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Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2020
The Securities Exchange Board of India vide notification dated on 8th October 2020 has published the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) (Amendment) Regulations, 2020 to give recognition to limited purpose clearing corporations. “limited purpose clearing corporation” means an entity set up for the activity of clearing transactions which are repo. “Repo” means an instrument which has been borrowed in exchange by selling debt securities with an agreement to repurchase in the future at an agreed price
The following amendments have been made:
•Regulation 2(d), which mentions the definition of the clearing corporations, has been switched.
A clearing corporation refers to an entity which has been set up to take the activity of clearing and settlement of trades in securities or other instruments that are dealt on a recognized stock exchange and includes a clearinghouse and a limited purpose clearing corporation which is specified under Chapter IV-A.”
•Chapter IV-A, which mentions the limited purpose clearing corporation has been inserted, in regards to its mentioning in regulation 22A, namely:
This Chapter provision which mentioned will only apply to the recognized limited purpose clearing corporations.”
•Regulation 22B, which mentions the shareholding in a recognized limited purpose clearing corporation, has been inserted, namely:
“No person who is resident in India shall at any time, directly or indirectly acquire the paid-up equity share capital not more than five percent in a limited purpose clearing corporation.”
•Regulation 22C, which mentions the composition of the governing board of recognized limited purpose clearing corporation, has been inserted, namely:
The one who is representative of the issuers of debt securities may be appointed on the governing board of the recognized limited purpose clearing corporation on a rotational basis and such a director will be a shareholder director.
•Regulation 22e, which mentions the utilization of the profits and investments, has been inserted, namely:
The utilization of profits and investments done by limited purpose clearing corporations shall be in line with the norms stated by the Board.
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