After SEBI's guidelines issued on August 27, 2014, regarding Core Settlement Guarantee Fund (CSGF), Default Waterfall and Stress Test, SEBI on May 04, 2016 issued further guidelines to strengthen the risk management measures for clearing corporations, under the SEBI (Stock Exchanges and Clearing Corporations) Regulations, 2012. The new guidelines prescribe that the investment policy of clearing corporations must be based on the highest degree of safety and least market risk. Investments should broadly be in Fixed Deposits/ Central Government Securities and Liquid schemes of Debt Mutual Funds, subject to applicable restrictions and investment thresholds. Such investments would count as "liquid assets" for calculating the net worth of the clearing corporation.

SEBI has also decided to reduce the provisioning requirements imposed on stock exchanges for guaranteeing settlements. Until now, Regulation 33 of the SECC Regulations required stock exchanges to transfer 25% of their total profits, annually, to their clearing corporation. Pursuant to the August 27, 2014 circular, SEBI required the creation of a CSGF, against which no exposure is allowed. The minimum corpus for the CSGF is calculated though a dynamic formula. Based on the recommendations of the K.V. Kamath Expert Committee, SEBI has decided to remove the requirement to transfer 25% of profits by stock exchanges, as the minimum corpus available in the CSGF of the clearing corporations is seen to be sufficient to cover shortfalls. However, any later shortfall in the corpus has to be replenished immediately. These changes would have a positive effect on the profitability of stock exchanges without blocking excess capital and should be welcomed.