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Markets regulator Sebi on Tuesday reviewed stress testing methodology for commodity derivatives to deal with the priority concerning excessive stress loss figures on positions with early pay-in.
The choice has been taken in session with clearing companies (CCs), Securities and Exchange Board of India (Sebi) stated in a round.
While calculating the residual losses, for positions on which early pay-in are given by the clients/brokers, and margin exemption are granted on such positions, CCs have been permitted to contemplate the ‘margin exemption granted’ or ‘worth of early paid-in items’, whichever is decrease, as ‘margins supporting these positions, it added.
For every consumer, residual loss can be equal to loss on account of consumer’s close-out place minus margin supporting his particular positions.
According to Jimeet Modi, founder and CEO of Samco Group, the evaluate can have no implications for merchants or buyers. It solely has a restricted influence to the extent of computing commodity clearing company’s solvency ranges in circumstances of stress assessments performed by them.
This story has been printed from a wire company feed with out modifications to the textual content.
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