CSDI News
Retrospective Assessment of "Settlement Guarantee Fund" Guideline by CSDI, SEBA Joint Task Force
A joint task force by CSDI and Brokers Association (SEBA) carry out a retrospective assessment of the "Settlement Guarantee Fund."
A joint task force by Central Securities Depository of Iran (CSDI) and Securities & Exchange Brokers Association (SEBA) conduct a retrospective assessment of the "Settlement Guarantee Fund," a financial container service by CSDI to contain defaults by brokerage firms.
The task force comprising CSDI CEO, Mohammad Baghestani and SEBA Secretary General, Azim Sabet, and experts from various fields aims to streamline and enhance existing protocols for better outcomes.
By leveraging collective expertise, the Task Force will evaluate the effectiveness of the guideline, identify gaps, and implement necessary revisions regarding the Settlement Guarantee Fund, a good faith deposit that allows CSDI to meet settlement obligations on a portfolio in the event of a clearing member's default.
"By amalgamating diverse perspectives, we hope to scrutinize the guideline comprehensively and bring about improvements, make it more precise, relevant, and adaptable to evolving market landscapes," Baghestani said.
The core reason for the formation of the Settlement Guarantee Fund and its formula, settlement contracts, Credit Limit ratio, profit and return of the Fund versus risk coverage capability, and the process of debt security settlement were top on the agenda of the meeting.
The principal purpose of the Settlement Guarantee Fund by CSDI is to contain the risk of defaults in brokerage firms’ payments. The SGF ensures trade parties, to the highest possible extent, that if either of one fails to fulfill their commitments on the due time, the clearinghouse takes on the duty at the specified time.
Therefore, this system is responsible to automatically record and manage the brokerage firms are in default and calculate the penalties and declare them to the brokerage firms.
Calculation of each brokerage firm’s qualification share based on its previous defaults in payments, according the amendment to the instructions of the Securities and Exchange Organization (SEO), is another feature of the system.
Release Date: 11/19/2024
