## Policy Analysis Report: Securities Contracts Regulation Stock Exchanges and Clearing Corporations Second Amendment Regulations, 2022
**1. Executive Summary:**
This report analyzes the Securities Contracts Regulation Stock Exchanges and Clearing Corporations Second Amendment Regulations, 2022 (the "Amendment"), as published in the Gazette of India on November 15, 2022. The Amendment modifies the Securities Contracts Regulation Stock Exchanges and Clearing Corporations Regulations, 2018. The core purpose of this amendment is to introduce a framework for orderly winding down of critical operations and services by clearing corporations, covering both voluntary and involuntary scenarios. The key finding is the addition of Regulation 44A, which mandates clearing corporations to devise and maintain such a framework, ensuring timely settlement, cessation, or transfer of positions and assets during wind-down events.
**2. Introduction:**
This report aims to provide an informative overview of the Securities Contracts Regulation Stock Exchanges and Clearing Corporations Second Amendment Regulations, 2022, based solely on the provided policy text. This analysis focuses on the specific changes introduced by the amendment and its potential impact on affected stakeholders within the industry.
**3. Policy Overview:**
* **Original Policy:** Securities Contracts Regulation Stock Exchanges and Clearing Corporations Regulations, 2018.
* **Core Objective(s) (Inferred):** Based on the amendment, a core objective appears to be ensuring the stability and orderly functioning of securities markets by establishing a clear process for the wind-down of clearing corporations, mitigating potential disruptions.
**4. Background and Rationale:**
The amendment likely arises from a need to address potential risks associated with the failure or wind-down of clearing corporations. Without a predefined framework, such events could lead to significant market instability and financial losses. This amendment aims to provide a structured approach to manage these situations, protecting market participants and maintaining confidence in the clearing system. The increasing complexity and interconnectedness of the financial system likely necessitate this formalization of wind-down procedures.
**5. Key Provisions / Changes:**
This amendment introduces a new regulation, Regulation 44A, into the Securities Contracts Regulation Stock Exchanges and Clearing Corporations Regulations, 2018.
* **Specific Part of Original Policy Changed:** The addition of a new regulation after regulation 44.
* **New Rule/Provision (Regulation 44A):**
* Regulation 44A(1): Mandates every clearing corporation to devise and maintain a framework for the orderly winding down of its critical operations and services, covering both voluntary and involuntary scenarios.
* Regulation 44A(2): Requires the framework to provide for:
* Timely and orderly settlement, cessation, or transfer of positions.
* The transfer of collaterals, deposits, margins, or other assets of members to another recognized clearing corporation taking over operations.
* Other related matters.
* Regulation 44A(3): States that the framework must align with guidelines specified by the Securities and Exchange Board of India (SEBI).
* **Effect of the Change:** This addition ensures that clearing corporations are prepared for potential wind-down events. It shifts the responsibility to clearing corporations to proactively plan and document a wind-down strategy. This reduces ambiguity and provides a more structured path for handling such events, aiming to minimize market disruption and protect member assets.
**6. Target Audience and Stakeholders:**
The primary target audience and directly affected stakeholders are:
* Clearing Corporations operating within the Indian securities market.
* Members of these clearing corporations, including brokers, financial institutions, and other market participants that rely on the clearing services.
* The Securities and Exchange Board of India (SEBI) as the regulatory body overseeing these entities.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** The Securities and Exchange Board of India (SEBI) is responsible for issuing guidelines for the framework mentioned in Regulation 44A(3) and overseeing the implementation by clearing corporations. Clearing Corporations themselves are responsible for devising and maintaining the wind-down frameworks.
* **Timelines/Procedures:** The amendment states that the regulations come into force on the date of publication in the Official Gazette (November 15, 2022). Clearing corporations must subsequently develop and maintain their wind-down frameworks. Specific timelines for developing and implementing the frameworks will likely be detailed in the guidelines to be issued by SEBI. The text doesn't provide more detailed procedures, beyond the required settlement, cessation, or transfer of positions and assets.
**8. Expected Outcomes / Impact of Changes:**
The intended outcome of this amendment is to enhance the resilience and stability of the Indian securities market by ensuring that clearing corporations have well-defined and executable plans for orderly winding down. The potential impact of these specific changes includes:
* Reduced systemic risk associated with clearing corporation failures.
* Increased confidence among market participants due to the existence of a pre-defined wind-down process.
* Clearer guidance and expectations for clearing corporations in preparing for and managing wind-down scenarios.
* Protection of member assets and the orderly transfer of positions during a wind-down.
**9. Conclusion:**
The Securities Contracts Regulation Stock Exchanges and Clearing Corporations Second Amendment Regulations, 2022, introduces a significant requirement for clearing corporations to establish frameworks for orderly winding down of their operations. This amendment aims to bolster the stability and resilience of the Indian securities market by mitigating the potential risks associated with clearing corporation failures. The clear mandate for a well-defined wind-down process, coupled with forthcoming SEBI guidelines, is expected to foster greater confidence among market participants and ensure a more orderly resolution in the event of a clearing corporation failure. This amendment represents a proactive measure to enhance market infrastructure and safeguards.
Key Entities Referenced
NEW DELHI: Capital of India
SECURITIES AND EXCHANGE BOARD OF INDIA: Regulatory body for securities market in India
Mumbai: City in Maharashtra, India; location of SEBI
Securities Contracts Regulation Act, 1956: An act of the Parliament of India to prevent undesirable transactions in securities
Securities and Exchange Board of India Act, 1992: An Act of the Parliament of India to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto
Securities Contracts Regulation Stock Exchanges and Clearing Corporations Regulations, 2018: Regulations pertaining to stock exchanges and clearing corporations
Securities Contracts Regulation Stock Exchanges and Clearing Corporations Second Amendment Regulations, 2022: Amendment regulations to the Securities Contracts Regulation Stock Exchanges and Clearing Corporations Regulations, 2018
Madhabi Puri Buch: Chairman of the Securities and Exchange Board of India
रजजस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
xxxGIDHxxx
सी.जी.-एम.एxxचxG.-IअDE.-x1x6x1 12022-240310
CG-MH-E-16112022-240310
असाधारण
EXTRAORDINARY
भाग III—खण् ड 4
PART III—Section 4
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 582] नई फदल्ली, मगं लिार, निम्ब र 15, 2022/कार्ततक 24, 1944
No. 582] NEW DELHI, TUESDAY, NOVEMBER 15, 2022/KARTIKA 24, 1944
भारतीय प्रजतभजू त और जिजनमय बोडड
अजधसचू ना
म ंबई, 15 निम् बर, 2022
प्रजतभजू त सजं िदा (जिजनयमन) (स्ट्टॉक एक्सचजें और समािोधन जनगम) (दसू रा सिं ोधन) जिजनयम, 2022
स.ं सबे ी/एल.ए.डी.-एन.आर.ओ./जी.एन./2022/104.—बोडड, भारतीय प्रजतभूजत और जिजनमय बोडड अजधजनयम,
1992 की धारा 11 तथा धारा 30 के साथ पठित प्रजतभूजत संजिदा (जिजनयमन) अजधजनयम, 1956 की धारा 4, धारा 8क
तथा धारा 31 द्वारा प्रदान की गई िजियों का प्रयोग करते हुए, एतद्द्वारा प्रजतभूजत संजिदा (जिजनयमन) (स्ट्टॉक एक्सचेंज
और समािोधन जनगम) जिजनयम, 2018 का और संिोधन करने के जलए जनम्नजलजखत जिजनयम बनाता ह,ै अथाडत:् -
1. इन जिजनयमों को प्रजतभूजत संजिदा (जिजनयमन) (स्ट्टॉक एक्सचेंज और समािोधन जनगम) (दसू रा संिोधन)
जिजनयम, 2022 कहा जा सकेगा ।
2. ये जिजनयम राजपत्र में इनके प्रकािन की तारीख को लाग ू होंग े।
3. प्रजतभूजत संजिदा (जिजनयमन) (स्ट्टॉक एक्सचेंज और समािोधन जनगम) जिजनयम, 2018 म,ें -
I. जिजनयम 44 के बाद, जनम्नजलजखत जिजनयम जोड़ा जाएगा, अथाडत्,-
“व्यिजस्ट्थत तरीके स ेबदं करना
44क. (1) प्रत्येक समािोधन जनगम (क्लीयररग कारपोरेिन) के यहााँ उसके महत्त्िपूण डकामकाज और
सेिाओं को व्यिजस्ट्थत तरीके स ेबंद करने (फिर चाह ेऐसा स्ट्िेच्छा से करना हो या अन्यथा) के संबंध में
एक ढााँचा होगा ।
(2) प्रत्येक समािोधन जनगम (क्लीयररग कारपोरेिन) यह स जनजित करेगा फक इस ढांचे में:-
7599 GI/2022 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4]
(क) ली गई पोज़ीिन (पोज़ीिनों) का समय पर और व्यिजस्ट्थत तरीके से जनपटान (सेटलमेंट) करन े
या इन्ह ेंसमाप्त करने या अंतठरत (रांसिर) करने का प्रािधान हो, और/या;
(ख) सदस्ट्यों (मेम्बर) की जमानत (जमानतें) [संपार्तिक / कोलेरल] या जमाराजि (जमाराजियााँ)
[जडपॉजज़ट] या मार्तजन या कोई अन्य आजस्ट्त (आजस्ट्तयााँ / असेट) फकसी ऐसे अन्य मान्यताप्राप्त
समािोधन जनगम को अतंठरत (रांसिर) करन ेका प्रािधान हो, जो समािोधन जनगम का
कामकाज अपने हाथ में लगेा, और/या;
(ग) ऐसे ही अन्य जिषयों के प्रािधान हों ।
(3) ऊपर उप-जिजनयम (1) म ेंजजस ढााँच ेका जजक्र फकया गया है, िह बोड डद्वारा इस संबंध में समय-
समय पर जनधाडठरत फकए गए फदिाजनदेिों के अन सार होगा ।”
माधबी प री ब च, अध्यक्ष
[जिज्ञापन-III/4/असा./403/2022-23]
पाद ठटप्पण :
1. प्रजतभूजत संजिदा (जिजनयमन) (स्ट्टॉक एक्सचेंज और समािोधन जनगम) जिजनयम, 2018, स.ं सेबी/एल.ए.डी.-
एन.आर.ओ./जी.एन./2018/41, 3 अिूबर, 2018 को भारत के राजपत्र म ें प्रकाजित हुए थ े।
2. प्रजतभूजत संजिदा (जिजनयमन) (स्ट्टॉक एक्सचेंज और समािोधन जनगम) जिजनयम, 2018, तत्पिात् –
(क) 4 जून 2019 को प्रजतभूजत संजिदा (जिजनयमन) (स्ट्टॉक एक्सचेंज और समािोधन जनगम) (संिोधन)
जिजनयम, 2019, सं. सेबी/एल.ए.डी.-एन.आर.ओ./जी.एन./2019/21, द्वारा
(ख) 17 अप्रलै , 2020 को भारतीय प्रजतभूजत और जिजनमय बोडड (रेग्यूलेटरी सैंडबॉक्स) (संिोधन) जिजनयम,
2020, स.ं सेबी/एल.ए.डी.-एनआरओ/जीएन/2020/10, द्वारा
(ग) 8 अिूबर, 2020 को प्रजतभूजत संजिदा (जिजनयमन) (स्ट्टॉक एक्सचेंज और समािोधन जनगम) (संिोधन)
जिजनयम, 2020, सं. सेबी/एलएडी-एनआरओ/जीएन2020/32, द्वारा
(घ) 23 माच,ड 2021 को प्रजतभूजत संजिदा (जिजनयमन) (स्ट्टॉक एक्सचेंज और समािोधन जनगम) (संिोधन)
जिजनयम, 2021, सं. सेबी/एल.ए.डी.-एन.आर.ओ./जी.एन./2021/12, द्वारा
(ङ) 13 अगस्ट्त, 2021 को प्रजतभूजत संजिदा (जिजनयमन) (स्ट्टॉक एक्सचेंज और समािोधन जनगम) (दसू रा
संिोधन) जिजनयम, 2021, स.ं सेबी/एल.ए.डी.-एन.आर.ओ./जी.एन./2021/44, द्वारा
(च) 12 अगस्ट्त, 2022 को प्रजतभूजत संजिदा (जिजनयमन) (स्ट्टॉक एक्सचेंज और समािोधन जनगम) (संिोधन)
जिजनयम, 2022, स.ं सेबी/एल.ए.डी.-एन.आर.ओ./जी.एन./2022/93, द्वारा
संिोजधत हुए थे ।
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 15th November, 2022
SECURITIES CONTRACTS (REGULATION) (STOCK EXCHANGES AND CLEARING
CORPORATIONS) (SECOND AMENDMENT) REGULATIONS, 2022
No. SEBI/LAD-NRO/GN/2022/104.—In exercise of the powers conferred by sections 4, 8A
and 31 of the Securities Contracts (Regulation) Act, 1956, read with sections 11 and 30 of the Securities
and Exchange Board of India Act, 1992, the Board hereby makes the following regulations
to further amend the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)
Regulations, 2018, namely:—
1. These Regulations may be called the Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) (Second Amendment) Regulations, 2022.
2. They shall come into force on date of their publication in the Official Gazette.[भाग III—खण् ड 4] भारत का राजपत्र : असाधारण 3
3. In the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)
Regulations, 2018,—
I. After regulation 44, the following regulation shall be inserted, namely,—
“Orderly Winding Down
44A(1)Every clearing corporation shall devise and maintain a framework for orderly
winding down of its critical operations and services covering both voluntary and
involuntary scenarios.
(2) Every clearing corporation shall ensure that the framework provides for:-
a. the timely and orderly settlement or cessation or transfer of position(s), and/
or;
b. the transfer of the collateral(s) or deposit(s) or margin(s) or any other
asset(s) of the members to another recognized clearing corporation that
would take over the operations of the clearing corporation, and/or;
c. such other related matter.
(3) The framework referred to in sub-regulation (1) above, shall be in accordance
with the guidelines specified by the Board in this regard from time to time.”
MADHABI PURI BUCH, Chairman
[ADVT.-III/4/Exty./403/2022-23]
Footnote:
1. The Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)
Regulations, 2018 were published in the Gazette of India on 3rd October 2018 vide No.
SEBI/LAD-NRO/GN/2018/41.
2. The Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)
Regulations, 2018 were subsequently amended on–
(a) 4th June, 2019, by the Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) (Amendment) Regulations, 2019 vide No. SEBI/LAD-
NRO/GN/2019/21.
(b) 17th April, 2020, by the Securities and Exchange Board of India (Regulatory
Sandbox) (Amendment) Regulations, 2020vide No. SEBI/LAD-NRO/GN/2020/10.
(c) 8th October, 2020, by the Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) (Amendment) Regulations, 2020 vide No. SEBI/LAD-
NRO/GN/2020/32.
(d) 23rd March, 2021, by the Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) (Amendment) Regulations, 2021 vide No. SEBI/LAD-
NRO/GN/2021/12.
(e) 13th August, 2021, by the Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) (Second Amendment) Regulations, 2021 vide No.
SEBI/LAD-NRO/GN/2021/44.
(f) 12th August 2022, by the Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) (Amendment) Regulations, 2022 vide No. SEBI/LAD-
NRO/GN/2022/93.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.