MANU/SDER/0010/2021

Ministry : Securities and Exchange Board of India

Department/Board : Commodity Derivatives Market Regulation Department

Circular No. : SEBI/HO/CDMRD/DRMP/CIR/P/2021/619

Date : 17.08.2021

Notification/ Circulars Referred : Circular SEBI/HO/CDMRD/DRMP/CIR/P/2021/35 dated March 23, 2021 MANU/SDER/0005/2021

Citing Reference:
Circular SEBI/HO/CDMRD/DRMP/CIR/P/2021/35 dated March 23, 2021 MANU/SDER/0005/2021  Referred

To,

The Managing Directors/Chief Executive Officers,
All Clearing Corporations having Commodity Derivatives Segment

Sir/Madam,

Penalty for repeated delivery default

1. SEBI had stipulated delivery default norms vide Circular SEBI/HO/CDMRD/DRMP/CIR/P/2021/35 dated March 23, 2021. It is felt that there is a need to put in place a suitable deterrent mechanism to address instances of repeated delivery defaults. This is expected to further strengthen the delivery mechanism and ensure market integrity.

2. In view of the above, in consultation with Clearing Corporations (CCs), the following has been decided:

2.1. In the case of repeated default by a seller or a buyer, for each instance of repeated default, an additional penalty shall be imposed, which shall be 3 % of the value of the delivery default.

2.2. Repeated Default shall be defined as an event, wherein a default on delivery obligations takes place 3 times or more during a six months period on a rolling basis.

2.3. The penalty levied shall be transferred to Settlement Guarantee Fund (SGF) of the Clearing Corporation.

3. The circular shall be effective after one month from the date of issuance of t........