NSCCL

NTRODUCTION
The Regulations framed hereunder shall be known as National Securities Clearing
Corporation (Capital Market) Regulations, 1996.
APPLICABILITY
These Regulations shall be applicable to all clearing members admitted to the Capital
Market Segment of the National Securities Clearing Corporation hereinafter referred to as
Clearing Corporation. These Regulations shall also be applicable mutatis mutandis to
all Clearing Members dealing in Debt segment of the Clearing Corporation unless the
context requires otherwise or unless otherwise specified by the relevant authority from
time to time.
CM CLEARING SEGMENT
2.1 Specified Exchange
The relevant authority may from time to time admit to the CM Clearing Segment
deals in securities of specified exchanges.
Without prejudice to the generality of the above, the following exchange is
specified as under:
National Stock Exchange
Deals in the Capital Market Segment of the National Stock Exchange of India
Limited (which exchange is hereinafter referred to as NSE for the purposes of
these Regulations) are admitted to the CM Clearing Segment
2.2 CM Clearing Members
CM clearing member means a member of the Clearing Corporation and
includes all categories of clearing members as may be admitted as such by the
Clearing Corporation to the Capital Market Segment.
2.3 Categories of CM Clearing Member
The relevant authority may specify from time to time different categories of CM
clearing members and specify different norms and conditions, including for
eligibility, admission and cessation of membership. Without prejudice to the
generality of the above, the following categories of CM clearing members are
specified as under :
TM Clearing Member
TM clearing member means a CM clearing member who may clear and settle
deals either on his own account or on account of his constituents by effecting
delivery and in making and receiving payment for the same in the manner
prescribed in these Regulations.
Custodian Clearing Member
Custodian Clearing Member means and includes Custodians, Banks, Trust
Companies and other firms admitted by the relevant authority as CM clearing
members who may act for TM clearing members and their constituents in giving
and taking delivery of securities, transfer deeds and any other documents by
effecting delivery and in making and receiving payment for the same in the
manner prescribed in these Regulations herein after called Custodian Clearing
Members.
Participant Clearing Member
Participant Clearing Member means and includes banks, financial institutions,

primary dealers and other RBI / SEBI regulated entities, admitted by relevant
authority, who may clear and settle their own deals in Government securities, put
through a Trading Member of the Exchange in the Retail Debt Market of the
Capital Market Segment of the Exchange, by effecting delivery and in making
and receiving payment for the same in the manner prescribed in these
Regulations.
2.4 Clearing Members Responsibility
Without prejudice to the obligations of the Custodian Clearing Member
hereunder, the registration and approval of Custodian Clearing Members, shall not
in any way affect the jurisdiction of the Clearing Corporation on the concerned
TM clearing member in respect of the deals effected by him for or on account of
his constituent who settle deals through such Custodian Clearing Members and
such clearing member shall continue to remain responsible, accountable and liable
to the Clearing Corporation in this behalf.
2.5 Participant Clearing Members Responsibility
Participant Clearing Member is responsible, accountable and liable to the
Clearing Corporation to clear and settle its own deals. The Participant Clearing
Member is bound and shall comply with the Byelaws, Rules and Regulations of
the Clearing Corporation. Without prejudice to the obligations of the Participant
Clearing Member hereunder, the registration and approval of Participant Clearing
Member shall not in any way affect the jurisdiction of the Clearing Corporation,
on the concerned Trading Member Clearing Member, in respect of deals effected
by it, for or on account of Participant Clearing Member, who settles its own deals
and such Trading Member Clearing Member shall continue to remain responsible,
accountable and liable to the Clearing Corporation in this behalf.
2.6 Collection of Securities Transaction Tax
The Clearing Corporation shall, on behalf of the Exchange, collect the Securities
Transaction Tax. Every Clearing Member shall remit to the Clearing Corporation
the Securities Transaction Tax payable by the Trading Member of the Exchange
in respect of the transactions entered into by him on the Exchange either on his
own behalf or on behalf of his Constituents and cleared and settled through such
Clearing Member in accordance with the procedures prescribed by the Relevant
Authority from time to time for the calculation and collection of such Tax. Any
Clearing Member who fails to make the payment in accordance with the
procedures, prescribed by the Relevant Authority from time to time, would be
liable for such consequences of non-payment including but not limited to
withdrawal of clearing facility, appropriation from the monies of the Clearing
Member, withholding of pay-outs, etc. as may be prescribed from time to time.

CLEARING BANK
13.1 Clearing Corporation to Regulate
The relevant authority shall specify from time to time the processes, procedures
and operations that every CM clearing member shall be required to follow for the
participation, functioning and operations of the Clearing Banks. The Regulations
relating to the Clearing Banks shall be deemed to form a part of any settlement
process so provided.
13.2 Functions Of Clearing Bank
The Clearing Corporation shall appoint a Clearing Bank(s) which shall act as an
agent for funds settlement, for the collection of margin money for all deals
entered into through the Clearing Corporation and any other funds movement
between CM clearing members and the Clearing Corporation and between CM
clearing member to CM clearing member as may be directed by the relevant
authority from time to time.
13.3 CM Clearing Members To Have Account With The Clearing Bank
Every CM clearing member of the Clearing Corporation shall have clearing
account(s) with designated Clearing Bank branch(es) as the Clearing Corporation
may specify from time to time. CM clearing members shall operate the clearing
account(s) only for the purpose of settlement of deals entered through the
Clearing Corporation, for the payment of margin money and for any other
purpose as may be specified by the relevant authority from time to time. The CM
clearing member shall not operate the clearing account(s) for any other purpose
unless otherwise specified by the relevant authority.
13.4 Clearing Bank To Act As Per The Instructions Of The Clearing
Corporation
The Clearing Corporation shall instruct the Clearing Bank as to the debits and
credits to be carried out for the funds settlement between CM clearing members.
The Clearing Bank shall act as per the instructions received from the Clearing
Corporation for the funds movement. Instructions of the Clearing Corporation as
to debits and credits to a CM clearing members accounts shall be deemed to be
irrevocable and confirmed orders by a CM clearing member to debit his account
and/or credit his account funds as specified in the instruction.
13.5 Clearing Bank To Inform Clearing Corporation Of Default In Funds
Settlement
If there is any funds default arising out of the instructions received from the
Clearing Corporation, the Clearing Bank shall inform the Clearing Corporation
immediately.
13.6 Members To Authorise Clearing Bank
CM clearing members shall authorise the Clearing Bank to access their clearing
account for debiting and crediting their accounts as per the instructions received
from the Clearing Corporation and to report balances and other credit information
to the Clearing Corporation.
13.7 Clearing Account(s) of Clearing Corporation in the Clearing Bank
Unless, otherwise prescribed in respect of any deals as may be specified by the
relevant authority, no clearing member or any person claiming through him shall

have or be deemed to have any right, title or interest in any monies in the Clearing
Account or other account(s), as the relevant authority may from time to time
prescribe, of the Clearing Corporation with the Clearing Bank.
The relevant authority may specify from time to time the deals in respect of which
all sums of monies paid into the Clearing Account or other account(s), as the
relevant authority may from time to time prescribe, of the Clearing Corporation
on account of any CM clearing member entitled thereto, shall be held by the
Clearing Corporation as agents and in trust for such clearing member. In such
cases, the making of such payment or credit entry shall be deemed and taken to be
a payment or credit to such clearing member.
Clearing Bank
Clearing Bank is such bank as the Clearing Corporation may appoint to
act as a funds settling agency, for the collection of margin money for all
deals cleared through the Clearing Corporation and any other funds
movement between clearing members and the Clearing Corporation and
between clearing members as may be directed by the Clearing
Corporation from time to time.
Activation by NSCCL
On submission of necessary documents as per 1.2 above, the participants / custodians, shall
be provided login id and password for login in the FIMMDA platform for reporting
and clearing and settlement. Entities that have signed the undertaking and provided bank
and depository account details as enumerated in 1.2 above shall be provided the details of
NSCCLs Bank Account and Depository Account which shall be used for carrying out
settlements.
All the registered participants shall be eligible to carry out clearing & settlement of
Corporate Bond trades through NSCCL.
SETTLEMENT PROCEDURE
3.1 Settlement of Corporate Bond Transactions
All trades in corporate bonds available in demat form which are reported on any of the
platforms provided by NSE viz., FIMMDA, NSE-WDM and NSE web site shall be
eligible for settlement through NSCCL.
In order to facilitate settlement of corporate bond trades through NSCCL, both buy and
sell participants shall be required to explicitly express their intention to settle the
corporate bond trades through NSCCL. Where trades are reported on the FIMMDA
reporting platform the participants can directly express their intent to settle on the
platform in the clear & settle screen. The trades will be settled at participant level on DVP I
basis i.e., on gross basis for
securities and funds. The settlements shall be carried out through the bank and DP
accounts specified by the participants.
On the settlement date, during the pay-in, participants shall be required to transfer the
securities to the Depository account specified by NSCCL and transfer the funds to the
bank account specified by NSCCL within the stipulated cut-off time.
On successful completion of pay-in of both securities and funds, the securities / funds

shall be transferred by NSCCL to the depository / bank account of the counter-party.

3.2 Custodian Trades
The participants desirous of clearing and settling the trade through a custodian may do so
by specifying the custodian details.
Custodian may be specified either for a participant wherein all the trades for such
participant shall be eligible for settlement by custodian or for a trade wherein only that
trade shall be eligible for settlement by custodian.
In order to facilitate settlement of trades identified for settlement by custodian, through
NSCCL, the custodian shall be required to explicitly express its intention to settle such
trades through NSCCL. The settlement of trade in such case shall take place through the
custodians bank and DP account as specified by the custodian.
3.3 Failure of Settlement Obligation of Corporate Bond Transactions
If either of the participants / custodians fails to honor their pay-in obligation, either fully
or partially, by stipulated time then the transaction shall be cancelled and shall not be
considered for settlement. Further the securities / funds received towards the pay-in
obligation shall be returned back to the respective participants / custodians.
National Securities Clearing Corporation Limited provides clearing and settlement of the
trades executed in the equities and derivatives segments of National Stock
Exchange (NSE). The company was incorporated in 1995 and is based in Mumbai,
Maharashtra. National Securities Clearing Corporation Limited operates as a subsidiary
of National Stock Exchange of India Ltd.
The National Securities Clearing Corporation Ltd. (NSCCL), a wholly owned subsidiary of
NSE, wasincorporated in August 1995. It was set up to bring and sustain confidence in clearing
and settlementof securities; to promote and maintain, short and consistent settlement cycles; to
provide counter-party risk guarantee, and to operate a tight risk containment system. NSCCL
commenced clearingoperations in April 1996.NSCCL carries out the clearing and settlement
of the TRADES executed in the Equities and Derivativessegments and operates Subsidiary
General Ledger (SGL) for settlement of TRADES in governmentsecurities. It assumes the
counter-party risk of each member and guarantees FINANCIAL settlement. Italso undertakes
settlement of transactions on other STOCK exchanges like, the Over the CounterExchange of
India.NSCCL has successfully brought about an up-gradation of the clearing and settlement
procedures andhas brought Indian FINANCIAL markets in line with
international MARKETS .
Home | Joining NSDL| As a CC/CH
Joining NSDL as a Clearing Corporation / House
Any STOCK exchange desiring to facilitate settlement in demat shares should have a
clearingcorporation/house with a fully operational settlement guarantee mechanism. The
settlementguarantee mechanism should have been approved by SEBI
Admission Criteria
:A clearing corporation or a clearing house of STOCK exchange shall be admitted as a User
onthe Depository only if:

The Depository is satisfied that the clearing corporation or a clearing house of

astock exchange operates in such a manner that it ensures payment against deliveryor
guarantees settlement;

In the opinion of the Depository, the clearing corporation or a clearing house of astock
exchange has the operational capability to provide the services relating toclearing
and settlement of transactions relating to the securities admitted to the Depository to
the held in dematerialised form;

The clearing corporation or a clearing house of a stock exchange undertakes to co-operate

at all times to redress the grievances of Clients and the Participant inrespect of its
operation in relation to the Depository;

the clearing corporation or a clearing house of a stock exchange has adequate

hardware and software systems to interact with the Depository as specified in theBusiness Rules.
Procedure for joining NSDL, systems specification and INVESTMENTS and expensesto
be incurred by a clearing corporation/house is same as
that of Depository Participant.

NSCCL,TheOrganisation
The National Securities Clearing Corporation Ltd. (NSCCL), a wholly owned
subsidiary of NSE, was incorporated in August 1995. It was the first clearing
corporation to be established in the country and also the first clearing corporation in
the country to introduce settlement guarantee.
It was set up with the following objectives:
to bring and sustain confidence in clearing and settlement of securities;
to promote and maintain, short and consistent settlement cycles;
to provide counter-party risk guarantee, and
to operate a tight risk containment system.
NSCCL commenced clearing operations in April 1996. It has since
completed more than 2400 settlements (equities segment) without delays or
disruptions.
National Securities Clearing Corporation Limited First Indian Clearing Corporation
to get rated
CRISIL has assigned its highest corporate credit rating of AAA to the National
Securities Clearing Corporation Ltd (NSCCL). 'AAA' rating indicates highest degree of
strength with regard to honouring debt obligations. NSCCL is the first Indian Clearing
Corporation to get this rating. The rating reflects NSCCLs status as Clearing

Corporation for NSE, Indias largest stock exchange. The rating also factors in NSCCLs
rigorous risk management controls and adequate settlement guarantee cover.
Products & Services
More on Products & Services
Clearing & Settlement
Guarantee
Risk Management
Subscribe to SMS Alerts

Clearing & Settlement

NSCCL carries out the clearing and settlement of the trades executed in the equities
and derivativessegments of the NSE. It operates a well-defined settlement cycle and
there are no deviations or deferments from this cycle. It aggregates trades over a
trading period, nets the positions to determine the liabilities of members and ensures
movement of funds and securities to meet respective liabilities.
NSCCL has empanelled 13 clearing banks to provide banking services to trading
members and has established connectivity with both the depositories for electronic
settlement of securities.
Read more about NSCCL's Clearing & Settlement functions for:
Equities
Security Lending & Borrowing Scheme (SLBS)
Mutual Funds
Equity Derivatives
Currency Derivatives
NSE Bond Futures

Retail Debt Market

Corporate Bonds

Guarantee
NSCCL assumes the counter-party risk of each member and guarantees settlement
through a fine-tuned risk management system and an innovative method of on-line
position monitoring.
A large Settlement Guarantee Fund provides the cushion for any residual risk. It
operates like a self-insurance mechanism where members contribute to the Fund. In
the event of failure of a trading member to meet settlement obligations or
committing default, the Fund is utilised to the extent required for successful
completion of the settlement. This has eliminated counter-party risk of trading on the
Exchange. As a consequence, credit risk no longer poses any threat in the market
place. The market has full confidence that settlement shall take place in time and
shall be completed irrespective of default by isolated trading members.
A separate Settlement Guarantee Fund is maintained for the Futures & Options
segment.

Risk Management
A sound risk management system is integral to an efficient clearing and
settlement system. NSE introduced for the first time in India, risk containment
measures that were common internationally but were absent from the Indian
securities markets.
NSCCL has put in place a comprehensive risk management system, which is constantly
upgraded to pre-empt market failures. The Clearing Corporation ensures that trading
member obligations are commensurate with their networth.
Risk containment measures include capital adequacy requirements of members,
monitoring of member performance and track record, stringent margin requirements,
position limits based on capital, online monitoring of member positions and automatic
disablement from trading when limits are breached, etc.
Read more about NSCCL's Risk Management systems for:
Equities

Securities Lending and Borrowing Scheme (SLBS)

Equity Derivatives
Currency Derivatives
NSE Bond Futures
Retail Debt Market

Subscribe to SMS Alerts

A facility wherein information in respect of some of the activities can be received by
members through SMS is provided to members.
The salient features of the new SMS Alert facility are as mentioned below:
Members can avail this facility in order to receive instant updates by way of
SMS in respect of certain activities / information.

Members can access the SMS application

Collateral Interface for Members (CIM).

Members can register multiple mobile numbers (Maximum 5 numbers per

member) for receiving SMS by registering multiple users with a flexibility to
modify or deregister users.
Members have the flexibility to subscribe to or unsubscribe any message alerts.
Subscription to multiple message alerts for single mobile number or
subscription to single message alert by multiple mobile numbers is also
permitted.
Members can replicate the subscriptions done for one user to another user.

through

link

on

the

This alert facility is only an additional facility provided to the members for receiving
the Alert / Information. The members shall verify the information received by way of
alert and not rely solely on such Alerts / Information for any purpose. NSCCL shall not
be liable for any delay or any other interruption which may occur due to any reason
including network (Internet) reasons or snags in the system, break down of the system
or any other equipment, server breakdown, maintenance shut down, breakdown of
communication services or inability of NSCCL to send the Alert / Information.
Irrespective of whether the member has received the Alert / Information or not, the
member shall be required to adhere to all the Rules, Byelaws and Regulations and
Circulars and all other requirements laid down by NSCCL from time to time.
Members are requested to ensure that the mobile numbers of only the concerned
officials are registered and updated on regular basis in order to prevent the messages
from being sent to unconcerned people.

Further, members are also requested to note that the alert messages may not be
received if the mobile numbers registered have opted for the Do not Disturb or such
other restrictive options provided by various service providers.

Partners
Our Partners
Clearing Members
Clearing Banks
Custodians
Depositories
Professional Clearing Members

Clearing Members
Clearing Member means a member of the Clearing Corporation who clears and settles
deals through the Clearing Corporation. The Clearing Member clears and settles deals
for a segment in a manner and mode and subject to such terms and conditions and
procedures prescribed for them. Further, a Clearing Member may clear and settle
deals either on their own account or on behalf of their clients subject to the terms
and conditions prescribed by the Clearing Corporation.
In the Capital market Segment, all trading members of the Exchange are required to
become the Clearing Member of the Clearing Corporation.
In F&O Segment, trading members need not necessarily clear their own deals but can
select another clearing member or a professional clearing member to clear and settle
their dues. Trading Members who are also Clearing Members, can clear and settle
their deals and also deals of other trading members who opt to settle their deals
through the said clearing member. 'Self Clearing Members' may clear and settle only

their own proprietary trades and their clients trades but cannot clear and settle
trades of other trading members.

Clearing Banks
NSCCL offers settlement of funds through 13 clearing banks namely Axis Bank Ltd.,
Bank of India, Canara Bank, Citibank N.A, HDFC Bank, Hongkong & Shanghai Banking
Corporation Ltd., ICICI Bank, IDBI Bank, IndusInd Bank, Kotak Mahindra
Bank, Standard Chartered Bank, State Bank of India and Union Bank of India.
Members may open their clearing accounts with any of the empanelled clearing banks
for the purpose of settlement of Exchange transactions.
The clearing banks are required to provide the following minimum services as
a single window to all clearing members of National Securities Clearing Corporation
Ltd. as also to the Clearing Corporation:

Branch network in cities that cover bulk of the trading cum clearing members
High level automation including electronic funds transfer (ETF) facilities
Facilities like (a) dedicated branch facilities (b) software to interface with the
Clearing Corporation (c) access to accounts information on a real time basis (d) backup procedures and fall back mechanism in case of failure of the bank system
Value-added services to members such as free-of-cost funds transfer across
centres etc.
Providing working capital funds
Stock lending facilities
Services as Professional Clearing Members
Services as Depository Participants
Other Capital Market related facilities
All other banking facilities like issuing bank guarantees / credit facilities etc.
Multiple
clearing
banks
provide
advantages
of
competitive
forces,
facilitate introduction of newproducts viz. working capital funding, anywhere
banking facilities, the option to members to settle funds through a bank, which
provides the maximum services suitable to the member.
Contact Details of Clearing Banks

Axis Bank Ltd.

Bank of India Ltd.
Canara Bank Ltd.
Citibank N.A.
The Hongkong & Shanghai Banking Corporation Ltd.
ICICI Bank Ltd.
HDFC Bank Ltd.
IDBI Bank Ltd.
IndusInd Bank Ltd.
Kotak Mahindra Bank Ltd.
Standard Chartered Bank
Union Bank of India
State Bank of India

Custodians
Custodians are clearing members but not trading members. They settle trades on
behalf of their clients that are executed through other trading members. A trading
member may assign a particular trade to a custodian for settlement. The custodian is
required to confirm whether he is going to settle that trade or not. If the custodian
confirms the trade, NSCCL assigns the obligation to the custodian. If the custodian
rejects the trade, the obligation is assigned back to the trading member.
Custodians Clearing members are required to request Clearing Corporation for
allotment of Custodian Participant (CP) code for the clients for which they wish to
clear and settle. The request has to be made along-with documentation for the said
purpose like SEBI registration number, PAN number etc. depending on the category of
the client.
Contact Details of Custodians

Axis Bank Ltd

BNP Paribas
Citibank N.A.
DBS Bank Ltd
Deutsche Bank A.G.
Edelweiss Custodial Services Limited
HDFC Bank Ltd.
Hong Kong & Shanghai Banking Corporation Ltd.
ICICI Ltd.
Infrastructure Leasing & Financial Services Ltd.
ILRTL
J P Morgan Chase
Kotak Mahindra Bank
Orbis Financial Corporation Ltd
Standard Chartered Bank
State Bank of India
Stock Holding Corporation of India Ltd.
SHRTL
SBI Custodial Services Pvt. Ltd.

Depositories
In order to promote dematerialisation of securities, NSE joined hands with
leading financial institutions to establish the National Securities Depository Ltd.
(NSDL), the first depository in the country with the objective of enhancing the
efficiency in settlement systems as also to reduce the menace of fake/forged and
stolen securities. The second depository in the country, CDSL promoted by the BSE and
a few commercial banks, was granted certificate of commencement of business in
February 1999.
This has ushered in an era of dematerialised trading and settlement. SEBI has made
dematerialised settlement mandatory in an ever-increasing number of securities in a
phased manner, thus bringing about an increase in the proportion of shares delivered
in dematerialised form. Today, more than 99% of settlement of securitiers takes place
in dematerialised form
NSCCL has established connectivity with both the depositories for electronic
settlement of securities.
Contact Details of Depositories

Central Depository Services (India) Ltd.

National Securities Depository Ltd.

Professional Clearing Members

Clearing Corporation admits a special category of members namely professional
clearing members. Professional Clearing Member (PCM) are clearing members who are
not trading members. They are typically banks, custodians etc. who clear and
settle trades executed for their clients (individuals, institutions etc.).
In such an event, the functions and responsibilities of the PCM would be similar to
Custodians. PCMs may also undertake clearing and settlement responsibility for
trading members. In such a case, the PCM would settle the trades carried out by the
trading members connected to them. The onus for settling the trade would be thus on
the PCM and not the trading member.

National Securities Clearing Corporation (NSCCL) will kick off its stock lending operations on
NSE screens on Wednesday. This in effect would be the beginning of the first real stock lending
operation in the country after Securities and Exchange Board of India (Sebi) cleared introduction
of the mechanism about two years ago.
Stock Holding Corporation of India (SCHIL), Deutsche Bank and Reliance Capital, the other
three stock lending intermediaries registered with Sebi, are yet to streamline their stock lending
mechanism into a commercially viable system.
Under the NSCCL system only dematerialised stocks are eligible for stock lending. To begin
with, the lending and the borrowing facilities will be limited to 20 stocks eligible for compulsory
demat trading. They include pivotals like State Bank of India and Bajaj Auto and the software
favourites NIIT and Infosys Technologies.
The advantage of NSCCL's stock lending proposition is that it is screen based, thus instantly
opening upparticipation from across the country wherever there is an NSE trading terminal. The
risk is also eliminated as the transactions are guaranteed by the NSCCL and the participating
members are the clearing members of NSCCL.
Christened Automated Lending & Borrowing Mechanism (ALBM), the lending/borrowing
session will be conducted every Wednesday on NSE screen, where borrower and lender enter
their requirement either as a purchase order, indicating an intention to borrow or as sale,
indicating intention to lend.
Previous day's closing price of a security will be taken as the lending price of the security. The
fee or interest that a lender gets will be market determined and will be the difference between the

lending price and the price arrived at the ALBM session. Typically the ALBM session will be
held on Wednesdays and the securities lending/borrowing will be given effect on Monday,
enabling a clearing member to complete the securities pay-in on Tuesday for which he has
borrowed the securities in the ALBMsession. The borrower's and lender's clearing account will
be debited or credited on Mondays following the Wednesday's ALBM session.
Funds towards each borrowing will have to be paid in on the securities lending day. A participant
will be required to pay-in funds equal to the total value of the securities borrowed. Similarly, a
participant will receive funds payout equal to the total value of the securities lent.
NSCCL is also planning to open a lending scheme to bridge the delivery gap for securities
entering compulsory demat segment called `demat shares for physical'. If a client of a clearing
member has only physical securities to deliver, the clearing member may seek to borrow demat
shares against the physical securities from NSCCL to complete the pay-in subject to adequate
collateral etc. These physical shares will then be dematerialised and returned to the lender as the
return of the securities loaned.
NSCCL WINS THE ASIAN BANKER AWARD FOR CLEARING HOUSE OF
THE YEAR
Securities Clearing Corporation introduced significant service innovations in 2009.
Rigorous selection process chaired by David Eldon, Chairman, Board of
Directors, Dubai International Financial Centre Authority and former Chairman of
HSBC Asia Pacific.
International jury uses comprehensive selection criteria.
The Asian Banker Achievement awards for Markets and Exchanges were announced
April 19 in a ceremony in Singapore. An exclusive audience of top industry leaders from
around the world witnessed the award ceremony for 52 of the top professionals and
organisations in the financial industry and markets & exchanges industry in the Asia
Pacific region.
This is the highest award programme of its kind for individual and institutional
achievement in the financial industry and markets and exchanges industry in the Asia
Pacific region today.
The achievement awards programme for MARKET and exchanges takes the idea of
business excellence in financial markets and exchanges very seriously. Here we look at
various aspects of these companies, including profitability, innovativeness, client
support, new product development, and assess their performance relative to peers in the
entire Asia Pacific region. says Yi Yuandong,Research Managing of The Asian Banker.
The winners of this years award have truly outperformed their peers in the region
whom we have studied; their institutions and customers have benefited as a result.

An audience of top industry leaders from around the world witnessed the awards
ceremony for 18 of the top chairmen, CEOs and industry leaders. Among the honoured
guests were Neel Kashkari, former Assistant Secretary, US Treasury and head of the
TARP Programme, Ronald Arculli, Chairman, Hong Kong Exchanges and Clearing,
David Conner, Vice Chairman and CEO, OCBC, Han Mingzhi, Director General, China
Banking Regulatory Commission, China, David Eldon, Chairman, Dubai International
Financial Centre and Chairman, The Asian Banker Summit Advisory Council, Cesar
Virata, Vice Chairman, RCBC Bank, the Philippines, and Banthoon Lamsam, Chairman
and CEO, Kasikornbank, Thailand.
The award ceremony was held in conjunction with The Asian Banker Summit, the
largest gathering of financial services industry professionals in the Asia-Pacific region.
The Summit is held annually in different Asian cities, and this years was held in
Singapore with the full support of the Monetary Authority of Singapore and the
Association of Banks of Singapore.
Among the key speakers at the event are Neel Kashkari, sgeir Jnsson, Chief
Economist, Arion Bank and author of the book Why Iceland?, Heng Swee Keat,
Managing Director, Monetary Authority of Singapore, David Eldon, former Chairman of
The Hongkong and Shanghai Bank and currently the Senior Advisor of
PricewaterhouseCoopers, and Wee Ee Cheong, Deputy Chairman and Chief Executive
Officer, UOB, and Chairman of The Association of Banks in Singapore.
Securities Clearing Corporation introduced significant service innovations in 2009.
The National Securities Clearing Corporation is a wholly-owned subsidiary of
National STOCK Exchange of India and it was the first clearing corporation in the
country to provide innovation/settlement guarantees that revolutionized the entire
concept of settlement system in India.
The National Securities Clearing Corporation is a dominant player in its MARKET . In
2009, it had a market share of 75% in equity clearing, 100% in
equity derivatives clearing, and 50% in CURRENCY derivatives clearing.
The cross margining mechanism across equity and equity derivatives segments that The
National Securities Clearing Corporation implemented in 2009 brought significant
benefits to investors. As a result of the implementation, the margin requirements for
offsetting positions were reduced by 75% of the total margin requirement in the
respective segment and therefore investors TRADING capability increased.

Minimum Base Capital

Securities
Clearing Members are permitted to deposit equity shares of approved
companies, inelectronic form ('demat securities') in the designated

depository accounts maintained by the Custodians (HDFC Bank Ltd. / STOCK

Holding Corporation of India Ltd. (SHCIL)) towards base minimum capital.
These securities are required to be pledged in favour of National Securities
Clearing Corporation Limited.
The securities would be subject to a minimum margin of 15% on Nifty
securities, and a minimum margin of 30% margin on other securities or such
other margin percentage as may be decided by NSCCL from time to time.
NSCCL may revise the list of approved securities and the margins (haircuts)
from time to time. Such changes would be notified to the clearing members.
Members who have deposited securities which have been discontinued from
the list of approved securities, would be required to replace such securities
within such time as specified by NSCCL.
Ownership of Securities
The securities deposited, would be subject to the legal and beneficial
ownership of the clearing member/ spouse, any of the partners/ their
spouses or any of the directors, in case of individual, partnership or
corporate clearing members respectively, as the sole/ first joint holder,
provided no depositor of securities is a minor as on the date of deposit
thereof.
In case of reconstitution / restructuring or any change in the partners
/directors of the clearing member, as applicable, the clearing member would
be required to replace the securities belonging to such outgoing partners
/directors immediately and no benefit will be given by NSCCL for such
securities towards base minimum capital.

Securities not approved for acceptance

The following securities are not accepted by NSCCL:
a) Partly paid securities
b) Securities subject to any lock in period, buy back scheme, any charge or
lien, encumberance of any kind, or such other limitations or title is
questioned before the court or any regulatory body.

Marking of pledge
Clearing members providing demat securities would be required to mark a
pledge of the securities in favour of NSCCL. In addition to any documents
required by the authorised Custodian, the following documents are required
to be provided to the authorised Custodian :
i. Deed of Pledge is to be executed as per specified format available with the
authorised Custodian on a non-judicial stamp paper of the prescribed
amount as applicable to an agreement of Deed of Pledge in the particular
State in which it is executed.
In case the Deed of Pledge is executed outside the State of Maharashtra, the
stamp duty payable in that particular State shall be payable, at the time of
execution, and the Deed of Pledge shall be stamped for the differential
amount within three months of its first receipt in the State of Maharashtra.
The differential amount of stamp duty payable on such instrument shall be
the amount of stamp duty in the State of Maharashtra, less the amount of
stamp duty, if any, already paid under any law in force in India, when it was
executed.

ii. Certified true copy of the relevant Board Resolution in case of Corporates
in this regard.

Clearing members would give the necessary pledge instruction(s) to the

Custodian for the securities to be pledged in favour of NSCCL. Once the
securities are accepted and duly pledged by the Custodian, the Custodian
shall inform NSCCL the value of the securities after adjusting the relevant
margin percentages. On the basis of the Custodian's advice, benefit towards
Base Minimum Capital would be provided to the member.

Valuation
Valuation of securities would be done by the Custodians at regular intervals
as specified by NSCCL.
The value of securities deposited would be reckoned at the last closing

price/rate as being provided by National Securities Depository Ltd. (NSDL)

to the Custodian prior to the date of deposit.
Valuation for this purpose will be done on the basis of the rates at the NSE
or in the event of the securities not being TRADED in NSE, the rates at
The STOCK Exchange, Mumbai (BSE). In case a security is not TRADED
in either of these stock exchanges on the date of valuation , the last traded
price at NSE and failing which the last traded price at BSE, would be
reckoned for this purpose. However, in case any security has not been traded
during the six months preceding the date of valuation, the same will be
excluded for the purpose of valuation. In case of securities subject to call or
put option, the valuation shall be done on the basis of exercise price or last
traded price on the valuation date, whichever is lower.
The above valuation would be reduced by the relevant margin percentage to
arrive at the collateral value of the security. Only the value net of margins
(hereinafter referred to as net value) would be considered as the value of
the security deposit.
Where the entire non-cash deposit of a member comprises only of
securities, the benefit provided to such clearing member would be only to
the extent of valuation of securities as provided by the Custodian, or as
applicable as per Base Minimum Capital requirement, whichever is lower.

Monitoring of total value of securities

Clearing members are required to ensure that the value of securities
deposited, net of margin, does not fall below the required minimum value for
which benefit towards Base Minimum Capital is provided to him/ them.
To ensure continued compliance, clearing members may deposit additional
securities whenever required. However in case of any shortfall in the value of
the securities, the clearing members are required to replenish such shortfall
immediately or within such time as stipulated by NSCCL.
In case it is not possible for the clearing member to immediately deposit
fresh securities to cover the value of the shortfall as required above, he may
deposit cash/ FDRs/ bank guarantees to the extent of the shortfall amount.

Release of securities deposited (Cancellation of pledge)

Clearing members may from time to time, withdraw, replace or make fresh
deposits of securities to the custodians subject to maintenance of the
required minimum value of securities towards Base Minimum Capital.
NSCCL would consider such request provided such clearing member has no
outstanding obligations/positions/dues towards NSCCL, there is no other
liability under the Rules, Byelaws and Regulations and if NSCCL is of the
opinion that such release does not entail any risk.
A clearing member camn make a requisition to NSCCL for withdrawal of
specific securities provided that pursuant to withdrawal of the specified
securities, the security deposit must be greater than the minimum
requirement of security deposit by 10% of the post withdrawal value of
securities as on the date of withdrawal.
On receipt of request from a clearing member relating to withdrawal of
securities, NSCCL may in accordance with the provisions detailed above,
instruct the authorised Custodian to release such specific securities. The
Custodian then cancels the pledge marked in favour of NSCCL and release
such securities to the clearing member.

Custodian charges
The charges to be levied by Custodians for the above services relating to
deposit of securities and the manner in which the payments are to be made
will be as specified by the respective Depository Participants/Custodian.
Clearing members are required to pay the Custodian, by a cheque/ demand
draft drawn in favour of the Custodian. The clearing members must pay the
bills raised by the Custodian within 15 days of receipt of such bills. In case
such bills are not paid within the period stipulated, appropriate action as
may be decided by the relevant authority from time to time may be initiated
against the concerned clearing member.

DISCIPLINARY PROCEEDINGS, PENALTIES, SUSPENSION AND

EXPULSION
1. DISCIPLINARY JURISDICTION
The relevant authority may expel or suspend and/or fine and/or penalise under censure
and/or warn and/or withdraw all or any of the membership rights of a Clearing Member if it
be guilty of contravention, non-compliance, disobedience, disregard or evasion of any of the
Bye Laws, Rules and Regulations of the Clearing Corporation or of any resolutions, orders,
notices, directions or decisions or rulings of the Clearing Corporation or the relevant
authority or of any other Committee or officer of the Clearing Corporation authorised in that
behalf or of any conduct, proceeding or method of business which the relevant authority
in its absolute discretion deems dishonourable, disgraceful or unbecoming a Clearing
Member of the Clearing Corporation or inconsistent with just and equitable principles or
detrimental to the interests, good name or welfare of the Clearing Corporation or
prejudicial or subversive to its objects and purposes.
2. PENALTY FOR BREACH OF RULES, BYE-LAWS AND REGULATIONS
Every Clearing Member shall be liable to suspension, expulsion or withdrawal of all or any of
his Clearing Membership rights and/or to payment of fine and/or to be censured,
reprimanded or warned for contravening, disobeying, disregarding or willfully evading of
any of these Rules, Bye-laws and Regulations or any resolutions, orders, notices,
directions, decisions or rulings thereunder of the Clearing Corporation, Securities
Contracts (Regulation) Act, 1956 and/or Rules thereunder, Securities and Exchange Board of
India Act, 1992 and/or Rules thereunder, the Board of Directors, Committee(s), Managing
Director or any officer of the Clearing Corporation or for any disreputable or fraudulent
transactions or dealings or method of business which the Board of Directors in its
absolute discretion deems unbecoming a Clearing Member of the Clearing Corporation or

inconsistent with just and equitable principles.

3. PENALTY FOR MISCONDUCT, UNBUSINESSLIKE CONDUCT AND
UNPROFESSIONAL CONDUCT
A Clearing Member shall be liable to expulsion or suspension or withdrawal of all or any of his
membership rights and/or to payment of a fine and/or penalty and/or to be censured,
reprimanded or warned for any misconduct, unbusinesslike conduct or unprofessional
conduct as provided in the provisions in that behalf as provided herein.
(1) Misconduct
(a) Fraud : If he is convicted of a criminal offence or commits fraud or a
fraudulent act which in the opinion of the relevant authority renders him unfit to
be a Clearing Member;
(b) Violation : If he has violated provisions of any statute governing the activities,
business and operations of the Clearing Corporation, Clearing Members and
securities business in general;
(c) Improper Conduct: If in the opinion of the relevant authority he is guilty of
dishonourable or disgraceful or disorderly or improper conduct on the Clearing
Corporation or of willfully obstructing the business of the Clearing
Corporation;
(d) Breach of Rules, Bye Laws and Regulations : If he shields or assists or omits to
report any Clearing Member whom he has known to have committed a breach or
evasion of any Bye Laws, Rules and Regulation of the Clearing Corporation or of
any resolution, order, notice or direction thereunder of the relevant authority or of
any Committee or officer or the Clearing Corporation authorised in that behalf; 18
Securities Contracts (Regulation) Act, 1956 and/or Rules thereunder, Securities
and Exchange Board of India Act, 1992 and/or Rules thereunder;

(e) Failure to comply with Resolutions : If he contravenes or refuses or fails to

comply with or abide by any resolution, order, notice, direction, decision or
ruling of the relevant authority or of any Committee or officer of the Clearing
Corporation or other person authorised in that behalf under the Bye Laws, Rules and
Regulations of the Clearing Corporation;
(f) Failure to submit to or abide by Arbitration : If he neglects or fails or refuses to
submit to the relevant authority or to a Committee or an officer of the Clearing
Corporation authorised in that behalf, such books, correspondence, documents and
papers or any part thereof as may be required to be produced or to appear and
testify before or cause any of its partners, attorneys, agents, authorised
representatives or employees to appear and testify before the relevant authority or
such Committee or officer of the Clearing Corporation or other person authorised
in that behalf;
(g) Failure to testify or give information : If he neglects or fails or refuses to submit to
the relevant authority or to a Committee or an officer of the Clearing
Corporation authorised in that behalf, such books, correspondence, documents
and papers or any part thereof as may be required to be produced or to appear
and testify before or cause any of its partners, attorneys, agents, authorised
representatives or employees to appear and testify before the relevant authority or
such Committee or officer of the Clearing Corporation or other person
authorised in that behalf;
(h) Failure to submit Special Returns : If he neglects or fails or refuses to submit
to the relevant authority within the time notified in that behalf special returns in
such form as the relevant authority may from time to time prescribe together
with such other information as the relevant authority may require whenever

circumstances arise which in the opinion of the relevant authority make it desirable
that such special returns or information should be furnished by any or all the
Clearing Members;
(i) Failure to submit Audited Accounts : If he neglects or fails or refuses to submit its
audited accounts to the Clearing Corporation within such time as may be specified
by the relevant authority from time to time;
(j) Failure to compare or submit accounts with Defaulter : If he neglects or fails to
compare his accounts with the relevant authority or to submit to it a statement of
its accounts with a defaulter or a certificate that he has no such account or if he
makes a false or misleading statement therein;
(k) False or misleading Returns : If he neglects or fails or refuses to submit or makes
any false or misleading statement in his clearing forms or returns required to be
submitted to the Clearing Corporation under the Bye Laws, Rules and Regulations;
(l) Vexatious complaints : If he or his agent brings before the relevant authority
or a Committee or an officer of the Clearing Corporation or other person authorised
in that behalf a charge, complaint or suit which in the opinion of the relevant
authority is frivolous, vexatious or malicious;
(m) Failure to pay dues and fees: If he fails to pay his subscription, fees, arbitration
charges or any other money which may be due by it or any fine or penalty imposed
on him.
(2) Unbusinesslike Conduct
A Clearing Member shall be deemed guilty of unbusinesslike conduct for any of the
following or similar acts or omissions namely:
(a) Fictitious Names: If he transacts his own business or the business of his
constituent in fictitious names or if he carries on business in more than one clearing

segment of the Clearing Corporation under fictitious names; 19

(b) Circulation of rumours: If he, in any manner, circulates or causes to be
circulated, any rumours;
(c) Unwarrantable Business: If he engages in reckless or unwarrantable or
unbusinesslike dealings in the market or effects purchases or sales for his
constituent's account or for any account in which he is directly or indirectly
interested which purchases or sales are excessive in view of his constituent's or
his own means and financial resources or in view of the market for such security;
(d) Compromise : If he connives at a private failure of a Clearing Member or accepts
less than full and bona fide money payment in settlement of a debit due by a
Clearing Member arising out of a deal in securities;
(e) Dishonoured Cheque: If he issues to any other Clearing Member or to its
constituents or to the Clearing Corporation a cheque which is dishonoured on
presentation for whatever reasons;
(f) Failure to carry out transactions with Constituents: If he fails in the opinion of
the relevant authority to carry out its committed transactions with its constituents;
(3) Unprofessional Conduct
A Clearing Member shall be deemed guilty of unprofessional conduct for any of the
following or similar acts or omissions namely:
(a) Business in Securities in which dealings not permitted: If he enters into dealings
in securities in which dealings are not permitted;
(b) Business for Defaulting Constituent : If he deals or transacts business directly or
indirectly or executes an order for a constituent who has within his knowledge failed
to carry out engagements relating to securities and is in default to another Clearing
Member unless such constituent shall have made a satisfactory arrangement with

the Clearing Member who is his creditor;

(c) Business for Insolvent : If without first obtaining the consent of the relevant
authority he directly or indirectly is interested in or associated in business with or
transacts any business with or for any individual who has been bankrupt or
insolvent even though such individual shall have obtained his final discharge
from an Insolvency Court;
(d) Business without permission when under suspension: If without the permission of
the relevant authority he does business on his own account or on account of a
principal with or through a Clearing Member during the period he is required by the
relevant authority to suspend business on the Clearing Corporation;
(e) Business for or with suspended, expelled and defaulter Clearing Members :
If without the special permission of the relevant authority he shares brokerage with
or carries on business or makes any deal for or with any Clearing Member who
has been suspended, expelled or declared a defaulter;
(f) Business for Employees of other Clearing Members : If he transacts
business directly or indirectly for or with or executes a deal for a
authorised representative or employee of another Clearing Member without
the written consent of such employing Clearing Member;
(g) Evasion of Margin Requirements: If he willfully evades or attempts to evade or
assists in evading the margin requirements prescribed in these Bye Laws and
Regulations;
(h) Clearing Fees: If he willfully evades or attempts to evade or assists in evading
the Bye Laws and Regulations relating to clearing fees.
(i) Advertisement: If he advertises for business purposes or issues regularly circular
or other business communication to persons other than its own constituents,

trading members of the Exchange, Banks and Joint Stock Companies or

publishes pamphlets, circulars or any other literature or report or information
relating to the stock markets, without the prior written permission of the 20
Clearing Corporation or in contravention of the advertisement code prescribed by
the Clearing Corporation.
4. CLEARING MEMBER RESPONSIBLE FOR PARTNERS, AGENTS AND EMPLOYEES
A Clearing Member shall be fully responsible for the acts and omissions of its authorised
officials, attorneys, agents, authorised representatives and employees and if any such act or
omission be held by the relevant authority to be one which if committed or omitted by
the Clearing Member would subject it to any of the penalties as provided in the Bye
Laws, Rules and Regulations of the Clearing Corporation then such Clearing Member shall
be liable thereof to the same penalty to the same extent as if such act or omission had been
done or omitted by him.
5. SUSPENSION ON FAILURE TO PROVIDE MARGIN DEPOSIT, DEPOSIT OR
CONTRIBUTION TO SETTLEMENT FUND OR MEET CAPITAL ADEQUACY NORMS
The relevant authority may suspend a Clearing Member and/or require a Clearing Member
to suspend his business if he fails to provide the margin deposits, deposits and contributions
to Settlement Fund and/or meet capital adequacy norms as provided in these Bye
Laws, Rules and Regulations and the suspension of business shall continue until the
Clearing Member furnishes the necessary margin deposit or deposit/contribution to
Settlement Fund or meet capital adequacy norms. The relevant authority may expel a
Clearing Member acting in contravention of this provision.
6. SUSPENSION OF BUSINESS
The relevant authority may suspend a Clearing Member and/or require a Clearing Member
to suspend its business in part or in whole:

a) Unwarrantable Business: When in the opinion of the relevant authority the Clearing
Member engages in unwarrantable business or effects deals for its constituent's
account or for any account in which he is directly or indirectly interested which
deals are excessive in view of his constituent's or his own means and financial
resources or in view of the market for such security, or
b) Unsatisfactory Financial Condition: When in the opinion of the relevant authority
the Clearing Member is in such financial condition that he cannot be permitted to do
business with safety to his creditors or the Clearing Corporation.
7. REMOVAL OF SUSPENSION
The suspension of business as mentioned above shall continue until the Clearing
Member has been allowed by the relevant authority to resume his business on paying
such deposit or his doing such act or providing such thing as the relevant authority may
require.
8. PENALTY FOR CONTRAVENTION
A Clearing Member who is suspended or who is required to suspend his business or part
thereof may be expelled by the relevant authority if he acts in contravention of such
suspension or requirement.

9. CLEARING MEMBERS AND OTHERS TO TESTIFY AND GIVE

INFORMATION
A Clearing Member shall appear and testify before and cause its partners, attorneys, agents,
authorised representatives and employees to appear and testify before the relevant
authority or before other Committee(s) or an officer of the Clearing Corporation authorised in
that behalf and shall produce before the relevant authority or before other Committee(s) or an
officer of the Clearing Corporation authorised in that behalf, such books, correspondence, 21

documents, papers and records or any part thereof which may be in its possession and
which may be deemed relevant or material to any matter under inquiry or investigation.
10. PERMISSION NECESSARY FOR LEGAL REPRESENTATION
No person shall have the right to be represented by professional counsel, attorney,
advocate or other representative in any investigation or hearing before the relevant authority
or any other Committee unless the relevant authority or other Committee so permits.

11. EXPLANATION BEFORE EXPULSION

A Clearing Member shall be entitled to be summoned before the relevant authority and
afforded an opportunity for explanation before being expelled but in all cases the findings of
the relevant authority shall be final and conclusive.
12. IMPOSITION OF PENALTIES
The penalty of suspension, withdrawal of all or any of the membership rights, fine, censure
or warning may be inflicted singly or conjointly by the relevant authority. The penalty of
expulsion may be inflicted by relevant authority.
13. PRE-DETERMINATION OF PENALTIES
The relevant authority shall have the power to pre-determine the penalties, the period
of any suspension, the withdrawal of particular membership rights and the amount of any
fine that would be imposed on contravention, non-compliance, disobedience, disregard or
evasion of any Bye Law, Rules or Regulations of the Clearing Corporation or of any
resolution, order, notice, direction, decision or ruling thereunder of the Clearing Corporation,
the relevant authority or of any other Committee or officer of the Clearing Corporation
authorised in that behalf.
14. COMMUTATION
The relevant authority in its discretion may in any case suspend a Clearing Member in lieu of

the penalty of expulsion or may withdraw all or any of the membership rights or impose a
fine in lieu of the penalty of suspension or expulsion and may direct that the guilty
Clearing Member be censured or warned or may reduce or remit any such penalty on such
terms and conditions as it deems fair and equitable.
15. RECONSIDERATION/REVIEW
The relevant authority may of its own or on appeal by the Clearing Member concerned,
within 90 days from the date of communication of decision of the relevant authority to
the member, reconsider and rescind, revoke or modify its order fining, censuring, warning or
withdrawing all or any of the membership rights of the Clearing Member. In a like manner the
relevant authority may rescind, revoke or modify its resolution expelling or suspending any
Clearing Member.
16. FAILURE TO PAY FINES AND PENALTIES
If a Clearing Member fails to pay any fine or penalty imposed on him within such period as
specified from time to time by the relevant authority he may be suspended by the relevant
authority until he makes payment and if within a further period as specified from time to time
he fails to make such payment he may be expelled by the relevant authority.
Limitations on Liability
(a) Notwithstanding any other provision in the Rules of the Corporation: The
Corporation will not be liable for any action taken, or any delay or failure to take any
action, hereunder or otherwise to fulfill the Corporations obligations to its AIP Members,
other than for losses caused directly by the Corporations gross negligence, willful
misconduct, or violation of federal securities laws for which there is a private right of
action. Under no circumstances will the Corporation be liable for the acts, delays,
omissions, bankruptcy, or insolvency, of any third party, including, without limitation, any
depository, custodian, sub-custodian, AIP Settling Bank, data communication service or

delivery service (Third Party), unless the Corporation was grossly negligent, engaged
in willful misconduct, or in violation of federal securities laws for which there is a private
right of action in selecting such Third Party.
(b) Under no circumstances will the Corporation be liable for any indirect,
consequential, incidental, special, punitive or exemplary loss or damage (including, but
not limited to, loss of business, loss of profits, trading losses, loss of opportunity and
loss of use) howsoever suffered or incurred, regardless of whether the Corporation has
been advised of the possibility of such damages or whether such damages otherwise
could have been foreseen or prevented.
GLOBAL CLEARANCE NETWORK SERVICE
The Corporation may establish a foreign clearing, settlement and custody service in conjunction
with banks, trust companies and other entities to be known as the Global Clearance Network
Service and may provide such service to any Member which is qualified to be a customer of the
bank, trust company or other entity and has executed such agreement with the Corporation as the
Corporation may require providing, among other things, a guarantee to the bank, trust company
or other entity for the services. The Corporation may from time to time establish procedures for
the operation of the service.