The Securities and Exchange Board of India vide its circular dated 3rd March 2020, has revised norms of compensation and penalty applicable on termination of contracts under the regaining matched book regulations for commodity derivatives segment.
Sebi in its earlier notification dated 1st September 2016 has prescribed four alternative norms to regain matched book based on market condition. However through this circular the norms related to compensation and penalty applicable on tear-up of positions have been revised as follows:
The voluntary tear-up at last mark-to-market price along with compensation equal to 10% of last mark-to-market price and penalty equal to 1% of last mark-to-market price (to be credited to SGF).
Similarly, partial tear-up (pro-rata against members/clients having opposite positions) would be at last mark-to-market price along with compensation equal to 8% of last mark-to-market price and penalty equal to 1 per cent of last mark-to-market price (to be credited to SGF).
Click here to read the Notification.
