Custodial Participant Deals
NSE CLEARING provides a facility to entities like FIIs, Mutual Funds, NRIs, Domestic Body Corporates & Domestic Financial Institutions etc. to execute trades through any TM, which may be cleared and settled by their own Clearing Member. To avail this facility the entities are required to take a Custodian Participant (CP) Code from NSE CLEARING through the clearing member. The client and clearing member are required to enter into an agreement as per specified format.
Thereafter, all trades executed by such CP through any TM are required to have the CP code in the relevant field on the F&O trading system at the time of order entry. Such trades executed on behalf of a CP are required to be confirmed by their CM (and not the CM of the TM through whom the trade was executed), within the time specified by NSE, using the confirmation facility provided by NSE CLEARING to the CMs in the F&O segment.
Till such time the trade is confirmed by the CM of the CP, the same is considered as a trade of the TM and the responsibility of settlement of such trade vests with the CM of the TM. Once the trades have been confirmed by the CM of the CP, they form part of the obligations of the CM of the CP and they shall be responsible for all obligations arising out of such trades including the payment of margins and settlement of obligations.
FII/ sub accounts of FII/MF/Scheme of MF which have been allotted a unique CP code by the Clearing Corporation shall only be permitted to trade on the Exchange.
Procedure for procurement of Custodian Participant (CP) code by FII/sub account, MF/MF schemes etc
The Clearing member is required request the NSE CLEARING to allot a CP code in respect of clients for which the member would be carrying out clearing and settlement and provide details of the client in a specified format. The request should be made along with a letter from the client giving details of the clearing member, who shall clear and settle their trades in the F&O segment.
The client is required to also procure a No objection letter from the custodian in case the clearing member is different from the custodian.
Procedure for change in Clearing Member
In case the clients wish to shift from one clearing member to another clearing member an NOC would need to be submitted by the old clearing member along with an application from the new clearing member. The application made by the client in the specified format to the new clearing member would also be required to be provided to NSE CLEARING.
Procedure for procurement of CP code by NRIs
An NRI is required to apply for a client code to the clearing member as per the specified format. The clearing member would apply for a Custodial Participant Code for the NRI client to the Clearing Corporation as per specified format.
In case an NRI client wants to shift from one clearing member to another clearing member, an NOC would need to be submitted by the old clearing member along with an application from the new clearing member and the application to the new clearing member by the NRI client.