The Securities and Exchange Board of India (SEBI) on aPRIL 17, put in place a dispute resolution mechanism for Limited Purpose Clearing Corporation (LPCC) to settle disputes and claims arising out of transactions cleared by it.
The mechanism will be used to settle disputes between clearing members; contention between the clearing members and their clients; differences between the LPCC and its vendors; and disputes between clearing members or its clients and the LPCC. The new framework would come into force with immediate effect, the Securities and Exchange Board of India (Sebi) said in a circular.
Limited Purpose Clearing Corporation is an entity established to undertake the activity of clearing and settlement of repo transactions. A well-functioning repo market contributes to the development of the debt securities market by way of boosting the liquidity of the underlying debt securities and allowing market participants to monetise their debt holdings without selling the underlying, thus meeting their temporary need for funds. In its circular, the markets regulator said that LPCC will have to adopt an appropriate dispute resolution mechanism for deciding disputes between the clearing members as prescribed by Sebi.
Sebi further said that the disputes arising between clearing members of the LPCC will be settled by conciliation and/or by an arbitration panel consisting of three clearing members, other than the clearing members who are party to the dispute. The decision of the arbitration panel would be final and binding on the parties.
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