Clearing members given one month extension to complete Interoperability

Moneylife Digital Team 29 May 2019

Clearing members have been given an extension of one month by the stock exchanges to complete the development and testing of the interoperability framework, laid down by the market regulator. The Securities Exchange Board of India had laid down the guidelines for an interoperable framework among Clearing Corporations on 27 November 2018. These guidelines were required to be adhered to and operationalized by stock exchanges and clearing members by 1 June 2019. However, the extension of one month has postponed the operation date of the interoperability framework to 1 July 2019.

Interoperability would reduce trading costs as it will allow trading members to choose a clearing member of their choice, than opt for the clearing owned by the bourses. As per the current practice, different stock exchanges have their own clearing houses to handle trade settlements on respective exchanges.

"Interoperability among CCPs necessitates linking of multiple clearing corporations. It allows market participants to consolidate their clearing and settlement functions at a single CCP, irrespective of the stock exchange on which the trade is executed," the Sebi circular said.

To promote transparency in the area of charges levied by the exchanges and CCPs, Sebi had said the transaction charges levied need to be clearly identified and made known to the participants upfront.

Addressing the delay in operationalising the guidelines, BSE and NSE stated in a public release, “while a large number of clearing members have updated their systems and processes necessary to implement interoperability, a few market participants have expressed that they are still in the process of developing and testing their systems and processes and need more time to move to the interoperable framework.”

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