock exchanges to be bought or sold there. There
are two most popular Stock Exchanges in India …National Stock Exchange (NSE) and
Bombay Stock Exchange (BSE). The NSE is started by the Govt. of India.

Brokers or Trading Members

A broker is an intermediary to carry out transactions (buy and sell securities) at the stock
exchange on behalf of clients. To deal with securities a stock broker must hold a
certificate of registration granted by SEBI (Securities Exchange Board of India). The
SEBI is a government body to regulate the various entities of financial markets.

Trading Terminals

To carry out transaction we need online fully-automated screen based trading system
(SBTS). SBTS electronically matches orders on a strict price/time priority and hence
down on time, cost and risk of error, as well as on fraud resulting in improved operational
efficiency. Brokers have terminals installed at their premises which are connected to the
Server at stock exchange side through VSATs/leased lines/modems. The trading terminal
provided by NSE is called NEAT (National Exchange for Automated Trading)
system.

Online Share Trading

When a client carries out transaction in securities through terminals placed at broker’s
premise it is called Offline Share Trading. Clients may also buy or sell shares using
their own computer through the terminal provided by the broker called Online Share
Trading.

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Career Prospects

After completing the course successfully you would be ready to start the challenging
career in financial markets. This course would lead you to become Dealer, Relationship
Manager, Trading Advisor and Share Analyst. And you may eventually get NCFM
certifications like Capital Market (Dealers) and Derivatives Market (Dealers) Modules.

Business Opportunities

After the completion of this course you would be equipped with the right knowledge and
expertise to face the challenges of the trading world. You can start your own broking
business just after completing this course. Or you can work as a professional trader to
earn yourself. You would learn the right strategy to trade in various financial instruments.

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Market Types

Normal Market

Normal market consists of various book types wherein orders are segregated as
Regular Lot Orders, Special Term Orders, Negotiated Trade Orders and Stop Loss Orders
depending on their order attributes.

Odd Lot Market

This facility is used for the Limited Physical Market.

RETDEBT Market

This is used for transactions in retail Debt Market session.

Auction Market

Auctions are initiated by the Exchange on behalf of trading members for

settlement related reasons. This situation may occur when one has sold shares without
having them in his demat account. There are three types of participants in the auction
market:

Initiator: The party who initiates the auction process.

Competitor: The party who enters on the same side as of the initiator.

Solicitor: The party who enters on the opposite side as of the initiator.

The trading members can participate in the Exchange initiated auctions by entering orders
as a solicitor. That is if the Exchange conducts a Buy-In auction, the trading members
entering sell orders are called solicitors.

When the auction starts, the Competitor Period for that auction also starts. Competitor
orders are the orders which compete with the initiator’s order i.e. if the initiator’s order is
a buy order, then all the by orders for that auction other than the initiator’s order are
competitor orders. And if the initiator order is a sell order than all the sell orders for that
auction other than the initiators order are competitor orders.

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After the competitor period ends, the solicitor period for that auction starts. Solicitor
Period is the period during which solicitor order entries are allowed. Solicitor orders are
the orders which are opposite to the initiator order.

After the solicitor period, order matching takes place. The system calculates trading price
for the auction and all possible trades for the auction are generated at the calculated
trading price. Competitor period and solicitor period for any auction are set by the
Exchange.

Market Watch

The purpose of Market Watch is to setup and view trading details of securities that are of
interest to users. Market information is dynamically updated for each security in the
Market Watch. The one line market information displayed in the market watch screen is
for current best price orders available in the Regular Lot book.

Sample Market Watch Snap Shot

Bid Offer Bid Offer Total Bid Total Offer

Symbol Price Price LTP Quantity Quantity Quantity Quantity Open High Low Close Volume

Order Management

Active & Passive Order

When any order enters the trading system, it is an active order. It tries to find a match on
the other side of the books. If it finds a match, a trade is generated. If it does not find a
match, the order becomes a passive order and goes and sits in the order book.

As and when valid orders are entered or received by the trading system, they are first
numbered, time stamped and then scanned for a potential match. This means that each
order has a distinctive order number and a unique time stamp on it. If a match is not
found, then the orders are stored in the books as per the price/time priority. If two orders
are entered into the system, the order having the best price gets the higher priority. If two
orders having the same price is entered, the order that is entered first gets the higher

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priority. Best price for a sell order is the lowest price and for a buy order, it is the highest
price.

Regular Lot Book (RL)

No special condition is associated with it. This option is selected by default in the order
entry screen in the normal market.

Stop Loss Book

Untriggered stop loss orders are stacked in the stop loss book. Stop Loss orders are
released into the market when the last traded price for that security in the normal market
reaches or surpasses the trigger price. The stop loss orders can either a market order or a
limit price order. For buy SL orders, the trigger price has to be less than or equal to the
limit price. Similarly, for sell SL orders, the trigger price has to be greater than or equal
to the limit price.

Auction Order Book

It stores orders entered by the trading members to participate in the Exchange initiated
auctions. Auction orders can be initiator orders, competitor orders and solicitor orders.

Order Types and Conditions

Time Conditions

DAY: It is valid for the on which it is entered

IOC: An immediate or cancel order allows the trader to by or sell a security as soon as
the order is released into the system; otherwise the order is cancelled from the system.

Quantity Conditions

DQ: It allows the user to disclose only a portion of the quantity to the market.

Price Conditions

Market: For such orders, the system determines the price.

Stop-Loss: It allows the trader to release an order into the system, after the market price
of the security reaches or crosses a predetermined price called trigger price.

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Limit Price: Price of the orders after triggering from stop loss book.

Trade Management

Before the trade is effected, the system performs checks with respect to the following
parameters:-

• The security in which the trade is to be effected is not suspended from operations.
• Trading members involved in the potential trade are not suspended from
operations.
• Turnover limits for the trading members involved are not exceeded.

Trade Modification

The user can request the Exchange to modify only the trade quantity field. Moreover, the
new quantity requested must be lower than the original trade quantity.
If the user is a Corporate Manager of a trading member firm, he can request for trade
modification for the trades of any dealer of the trading members firm and if he is a
Branch Manager of a branch, then he can request for trade modification for any dealer of
the branch of the trading member firm. The counterparty to the trade has to make a
similar request for the same modified quantity on the same trading day. Once both the
parties to trade send their respective trade modification requests, the Exchange either
approves or rejects it.

Trade Cancellation

If the user is a corporate manager of a trading member firm, he can

request for trade cancellation for the trades of any dealer of the trading
members firm and if he is a branch manager of a branch, then he can request
for trade cancellation for the trades for any dealer of the branch of the trading
member firm.

The counterparty to the trade also receives the message. The counterparty then has to
make similar request on the same trading day. Once both the parties to trade send the
trade cancellation request, the Exchange either approves or rejects it. The message
to that effect is displayed in the message window.

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TRADING MEMBERSHIP

Stock Brokers

A broker is an intermediary who arranges to buy and sell securities on behalf

of clients (the buyer and the seller). According to Rule 2 (e) of SEBI (Stock Brokers and
Sub-Brokers) Rules, 1992, a stockbroker means a member of a recognized stock
exchange. No stockbroker is allowed to buy, sell or deal in securities, unless he or she
holds a certificate of registration granted by SEBI. A stockbroker applies for
registration to SEBI through a stock exchange or stock exchanges of which he
or she is admitted as a member.

Membership in NSE

There are no entry/exit barriers to the membership in NSE. Anybody can

become member by complying with the prescribed eligibility criteria and exit
by surrendering membership without any hidden/overt cost.

The standards for admission of members laid down by the Exchange stress on
factors such as, corporate structure, capital adequacy, track record,
education, experience, etc. and reflect a conscious effort on the part of NSE
to ensure quality broking services so as to build and sustain confidence
among investors in the Exchange’s operations.

Benefits to the trading membership of NSE include:

1) access to a nation-wide trading facility for equities, derivatives, debt

and hybrid instruments / products,

2) ability to provide a fair, efficient and transparent securities market to

the investors,
3) use of state-of-the-art electronic trading systems and technology,

4) dealing with an organisation which follows strict standards for trading

& settlement at par with those available at the top international
bourses,

5) a demutualised Exchange which is managed by independent and

experienced professionals, and

6) Dealing with an organization which is constantly striving to move

towards a global marketplace in the securities industry.

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New Membership

The different segments currently available on the Exchange for trading are:

 C apital Market (Equities and Retail Debt)

Wholesale Debt Market
Derivatives (Futures and Options) Market

Persons or Institutions desirous of securing admission as Trading Members

(Stock Brokers) on the Exchange may apply for any one of the following
segment groups:
I. Wholesale Debt Market (WDM) Segment
II. Capital Market (CM) and Wholesale Debt Market (WDM) segments
III. Capital Market (CM) and Futures & Options (F&O) segments
IV. Capital Market (CM), Wholesale Debt Market (WDM) and Futures &
Options (F&O) segment
V. Clearing Membership of National Securities Clearing Corporation Ltd.
(NSCCL) as a Professional Clearing Member (PCM)

Eligibility for acquiring new membership of NSE

1) The following persons are eligible to become trading members:

(a) Individuals
(b) Partnership firms registered under the Indian Partnership Act,
1932
Individual and Partnership firm are not eligible to apply for
membership on WDM segment.
(c) Institutions, including subsidiaries of banks engaged in financial
services.
(d) Body Corporates including companies as defined in the
Companies Act, 1956.

Education and Experience

Where an applicant is a corporate, not less than two directors of the company
(in case of a sole proprietorship, individual and in case of a partnership firm,
two partners) should satisfy the following criteria:
They should be at least graduates and each of them should possess at least
two years' experience in an activity related to broker, sub-broker, authorised
agent or authorised clerk or authorised representative or remisier or
apprentice to a member of a recognized stock exchange. Such experience will
include working as a dealer, jobber, market maker, or in any other manner in
the dealing in securities or clearing and settlement thereof, as portfolio
manager or merchant bankers or as a researcher with any individual or
organization operating in the securities market.

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Shareholding Pattern

Though membership on NSE is granted to the entity applying for it, but for all practical
purposes the entity is managed by a few shareholders who have controlling interest in the
company. The shareholders holding the majority of shares have a dominant role in
theaffairs of the company. In case of any default by the broking entity, theExchange
should be able to identify and take action against the persons whoare behind the
company. The Exchange, therefore, needs to know the
background, financial soundness and integrity of these shareholders holding
such controlling interest. Hence, during the admission process the dominant
shareholders are called for an interview with the Membership
Recommendation Committee.

Dominant Promoter /Shareholder Group (DPG)

Dominant Promoter norms are applicable to all the corporate trading

members. The norms relating to dominant promoter are given as under:

Segments provided in New Membership

Persons or Institutions desirous of securing admission as Trading Members

(Stock Brokers) on the Exchange may apply for any one of the following
segment groups:
 W holesale Debt Market Segment (WDM) segment
Capital Market (CM) segment and Futures & Options (F&O) segment
Capital Market (CM) segment, Wholesale Debt Market (WDM) segment
and Futures & Options (F&O) segment
Clearing Membership of National Securities Clearing Corporation Ltd.
(NSCCL) as a Professional Clearing Member (PCM)

Criteria Individuals Corporates

AGE
Minimum age: 21 years
Maximum age: 60 years
Minimum age: 21 years
(applicable for directors)

STATUS Indian Citizen

Corporate registered under
The Companies Act, 1956
(Indian)
EDUCATION
At least a graduate or equivalent
qualification

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Two Directors should be at

least graduate or equivalent
qualification

EXPERIENCE
Should have a minimum of 2 years
experience in an activity related to
dealing in securities or as portfolio
manager or as investment
consultant or as a merchant
banker or in financial services or
treasury, broker, sub broker,
authorised agent or authorised
clerk or authorised representative
or remisier or apprentice to a
member of a recognized stock
exchange, dealer, jobber, market
maker, or in any other manner in
dealing in securities or clearing
and settlement thereof.
MINIMUM
PAID UP
EQUITY
CAPITAL
Not Applicable Rs.30 lakh

Fees, Deposit and Networth Requirements

1) Wholesale Debt Market (WDM) Segment

Applicants recommended for admission will be required to pay the following
fee and deposits:

(Amount in Rs. lakh)

Advance annual subscription 1.00
Interest free security deposit 150.00
Annual subscription fee 1.00

Networth

An applicant for membership must possess a minimum networth of Rs. 200

lakh. In case the company is a member of any other Stock Exchange(s), it
should satisfy the combined minimum networth requirements of all these
Stock Exchanges including NSEIL.

ADMISSION PROCEDURE FOR NEW MEMBERSHIP

(a) Submission of application form

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(b) Online examination [NSE’s Certification in Financial Markets (NCFM)]

130
(c) Membership Recommendation Committee (MRC)
(d) MRC/Board approval
(e) SEBI Registration
(f) Formalities for enablement
(a) Submission of application form

Applicants should submit their application form complete in all respects in the
prescribed format along with other relevant documents and accompanied by a
demand draft for Rs. 10,000/- drawn in favour of National Stock Exchange of
India Limited, payable at Mumbai.

(b) Online examination

At any point of time the applicant has to ensure that at least the sole
proprietor/one of the designated partner/one of the designated
director/compliance officer would have a valid certificate for at least one of
the following NCFM Modules :
i. Securities Market (Basic) Module
ii. Compliance Officer (Broker) Module
iii. Capital Market (Dealers) Module
iv. Derivatives Market (Dealers) Module

(c) Membership Recommendation Committee (previously known as

Membership Approval Committee)

The Membership Recommendation Committee (MRC) consists of seven

persons from various disciplines, including the Managing Director of the
Exchange. The MRC conducts interviews with the applicants for trading
membership.
The following persons have to appear for the interview:
(i) Corporates - A dominant shareholder and a Whole-time Director
(ii) Individuals – individual himself
(iii) Partnership Firms – Two partners
The purpose of the interview is to gain knowledge about the prospects as to
their capability & commitment to carry on stock broking activities, financial
standing and integrity.
The MRC is only a recommendatory body about the admissibility of the
prospect or otherwise to the Board of Directors of the Exchange. It
recommends the names of the prospects it deems fit to the Board for their
approval.

(e) SEBI Registration

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In this offer letter, the requirements to be complied with by the trading

member for forwarding their application to SEBI are listed, important among
them being:
(1) SEBI Application form along with DD of Rs. 5000/- favouring SEBI for
Capital Market, Rs. 10,000/- for F&O trading only and Rs. 50,000/- for
Trading cum Clearing/ Self clearing member on F&O segment.
(2) Audited financial statements, Networth certificate, Details of Directors
and shareholders, etc.
(3) Memorandum or Articles of association or Partnership deed, as the
case may be.
It must be noted that the applicant has to remit the prescribed membership

Continuing Membership

Compliance with respect to Trading Members - The Trading Members are

required to comply with various requirements for continuing membership.
These include:
(1) Submission of the following documents in the prescribed format duly
certified by a chartered accountant:
(a) Audited Annual Accounts
(b) Net worth Certificate
(c) Shareholding pattern
(d) Dominant Promoter Group details
The above documents have to be submitted before the expiry of six
months from the end of the respective financial year of the Trading
Member. Non-submission of the above documents by the due date
would attract penalty.
(2) Members have to annually renew their Insurance policies failing which,
disciplinary action would be initiated by the Exchange.

Sub-Brokers

The trading members of the Exchange may appoint sub-brokers to act as

agents of the concerned trading member for assisting the investors in buying,
selling or dealing in securities. The sub-brokers would be affiliated to the
trading members and are required to be registered with SEBI. A sub-broker
would be allowed to be associated with only one trading member of the
Exchange.
Trading members desirous of appointing sub-brokers are required to submit
the following documents to the Membership Department of the Exchange:
Copy of sub-broker - broker agreement duly certified by the trading
members
Application form for registration as a sub-broker with Securities and
Exchange Board of India (Form B)

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Recommendation letter to be given by the trading member with whom

the sub-broker is affiliated (Form C)

Eligibility

A sub-broker may be an individual, a partnership firm or a corporate. In case

of corporate or partnership firm, the directors or partners and in the case of
an individual sub-broker applicant, each of them shall comply with the
following requirements:
(1) They shall not be less than 21 years of age;
(2) They shall not have been convicted of any offence involving fraud or
dishonesty;
(3) They shall have atleast passed 12th standard equivalent examination
from an institution recognized by the Government;
(4) They should not have been debarred by SEBI
(5) The corporate entities applying for sub-brokership shall have a
minimum paid up capital of Rs. 5 Lakh and it shall identify a dominant
shareholder who holds a minimum of 51% shares either singly or with
the unconditional support of his/her spouse.

Registration
No sub-broker is allowed to buy, sell or deal in securities, unless he or she
holds a certificate of registration granted by SEBI.

Brokerage

The maximum brokerage chargeable by TM in respect of trades effected in

the securities admitted to dealing on the CM segment of the Exchange is fixed
at 2.5% of the contract price, exclusive of statutory levies. This maximum
brokerage is inclusive of sub-brokerage. The brokerage shall be indicated
separately from the price, in the contract note.

DISPUTE, ARBITRATION AND APPEAL

Investor complaints received against the trading members / companies in

respect of claims/disputes for transactions executed on the Exchange are
handled by the Investor Service Cell (ISC). The complaints are forwarded to
the trading members for resolution and seeking clarifications. The ISC
follows-up with the trading members and makes efforts to resolve the
complaint expeditiously. However, in certain cases, on account of conflicting
claims made by the investor and the trading member, when it is not possible
to administratively resolve the complaint, investors are advised to take
recourse to the arbitration mechanism prescribed by the Exchange.

Arbitration, which is a quasi judicial process, is an alternate dispute resolution

mechanism prescribed under the Arbitration and Conciliation Act, 1996. The

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Exchange Bye Laws prescribe the provisions in respect of Arbitration and the
procedure therein has been prescribed in the Regulations.
The claim, difference or dispute between the trading members inter se,
between trading members and constituents/registered sub-brokers between
investors and listed companies arising out of transactions executed on the
Exchange can be referred to arbitration in accordance with the provisions
prescribed under the Byelaws and Regulations of the Exchange. To establish
that the disputes have arisen out of trades done on the Exchange, it is
essential that the parties produce adequate documents viz. contract notes,
bills, ledger accounts, etc.
The aggrieved parties can file for arbitration at the regional centres viz.
Mumbai, Delhi, Kolkata and Chennai based on the region where the
constituent ordinarily resides. The reference for arbitration should be filed
within six months from the date when the dispute arose between the parties
in the prescribed form along with a list of Arbitrators (selected from the
names of persons who are eligible to act as Arbitrators provided by the
Exchange).

The arbitration application received from the applicant (aggrieved party) is

forwarded to the other party i.e. the respondent. The respondent is called
upon to file his reply along with the list of Arbitrators within the specified
time. The parties (applicant and respondent) have to select seven names in
the descending order of preference from the eligible list of Arbitrators if
arbitration reference is filed at Mumbai and five names in the descending
order of preference from the eligible list of Arbitrators if arbitration reference
is filed at Delhi, Chennai or Kolkata.

The sole arbitrator or panel of arbitrators to whom the highest preference has
been given by both the parties is/are appointed by the Exchange to conduct
the arbitration proceeding and pass the award in the respective arbitration
matter. If no common person/s are identifiable from the list submitted by
both the parties, the sole arbitrator or panel of Arbitrators is/are appointed by
the Exchange from the list of persons eligible to act as Arbitrators after
excluding the names of Arbitrators given by the parties. Sole Arbitrator is
appointed if the claim amount is upto Rs.25 lakhs and panel of Arbitrators
comprising of three persons are appointed if the claim amount is more than
Rs.25 lakhs based on the list of Arbitrators submitted by the parties. The sole
Arbitrator/panel of Arbitrators would fix a hearing in the matter unless both
parties waive their right for such hearing in writing. In cases the claim
amount is Rs. 25,000/- or less, it is not mandatory to hold a hearing of the
parties and the matter is decided based on the documents and submissions
made by the parties.
Based on the submissions made by the parties and the documentary evidence
produced before the Arbitrator, the award is passed by the Arbitrator. The
award is pronounced in writing and signed by the sole Arbitrator or in case of
a panel of Arbitrators by all the three Arbitrators. The Arbitrator may include

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an interest component on the amount awarded, at such rate and for such
period, as the Arbitrator deems reasonable. In case the award is passed in
favor of the constituent (investor) the trading member is requested to comply
with the award failing which the award amount is debited and set aside from
the available deposit of the trading member.

The petition has to be filed normally within a period three months from the date of receipt
of the award. On expiry of three months, the award amount set aside shall be
released to the constituent incase petition is not filed under section 34 of the
Arbitration and Conciliation Act, 1996 by either of the parties. In case petition
is filed, the award amount set aside is dealt in accordance with the court
order.

Miscellaneous Topics

Trading account

Demat account

Circuit Breakers

The Exchange has implemented index-based market-wide circuit breakers in

compulsory rolling settlement with effect from July 02, 2001. In addition to
the circuit breakers, price bands are also applicable on individual securities.

Index-based Market-wide Circuit Breakers: The index-based market-wide

circuit breaker system applies at 3 stages of the index movement, either way
viz. at 10%, 15% and 20%. These circuit breakers when triggered bring
about a coordinated trading halt in all equity and equity derivative markets
nationwide. The market-wide circuit breakers are triggered by movement of
either the BSE Sensex or the NSE S&P CNX Nifty, whichever is breached
earlier.
In case of a 10% movement of either of these indices, there would be
a one-hour market halt if the movement takes place before 1:00 p.m.
In case the movement takes place at or after 1:00 p.m. but before
2:30 p.m. there would be trading halt for ½ hour. In case movement
takes place at or after 2:30 p.m. there will be no trading halt at the
10% level and market shall continue trading.
In case of a 15% movement of either index, there shall be a two-hour

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halt if the movement takes place before 1 p.m. If the 15% trigger is
reached on or after 1:00 p.m., but before 2:00 p.m., there shall be a
one-hour halt. If the 15% trigger is reached on or after 2:00 p.m. the
trading shall halt for remainder of the day.
In case of a 20% movement of the index, trading shall be halted for
the remainder of the day.

Price Bands

Daily price bands are applicable on securities as below:

Daily price bands of 2% (either way) on securities as specified by the
Exchange.
Daily price bands of 5% (either way) on securities as specified by the
Exchange.
Daily price bands of 10% (either way) on securities as specified by the
Exchange.
No price bands are applicable on: scrips on which derivative products
are available or scrips included in indices on which derivative products
are available.
The price bands for the securities in the Limited Physical Market are the same
as those applicable for the securities in the Normal Market. For auction
market the price bands of 20% are applicable.
There are no price bands for those securities which are available for trading in
the Futures and Options segment and securities which form part of the indices
on which trading is available in the Futures and Options segment

Stock indices

Stock Futures
Stock Options
Index Futures
Index Options

Trading Strategy
Equity Trading Strategy
Futures Trading Strategy
Options Trading Strategy

Swing trading free fall short covering news rumors global effect arbitrage
opportunity

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Commodity

Agri copper gold crude

CLEARING AND SETTLEMENT

Introduction

T+2 rolling settlement has now been introduced for all securities. The members
receive the funds/securities in accordance with the pay-in/pay-out schedules notified
by the respective exchanges. The exchanges and their clearing corporations employ
risk management practices to ensure timely settlement of trades. The regulators
have also prescribed elaborate margining and capital adequacy standards to secure
market integrity and protect the interests of investors. The trades are settled
irrespective of default by a member and the exchange follows up with the defaulting
member subsequently for recovery of his dues to the exchange. Due to setting up of
the Clearing Corporation, the market has full confidence that settlements will take
place on time and will be completed irrespective of possible default by isolated
trading members. Two depositories viz., National Securities Depositories Ltd. (NSDL)
and Central Depositories Services Ltd. (CDSL) provide electronic transfer of
securities and more than 99% of turnover is settled in dematerialised form. All
actively traded scrips are held, traded and settled in demat form. The obligations of
members are downloaded to members/custodians by the clearing agency. The
members/custodians make available the required securities in their pool accounts
with depository participants (DPs) by the prescribed pay-in time for securities. The
depository transfers the securities from the pool accounts of members/custodians to
the settlement account of the clearing agency. As per the schedule determined by
the clearing agency, the securities are transferred on the pay-out day by the
depository from the settlement account of the clearing agency to the pool
accounts of members/custodians. The pay-in and pay-out of securities is
effected on the same day for all settlements. Select banks have been empanelled by
clearing agency for electronic transfer of funds. The members are required to
maintain accounts with any of these banks. The members are informed electronically
of their pay-in obligations of funds. The members make available required funds in

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their accounts with clearing banks by the prescribed pay-in day. The clearing agency
forwards funds obligations file to clearing banks which, in turn, debit the accounts of
members and credit the account of the clearing agency. In some cases, the
clearing agency runs an electronic file to debit members’ accounts with
clearing banks and credit its own account. On pay-out day, the funds are
transferred by the clearing banks from the account of the clearing agency to
the accounts of members as per the member’s obligations. In the T+2 rolling
settlement, the pay-in and pay-out of funds as well as securities take place 2
working days after the trade date.

Transaction Cycle

Figure 2.1: Transaction cycle

At the end of the trade cycle, the trades are netted to determine the obligations of the
trading members to deliver securities/funds as per settlement schedule.
Buyer/seller delivers funds/securities and receives securities/ funds and
acquires ownership of the securities. A securities transaction cycle is
presented in Figure 2.1.

Settlement Process

While NSE provides a platform for trading to its trading members, the
National Securities Clearing Corporation Ltd. (NSCCL) determines the
funds/securities obligations of the trading members and ensures that trading
members meet their obligations. NSCCL becomes the legal counterparty to
the net settlement obligations of every member. NSCCL is obligated to meet all
settlement obligations, regardless of member defaults, without any discretion. Once a
member fails on any obligations, NSCCL immediately cuts off trading and initiates
recovery.
The clearing banks and depositories provide the necessary interface between
the custodians/clearing members (who clear for the trading members or their
own transactions) for settlement of funds/securities obligations of trading
members.
The members bring in their funds/securities to the NSCCL. They make available
required securities in designated accounts with the depositories by the prescribed pay-in
time. The depositories move the securities available in the accounts of embers to the
account of the NSCCL. Likewise members with funds obligations make available
required funds in the designated accounts with clearing banks by the
prescribed pay-in time. The NSCCL sends electronic instructions to the
clearing banks to debit member’s accounts to the extent of payment
obligations. The banks process these instructions, debit accounts of members
and credit accounts of the NSCCL.
(c) Pay-out of Funds and Securities: After processing for shortages of
funds/securities and arranging for movement of funds from surplus banks to
deficit banks through RBI clearing, the NSCCL sends electronic instructions to
the depositories/clearing banks to release pay-out of securities/funds. The

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depositories and clearing banks debit accounts of NSCCL and credit

settlement accounts of members. Settlement is complete upon release of payout
of funds and securities to custodians/members. The settlement process
for transactions in securities in the CM segment of NSE is presented in the
Figure 2.2.

Risk Management: A sound risk management system is integral to an

efficient settlement system. NSCCL has put in place a comprehensive risk
management system, which is constantly monitored and upgraded to preempt
market failures. It monitors the track record and performance of members and their net
worth; undertakes on-line monitoring of members’ positions and exposure in the market,
collects margins from members and automatically disables members if the limits are
breached.

Settlement Agencies

The NSCCL, with the help of clearing members, custodians, clearing banks
and depositories settles the trades executed on exchanges. The roles of each
of these entities are explained below:

(a) NSCCL: The NSCCL is responsible for post-trade activities of a stock

exchange. Clearing and settlement of trades and risk management are
its central functions. It clears all trades, determines obligations of
members, arranges for pay-in of funds/securities, receives
funds/securities, processes for shortages in funds/securities, arranges
for pay-out of funds/securities to members, guarantees settlement,
and collects and maintains margins/collateral/base capital/other funds.

(b) Clearing Members: They are responsible for settling their obligations
as determined by the NSCCL. They have to make available funds
and/or securities in the designated accounts with clearing
bank/depository participant, as the case may be, to meet their
obligations on the settlement day. In the capital market segment, all
trading members of the Exchange are required to become the Clearing
Member of the Clearing Corporation.

(c) Custodians: A custodian is a person who holds for safekeeping the

documentary evidence of the title to property belonging like share
certificates, etc. The title to the custodian’s property remains vested
with the original holder, or in their nominee(s), or custodian trustee,
as the case may be. In NSCCL, custodian is a clearing member but not
a trading member. He settles trades assigned to him by trading
members. He is required to confirm whether he is going to settle a
particular trade or not. If it is confirmed, the NSCCL assigns that
obligation to that custodian and the custodian is required to settle it on
the settlement day. If the custodian rejects the trade, the obligation is
assigned back to the trading / clearing member.

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(e) Depositories: A depository is an entity where the securities of an

investor are held in electronic form. The person who holds a demat
account is a beneficiary owner. In case of a joint account, the account
holders will be beneficiary holders of that joint account. Depositories
help in the settlement of the dematerialised securities. Each
custodian/clearing member is required to maintain a clearing pool
account with the depositories. He is required to make available the
required securities in the designated account on settlement day. The
depository runs an electronic file to transfer the securities from
accounts of the custodians/clearing member to that of NSCCL. As per
the schedule of allocation of securities determined by the NSCCL, the
depositories transfer the securities on the pay-out day from the
account of the NSCCL to those of members/custodians.

(f) Professional Clearing Member: NSCCL admits special category of

members namely, professional clearing members. Professional
Clearing Member (PCM) may clear and settle trades executed for their
clients (individuals, institutions etc.). In such an event, the functions
and responsibilities of the PCM would be similar to Custodians. PCMs
may also undertake clearing and settlement responsibility for trading
members. In such a case, the PCM would settle the trades carried out
by the trading members connected to them. The onus for settling the
trade would be thus on the PCM and not the trading member. A PCM
has no trading rights but has only clearing rights, i.e. he just clears the
trades of his associate trading members and institutional clients.

Normal Market

The trades executed each trading day are considered as a trading period and
trades executed during the day are settled based on the net obligations for
the day.
At NSE, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd
working day. Typically trades taking place on Monday are settled on
Wednesday, Tuesday's trades settled on Thursday and so on.
A tabular representation of the settlement cycle for rolling settlement is given
below:

Inter Institutional Segment

Trading in this market segment is available for 'institutional investors' only. In

order to ensure that the overall FII limits are not violated, selling in this
segment is restricted to FII clients. Buying is restricted to Institutional
clients.

Deals executed in this segment are cleared on a T+2 rolling basis. Settlement
of all transactions is compulsorily in demat mode only.

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RIFM

2.3 SECURITIES SETTLEMENT

The securities obligations of members are downloaded to

members/custodians by NSCCL after the end of the trading day. The
members/custodians deliver the securities to the Clearing House on the payin
day in case of physical settlement and make available the required
securities in the pool accounts with the depository participants in case of
dematerialised securities. Members are required to open accounts with
depository participants of both the depositories, NSDL and CDSL.
Delivering members are required to deliver all documents to the Clearing
House (in case of physical settlement) between 9:30 a.m. and 10:30 a.m. on
the settlement day. Receiving members are required to collect the documents
from the Clearing House between 2:00 p.m. and 2:30 p.m.
In case of dematerialised settlement, the members receive their obligation by
2.30 pm on T + 1 day. The members need to arrange for the securities as per
their obligations and give instructions by 10.30 am on the pay-in day. In case
of NSDL the members need to give instructions to move the securities to the
settlement account of NSCCL, whereas in case of CDSL the members need to
ensure that the necessary quantity of securities are available in their pool
account. The members need to ensure that the settlement number and type
are correctly entered to avoid any defaults. Pursuant to SEBI directive (vide
its circular SMDRP/Policy/Cir-05/2001 dated February 1, 2001) NSCCL has
introduced a settlement system for direct delivery of securities to the
investors accounts with effect from April 2, 2001.
78
Direct Payout to Investors
SEBI vide its circular no.SMDRP/Policy/Cir-05/2001 dated February 1, 2001
had directed stock exchanges to introduce a settlement system for direct
delivery of securities to the investors accounts with effect from April 2, 2001.
Accordingly, NSCCL has introduced the facility of direct payout to clients'
account on both the depositories. It ascertains from each clearing member,
the beneficiary account details of their respective clients who are due to
receive pay out of securities. NSCCL has provided its members with a frontend
for creating the file through which the information is provided to NSCCL.
Based on the information received from members, the Clearing Corporation
sends payout instructions to the depositories, so that the client receives the
pay out of securities directly to their accounts on the pay-out day. The client
receives payout to the extent of instructions received from the respective
clearing members. To the ext ent of instruction not received, the securities are
credited to the CM pool account of the member.
Salient features of Direct Payout to Investors
• Clearing members are required to provide a file to NSCCL for effecting
pay out to investors' accounts for a particular settlement type,
settlement number and delivery type. The file is to be provided as per
the structure specified by NSCCL.
• Clearing members are provided with an application in the clearing
front end for the purpose of capturing the requisite data and
generating the file. This front end is a part of the Clearing Front End
Version 4.2, which is available on the extranet in the
'common/clearing' directory.

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• The time limit for submission of files is up to 9.30.am on the pay out
day
• The files are uploaded by NSCCL in its system and returned with the
indication of the success/rejection of the file and the records. This is
purely a validation of the correctness of the file and record formats.
• Clearing members shall provide details of beneficiary account of the
clients of the trading members in any one of the depositories.
• Credit to the accounts of various constituents (i.e. client account and
CM Pool / CM Clearing account) would be in the same order as
specified by the clearing member in the file given to NSCCL.
• If for any client account record, the quantity requested for direct
payout is more than the balance available for pay out to the clearing
member in that depository, the quantity available in that depository
shall only be directly credited to members settlement account in that
depository.
79
If the member receives entire shares in NSDL the same will be transferred to
members pool account in NSDL.
• In the following situations, the pay out shall be credited to CM Pool /
Clearing account of the clearing members :
(a) Where the clearing members fail to provide the details of the
beneficiary account or where the credit to the beneficiary
accounts of the clients fail, or any account whatsoever
(b) The remaining quantity received from other depository as pay
out shall be credited to the CM Pool / Clearing account of the
clearing member with the respective depositories
• If the member's client has not paid the dues to the member for the
said securities or for any other reason, the member has valid
justification not to release the payout of a client direct in such a
situation the member may not be giving the beneficiary account details
of such client's in the file. In case the investor has paid the dues for
delivery of securities and there is no valid justification for not releasing
pay-out directly to the client, the member has to provide the details of
its clients beneficiary account so that direct credit can be given to the
client.
2.4 FUNDS SETTLEMENT
Currently, NSCCL offers settlement of funds through 13 clearing banks
namely Canara Bank, HDFC Bank, Indusind Bank, ICICI Bank, Bank of India,
UTI Bank, IDBI Bank, Standard Chartered Bank, HSBC Ltd., Kotak Mahindra
Bank, State Bank of India, Union Bank of India, Citibank NA. Every Clearing
Member is required to maintain and operate a clearing account with any one
of the empanelled clearing banks at the designated clearing bank branches.
The clearing account is to be used exclusively for clearing & settlement
operations.
Clearing Account:
Every Clearing Member is required to maintain and operate a clearing account
with any one of the empanelled clearing banks at the designated clearing
bank branches. The clearing account is to be used exclusively for clearing
operations i.e., for settling funds and other obligations to the Clearing
Corporation including payments of margins and penal charges. Clearing
Members are required to authorise the Clearing Bank to access their clearing
account for debiting and crediting their accounts, reporting of balances and

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80
other information as may be required by NSCCL from time to time as per the
specified format. The Clearing Bank will debit/ credit the clearing account of
clearing members as per instructions received from the Clearing Corporation.
A Clearing member can deposit funds into this account in any form, but can
withdraw funds from this account only in self-name.
Change in Clearing Bank:
In case a Clearing Member wishes to shift a clearing account from one
designated Clearing Bank to another, the procedure is as follows:
(1) The CM clearing member while requesting the Clearing Corporation for
a change in the clearing bank account shall either
• Furnish the no objection certificate (NOC) received by the member
from the existing clearing bank for shifting of account, or
• In case no response was received by the clearing member from the
existing clearing bank in respect of the NOC request even after a
minimum waiting period of a fortnight, a declaration to the above
effect along with an acknowledged copy of the NOC request made by
the member to the existing clearing bank.
(2) The Clearing Corporation would thereon issue a letter of introduction
to the other designated clearing bank.
(3) On opening the account with the other designated clearing bank, the
clearing member shall submit to the Clearing Corporation the account
particulars issued by the bank and also the acknowledged copy of the
letter issued by the clearing member to the clearing bank.
(4) The Clearing Corporation shall thereon communicate the date from
which the new clearing account will be operational and also the date
after which the existing clearing account may be closed by the clearing
member.
Funds settlement:
Members are informed of their funds obligation for various settlements
through the daily clearing data download. The daily funds statement gives
date-wise details of each debit/ credit transaction in the member’s clearing
account whereas the summary statement summarises the same information
for a quick reference.
The member account may be debited for various types of transactions on a
daily basis. The member is required to ensure that adequate funds are
available in the clearing account towards all obligations, on the scheduled
date and time. The member can refer to his various obligation statements and
provide for funds accordingly. To ensure timely fulfillment of funds
81
obligations, members may avail of the facility of standing instructions to
transfer the requisite amount from some other account to the clearing
account or a Temporary Overdraft facility from the bank. In case the member
has availed such a facility, the member may furnish details of his obligation to
the bank to ensure timely transfer of funds towards the same to avoid
inconvenience. The member with a funds pay-in obligation is required to have
clear funds in his account on or before 11.00 a.m. on the scheduled pay-in
day. The payout of funds is credited to the clearing account of the members
on or after 1.30 p.m. on the scheduled payout day.
Funds shortages
In pursuance of chapter IV of the Byelaws of the NSCCL and Regulations
framed there under, all clearing members are requested to note that on
account of settlement funds shortages trading may not be permitted and

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securities payout withheld as per the norm in place from time to time -
Penal Charges
Penalties are charged to members for:
(a) failure to fulfil their funds obligations
(b) failure to fulfil their securities deliverable obligations
(c) Gross Exposure & Turnover Violations
(d) Margin Shortages
(e) Security Deposit Shortages
(f) Other violations in respect of client code modifications, nonconfirmation
of custodial trades, company objections reported against
the members' etc.
2.5 SHORTAGES HANDLING
On the securities pay-in day, NSCCL identifies short deliveries and the
respective clearing member is debited by an amount equivalent to the
securities not delivered by him and valued at a valuation price. This is called a
valuation debit. A valuation debit is also conducted for bad delivery by
clearing members.
NSCCL conducts a buying-in auction for security shortages on the day after
the pay-out day through the NSE trading system. If the buy-in auction price is
more than the valuation price, the member is required to make good the
difference.
82
2.5.1 Valuation Prices
Valuation prices at which valuation debits are conducted are calculated as
below:
Valuation Price for failure to deliver for Regular Market Deals,
Depository Deals:
The valuation price for securities which were not delivered on the settlement
day for securities, shall be the closing price of such securities, on the
immediate trading day preceding the pay-in day for the securities unless
prescribed otherwise from time to time by the relevant authority.
Valuation Price for failure to deliver for Limited Physical Market:
The valuation price for securities which were not delivered on the settlement
day for securities, shall be the closing price of such securities, on the
immediate trading day preceding the pay-in day for the securities unless
prescribed otherwise from time to time by the relevant authority.
Valuation Price for Bad Delivery for Regular Market Deals:
The valuation price for securities which constitute bad deliveries, shall be the
closing price of such securities, on the immediate trading day preceding the
bad delivery rectification day for the securities unless prescribed otherwise
from time to time by the relevant authority.
Valuation Price for Bad Delivery for Limited Physical Market:
The valuation price for securities which constitute bad deliveries, shall be the
closing price of such securities, on the immediate trading day preceding the
bad delivery rectification day for the securities unless prescribed otherwise
from time to time by the relevant authority.
2.5.2 Close-out Procedures
All shortages not bought-in are deemed closed out at the highest price
between the first day of the trading period till the day of squaring off or
closing price on the auction day plus 10%/20% (as the case may be). This
amount is credited to the receiving member's account on the auction pay-out
day.

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83
For Regular Market, Depository Deals:
• In the case of failure to give delivery : At the highest price prevailing
in the NSE from the first day of the relevant trading period till the day
of closing out or 20% above the closing price on the auction day,
whichever is higher.
• In cases of securities having corporate actions all cases of short
delivery of cum transactions which cannot be auctioned on cum basis
or where the cum basis auction pay out is after the book
closure/record date, would be compulsory closed out. For compulsory
close out, the following formula shall be applicable:
- Higher of 10% above the closing price of the security in Normal
Market on the auction day
OR
- The highest traded price from first trading day of the
settlement till the auction day.
• In the case of non rectification/replacement for bad delivery: At the
highest price prevailing in the NSE from the first day of the relevant
trading period till the day of the closing out or 20% above the official
closing price on the auction day, whichever is higher.
• In the case of non rectification/replacement for objection cases: At
20% above the official closing price on the auction day.
For Limited Physical Market Deals:
• In the case of failure to give delivery : At 20% over the actual trade
price
• In the case of non rectification/replacement for bad delivery: 20%
over the actual trade price
• In the case of non rectification/replacement for objection cases: At
20% above the official closing price in Regular Market on the auction
day.
Auction Market:
• In the case of auction non delivery: When the auction seller fails to
deliver in part or full on auction pay-in day, the deal will be squared up
at the highest price prevailing in the NSE from the first day of the
relevant trading period till the day of closing out or 20% over the
official closing price on the close out day whichever is higher and will
be charged to the auction seller unless otherwise specified.
• In the case of an auction bad delivery: An auction delivery reported as
bad delivery shall be squared up at the highest price prevailing in the
NSE from the first day of the relevant trading period till the day of
closing out or 10% over the official closing price on the close out day,
whichever is higher and will be charged to the auction seller unless
otherwise specified.
84
Rectified/Replaced bad deliveries reported as bad delivery (Rebad
delivery):
• For Regular Market Deals: At the highest price prevailing in the NSE
from the first day of the relevant trading period till the day of the
closing out or 10% above the official closing price on the auction day
whichever is higher.
• For Limited Physical Deals: Rectified / replaced shares reported as bad
delivery (Rebad delivery) shall be squared up at 10% over the actual
trade price

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RIFM

Company objection cases reported as bad delivery:

Rectified /replaced company objection reported as bad delivery shall be
squared up at 10% above the official closing price on the auction day.
Close out price for deleted security:
Security for which trading has been discontinued on the Exchange
(hereinafter referred to as deleted security), close out shall be at 20 % over
the official closing price on the last traded day of the 'deleted security' on the
Exchange.
Deleted security on account of payment of additional call money:
In the case of securities for which trading has been discontinued on the
Exchange on account of payment of additional call money (deleted security),
the security where the respective call money has been paid (new security) will
be considered to arrive at the closing price.
Company objections received in the 'deleted security' will be required to be
reported in the 'new security' symbol / series. In case the 'new security' is not
available for the reason of such security not being introduced for trading on
the Exchange/trading being discontinued on the Exchange, company
objections will be required to be reported in the 'deleted security' and closing
price for such deleted security will be at 20 % over the official closing price on
the last traded day of the 'deleted security' on the Exchange.
Deleted security on account of payment of redemption:
In the case of securities for which trading has been discontinued on the
Exchange on account of redemption (deleted security), the security (with the
new face value after redemption) introduced for trading by the Exchange
(new security) will be considered to arrive at the closing price.
85
Company objections received in the 'deleted security' will be required to be
reported in the new security symbol / series and members will be entitled to
claim redemption amount as corporate benefit.
In case the 'new security' is not available for the reason of such security not
being introduced for trading on the Exchange / trading being discontinued on
the Exchange on account of full redemption, company objections will be
required to be reported in the 'deleted security' and closing price for such
deleted security will be at 20 % over the official closing price on the last
traded day of the 'deleted security' on the Exchange.
Deleted security on account of merger / amalgamation / hive off /
scheme of restructuring:
In the case of securities for which trading has been discontinued on the
Exchange on account of merger / amalgamation/ scheme of restructuring
('deleted security'), the security with which the deleted security is merged /
amalgamated / hived off / restructured into ('new security') will be considered
to arrive at the closing price. Closing price for such 'deleted security' will be
the official closing price of the new security on the auction day prevalent on
the Exchange. In case where the price of the 'new security' is not available for
the reason of such security not being traded on the Exchange, the closing
price for such deleted security will be at 20 % over the official closing price on
the last traded day of 'deleted security' on the Exchange. In case, where more
than one security ('additional securities') is being given by the company in
lieu of the 'deleted security', the claim of company objection lodged for such
'deleted security' shall be settled as follows:
(i) if such 'additional securities' are traded on the Exchange, in the
ratio in which they have been issued by the company.
(ii) If any one or more of these 'additional securities' are not traded

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on any Stock Exchange, no claim shall arise, for such security

not traded.
(iii) If any one or more of these 'additional securities' are not traded
on the Exchange but traded on some other Stock Exchanges,
the relevant closing price of such securities shall be the closing
price on the Regional Exchange, to be notified by NSCCL.
Close out price for bonds:
• In case of failure to give delivery, non rectification/replacement of bad
delivery, rectified/replaced bad delivery subsequently reported as rebad,
auction non-delivery, and auction delivery reported as bad
delivery, closing out price will be the highest rate prevailing on the
Exchange from the first day of the relevant trading period till the day
of closing out or 5% over the official closing price on the auction day,
whichever is higher.
86
• In case of non rectification / replacement of company objection and
rectified/replaced company objections reported as bad delivery, closing
price will be 5% over the official closing price on the auction day.

Risk Containment Measures

A sound risk management system is integral to/pre-requisite for an efficient

clearing and settlement system. The National Securities Clearing Corporation
Ltd. (NSCCL), a wholly owned subsidiary of NSE, was incorporated in August
1995. It was set up to bring and sustain confidence in clearing and settlement
of securities; to promote and maintain, short and consistent settlement
cycles; to provide counter-party risk guarantee, and to operate a tight risk
containment system. NSCCL commenced clearing operations in April 1996.
NSCCL ensures that trading members’ obligations are commensurate with
their net worth. In recognition of the fact that market integrity is the essence
of any financial market and believing in the philosophy that prevention is
better than cure, NSCCL has put in place a comprehensive risk management
system which is constantly monitored and upgraded to pre-empt market
failures.
Risk containment measures include capital adequacy requirements of
members, monitoring of member performance and track record, stringent
margin requirements, position limits based on capital, online monitoring of
member positions and automatic disablement from trading when limits are
breached.
To safeguard the interest of the investors, NSE administers an effective
market surveillance system to curb excessive volatility, detect and prevent
price manipulation and follows a system of price bands. Further, the exchange
maintains strict surveillance over market activities in liquid and volatile
securities.
2.6.1 Capital Adequacy Requirements
The core of the risk management is the liquid assets deposited by members
with the exchange / clearing corporation. The trading members are required
to provide liquid assets which adequately cover various margins & base
minimum capital requirements. Liquid assets of the member include their
Initial membership deposits including the security deposits. Members may
provide additional collateral deposit towards liquid assets, over and above
their minimum membership deposit requirements.

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RIFM

The acceptable forms of capital towards liquid assets and the applicable
haircuts are listed below:
87
1. Cash Equivalents: Cash, Bank Fixed Deposits with approved
custodians, Bank Guarantees from approved banks, Government
Securities with 10% haircut, Units of liquid mutual funds or
government securities mutual funds with 10% haircut.
2. Other Liquid assets:
(i) Liquid (Group I) Equity Shares in demat form, as specified by
NSCCL from time to time deposited with approved Custodians.
Haircuts applied are equivalent to the VaR margin for the
respective securities
(ii) Mutual fund units other than those listed under cash equivalents
decided by NSCCL from time to time. Haircut equivalent to the VaR
margin for the units computed using the traded price if available,
or else, using the NAV of the unit treating it as a liquid security.
Capital Adequacy Norms for Membership on NSE
(Rs. in lakh)
Particulars
(all values in Rs. Lakh)
CM and F&O segment CM, WDM and F&O
segment
Net worth 1 100 200
Interest free security deposit
(IFSD) 2
125 275
Collateral security deposit
(CSD) 3
25 25

Annual subscription 1 2
1: No additional networth is required for self clearing members.
However, a networth of Rs. 300 Lakh is required for TM-CM and PCM.
2 & 3: Additional Rs. 25 Lakh is required for clearing memberships (SCM, TMCM).
In addition, the clearing member is required to bring in IFSD of
Rs. 2 Lakh and CSD of Rs. 8 Lakh per trading member he undertakes
to clear and settle.

Additional Base Capital

Members may provide additional margin/collateral deposit (additional base
capital) to NSCCL, over and above their minimum deposit requirements (base
capital), towards margins and/ or exposure / turnover limits. Members may
submit such deposits in any one form or combination of the following forms:

29