SEBI Permits Clean Sweep: SGF Funds Excess Shifted from Currency to Equity Derivatives

SEBI has allowed clearing corporations to make a one-time transfer of excess core Settlement Guarantee Fund (SGF) from the currency segment to the equity derivatives segment.”

What’s Changing?

The Securities and Exchange Board of India (SEBI) has given the green light for clearing corporations—the settlement arms of stock exchanges—to one-time transfer excess funds from the currency derivatives SGF to the equity derivatives SGF. This move means excess safety net funds in the currency segment can support equity derivatives, without needing new cash contributions .

Why Now?

• Declining currency volumes: Exchange-traded currency volumes dropped sharply, thanks to a restrictive RBI circular from May last year.

• As a result, currency SGF balances shrank, while equity derivatives required higher SGF funding due to rising volumes and stricter risk assessments.

Size of the Transfer

Clearing corporations have already acted:

• BSE’s ICCL shifted ₹444 crore from currency to equity SGF. Equity SGF now holds ₹883.22 crore, and currency SGF ₹13.89 crore .

• NSE Clearing transferred around ₹209 crore. Current balances stand at ₹11,400 crore in equity SGF and ₹166 crore in currency SGF .

What It Means

• Faster deployment of funds: Equity derivatives now have access to capital without fresh contributions, easing operational burdens.

• Better capital efficiency: Currency SGF resources are used smartly—no longer idle—while equity SGF gets a boost.

• Preparing for volatility: Equity derivatives, often riskier, now have a stronger safety cushion.

Responses & Process

• SEBI executed this via a one-time approval process after exchange requests earlier this year.

• The move follows SEBI’s risk reforms—allowing such inter-segment transfers to ensure sufficient SGF coverage benefitting both market stability and clearing operations.

Key Takeaways

• SEBI’s decision enables efficient fund movement from currency SGF to bolster equity derivatives safety nets.

• BSE & NSE have already transferred hundreds of crores.

• This change enhances settlement resilience for equity derivatives, avoids unnecessary capital lock-up, and mirrors SEBI’s broader risk-oriented regulations.