India Exchanges - Clearing Corporations’ Regulations, No Major Impact: HDFC Securities

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.Clearing corporations play a crucial role in the exchange ecosystem. They are entirely owned by exchanges and perform essential functions such as clearing, settlement and risk management. The revenue from clearing corporations has registered a strong two year compound annual growth rate of 71% and constitutes ~8/15% of the exchange’s consolidated revenue and profits. SEBI in its consultation paper related to the treatment of interest income by CCs has proposed that – interest income earned by CCs on the cash collaterals received from clearing members shall periodically be distributed to CMs. The reversal of interest from clearing funds will have a negative impact on the exchange’s profitability. Given the uncertainty around whether the entire interest income or just the interest on idle funds will be reversed, we assume that only the interest earned on idle funds (clearing funds which have no underlying position) will be reversed. If on average ~15% of the clearing funds are idle, the estimated impact on FY24 EPS for BSE and Multi Commodity Exchange of India is ~3.3/1.4% for FY24. The maximum impact will be ~6.6/2.8% for BSE/MCX if we assume ~30% of the funds are idle. We continue to like MCX within exchanges as it has minimum impact from the proposed regulatory changes related to clearing interest and restriction on speculative index options trading. We have a Buy on MCX and increase our target price to Rs 5,000 (versus Rs 4,700 earlier) and maintain our Reduce rating on BSE..Click on the attachment to read the full report:.Sonata Software - A Temporary Blip; Long Term Drivers Intact; Systematix Initiates Coverage With A Buy.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

India Exchanges - Clearing Corporations’ Regulations, No Major Impact: HDFC Securities

The brokerage continues to like MCX within exchanges as it has minimum impact from the proposed regulatory changes related to clearing interest and restriction on speculative index options trading.

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