Sebi may exempt bourses from giving 25% profit to SGF

Markets regulator Sebi plans to exempt stock exchanges from transferring 25 per cent of their annual profit to Settlement Guarantee fund (SGF) of clearing corporations.
The decision in this regard is likely to be taken in the board meeting of Securities and Exchange Board of India (Sebi) next week, sources said.
Currently, stock exchanges credit 25 per cent of their profits every year to the Fund of the recognised clearing corporations, which clears and settles trades executed on the bourses.
The board of Sebi will discuss a proposal to implement the recommendations of K V Kamath panel, which suggested to do away with the requirement of transfer of 25 per cent profit by exchanges to clearing corporations' SGF.

Major exchanges in the country include BSE and NSE, both of which have their own clearing corporations.
Earlier, Risk Management Committee of Sebi reviewed the 'stress test models' of the clearing corporations used to determine the minimum required corpus of core SGF and found that avail be core SGF is sufficient to cover the expected shortfalls in stressed scenario.

Subsequently, the committee recommended doing away with the proposed requirement of transferring 25 per cent of the annual profit to SGF.
Sebi had set-up a committee in November 2012 under the chairmanship of eminent banker K V Kamath and the panel's report was placed before the board in August 2015. Later, the stakeholder comments on the report was discussed by the board in November last year.

Some of the recommendations have been implemented. The panel was entrusted with the task of defining liquid assets of clearing corporations for the purpose of calculation of net worth.