SEBI Sets Up Committee To Review Ownership, Economic Structure Of Clearing Corporations

Capital markets regulator SEBI on Tuesday said it has set up a committee to review the ownership and economic structure of clearing corporations and suggest measures to ensure that clearing corporations function as resilient, independent, and neutral risk managers. The ad-hoc committee would be chaired by Usha Thorat, former Deputy Governor of the Reserve Bank of India.

The decision has been taken in the wake of the substantial growth of Indian securities markets in recent years and the importance of clearing corporations as central risk management institutions.

In a statement, SEBI said that the committee has been entrusted with the task of reviewing ownership structure as well as finances of clearing corporations.

With regards to ownership structure, the committee will examine the feasibility, and broadening the list of eligible investors, who are allowed to take shareholding in a clearing corporation and suggest categories of investors who can acquire stakes in such corporations.

Additionally, it will examine the need to alter the caps on the shareholding of various entities in a clearing corporation.

Given the common service, cutting across exchanges that is provided by a clearing corporation in an inter-operable environment, the committee can suggest shareholding pattern of clearing corporation suited to such an environment, SEBI said.

While suggesting alternative ownership structures, the committee can also examine the shareholding structures of other clearing corporations globally.

"The suggested alternatives should keep in view the periodic capital needs of a clearing corporation towards augmenting its settlement guarantee fund. The suggested alternatives should also keep in sight the need for a clearing corporation to ensure sufficient capital/ liquidity in times of market-wide systemic stress," the regulator said.

At present, the current ownership structure of a clearing corporation is dominated by the parent exchange with all clearing corporations under the regulatory purview of SEBI being subsidiaries of their parent exchanges.

"The dominance of the parent exchange in the ownership structure invariably exposes a clearing corporation to the expectations of shareholders of the parent exchange, with the financial statements of clearing corporations being incorporated in the consolidated financial statement of the parent exchange," the regulator added.

Additionally, the committee is required to deliberate and suggest alternatives towards achieving optimum financial structure for a clearing corporation which ensures its financial independence and sustenance as a robust going concern, while also taking into consideration the following aspects.