What changed
Previously, OTC trades in CDs and CPs were reported on the FIMMDA platform within 15 minutes but settled bilaterally. Now, RBI mandates DvP I-based settlement through NSCCL or ICCL pooling accounts, effective April 1, 2012.
What it means for you
Banks and lenders must shift from bilateral settlement to centralized clearing for CDs and CPs, reducing counterparty risk. This standardizes settlement with corporate bond practices, enhancing market transparency and operational efficiency.
What you must do
- Ensure all OTC trades in CDs and CPs from April 1, 2012 are cleared through NSCCL or ICCL.
- Update internal systems and processes to comply with DvP I settlement norms.
- Coordinate with NSCCL or ICCL for pooling account access and settlement procedures.
- Train trading and settlement teams on the new mandatory clearing requirements.
Who it affects
All RBI-regulated entities trading in CDs and CPs, Treasury and settlement departments of banks, Primary dealers and other market participants
What is DvP I settlement?
Delivery versus Payment I ensures simultaneous transfer of securities and funds, reducing settlement risk. Here, it applies to OTC trades in CDs and CPs through NSCCL or ICCL.
When does this mandate take effect?
The requirement is effective from April 1, 2012, as per the RBI circular dated March 5, 2012.
Does this replace the FIMMDA reporting requirement?
No, the existing 15-minute reporting on FIMMDA platform continues. The new rule adds mandatory clearing and settlement through NSCCL or ICCL.