11:51 May 18, 2012
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Home > Derivatives > Non Guaranteed Settlement and Benefits

Non Guaranteed Settlement: Process Flow

A) Settlement Process:

1. The Final Settlement Obligations is made available to all members at EOD of the previous business day.This report would be the basis for settlement.
2 On the day of the settlement, the settlement file is sent to RBI for settlement through RTGS. The amounts payable are debited from the member accounts through RTGS in the morning at around 11.00 a.m.
3. If the member’s account is sufficiently funded and the pay-ins are successfully debited, the payouts are released immediately through RTGS.
4. Currently, the settlement at RBI is on “All or None” basis and hence in case of insufficient funds in the account of any member(s) the entire file is rejected by RBI.

In this case the shortage is handled in the manner prescribed below:

B) Shortfall Handling process:

1. The shortfall amount is handled by allocating the shortfall to the members who were to receive funds on a bilaterally netted basis from the member in default- with the allocation being in the ratio of net amounts receivable from the defaulting member.
2. All affected counter-parties are informed about the revised obligation values.
3. Members whose receivable position is converted to a payable position or for those members whose payable position is increased, will be required to fund their account with RBI before 1.00 p.m.
4. Revised settlement file is sent by CCIL to RBI through RTGS around 1.00 p.m
5. If all pay-ins (payable by the member) are successfully processed, the payouts or the receivable obligations of the members are paid out.
6. In the unlikely event of a shortage being encountered at this stage, settlement for the day is abandoned and members are accordingly informed.
7. In such cases, CCIL ensures that the decision is taken around 2.00 p.m and communicated to all members so that the members can settle the netted values on a bilateral basis. Information about such netted bilateral positions is available in the Settlement obligation report.


Benefits of Non Guaranteed settlement:

  •  Translation of gross bilateral settlement into multilateral net settlement;
  •  Significant reduction in liquidity requirement
  •  Improved operational efficiencies with reduction in related operational cost;
  •  Easy reconciliation of portfolio of contracts;
  •  Settlement at free of cost
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