Services

CCIL‘s objective is to provide risk mitigated Clearing & Settlement services as a Central Counterparty of trades in OTC financial markets (Securities, Money market Instruments, Forex, and Derivatives, etc.). CCIL manages the risks through its risk management processes in such a manner that the ultimate risk to its members on account of participant default/s is either eliminated or reduced to a minimum.

CCIL is exposed to market risk arising from its role as a CCP, which may manifest as credit risk.  These exposures are managed by collecting risk-based margins (initial margin, volatility margin, concentration margin, and MTM margins) from participants to cover both current and potential future exposures. 

In addition, CCIL requires participants to contribute to the segment-wise default fund, which provides additional resources to handle credit losses. Moreover, CCIL has also set up, from its own resources, a Settlement Reserve Fund (SRF) as its ‘skin in the game’ in respect of losses due to participant default. 

The margins for trades accepted for guaranteed settlement are blocked from the Collateral placed in the Settlement Guarantee Fund (INR SGF) which is an across segments (Securities, Forex Settlement, Forex Forward & Rupee IRS) common margin pool at member level. The INR SGF consists of member-deposited Cash & Securities and notional MTM credit allowed to members for MTM gain on the accepted portfolio in Forex, Forex Forward, and Rupee IRS Segment. Further, there is a separate INR SGF for Borrowing Limits allowed in Tri-party Repo and USD SGF for Exposure Limits allowed in Forex Segment.

CCIL has outlined detailed default handling procedures in its Byelaws, Rules, and Regulations (BRR) to handle participant default. A specific default waterfall is outlined in CCIL‘s BRR clarifying the order in which pre-funded default resources such as margins, member-contributed Default Funds, and CCIL ‘s skin in the game will be used to meet default losses. CCIL, in order to make participants aware of its default procedures, conducts default handling drills involving market participants.

The Risk Management Department in CCIL has been entrusted with the responsibility of designing the risk processes and their execution. The department is also responsible for keeping the processes efficient, current, and user-friendly. The department conducts regular reviews of its policies and processes, taking into account the changing global risk environment and market practices. Further, risk processes are also reviewed annually by independent external experts.

The department has progressively enhanced its risk management services, like:

• Introducing a comprehensive risk management dashboard called ‘Integrated Risk Information System (IRIS)’ for its members to have a real-time view of their trade positions, margin utilization, settlement status, liquidity exposures, collaterals, default fund etc.
• Daily Stress Testing and Back Testing of Member Portfolios
• SMS and Mail alerts on breaches of margin thresholds.
• Portfolio compression services in derivatives segments, viz., Rupee IRS and Forex Forward.
• Publishing of risk measurement data viz. ZCYC parameters, MTM prices, etc.
• Quantitative and Qualitative Disclosures.
• Margin simulation tools etc.

As the Risk department relies heavily on the feedback of the members and other interested persons to initiate measures to improve the efficiency of the risk processes, etc., it considers receiving their comments and suggestions a privilege.

Points of Contact: