SECURITIES SETTLEMENT

The transaction relating to government securities are

settled through member's SGL/current a/c at RBI, with
the settlement offunds on a net basis and that of
securities on a gross, or trade-by-trade basis.CCIL
guarantees settlement of trades on the settlement date
by becoming a central counterparty to every trade
through the process of novation. The secondary market
trades in Government securities received by CCIL for clearing
and settlement are from Negotiated Dealing System – Order
Matching (NDS-OM), Clearcorp Repo Order Matching System
(CROMS) and Negotiated Dealing System (NDS)

BENEFITS

The benefits of settling trades through CCIL are as

under.

 Assurance of Settlement On the Settlement

Date.
 Reduction in counterparty exposure. ( in case
of govt. securities the exposure will get
extinguished upon acceptance of trades for
settlement. In forex clearing and settlement ,
since a loss allocation procedure is stipulated,
the exposure will not get extinguished but will
come down from the gross level to the next
level.
 Operational efficiency improved liquidity and
better leveraging. (e.g. shorter holding periods
for government securities.)
 Lower Operational Cost,Overall.

1.Market efficiency

Market efficiency refers to the degree to which market

prices reflect all available, relevant information. If
markets are efficient, then all information is already
incorporated into prices, and so there is no way to
"beat" the market because there are no undervalued
or overvalued securities available.
2.Transparency

3.Liquidity and risk management

Liquidity is the ability of a firm, company, or even an
individual to pay its debts without suffering
catastrophic losses. Conversely, liquidity risk
stems from the lack of marketability of an investment
that can't be bought or sold quickly enough to prevent
or minimize a loss. It is typically reflected in unusually
wide bid-ask spreads or large price movements.

4. Reduced settlement and operational risk

5. Savings on settlement cost