The Bombay Stock Exchange (BSE) has decided to permit direct transfer of collateral in the form of cash and fixed deposit receipts (FDRs) from its cash segment to the derivatives segment and vice-versa, with immediate effect.
The decision will facilitate members to optimise the utilisation of collateral deposited with the exchange.
The procedure for transfer of collateral deposited by the members in the form of bank guarantees and securities is being worked out and will be implemented shortly.
Uptil now, if a member wanted to transfer a collateral deposited by him towards the additional capital in the form of cash, fixed deposit receipts (FDRs), bank guarantees and/or securities from the cash segment to the derivatives segment or vice versa, he was required to follow the procedure of withdrawal of the collateral from one segment and again deposit the same in the other segment.
This procedure was not only time consuming but also involved considerable paperwork on the member's side as well as the exchange administration side.
The members desiring to transfer cash or FDRs from one segment to another would be required to give a written request containing the details of the collateral to be transferred, to the clearing and settlement department (CSD).
On receipt of the request, CSD would process the same and arrange to transfer the collateral from one segment to another, at the end of the trading day, without any further requirement from the member.
The transfer of collateral would be subject to the availability of unutilised capital in the segment from which will be sought to be transferred. However requests for on-line transfer of collateral will not be accepted by the exchange.
Exchange has further stated that In the case of transfer of FDRs from one segment to another, no partial transfer of the amount of a single FDR would be permitted. For example, where a member has a single FDR of Rs 25 lakh, he would have to submit a request for transfer of the entire Rs 25 lakh and not any part thereof.
In continuation with the current practice, transfer from any one segment to the other would be subject to a charge of Rs 100 per transfer instruction which would be recovered by debiting the members general charges account every month.
