Sebi reduces minimum net worth requirements for clearing corp in IFSC

Clearing corporations operating in international financial services centre should have at least Rs 100 crore net worth from three years of commencing operations, Sebi said Friday as it reduced the minimum requirement level. This net worth requirement in the form of liquid assets has been brought down from the earlier Rs 300 crore.

However, the minimum net worth required to be held in liquid assets for clearing corporations on the commencement of operations remains the same as Rs 50 crore or the capital determined as per the Sebi norms.

"Every recognised clearing corporation shall enhance, over a period of three years from commencement of operations, its net worth, to be maintained in the form of liquid assets, to a minimum equivalent of one hundred crore rupees or capital as determined in accordance with ... Sebi circular dated April 10, 2019," Sebi said.

In this regard, the regulator has amended the Sebi (IFSC) Guidelines, 2015.

Sebi in its circular on April 10 provided the methodology to determine the minimum net worth requirements for clearing corporations that included capital requirement based on credit risk, business risk, orderly winding down or recovery of operations and legal and operational risks assessment.

Moreover, the clearing corporations in international financial services centre are required to regularly review their net worth requirement and ensure that the net worth does not fall below the prescribed threshold.

With regard to net worth, the clearing corporation has to submit a certificate signed by its managing director within 15 days from the end of every quarter. "The first such submission shall be made applicable for the April 2019-June 2019 quarter," Sebi said.

However, in case the net worth of clearing corporation falls below the prescribed threshold, it shall be informed to the regulator along with the reasons and the measures the clearing corporation intends to adopt in order to re-attain the prescribed net worth, it added.