What changed
RBI reviewed its earlier March 2012 directions on settlement of OTC transactions in CDs and CPs. It has now decided to include MCX-SX Clearing Corporation Limited as an additional eligible clearing and settlement entity. This expands the list of approved clearing corporations beyond NSCCL and ICCL.
What it means for you
Banks and market participants now have a third clearing option for OTC trades in CDs and CPs, which could improve operational flexibility and reduce settlement risk. The move may also enhance competition among clearing houses, potentially lowering costs for members. However, the core regulatory framework for these instruments remains unchanged.
What you must do
- Update your internal list of approved clearing corporations for CD and CP OTC trades to include MCX-SX Clearing Corporation Limited.
- Review and amend any bilateral agreements or operational procedures that reference only NSCCL or ICCL.
- Inform your trading and settlement teams about the new eligible clearing entity.
- Assess whether using MCX-SX Clearing Corporation offers any cost or efficiency benefits for your CD/CP portfolio.
Who it affects
All market participants trading OTC in CDs and CPs, Clearing members of MCX-SX Clearing Corporation Limited, Banks and primary dealers dealing in money market instruments, Operations and settlement teams handling CD/CP trades
Does this notification change any other rules for CD or CP trading?
No, this notification only adds MCX-SX Clearing Corporation Limited as an eligible clearing entity. All other existing directions on OTC trading in CDs and CPs remain unchanged.
When does this change take effect?
The notification was issued on June 26, 2013, and is effective from that date. Market participants should comply immediately.
Do I need to migrate all my CD/CP trades to the new clearing house?
No, migration is not mandatory. You may continue using NSCCL or ICCL, or choose MCX-SX Clearing Corporation as per your operational convenience.