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The Securities and Exchange Board of India (SEBI) has recently allowed clearing corporations to make a one-time transfer of their core Settlement Guarantee Funds (SGF) from the currency derivatives segment to the equity derivatives segment.
This decision comes after a significant drop in exchange-traded currency trading volumes, partly due to a Reserve Bank of India (RBI) directive that came into effect in May 2024. This left the currency derivatives SGFs with excess capital, while the equity derivatives segment, with its robust demand and increasing volumes, required more funding for its safety net.
Clearing houses like Indian Clearing Corporation (ICCL) and NSE Clearing have already undertaken these transfers to bolster their equity derivatives SGFs. For example, ICCL transferred ₹444 crore from its currency derivatives SGF to its equity derivatives SGF.
The core SGF acts as a crucial financial buffer, ensuring the settlement of trades even if a clearing member defaults on their obligations. SEBI’s move aims to optimize the utilization of these funds and enhance the stability of the equity derivatives market.

Video courtesy of First Bank of Nigeria

Video courtesy of First Bank of Nigeria