BSE and NSE Clearing, the clearing arm of NSE, have settled an issue between them over certain clearing charges. On Wednesday evening, BSE sent an email to NSE Clearing about the same. However, the regulator had to intervene in the matter.
According to a source, “The regulator had to convey a strong message to the entities to resolve the issue and honor the commitment, as such infighting was sending a wrong message in the market.”
BSE had yet to clear dues worth Rs 312.37 crore owed to NSE Clearing. According to sources, out of the total sum, around Rs 310 crore was paid on Wednesday and the remainder was set to be paid after reconciliation of transaction statements.
At the time of publishing this report, it was unclear as to whether interest on the said amount would be demanded.
The issue was highlighted when NSE Clearing’s auditor flagged the issue in the company’s December 2024 financials. NSE also informed to SEBI about a deficit of Rs 176.65 crore in the minimum liquid assets required, primarily on account of non-receipt of Rs 312.37 crore of dues from BSE.
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Minimum liquid assets are required under the mandatory regulatory compliance rules set by market regulator Securities and Exchange Board of India (SEBI).
“This deficit will be replenished by the internal accruals/recovery of the receivables before March 31, 2025. Further, NCL has not factored in interest accrued of Rs. 424.35 crores as of December 31, 2024, while computing said deficit,” NSE Clearing added in its earnings statement.
The charges pertain to interoperability arrangements between clearing corporations. Clearing corporations are the entities that settle the trades executed on an exchange and provide counterparty guarantees for executed trades on an exchange.
Initially, there was negligible derivatives volume on BSE, but after certain changes in strategy and regulation, the derivatives volume started to pick up on the bourse and NSE Clearing started to settle a large number of trades due to interoperability among clearing corporations.
Another source said, “I don’t think BSE had any intent of not paying but difference of interpretation may have been an issue, which is not uncommon among entities.”
It is believed that initially, the dispute started between NSE and BSE clearing arm Indian Clearing Corporation Limited (ICCL), which later on impacted NSE Clearings payments as well.
At the time of publishing this report, emails sent to exchanges BSE and NSE were yet to elicit any response.
SEBI issued interoperability norms in November 2018, and in June 2019, interoperability was introduced among clearing corporations. Before that, exchanges used to clear trades on their platforms through their respective clearing corporations. This helped in trades executed at BSE getting cleared at NSE Clearing and, similarly, trades executed at NSE getting cleared at ICCL. This linkage helped brokers save funds, as after the introduction of interoperability, they were not required to keep separate funds for both clearing corporations.
Interoperability also helps in trading during disruptions.
