Nse Clearing & Settlement

Clearing & Settlement (National Stock Exchange of India)
National Stock Clearing Corporation of India (NSCCL) carries out clearing and settlement of
trades executed on NSE. NSCCL is the legal counter-party to all deals on NSE's F&O segment
and guarantees settlements.
Equity Segment
In the Equity Segment there are two categories of clearing members: trading clearing members
and custodians.
A multilateral netting procedure is adopted to determine the net settlement obligations
(delivery/receipt positions) of the clearing members. Accordingly, a clearing member would
have either pay-in or pay-out obligations for funds and securities separately. In the case of
securities in the Trade for Trade Surveillance segment and auction trades, obligations are
determined on a gross basis i.e. every trade results into a deliverable and receivable obligation of
funds and securities. Members pay-in and pay-out obligations for funds and securities are
determined by 2.30 p.m. on T + 1 day and are downloaded to them so that they can settle their
obligations on the settlement day (T+2).
CP Code:
All institutional trades including FII trades are to be settled by Custodians. Trades which are for
settlement by Custodians are indicated with a Custodian Participant (CP) code and the same is
subject to confirmation by the respective Custodian. Custodians procure a CP code for their
clients from NSCCL. While placing the order request with the trading/clearing member FIIs shall
specify to the member the CP code provided to them by their appointed Custodian. The
custodian is required to confirm settlement of these trades on T + 1 day by the cut-off time 1.00
p.m. Non-confirmation by custodian devolves the trade obligation on the member who had input
the trade for the respective client.
Settlement Cycle
NSCCL follows a T+2 rolling settlement cycle. For all trades executed on the T day, NSCCL
determines the cumulative obligations of each member on the T+1 day and electronically
transfers the data to Clearing Members (CMs). All trades concluded during a particular trading
date are settled on a designated settlement day i.e. T+2 day. In case of short deliveries on the
T+2 day in the normal segment, NSCCL conducts a buy in auction on the T+3 day and the
settlement for the same is completed on the T+4 day, whereas in case of W segment there is a
direct close out. For arriving at the settlement day all intervening holidays, which include bank
holidays, NSE holidays, Saturdays and Sundays are excluded. The settlement schedule for all the
settlement types in the manner explained above is communicated to the market participants vide
circular issued during the previous month.
Shortages Handling
On the settlement day NSCCL accepts pay-in of securities made by members through
depositories and identifies the shortages. The members are debited by an amount equivalent to
the securities not delivered and valued at a valuation price. This is known as valuation debit. For
all such short deliveries NSCCL conducts a buying-in auction on the day after the pay-out day
(T+3 day) through the NSE trading system. If the buy-in auction price is more than the valuation
price, the CM is required to make good the difference. All shortages not bought-in are deemed
closed out.
Securities Settlement
The final obligation for securities pay-in is downloaded to the members and custodians on the
T+1 day. The members / custodians make available the required securities in the settlement pool
accounts with the depository participants on the pay-in day by 10.30 a. m. To facilitate this
members are required to open pool accounts with depository participants of both the
depositories, NSDL and CDSL.
Funds Settlement
NSCCL has empanelled 13 clearing banks namely Axis Bank Ltd., Bank of India, Canara Bank,
Citibank N.A, HDFC Bank, Hongkong & Shanghai Banking Corporation Ltd., ICICI Bank, IDBI
Bank, IndusInd Bank, Kotak Mahindra Bank, Standard Chartered Bank, State Bank of India and
Union Bank of India. Every Clearing Member is required to maintain and operate clearing
accounts with any of the empanelled clearing banks at the designated clearing bank branches.
The clearing accounts are to be used exclusively for clearing & settlement operations.
Inter-Institutional Deals
Trading in this market segment is available for institutional investors only in respect of securities
where the FII limits have been reached. In order to ensure that the overall FII ceiling limits are
not violated, trading members are allowed to enter sell orders in this market segment only for
their FII clients.
Eligible clients
Only FII's are permitted to place sell orders.
Buy orders can be placed by FII's, DFI's, Banks, Mutual Funds and Insurance Companies,
Pension Funds registered under PFRDA and such other institutions as may be approved from
time to time.
Equity Derivatives Segment

Types of Clearing Members
1. Trading Member Clearing Member (TM-CM)
A Clearing Member who is also a TM. Such CMs may clear and settle their own
proprietary trades, their clients' trades as well as trades of other TM's & Custodial
Participants
2. Professional Clearing Member (PCM):
A CM who is not a TM. Typically banks or custodians could become a PCM and clear
and settle for TM's as well as of the Custodial Participants.
3. Self Clearing Member (SCM):
A Clearing Member who is also a TM. Such CMs may clear and settle only their own
proprietary trades and their clients' trades but cannot clear and settle trades of other TM's.
CP Code
An FII may select a TM-CM or a PCM for the clearing and settlement of transactions
executed in the segment. The Clearing Member would procure a CP code from NSCCL.
While placing orders with the Trading / clearing member the FII should specify the CP
code based on which the clearing member would accept the trade for clearing and
settlement.
Settlement cycle
The settlement of trades is on T+1 working day basis. The following settlements are
conducted:
MTM settlement for futures
The positions in the futures contracts for each member are marked-to-market to the daily
settlement price of the futures contracts at the end of each trade day.
Premium settlement for options
The premium payable position and premium receivable positions are netted across all
option contracts for each CM at the client level to determine the net premium payable or
receivable amount, at the end of each day.
Final exercise settlement on expiry for options and futures final settlement.

Nse Clearing & Settlement

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Clearing & Settlement (National Stock Exchange of India)

Equity Derivatives Segment

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