The Securities and Exchange Board of India (SEBI) has amended the Core Settlement Guarantee Fund (SGF) coverage framework for recognised clearing corporations in the commodity derivatives segment, updating the standardized stress-testing coverage requirement and introducing a mechanism for case-by-case exemptions or relaxations. Under the revised Part C coverage test in Annexure O of the SEBI Master Circular for the Commodity Derivatives Segment, clearing corporations must calculate credit exposure for each stress scenario based on the simultaneous default of at least three clearing members (and their associates) that generates the highest exposure. This replaces the earlier approach that required coverage for the highest exposure from at least two clearing-member defaults and 50% of the exposure from a simultaneous default of all clearing members. SEBI has also inserted a new provision allowing it, after due deliberation, to grant exemptions or relaxations from strict SGF enforcement on a case-by-case basis, taking into account prevailing market conditions, the adequacy of the applicable risk management framework and investor protection. The changes apply with immediate effect.
Securities & Exchange Board of India 2026-03-16
Securities and Exchange Board of India revises commodity derivatives settlement guarantee fund stress-testing coverage and adds case-by-case relaxation power
The Securities and Exchange Board of India has revised the Core Settlement Guarantee Fund coverage framework for clearing corporations in the commodity derivatives segment. The updated framework requires stress-testing for credit exposure based on the default of at least three clearing members, replacing the previous two-member default requirement. SEBI may grant exemptions or relaxations based on market conditions and risk management adequacy.