SEBI Approves One-Time SGF Reallocation from Currency to Equity

In a key regulatory move, the Securities and Exchange Board of India (SEBI) has permitted clearing corporations—entities responsible for settling trades on stock exchanges—to carry out a one-time transfer of funds from the core Settlement Guarantee Fund (SGF) of the currency derivatives segment to that of the equity derivatives segment. The core SGF acts as a financial buffer to ensure uninterrupted trade settlement in cases where clearing members fail to meet their obligations.

Decline in Currency Derivatives Triggers Move

The decision follows a sharp drop in trading activity in exchange-traded currency derivatives, which was further exacerbated by a Reserve Bank of India (RBI) circular that came into effect in May 2024. This led clearing corporations to approach SEBI, requesting permission to shift unused capital from the underutilised currency derivatives SGF to the equity derivatives SGF, where demand remains robust.

ICCL Transfers ₹444 Crore to Equity Derivatives SGF

ICCL, the clearing division of the Bombay Stock Exchange (BSE), was among the first to receive SEBI's approval in late March 2025. Following the green light, ICCL transferred ₹444 crore from its currency derivatives SGF to the equity derivatives SGF. 

According to BSE’s financial records, as of May 2025, the core SGF for equity derivatives stands at ₹883.22 crore, while the currency derivatives SGF has dropped to ₹13.89 crore. Notably, ICCL had contributed ₹147 crore to the core SGF during the December 2024 quarter, which was reversed in the March 2025 quarter following SEBI’s one-time approval.

NSE Clearing Also Utilises Relief Provision

NSE Clearing, the settlement arm of the National Stock Exchange, also leveraged this regulatory relief. Industry insiders report that NSE Clearing shifted ₹209 crore from its currency derivatives SGF to the equity derivatives SGF. Currently, NSE’s core SGF balance stands at approximately ₹166 crore for currency derivatives and a substantial ₹11,400 crore for equity derivatives, underlining the dominance of the equity derivatives market.

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Regulatory Response to Market Evolution

This one-time fund reallocation reflects SEBI’s responsiveness to shifting market trends. With currency derivatives volumes declining significantly and equity derivatives continuing to expand, the measure allows clearing corporations to optimise the use of reserve funds, ensuring adequate risk coverage in more active market segments while minimising idle capital.

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