For trading in continuous market, every participant can set up counter party exposure limits to ensure that all his trades are within the exposure limits set up for the respective counter party. This provision enables the participants to minimise the counter party risk associated with any counter party.


CP Exposure Screen

This facility is available only to the privileged trading members and participants. The user can set up exposure limits against other trading members or participants with respect to buy, sell, buy + sell or buy-sell transactions. The user can set limits for a certain amount or has an option to trade without restrictions i.e. NO LIMIT. The system provides flexibility to set up different limits for different trade types (repo, non-repo) and settlement days (same day, day one, day two, any other day).


How CP Exposure Limit works

Any Trading Member/Participant can set up/modify CP limits on other Trading Members/Participants to commence trading on the WDM system. These limits are stored by the system and are used for validation of all transactions before orders are matched into trades. Every time a trade is executed between respective Trading Members/Participants the counterparty limit is reduced by the value of trade consideration. On settlement of the trade, the limit is restored to the original level. i.e. all Same Day trades will reduce limit available during the day for trading and the limits are restored for the next trading day. Where trades are executed for other day settlement (say, T+2) the limit shall be restored on T+3rd day. The limits will be overwritten only when the Trading Member/Participant modifies the previously set limits. All trades executed by Trading Members for their Participants (entities registered with NSE as Participants) will not affect Trading Member's counter party exposure and will get reckoned only in the Participant's counter party exposure. All client trades are done by the Trading Member on his own account and settled directly by the client. This reduces the exposure limit available to the Trading Member.

In case of Repo trades the CP limit will be reduced by trade value and will become available only after the forward leg is completed.