NSCCL assumes the counter-party risk of each member and guarantees settlement through a fine-tuned risk management system and an innovative method of on-line position monitoring.
A large Settlement Guarantee Fund provides the cushion for any residual risk. 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 default, the Fund is utilised to the extent required for successful completion of the settlement. This has eliminated counter-party risk of trading on the Exchange. As a consequence, credit risk no longer poses any threat in the market place. The market has full confidence that settlement shall take place in time and shall be completed irrespective of default by isolated trading members.
A separate Settlement Guarantee Fund is maintained for the Futures & Options segment.