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NSCCL (National Securities Clearing Corporation Limited)

 

The NSCCL or the National Securities Clearing Corporation Limited is the clearing corporation of the National Stock Exchange (NSE).

The NSE (National Stock Exchange) is a Mumbai-based stock exchange. NSE (National Stock Exchange) is the largest stock exchange in India and the third largest in the world in terms of volume of transactions. The NSE (National Stock Exchange) is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities.The NSE has remained a lead player in the modernization of India's capital and financial markets. Towards this end the NSE (National Stock Exchange) set up the first clearing corporation in India - the NSCCL (National Securities Clearing Corporation Ltd). The NSCCL was a landmark in providing novation on all the spot equity market (and later, derivatives market) trades in India.

Part of the NSE Group (National Stock Exchange Group)

The National Securities Clearing Corporation Ltd. (NSCCL) is part of the NSE (National Stock Exchange) group and is a wholly-owned subsidiary of the NSE. It was incorporated in August 1995 and started clearing operations in April 1996. It was formed to build confidence in clearing and settlement of securities, to promote and maintain short and consistent settlement cycles, to provide a counter-party risk guarantee and to operate a tight risk containment system.

Clearing and Settlement

The NSCCL (National Securities Clearing Corporation Limited) carries out the clearing and settlement of the trades executed in the CM segment of NSE (National Stock Exchange) and operates constituent SGL for settlement trades in government securities.

Inter-region Clearing

The NSCCL (National Securities Clearing Corporation Limited) facilitates inter-region clearing. It has Regional Clearing Centres at Delhi, Kolkata and Chennai and a Central Clearing Centre at Mumbai. Members have the option of delivering or receiving the securities at a clearing centre chosen by them.

Certificates Handled

To provide a level playing field to members irrespective of their location, the NSCCL (National Securities Clearing Corporation Limited) moves securities in the normal pay-in and pay-out on behalf of the Clearing Members from and to Regional Clearing Centres (RCC) and the Central Clearing Centre (CCC) at Mumbai.

Pre-delivery Verification

The NSCCL (National Securities Clearing Corporation Limited) was the first to start pre-delivery verification to detect bad papers such as fake and forged certificates or lost and stolen share certificates.

Dematerialised Settlement

The only effective solution to the problem of fake/forged and stolen shares was dematerialised trading and settlement. As SEBI made demat settlements mandatory in an ever-increasing number of securities in a phased manner, the proportion of shares delivered in the dematerialised form by the NSCCL (National Securities Clearing Corporation Limited) has increased.

Risk Management

The NSCCL has also incorporated risk containment measures. A risk group, constituted by the NSCCL (National Securities Clearing Corporation Limited) identified additional areas of perceived risk and intensified the monitoring of members' position having concentration in certain high-risk securities that attract high volumes and volatility.

Also a structured exercise of requiring unusually high pay-in liability members to make advance pay-in of funds has been put in place, in addition to offering facility of early pay-in of securities in demat mode.

Securities Lending/Borrowing

The automated lending and borrowing mechanism of the NSCCL (National Securities Clearing Corporation Limited) provides a facility to lend/borrow securities/funds at market-determined rates. This facilitates timely delivery of securities and thereby improves the efficiency of the system.

Professional Clearing Membership

The NSCCL (National Securities Clearing Corporation Limited) started the Professional Clearing Membership and the Stock Holding Clearing Corporation Ltd. has been admitted as the first professional clearing member on CM Segment.

Derivatives Settlement

The NSCCL (National Securities Clearing Corporation Limited) also provides clearing and settlement services including risk management for the derivatives market.

Multiple Depositories

The Central Depositories Securities Limited (CDSL) has been connected to the NSCCL (National Securities Clearing Corporation Limited) and clearing and settlement of securities in dematerialised form through the CDSL has also been introduced.

Collateral FDRs

The NSCCL (National Securities Clearing Corporation Limited) accepts FDRs drawn in its favour and maintains them in its custody. This has added value in services to the members as they are not any longer required to pay custodial charges but can be given instantaneous credit and benefit.

As the importance and size of the NSE grows, the importance and size of the NSCCL (National Securities Clearing Corporation Limited) is also bound to go up.

 


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