SEBI Forms committee to review clearing corporations

Financial market regulator SEBI has established a committee to review the ownership and economic structure of clearing corporations, aiming to ensure they operate as resilient, independent, and neutral risk managers.

The ad-hoc committee will be chaired by Usha Thorat, a former Deputy Governor of the Reserve Bank of India (RBI).

The market regulator said given the substantial growth of Indian securities markets in recent years, clearing corporations as central risk management institutions are important.

A 2018 report of the Committee on review of regulations and relevant circulars pertaining to Market Infrastructure Institutions (MIIs), headed by R Gandhi (referred to as Gandhi Committee), had noted that the ownership of MIIs should be dispersed and should be widely held.

With respect to clearing corporations, the committee had specifically noted that while most clearing corporations in India were 100 per cent owned by a single exchange, given that clearing corporations are risk bearing MIIS, it is highly desirable that they should be widely held.

Further, the Gandhi Committee had also noted that with the clearing corporations being sensitive and high risk-bearing and risk managing entities, listing of clearing corporations should not be permitted.