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PRISM (Parallel Risk Management System) is the real-time position monitoring and
risk management system for the Currency derivatives market segment at NSCCL. The
risk of each trading and clearing member is monitored on a real-time basis and
alerts/disablement messages are generated if the member crosses the set limits.
The initial margin on positions of a CM is computed on a real time basis i.e.
for each trade. The initial margin amount is reduced from the effective deposits
of the CM with the Clearing Corporation. For this purpose, effective deposits
are computed by reducing the total deposits of the CM by Rs. 50 lakhs (referred
to as minimum liquid networth). The CM receives warning messages on his terminal
when 70%, 80%, and 90% of the effective deposits are utilised. At 100% the
clearing facility provided to the CM is withdrawn. Withdrawal of clearing
facility of a CM in case of a violation will lead to withdrawal of trading
facility for all TMs and/ or custodial participants clearing and settling
through the CM.
Similarly, the initial margins on positions taken by a TM are computed on a real
time basis and compared with the TM limits set by his CM. The initial margin
amount is reduced from the TM limit set by the CM. Once the TM limit has been
utilised to the extent of 70%, 80%, and 90%, a warning message is received by
the TM on his terminal. At 100% utilization, the trading facility provided to
the TM is withdrawn.
A member is provided with warnings at 70%, 80% and 90% level before his trading/
clearing facility is withdrawn. A CM may thus accordingly reduce his exposure to
contain the violation or alternately bring in additional base capital.
Additionally, in the event of such a violation,
penalty would be charged to Clearing Members.
This violation occurs when the extreme loss margin of a Clearing Member exceeds
his liquid networth, at any time, including during trading hours. The liquid net
worth means the effective deposits as reduced by initial margin and extreme loss
margins. In case of violation, the clearing facility of the clearing member is
withdrawn leading to withdrawal of the trading facilities of all trading members
and/ or clearing facility of custodial participants clearing through the
clearing member.
Additionally, in the event of such a violation, penalty would be charged to
Clearing Members.
This violation occurs when the open position of the trading member /custodial
participant exceeds the Trading Member wise Position Limit at any
time, including during trading hours. In case of violation the trading facility
of the trading member is withdrawn.
In respect of initial margin violation, exposure margin violation and position
limit violation, penalty is levied on a monthly basis based on slabs
as mentioned.
This occurs when the open position of any client exceeds the client-wide positon
limit
The TM/ CM through whom the client trades/ clears his deals is liable for such
violation.
In the event of such a violation, TM / CM should immediately ensure,
(i) that the client does not take fresh positions and
(ii) reduces the positions of such clients to be within permissible limits.
Additionally, in the event of such a violation, penalty would be charged to
Clearing Members for every day of violation.
The Clearing Member can recover the penalty so charged from the respective
Trading Member / Client violating the requirement of position limits and in
cases where it is levied and collected from Trading Member, such trading member,
in turn, can recover the same from the respective clients who violated the
position limits.
This violation takes place when a clearing member utilises the collateral of one
TM and/ or constituent towards the exposure and/ or obligations a
TM/constituent, other than the same TM and/ or constituent.
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