The Reserve Bank of India (RBI) announced that any entity seeking authorisation or recognition as a Central Counterparty (CCP) should have at least net worth of Rs 300 crore at the time of submitting its applications.
- RBI has updated its previous regulations established in June 2019 regarding capital requirements and governance frameworks for CCPs.
- The provisions of these revised regulations will be applicable to both domestic CCPs authorised by RBI and foreign CCPs recognized under the Payment and Settlement Systems Act, 2007(PSS Act).
Note: CCP is a system provider that uses novation to interpose between system participants in the transactions admitted for settlement. CCP becomes a buyer to every seller and the seller to every buyer for the purpose of effecting settlement of their transactions.
Key Features:
i.Mandatory submission of audited net worth: As per the revised regulations, every authorised CCP has been mandated to submit an audited networth certificate at the end of financial year from the statutory auditor within 6 months of the closure of the financial year.
ii.Public Company Limited by Shares: According to the RBI directions, the authorised CCP must be a public company limited by shares. The shares of an authorised CCP must be held by those persons who use its services. If a person ceases to be a user, the CCP is required to ensure that the person’s shares are divested.
iii.Approval for Foreign CCP: A foreign CCP is required to apply to the RBI for approval as a recognised CCP for its operations including clearing and settlement in India.
- It is required to submit its application form and manner as prescribed under Payment and Settlement Regulations, 2008.
iv.Composition of Board: As per RBI revised directions, the board of every authorised CCP is required to include: Nominee Directors, Independent Directors, Managing Directors(MD); and such other Directors as may be specified by the RBI from time to time.
- It is mandatory for the Board of every authorised CCP to have a minimum number of directors as specified in the Companies Act, 2013.
v.Formation of Compliance Committee: It is mandatory for every authorised CCP to constitute a Regulatory Compliance Committee of the Board which will be chaired by an Independent Director(ID).
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About Reserve Bank of India (RBI):
Governor- Shaktikanta Das (25th Governor of RBI)
Headquarter- Mumbai, Maharashtra
Established- 1 April, 1935
