Section 39 in The Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012
39. Fund to guarantee settlement of trades.
(1)Every recognised clearing corporation shall establish and maintain a Fund by whatever name called, for each segment, to guarantee the settlement of trades executed in respective segment of a recognised stock exchange.(2)The Settlement Guarantee Fund or the Trade Guarantee Fund of an existing recognised stock exchange shall be transferred to the recognised clearing corporation to which the clearing and settlement functions of the stock exchange are transferred.(3)Till such time the Fund is transferred under sub-regulation (2), it shall be utilized only for the purposes of meeting settlement obligations as specified by the Board and as per the byelaws of the recognised stock exchange.(4)An existing clearing corporation shall continue to utilize its Settlement Guarantee Fund or Trade Guarantee Fund after its recognition under these regulations.(5)In the event of a clearing member failing to honour his settlement obligations, the Fund shall be utilized to complete the settlement.(6)The corpus of the Fund shall be adequate to meet the settlement obligations arising on account of failure of clearing member(s).(7)The sufficiency of the corpus of the Fund shall be tested by way of periodic stress tests, in the manner specified by the Board.(8)The [***] [Omitted 'contribution and' by Notification No. SEBI/L.A.D.-N.R.O./G.N./2016-17/011, dated 26.8.2016 (w.e.f. 20.6.2012).] utilization of the Fund shall be in accordance with the norms specified by the Board.
