Karachi: Significant amendments to the National Clearing Company of Pakistan Limited (NCCPL) Regulations, 2015, specifically addressing Liquid Capital Monitoring for Debt Market Clearing Members, were approved recently. These changes aim to refine the financial oversight mechanisms applied to these members.
The revised regulations maintain the requirement for Debt Market Clearing Members, including those operating as TOSB (keeping limited custody), TSSB, and TCSB, to submit biannual certificates or financial statements. These documents, certified by statutory auditors, confirm their Net Capital Balance/Liquid Capital (NCB/LC) allocations to both the Debt and GDS Markets. Changes to these allocations must now be communicated to NCCPL in writing.
According to information available from the Pakistan Stock Exchange (PSX), a significant shift in monitoring practices has been instituted. Previously, the NCCPL would monitor the NCB/LC of each relevant member pre-trade to ensure compliance with capital adequacy limits. The updated regulation removes routine pre- and post-trade monitoring. Instead, monitoring will occur only when actions detrimental to the Debt Market or its investors are observed, with subsequent corrective actions prescribed by established procedures.
Additionally, the exposure limits for various markets have been adjusted. For TOSB, TSSB, and TCSB Clearing Members, the maximum exposure is now set at 7.5 times their LC across several markets, including Deliverable Futures and Stock Index Futures, with a significant increase to 25 times the LC permitted across all markets, excluding GDS and Debt Market exposure.
For Professional and TCSB Clearing Members providing services to associated entities and clients, the updated exposure limits are uniformly set at 9 times the LC for specified markets and elevated to 30 times the LC across all markets.
Further modifications include procedural changes regarding the deposit of exposure margins. The new regulation permits the acceptance of crossed cheques for payments up to Rs. 2,500,000 against exposure margins and losses, exclusively on bank holidays, provided that funds are transferred to the company’s account before the market reopens.
These amendments are part of NCCPL's ongoing efforts to enhance the robustness of financial oversight and risk management within Pakistan's capital markets.