Earlier, on November 27, 2020, NSE Clearing Limited had issued a circular (NCL/CMPL/46503) on Peak Margin reporting of Marginable Custodian Participant trades in the Capital Market Segment. Members had many queries regarding the details in that circular. So, to help clarify the doubts and queries raised, NSE Clearing Limited issued a circular (NCL/CMPL/46505) on November 28, 2020.
The circular had an annexure with the answers for some frequently asked questions (FAQs) about the Peak Margin reporting of Marginable Custodian Participant trades in the Capital Market Segment.
Here are the details about the clarifications.
1. Trading Members will now need to report the peak margins for Custodian Participant trades in the MG13 reporting, considering the collection of margins by the Custodian. This is because the penalties are to be levied by the Clearing Corporations on the basis of the reporting made by the Custodian.
2. If a Trading Member reports a shortage, a penalty will be levied on the Trading Member and collected from the Custodian.
3. If the Custodian reports a shortage instead, and the Trading Member (executing broker) reports no shortage, then a penalty will be levied on the Custodia, depending on the amount of shortage reported.
4. If both the Trading Member and the Custodian do not report any shortage, then no penalty shall be levied on either party.
5. During the interim process, the Clearing Corporation will continue to provide intraday peak snapshots.
6. The cut off time for reporting peak margins collection by the Trading Member and the Custodian through email will continue to be the T+5 day.
7. In case of any erroneous email confirmation, the revised reporting will be accepted on a best effort basis. For this, custodians are required to ensure proper due diligence before sending the email to Clearing Corporations.
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