Liquid Asset
In pursuance of the regulations of SEBI, Bye- laws, Rules and Regulations of NCCL, NCCL has defined norms and procedures for acceptance of liquid assets, haircuts, and limits applicable to Members and their clients.
Member may deposit liquid assets in the form of cash, bank guarantees, fixed deposit receipts and approved mutual funds, securities, commodities and any other form of collateral as prescribed by NCCL and/ or SEBI from time to time.
These liquid assets are segregated as cash, cash equivalent and Non Cash Collaterals (Other Liquid Assets). Cash equivalent shall mean bank guarantees, fixed deposit receipts, Units of liquid mutual funds or government securities mutual funds and any form of collateral as may be prescribed from time to time. Non Cash Collaterals (Other Liquid Assets) shall mean all other form of collateral deposits like securities (equity shares) and mutual fund units as per approved list, approved commodities and any other form of collateral as may be prescribed from time to time.
The types of liquid assets acceptable by NCCL from their members and the applicable haircuts and concentration limits are listed below:
Liquid assets are classified into two components:
- Cash Equivalents
Cash Equivalents consists of:
- Cash
- Bank fixed deposits
- Bank guarantees
- Units of liquid mutual funds or government securities mutual funds
- Government Securities,Treasury Bills and Sovereign Gold Bonds
- Other Liquid Assets
Other liquid Assets consists of
- Equity Shares
- Mutual fund units
- Agricultural Commodities
- Base metals and Alloys
- Steel
Cash equivalents shall be at least 50% of liquid assets. This would imply that Other Liquid assets in excess of the total Cash Equivalents would not be regarded as part of member’s liquid assets as well as total liquid assets.
I. Cash equivalents
| Sr No | Item | Minimum Haircut | Limits |
|---|---|---|---|
| 1 | Cash | 0 | No Limit |
| 2 | Bank fixed deposits | 0 | Limit on exposure to a single bank as decided by NCCL from time to time. |
| 3 | Bank guarantees | 0 | |
| 4 | Units of liquid mutual funds or government securities mutual funds | 10% | Limit on exposure to a single asset management company shall be Rs 100 crores. |
II. Other Liquid assets
| Sr No | Item | Minimum Haircut | Limits |
|---|---|---|---|
| 1 | Liquid (Group-I) Equity shares | For Nifty 50 securities - VaR rate | Limit on exposure to a single issuer shall be Rs 100 crores. |
| For other securities of Nifty 500 - VaR rate or 20% whichever is higher | |||
| 2 | Mutual fund units | VaR or 10% whichever is higher. | Limit on exposure to a single asset management company shall be Rs 100 crores. |
| 3 | Agricultural Commodities (See Note) | 40% | Total commodities collateral for any clearing member shall not exceed 15% of the total deposits (Liquid Assets) of the clearing member. |
| 4 | Base metals and Alloys | 30% |
The approved commodities as collateral shall be permitted to a maximum of Rs. 15 Crores (after haircut) as part of Additional Base Capital for a member.
Note : A maximum value of Rs. 75 Crore (after haircut) of select approved commodities shall be permitted to be accepted as collateral across all members of NCCL.
NCCL shall accept liquid assets as collateral only as per the list of liquid assets specified in the table above. However, NCCL may decide not to accept certain types of liquid assets specified in the above list based on their risk perception, capability to hold and arrangements for timely liquidation. NCCL may stipulate concentration limits at member level/across all members as may be necessary.