InvestorQ : What is the settlement mechanism for IRFs under different circumstances?
swati Bakhda made post

What is the settlement mechanism for IRFs under different circumstances?

Answer
user profile image
Dia Deshpande answered.
2 years ago


Settlement of futures contracts on interest rate will be done as under:

Daily Mark-to-Market Settlement

The positions in the futures contracts for each member is marked-to-market to the daily settlement price of the futures contracts at the end of each trade day. The profits/ losses are computed as the difference between the trade price or the previous day’s settlement price and the current day’s settlement price. The CMs who have suffered a loss are required to pay the mark-to-market loss amount to NSE Clearing which is passed on to the members who have made a profit. This is known as daily mark-to-market settlement.

Daily mark to market settlement in respect of admitted deals in Interest rate futures contracts is cash settled by debit/ credit of the clearing accounts of clearing members with the respective clearing bank.

All positions (brought forward, created during the day, closed out during the day) of a clearing member in futures contracts, at the close of trading hours on a day, shall be marked to market at the daily settlement price and settled on T+1 day basis. The settlement shall be netted with the settlement of Currency futures.