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A Clearing Member (CM) of NSE CLEARING has the responsibility of clearing and settlement of all deals executed by Trading Members (TM) on NSE, who clear and settle such deals through them. Primarily, the CM performs the following functions:
- Clearing - Computing obligations of all his TM's i.e. determining positions to settle.
- Settlement - Performing actual settlement. Only funds settlement is allowed at present in Index as well as Stock futures and options contracts
- Risk Management - Setting position limits based on upfront deposits / margins for each TM and monitoring positions on a continuous basis.
Types of Clearing Members
- Trading Member Clearing Member (TM-CM)
A Clearing Member who is also a TM. Such CMs may clear and settle their own proprietary trades, their clients' trades as well as trades of other TM's & Custodial Participants
- Professional Clearing Member (PCM)
A CM who is not a TM. Typically banks or custodians could become a PCM and clear and settle for TM's as well as of the Custodial Participants
- Self Clearing Member (SCM)
A Clearing Member who is also a TM. Such CMs may clear and settle only their own proprietary trades and their clients' trades but cannot clear and settle trades of other TM's.
Clearing Member Eligibility Norms
- Net worth of at least Rs.300 lakhs. The net worth requirement for a CM who clears and settles only deals executed by him is Rs. 100 lakhs.
- Deposit of Rs. 50 lakhs to NSE CLEARING which forms part of the security deposit of the CM
- Additional incremental deposits of Rs.10 lakhs to NSE CLEARING for each additional TM in case the CM undertakes to clear and settle deals for other TMs.