Sebi's New Working Group: Enhancing Economic Independence of Clearing Corporations

SEBI’s New Working Group: Finally Tackling the Real Costs of Clearing and Trading

If you’ve ever looked into how Indian markets actually work—beyond the tickers and headlines—you’ll know one thing for sure: clearing corporations and transaction charges are a mystery wrapped in bureaucracy. But that might be changing, finally. SEBI has just rolled out a new working group, and this time, it looks like they’re serious about bringing more fairness and transparency to market infrastructure.

So, Who’s in the Room This Time?

Announced on June 18, 2025, this isn’t just another committee filled with insiders patting each other on the back. SEBI’s been smart about the composition. The group is chaired by a former regulator with a solid track record in market infrastructure—someone who knows where the bones are buried, so to speak.

They’ve also roped in:

Public interest directors from both exchanges and clearing corps
A technical expert from the Clearing Corporation of India
A broker with real skin in the game and deep knowledge of how the system works

What’s notably missing? CEOs and MDs of clearing corporations or exchanges. That’s intentional—to keep bias and lobbying at bay.

First Agenda: Let’s Talk About the Real Costs of Keeping Markets Safe

The working group’s first order of business is expected to be simple on paper, but complex in practice:

How do we ensure clearing corporations stay financially strong while meeting increasingly tech-heavy regulatory demands?

With new norms, cybersecurity upgrades, and real-time monitoring tools becoming standard, clearing houses are being forced to spend more just to stay compliant. The group will dig into whether current revenue models can handle that—without inflating trading costs for the rest of the ecosystem.

Spotlight on the Core Settlement Guarantee Fund (SGF)

Let’s not forget the SGF—the last line of defense when trades go wrong. This fund acts like a financial shock absorber, especially in the fast-moving equity derivatives space.

Right now:

SGF contributions are based on stress test outcomes
Both exchanges and clearing corps chip in
Brokers can technically cover up to 25% of risk capital—but let’s be real, exchanges usually foot more of the bill to keep members happy

And here’s the catch: there’s no standard formula for how risk is calculated. So in 2024, when one clearing corporation’s risk spiked post-stress test, they had to fork over a lot more, raising eyebrows across the board. The working group wants to fix this inconsistency.

The Problem With Transaction Charges: It’s Not a Level Field

If you’re a broker or smaller exchange, you’ve probably felt the sting of transaction charges that seem to penalize you for not being big. The current slab-based model favours the volume kings—read: the big exchanges—who offer better rates simply because they can.

That might work for them, but it marginalises smaller players. In fact, several mid-tier brokers who switched away from NSE or BSE in 2023 saw their clearing costs spike—and they weren’t quiet about it.

The group is now under pressure to bring more balance and transparency to this system.

Interoperability: A Promise That Needs Updating

Back in 2019, India’s three equity exchanges and two clearing corporations signed a five-party agreement to make clearing interoperable. The idea was to reduce friction between exchanges and improve cost efficiency.

Fast forward to 2025, and a lot’s changed—new regulations, complex software demands, even settlement delays thanks to a system glitch in late 2024. Clearing members bore the brunt of the fallout.

The group now needs to rework that old agreement to reflect the current market reality.

Should Charges Be Unbundled? Sounds Simple. It’s Not.

Here’s a headache waiting to happen: right now, clearing corporations send just three bills per exchange every month. Clean, efficient, centralised.

But there’s talk of moving to an unbundled system, where hundreds of brokers get billed individually. Sounds more transparent, sure—but imagine the infrastructure overhaul needed to support that. Systems will have to evolve fast, and the rollout will need to be surgical to avoid chaos.

The 70:30 Question—Is It Still Fair?

Currently, 70% of transaction charges go to exchanges, while 30% goes to clearing corps. But that split is starting to look a bit dated.

As clearing corporations invest more in compliance tech and risk tools, there’s talk of raising their share—which could dent exchange profits. Earlier this year, one major exchange saw earnings take a hit after a regulatory tweak increased its clearing contributions.

Bigger Questions on Governance Still Linger

SEBI’s not just looking at pricing models. There’s also the broader issue of governance within Market Infrastructure Institutions (MIIs).

The Mahalingam Committee flagged this back in 2022—these institutions are profit-making but also have regulatory responsibilities. That dual role? It’s a conflict waiting to blow up. Expect the working group to revisit those earlier recommendations and maybe even draw clearer lines between business incentives and regulatory duty.

Final Take: The Stakes Are Higher Than They Look

This isn’t just about cleaning up fee structures or modernising systems. If this group gets it right, India’s market infrastructure could become faster, fairer, and far more future-ready.

Because at the end of the day, the best markets aren’t just the biggest—they’re the ones that work better for everyone, not just the top few.