New Delhi: Strengthening its risk management mechanism, stock exchange NSE on Wednesday said its clearing corporation will not accept fixed deposit receipts (FDRs) from trading members as collateral that are issued by the participants directly or through associate entities.
The move comes after market regulator Sebi (Securities and Exchange Board of India) issued guidelines in this regard.
"NSCCL (National Securities Clearing Corporation Ltd) shall not accept FDRs from participants as collateral which are issued by the participants themselves or banks that are associates of participants," NSE said in a circular.
Participants will not be permitted to place fresh FDRs or go for renewal of existing FDRs as collateral that are issued by the participants themselves or banks who are associates of participants after August 16, 2016, it added.
"Participants shall be required to replace existing FDRs placed as collateral which are issued by the participant themselves or banks who are associate of participant with other eligible collateral as per extant norms, on or before January 13, 2017, post which no exposure shall be permitted on such FDRs," NSE said.