The Indian Commodity Exchange has tied up with Metropolitan Clearing Corporation, a subsidiary of Metropolitan Stock Exchange, to clear and settle the trades executed on its platform.
Both ICEX and MCCIL got SEBI’s go-ahead on September 27. MCCIL will act as the counterparty for all trades to be executed on ICEX, and guarantee settlement. Accordingly, the associated risks will also be assumed and handled by the MCCIL. So far, the clearing and settlement department of ICEX was handing post-trade activities.
As per market regulator SEBI’s norms, all commodity exchanges have to either set up a separate clearing house or outsource the function by October 1 to mitigate risk.
This is the first time that a clearing corporation is providing services to more than one exchange and for diverse segments such as commodities, securities and currencies. Balu Nair, Managing Director of MCCIL, said the fee-based arrangement between MCCIL and ICEX should be looked at from not only the associated costs point of view but also the risk premium associated with the business of guaranteeing settlements.
“We have ensured that pricing is reasonably attractive for stock exchanges when compared with the costs of having a vertically integrated clearing corporation model,” he said.