Dated 27.2.2013


With Effect From 1.3.2013


The Business model for CSE consists trading of Brokers in CSE as well as BSE-CSE and CSE-NSE arrangements.


Comprehensive Risk management frame work for CSE cash market already notified on 25th May 2005 in line with SEBI circular.


In case of trade in NSE and BSE the following policy adopted:


The clients are linked or mapped to the Brokers, herein after called as Branches, and are engaged in trading from these Brokers. Controlling and monitoring of these trades are being done by RMS and Surveillance department.

Major Functions of RMS/Surveillance:

In short, the Risk management in relation to all the trading activities for Clients is handled by RMS and Surveillance Dept.



In CSE, Surveillance department employs one executives & one staff, who are reporting to Manager-Surveillance. Manager Surveillance is reporting to MD&CEO/GM. Decisions relating to routine and risk management activities are made by Manager-Surveillance. Activities which contain high risk and complications are to be put forward to the notice of senior executives like DGM/GM/MD & CEO and proper guidance should be taken before executing any action on such activities.

The Calcutta Stock Exchange Limited classifies Brokers into High Risk Profile, Medium Risk Profile and Low Risk Profile. Such classification is done based on a relationship maintained with Brokers and based on the input received from Surveillance department of NSE and BSE. Apart from this, all the Brokers are evaluated based on the initial margin and subsequent margins paid by them. The trading patterns of Brokers are also taken into consideration for classification of risk profile.



Trading members are required to provide liquid assets which adequately cover upfront margin requirements. A trading member may deposit liquid assets in the form of cash, bank guarantees, fixed deposit receipts, approved securities and any other form of collateral as may be prescribed from time to time. The total liquid assets comprise of the cash component and the non-cash component wherein the cash component shall be at least 50% of liquid assets.


Approved Securities:


Trading member are encouraged to deposit the upfront margin through pledge FD or in cash as CSE do not get back to back margin in NSE and BSE  for Pledge securities and Bank guarantee. Accordingly CSE discourage members to deposits which are not allowed to transfer to NSE and BSE for margin.


As a temporary arrangement, Trading members are permitted to pledge shares which includes existing approved list of securities by the Exchange and all scripts listed with NSE, and BSE. And/or units of mutual fund subject to assessment of Head of Risk Management department. Securities are required to be pledged in electronic form ('demat securities') in the CSE’s designated depository accounts. These securities shall be pledged in favour of The Calcutta Stock Exchange Ltd.(CSE). CSE may revise the list of securities and the haircuts from time to time as decided after assessing the risk by the Head of Risk management.


The securities are valued on a daily basis based on the closing price of the security in the Capital Market segment of NSE / BSE. The haircut applicable for the security will be VaR of BSE /NSE or as per the assessment of head of Risk Management department. This haircut shall be applied on the value of the securities provided by the Trading Members to arrive at the net value of the securities. Only the value net of applicable haircuts shall be considered as the value of the securities.

Fixed Deposit:

Members are permitted to submit fixed deposit receipts as collateral towards liquid assets. Fixed deposits are allowed from those banks which are permitted by BSE and NSE.Those FDs will be third party FD and the same will be deposited to NSE and BSE as decided by head of Risk management along with CFO.

Bank Guarantee:

Members may opt for giving bank guarantee in the specified formats, either for specific segment from any nationalized banks and any other bank which are approved by NSE towards liquid assets and also be assessed by the Head of the Risk management Department along with CFO.

Additionally, at the time of deposit of the bank guarantee, the clearing member is required to ensure the following:

The bank guarantee is strictly as per the formats prescribed by the Exchange.

A bank guarantee for collateral margin deposit should have validity for a minimum period of 3 months. In case the issuing bank does not provide for a specific claim period beyond the expiry date in the bank guarantee, the maturity period of such bank guarantee shall be reduced by 7 days, which would be considered as the claim period of the bank guarantee.

In case bank guarantee is for any segment then in such cases Trading member should also submit member letter in the specified format.

While filling the details in a bank guarantee, clearing members shall ensure that:

No relevant portion is left blank

All handwritten corrections and blanks are attested by the bank by affixing the bank seal / stamp duly authorised.

All irrelevant portions struck off on the printed format should also be authenticated by the bank by affixing the bank seal / stamp duly authorised.

Each page of the bank guarantee should bear the bank guarantee number, issue date, stamp of the bank and should be signed by at least two authorised signatories.

The Trading member should also ensure that the bank guarantee is free from any discrepancy before the same is submitted to the Exchange.

The stamp paper should be issued either in the name of the member or in the name of bank, no third party stamp papers are permissible.

The stamp paper should not be older than 6 months from the executed date of the bank guarantee/ renewal.

In case the bank guarantee does not strictly conform to the above-mentioned conditions.

Mutual Funds:

Trading Members are permitted to pledge open ended mutual fund units available in demat form as collateral towards Liquid assets. A deed of pledge is required to be executed in specified formats. CSE may revise the list of approved mutual fund scheme and the haircuts from time to time Valuation

The mutual funds units are valued based on the Net Asset Value of the mutual fund unit. The value of the mutual fund unit is reduced by such haircut as may be prescribed by CSE from time to time to arrive at the collateral value of the mutual fund unit. The hair cut applicable shall be the VaR margin rate and exit load if any applicable for the respective mutual fund scheme. Only the value net of applicable haircuts and exit load shall be considered as the value of the mutual funds pledged. Valuation of mutual funds are done by the Exchange at periodic intervals. Further, the total value of mutual funds units provided as non-cash portion of the liquid assets shall not exceed 25% of the liquid assets of the respective member.

Units of money market mutual fund and Gilt funds (including units of open ended liquid mutual funds or government securities mutual funds) where applicable haircut is 10%.


Government Securities, Bonds and T-Bills

Trading member desirous of providing G-Sec/Bonds/ T-Bills shall deposit the same as per the specific format.

Members are allowed to deposit G-Sec/Bonds/T-Bills that shall be as per approve list of NSE/BSE.

G-sec/Bonds/T-bill shall be accepted as collateral only in electronic form.


General Manager