Upstreaming of Client funds by Stock Brokers / Clearing members to CC

Applicability from 1^st July 2023

• Operational requirement
• Open Bank accounts for Upstreaming and Down-streaming
• Upstreaming Client Nodal Bank Accounts (USCNBA)
• Down-streaming Client Nodal Bank Accounts (DSCNBA)

Bank account nomenclature

For up-streaming – Name of the SB/CM – USCNBA Account

For Down-streaming – Name of the SB/CM – DSCNB account

• Open Client Nodal MFOS Account for subscription/redemption of MFOS

• Upstreaming of clients’ funds by Stock Brokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs)

Funds received on a given day by SBs shall be transferred to CMs, and by CMs to the CC any time during the day on or before cut off time as provided in the circular.

• Method of Upstreaming Client funds to CC
• In form of Cash
• Placement of FDRs as collateral with CC
• Upstreaming via pledge of units of Mutual Fund Overnight Schemes (MFOS)

• In form of Cash

Any client funds remained in USCNBA account with SB/CM shall be up-streamed to a CC before a stipulated cut-off time.

• Placement of FDRs as collateral with CC
• The existing process for placing FDR with CC shall continue.
• The period of FDR shall not be more than 1 year and should be pre-terminable.
• No funded or non-funded facility shall be availed on FDR created out of client funds.
• If any existing FDR maturing after more than one year shall be released on or before the July 01, 2023

• Upstreaming via pledge of units of Mutual Fund Overnight Schemes (MFOS)
• The units of MFOS shall be pledged or re-pledged to CC via margin pledge-repledge mechanism.
• Repledge by CM to CC shall be done via existing mapped TMCM Margin pledge accounts.
• Eligible MFOS list shall be published by CC from time to time.
• For limit purposes, existing norms for valuation and hair cut shall be applicable.

• Addition and Release of Cash as collateral
• Procedure for deposit and release of Cash collateral will remain same.
• Cut-off time for deposit and release by Clearing member:

Release of Cash collateral by CC to CM

Funds shall be released subject to sufficient free collateral available in the collateral pool and credited to settlement bank account.

• Allocation

Procedure for allocation of collateral at client level will remain same

• Release of Cash towards pay-in

Any excess (unutilized collateral) lying with CC can be used for meeting fund pay-in obligations.

• In case of release of funds for pay-in for same segment

In case of release of funds for pay-in obligation “Value date release request” to be used.

On receipt of request as per the method provided above, the funds shall be credited in the settlement account of the respective segment on value date and can be used to meet the funds pay-in requirement in the respective segment.

• In case of release of funds for pay-in for other segment

In case of release of funds for pay-in obligation “Value date release request” to be used.

Send a mail to cash_collaterals@nsccl.co.in with following details by 8.00 pm with

subject as “REQUEST TO ADJUST RELEASE TOWARDS PAY-IN MEMBER

CODE XXXXX”

▪ Member Code

▪ Member Name

▪ Source segment (where value date release has been placed)

▪ Target segment where such funds are required.

• Release of Other Collaterals

*The release processed time mentioned are tentative and subject to best effort basis. In case of request for release of repledge securities towards pay-in requirement clearing members should ensure that such request is made one-day prior to pay-in and not on the pay-in date.

$ Not applicable for G-SEC and T-BILLS

• Reporting of Reasons for Collateral withdrawal

• Clearing Members shall, report TM-wise break-up of all collateral release requests from NCL (Cash, FDRs, MFOS), with the following reason(s):
  • Client unpaid securities obligations / MTF Obligations
  • Loss due to sale of unpaid securities
  • Penalties
  • Statutory levies (STT / Stamp Duty / SEBI Turnover Fee)
  • Brokerage (including exchange transaction fee)
  • Other charges (DP charges, )
  • Funds to be released to client on account of regulatory requirements such as running account settlement.
  • Funds withdrawal request from client
  • CM /TM Prop
  • Reconverting to another form of Collateral
  • Giving to Other CC
  • Pay-in

• Cut off time for reporting shall be 11:59:59 PM on same day.
• Reporting shall be consolidated across segments.

Reporting path

Circular references