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Bank FDs may soon cease to act as collateral in stock market

Concerns over the legal enforceability of liquidating bank FDs in the event of non-payment of dues by investors have prompted clearing corporations to consider this move.
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21 Sep 2020 2 Mins Read 0 comment
Vijay Bhushan, former president of Association of National Exchanges Members of India (ANMI) said clearing corporations must ensure a smooth transition if the rules are being changed because FDs are widely used as collaterals. Getty Images
Vijay Bhushan, former president of Association of National Exchanges Members of India (ANMI) said clearing corporations must ensure a smooth transition if the rules are being changed because FDs are widely used as collaterals.
Mumbai: Brokers may cease to accept bank fixed deposits from clients as margins for stock market transactions. Clearing corporations — entities associated with stock exchanges to handle confirmation, settlement and delivery of all trades — are planning to remove FDs from the list of securities that can be put up as collaterals against trades, said people with direct knowledge of
provided as collaterals,” said Moin Ladha, partner, Khaitan & Co. “This could be the reason why clearing corporations are hesitant to accept them as collaterals.” Vijay Bhushan, former president of Association of National Exchanges Members of India (ANMI) said clearing corporations must ensure a smooth transition if the rules are being changed because FDs are widely used as collaterals.
Mumbai: Brokers may cease to accept bank fixed deposits from clients as margins for stock market transactions. Clearing corporations — entities associated with stock exchanges to handle confirmation, settlement and delivery of all trades — are planning to remove FDs from the list of securities that can be put up as collaterals against trades, said people with direct knowledge of provided as collaterals,” said Moin Ladha, partner, Khaitan & Co. “This could be the reason why clearing corporations are hesitant to accept them as collaterals.” Vijay Bhushan, former president of Association of National Exchanges Members of India (ANMI) said clearing corporations must ensure a smooth transition if the rules are being changed because FDs are widely used as collaterals.

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