What is the settlement system that CCIL follows? What are the pre-requisites for seeking Forex membership? What is the mode of settlement through CCIL? What are the advantages of Payment versus Payment PVP mode of Settlement through CCIL? What is the process of Novation? How is the connectivity between CCIL and the members established? How will the members know if the files have not been successfully sent to CCIL through FRS?

How will the member re-report the trades failed due to technical validation or incorrect format? What are the basic business validations that CCIL does after the data is received in the system? What are the types of trades that are currently settled through CCIL? What are the types of trades reported to CCIL?

What is the cut-off time to report trades to CCIL? What happens to the trades reported post 6: Do banks have to report trades done on Fx-Clear or Fx-Swap Dealing platform of CCIL? Are trades done on Fx-Clear or Fx-Swap Dealing platform of CCIL subjected to Exposure Check? How is the Exposure verification done?

Money A2Z

Explain the process of pre-funding in USD? What are the charges towards S-1 day pre-funding in USD? Explain the process of temporary enhancement or pre-funding in INR? What is the process of Cash Settlement? When and how can a deal be amended or cancelled? How will a member do the reconciliation of deals settling through CCIL? What is the cut-off time for receiving US Dollar obligation by CCIL? What happens if the funds are received post the cut-off time?

What is the process of Shortage Handling? CCIL runs a multilateral netting system for forex inter-bank transactions that nets the members payments and receipts in a currency, though they are due to or from different counterparties and settles the net position on a payment versus payment PVP basis in both the legs of the transactions.

CCIL becomes the central counterparty to every accepted trade through the process of novation. The applicant shall —. CCIL adopts the Payment versus payment mode of Settlement.

Currency Forward Contracts

The key benefits on account of a PvP model to members are: The net positions of all member banks, both in INR and USD, are computed by a multilateral netting of all accepted trades. Novation takes effect from the moment a trade is accepted by CCIL for settlement. The Member Banks have to install a utility called File Routing System FRS utility on this gateway server through which the banks can transmit data in IFN format to CCIL.

The IFN files transmitted are text files with the file extension as. The FRS utility software developed by CCIL can be downloaded by the member banks from the CCIL report browser. The trades that are rejected outright because of incorrect format or technical failures are placed in a separate sub-folder called UINR under the received folder in the FRS application.

Member has to check for the reason for rejected deals on account of technical validation under the path C: CCIL will perform the following validation checks: All inter-bank forex trades concluded bilaterally through various dealing platforms are reported to CCIL.

The cut-off time for reporting Spot and Forward deals is 1: The connectivity between the Member banks back office and CCIL is via the INFINET. Trades that are validated and matched, are subjected to online exposure check. There are three batches being run during the day viz: Pre-early Morning batch run at 8.

This batch is run at 1: The banks have the option of pre-funding on S-1 day for the trades pending exposure. All trades which are in breach of exposure limit would be rejected in this batch for value S day.

Besides the above batches, CCIL has a Netting Batch which is run at 1: The Member banks with a net debit short position in USD have to issue payment instructions to their correspondent bank for credit to CCIL account. EST on the settlement date. Banks are required to put their Member ID in field 21 of the MT payment instructions. Members have to ensure that their rupee account is funded with the amount that is due from them for each value date.

Banks having INR receivable position shall receive INR, once the USD is received by CCIL in its account with its Settlement Bank within the cut-off time of 7: Window of Operations - Timings all references to timings in these documents refer to Indian Standard Time unless otherwise specified. Pre- Early Morning Batch.

Spot forex trading

INR settlement cut-off time. Trades matched post the online session closure of 6: Banks need not report trades done on FX-Clear or Fx-Swap Dealing System of CCIL. These trades shall have CCIL as the counterparty. The Member will be under the obligation to meet such margin breach without any delay. All matched trades including trades received from Forex Dealing systems and netted positions, if any, received from Forex Forward segment shall be subject to checks for adequacy of margin for both counterparties to the trade.

Trades which pass through Exposure and margin Check shall be accepted for settlement by CCIL. Exposure check for all trades shall be carried out on an online basis upto 6: Trades which result in a breach either due to inadequacy of Exposure Limits or due to inadequacy of margins shall remain in queue and be eligible for consideration for exposure check.

Banks that have availed higher limits are required to bring down their position within the Exposure Limit on S day by Other trades in Pending exposure have to be covered by 1: Banks have the following options to cover the limit excess or pending exposure trades: Prefunding is an option given to members to avoid trades being rejected on account of exposure violation.

Amount in excess of Exposure limit can be prefunded by the member i. Banks have the following options in USD Pre-funding: Exposure limit for a bank shall be enhanced only after the credit is received by CCIL in its account with the Settlement Bank. Funds received up to The charges levied towards handling cost on Prefunding are as under: Handling Charges in USD.

Interest earned upto USD Interest earned more than 50 and upto Interest earned more than and upto Interest earned more than Banks have the following options in INR Pre-funding: The USD sell leg will have to be settled by the bank with the respective counterparty outside the CCIL system.

It will also leave the members FX positions unchanged with a neutral exchange rate. A Member that has availed higher limits or has Forex Forward position in pending exposure status shall be required to ensure that the positions are within the Exposure Limit on the settlement date by In the event the Member fails to bring down its position within the Exposure Limit on Settlement date by The cash settlement shall be effected by way of allocation of such positions first to the Members breaching Exposure Limits in the counter currency on S day at the notified time, to the extent such allocation is possible without any breach of exposure limit in the counter currency.

CCIL shall allocate the balance amount, if any, to the top ten Members having highest receivable position in the currency of breach. Allocations shall be in proportion to the net receivable position of such Members. The deals arising out of Cash settlement shall be with CCIL as counterparty.

Such Members to whom allocations have been made shall be referred as Allocatee Members. Allocation advice would be sent to both, the Allocatee Members and to those Members whose sale positions are cash settled, by CCIL after the allocation has been effected.

Such intimation must be received by the CCIL in the format specified before A deal which has already been accepted by CCIL for settlement cannot be amended. However, a trade can be cancelled by the member before the Cut-off time i.

The cancellation for an accepted or matched trade has to be received from both the counterparties. Further, any unmatched deal NEWT, AMND and CANC can be unilaterally cancelled by reporting CANC by the member. Banks can reconcile the status of their deals on T day itself, taking note of all Unmatched, Overexposed and Accepted deals, the details of which are available in the Deal Status Report in the IRIS online system.

This status can change up to cut-off batch on S-1 for Spot and forwards and up to cut-off batch on S day for Cash and Tom deals. Spot and forward deals which continue to be unmatched on S-1 after the cut-off batch will be rejected. Cash and Tom deals which continue to be unmatched till the cut-off batch will be rejected on S day. The pending exposure deals will be carried forward till S day and if an offsetting buy in the currency of breach is reported by the member, then the pending exposure trade would be accepted for settlement.

The cut-off time for receiving U S Dollar funds is 7: In the event, funds are received post the cut-off time, the counter-value INR pay-out would be released only on the next business day. Further, if the USD funds are received after 8.

IST, CCIL will levy interest charges at 30 basis point p. IST on the value date.

In such a case, CCIL will with-hold the equivalent rupee funds receivable by member and complete the US Dollar leg of the settlement by drawing the lines of credit which CCIL has with the settlement bank. The withheld INR funds will be released on the next day on receipt of dollar funds.

A member with a net INR payable position is said to have defaulted in its obligation when it fails to fund its account with RBI. In such a case, CCIL will use the Rupee lines of credit and complete the settlement process and withhold corresponding dollar payout due to the defaulting Member. The dollar funds will be released on the next day on receipt of INR Funds. CCIL shall impose penalty and LOC charges on the defaulting member.

LOC charges will be on the basis of actuals for both INR and USD defaults i. What is Shortage Allocation Process? In case of Shortage, CCIL shall avail the Lines of Credit available and complete the settlement.

However, in the event CCIL is unable to fully meet the shortage by availing the Lines of Credit, the residual amount, i. Following will be the allocation process: In the event any member fails to pay funds to CCIL towards its settlement obligation, the lines of credit LOC shall be availed by CCIL and the settlement shall be completed.

If the shortfall exceeds the available LOC, shortfall amount exceeding the LOC shall be apportioned to members having receivable from CCIL. Such shortfall shall be allocated to the top 10 members having receivable from CCIL. In case CCIL is unable to apportion the shortage to the top 10 members, the balance shall be apportioned to the next 10 banks having dollar receivable position in proportion to their receivable position from CCIL and this process shall continue until the allocation is completed.

The final allocation amount shall be known at 7: CCIL shall with-hold the counter-value funds of the member with shortage. On the next business day, if the member s causing the shortfall replenishes the funds, the members who have been allocated short, would be paid the funds by CCIL.

In the event the member s causing shortfall, does not replenish the funds, CCIL would sell the counter value withheld previous day to raise funds in shortage and the members who have been allocated short, would be paid by CCIL. The members who have been allocated the USD shortfall would be entitled to receive interest at the rate of Fed Fund rate prevailing on the day of shortage plus basis points or receive the funds with good value.

Members who have been allocated INR shortfall would be entitled to receive interest at the NSE MIBOR prevailing on the day of shortage. What are the various reports available for members? The report is available after 6. This report contains the status of all deals reported for the day and any deal whose status has changed during that day. This report can be downloaded as many times as required on the day of download after the closure of session.

This report shall be available only for current day. This report contains all the status that is currently available in the Deal status report. On any given day this report will be generated for three value dates i. Members may note that the reports get updated after cut-off batch and End of the day session closure for those deals accepted for settlement for the respective value date.

This report gives the final net position of a Member for a particular settlement day. This report will be generated on S day at around 1: This report is generated every day after the End of Day EOD process at CCIL. It reflects all the forward deals submitted by the counterparty of the members and not reported by the member. This report gives details of the total obligation amount, the settled amount and the amount of shortfall in INR and USD and also the status whether settled or short.

This report gives details of actual INR shortage for a value date. It is generated on the Settlement date, i.

This report indicates the final shortfall in USD for a value date. As and when the member replenishes the shortfall on the same day this report is generated advising member of the replenishment. This report is generated to advice the member when overnight shortfall in USD is replenished by the member. This report is generated every day after the session closure in the evening between 6: The deals are reflected in this report till S-3 day.

In the event of CCIL resorting to shortfall allocation a report would be generated after 6. The report would be generated for all members who have shortfall in USD or INR because of which such allocation was necessitated, and to the allocatee members who have been paid less on account of such shortfall.

Members are required to pay settlement charges for every deal accepted for settlement. The following is the schedule of slab-wise fees and charges: Trade value in USD. Charges per trade accepted per segment. Less than 1 mio. Service Tax shall be applicable on above charges at applicable rates.

If the member delays the payment i. If the payment is made after 10th of a calendar month then member will have to pay 5 basis point per day on the amount of charges. How will it help the member Banks? The main benefit of this message to the member banks is that they need not send a separate payment instructions MT to their correspondent.

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