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BROKERS CONTINGENCY FUND, TRADE GUARANTEE FUND and SETTLEMENT GUARANTEE FUND

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BROKERS CONTINGENCY FUND, TRADE GUARANTEE FUND and SETTLEMENT GUARANTEE FUND
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BROKERS CONTINGENCY FUND, TRADE GUARANTEE FUND and SETTLEMENT GUARANTEE FUND - September 2nd, 2010

BROKERS CONTINGENCY FUND

The scheme has come into force with effect from July 21, 1997.

Objective

To ensure that the settlement cycles at the Exchange are not affected due to the temporary financial problems faced by the members.

Functioning
  • It provides temporary advance(s) to the members facing temporary financial mismatch as a result of which they may not be in a position to meet their financial obligations to the Exchange in time

  • The Exchange has contributed a sum of Rs.9.51 crores to the corpus of the Fund.

  • All the active members are required to make an initial non-refundable contribution of Rs.1,000/- to the Fund and also contribute Re. 0.075 for every one lakh rupees of gross turnover by way of continuous contribution

  • The members are eligible to get advance(s) from the Fund upto a maximum of Rs.25 lakhs.


TRADE GUARANTEE FUND

The Scheme has come into force with effect from May 12, 1997

Objectives
  • To guarantee settlement of transactions of members of the Exchange so as to protect the interest of investors and the members of the Exchange.

  • To inculcate confidence in the minds of secondary market participants and global investors

  • To promote the development of and regulation of the secondary market.

  • To ensure that market equilibrium is not disturbed in case of payment default by the members.



SETTLEMENT GUARANTEE FUND
  • It operates like a self-insurance mechanism where members contribute to the Fund.

  • In the event of failure of a trading member to meet settlement obligations or committing a default, the Fund is utilised to the extent required for successful completion of the settlement.

  • As a consequence, despite the fact that the daily turnover at times exceeds Rs. 10,000 crore, credit risk no longer poses any threat in the market place.



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