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Clearing & Settlement - Equities


NSE Clearing carries out clearing and settlement functions as per the settlement cycles provided in the settlement schedule.

The clearing function of the clearing corporation is designed to work out a) what members are due to deliver and b) what members are due to receive on the settlement date. Settlement is a two way process which involves transfer of funds and securities on the settlement date.

NSE Clearing has also devised mechanism to handle various exceptional situations like security shortages, auction settlement etc.

Clearing is the process of determination of obligations, after which the obligations are discharged by settlement.

  • NSE Clearing has following categories of Clearing Members :
  • 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
  • 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
  • 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.
  • Custodian- A Custodian Clearing member settle trades of Custodian Participant client’s

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 on provisional basis by 09:00 PM on T day and on Final basis by 09:00 AM  on T + 1 day and are downloaded to them so that they can settle their obligations on the settlement day (T+1 ).

Auto Delivery Out facility

For pay-in through NSDL / CDSL a facility has been provided to members wherein delivery-out instructions will be generated automatically by the Clearing Corporation based on the provisional net delivery obligations of its Clearing Members. These instructions will be released on  T day to NSDL / CDSL and the securities in the Clearing Members’ pool accounts will be marked for pay-in. Clearing members desirous of availing this facility shall send a letter in the format provided in the Annexure of the Consolidated Circular.

Cleared and non-cleared deals

NSE Clearing carries out the clearing and settlement of trades executed on the exchange except Trade for trade - physical segment of capital market. Primary responsibility of settling these deals rests directly with the members and the Exchange only monitors the settlement. The parties are required to report settlement of these deals to the Exchange.

 

More about Clearing & Settlement

  1. Settlement Cycle
  2. Shortages Handling
  3. Securities Settlement
  4. Funds Settlement
  5. Data and Reports Download
  6. Penalties
  7. Electronic Reporting
  8. Non-cleared (Trade for Trade) Deals
  9. Inter-Institutional Deals and Block Deals
Updated on: 28/02/2023