All the secondary market transactions in Government Securities i.e. outright, market repo and triparty repo, are settled through Clearing Corporation of India Limited (CCIL). CCIL acts as a Central Counterparty (CCP) to all trades received for settlement subject to exposure check. The settlement obligations are determined through multilateral netting. The settlement is achieved under DVP III mode. The funds obligations determined for respective settlement date for each member is the net position from the outright, repo and triparty repo trades. The funds settlement is achieved in the current account of the member with Settlement Bank or RBI as the case may be. The securities obligations are determined for outright and market repo trades (proprietary and gilt account) and settled in their SGL and CSGL account respectively and demat trades in the CSGL of the depository. The securities obligations for Triparty repo trades are settled in the Triparty gilt account of the member maintained with CCIL.
The benefits to the market from the process flow as above, are
1. CCP clearing and settlement, thereby risk mitigation and efficient clearing;
2. Multilateral netting and consequent reduction in intraday
3. Demat account holders benefiting from better prices due to
access to NDS-OM and matchable offers/ bids includes those selling/ buying from
their SGL/CSGL coupled with seamless conversion from demat to SGL/ CSGL and
vice versa ;
4. Covered short sales;
5. Repo rollovers;
6. Settlement of When Issued trades along with other secondary
market trades due for settlement on auction settlement date.