Developments in Developments in CCIL and their impact on risk in by huanghengdong

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									       Developments in 
       Developments in
CCIL and their impact on risk in 
        Forex Markets
                       Agenda
•   Objectives
•   Functions
•           ibili i
    Responsibilities
•   Achievements
•   Way Forward
               Organization
  Initiated by RBI through a Core Committee
• Initiated by RBI through a Core Committee
• Co‐opted:
    FIMMDA, AMFI, PDAI, FEDAI, RBI
  – FIMMDA AMFI PDAI FEDAI RBI
• Incorporated on the 30th of April, 2001 
• Operations on February 15, 2002 with the 
  Negotiated Dealing System of RBI
• Ownership – Banks, Institutions and NBFCs
  SBI is the lead promoter
• SBI is the lead promoter
                     j
                   Objective
• Creating institutional structure for the C&S in 
  Gilts and Forex & Related Products
  – Structured Settlement System with CCP 
• Bringing in efficiency in the transaction 
  settlement process
  – STP
  – Multilateral Netting
        l     f     l
  – Finality of settlement
• Insulate the financial system from shocks 
         ti f      th         ti    l t di
  emanating from the operations related issues
  – Novation
 Snapshot of Daily activity at CCIL
 Snapshot of Daily activity at CCIL
  Govt. Bonds  Rs.6000crores (currently about 
• Govt Bonds – Rs 6000crores (currently about
  Rs.15000crores)
  Repo – Rs.13000crores
• Repo Rs 13000crores
• Forex – Rs.48000crores
• CBLO – Rs.30000crores
• NDS‐Call – Rs.15000crores 
• CLS (Cross Currency) – Rs.10000crores
  IRS/FRA – Rs.15000crores
• IRS/FRA Rs 15000crores
                                  CCIL Business Growth


90000
80000
70000
60000
50000
40000
30000
20000                                       \

10000
    0
        2002 ‐ 03    2003 ‐ 04     2004 ‐ 05    2005 ‐ 06     2006‐07     2007‐08 (
                                                                         Upto Dec'07)
                                            Years


                        Bonds        Repo       Forex       CBLO
          Facilitator in Growth…..1
          Facilitator in Growth…..1
• Gilts
  – Guaranteed settlement eliminating Counter‐party 
    risk in outright and repo
    risk in outright and repo
  – On Time Settlement since Feb’2002
    Netting benefit in terms of DvP III since April 04
  – Netting benefit in terms of DvP III since April’04
     • Funds – 81%
       Secu t es 6 %
     • Securities – 61%
       Facilitator in Growth…..2
       Facilitator in Growth…..2
• Forex
  – Guarantee of Settlement of INR‐USD Inter bank 
    deals 
  – Netting
     • 92% in 2007‐08
  – CLS
     • Cross Currency Settlement of Indian Banks 
    Dealing Platform –
  – Dealing Platform FXClear
     • Provided free of cost to members
             Forex Market in India
             Forex Market in India
• Growing at faster pace
  Growing at faster pace
                              Yearly Business Growth (%)

    80.00
    80 00


    70.00


    60.00


    50.00


    40.00


    30.00


    20.00


    10 00
    10.00


     0.00
            2003 ‐ 04    2004 ‐ 05      2005 ‐ 06    2006‐07    2007‐08 ( Upto 
                                                                   Dec'07)
                Forex Market Direction
                Forex Market Direction
• More Volume
  More Volume
                                 Avg. Daily Volume (Rs. Billion)

 500

 450

 400

 350

 300

 250
                                                                                          Avg. Vol
 200

 150

 100

  50

  0
       2002 ‐ 03    2003 ‐ 04       2004 ‐ 05    2005 ‐ 06   2006‐07    2007‐08 ( Upto 
                                                                           Dec'07)
Volatility of Exchange Rate(1999 to 2007)
Volatility of Exchange Rate(1999 to 2007)
                         Volatility

1.8000

1.6000

1.4000

1.2000

1.0000

0.8000

0.6000

0.4000

0.2000

0.0000
         1   2   3   4        5       6   7   8   9
         How we Manage Risk
         How we Manage Risk
• Central Counter Party
• Exposure Management
   – Net Debit Cap
• Daily Margins
   – Mark to Market
   – Volatility
   – Concentration
  Lamfalussy Standards
• Lamfalussy Standards
• CPSS(Committee on Payment and Settlement Systems) / 
  IOSCO (International Organization of Securities 
        i i )         li
  Commissions) Compliant
       Facilitator in Growth…..3
       Facilitator in Growth…..3
  Collateralized Borrowing & Lending Obligation 
• Collateralized Borrowing & Lending Obligation
  (CBLO)
        q
  – Unique Product in the World
  – Trading, Clearing & Settlement 
  – Guaranteed settlement
  – Accounts for more than 50% of the total money 
    market
  – Efficient Price Discovery
  – Sets the rates for other short term markets
       Facilitator in Growth…..4
       Facilitator in Growth…..4
  ATM Transactions
• ATM Transactions
  – Inter‐bank settlement of ATM transactions 
    through National Financial switch
    through National Financial switch
 Facilitator in Growth…..5
 Facilitator in Growth…..5
• Expertise
  – Developed and Managing the G‐Secs and T‐
    bills trading platform NDS‐OM of RBI 
       Anonymous Order Matching System
     • Anonymous Order Matching System
     • When Issued Market
          p           g g        gp
  – Developed and Managing dealing platform 
    NDS‐Call of RBI
     • Electronic Negotiation
       Call, Notice & Term
     • C ll N ti & T
  – Auction Module for T‐bills bidding
    IRS/FRA reporting Platform
  – IRS/FRA reporting Platform
     Information Dissemination 
     Information Dissemination
  Availability of Information 
• Availability of Information
• Trade information updates at frequent 
  intervals
  – NDS‐OM/ NDS‐Call/CBLO – Real time
         p            y
  – Comparable Money Market Rates – 30 minutes
  – Consolidated Information for all Market segments 
    – End of day
  – Real time Data feed to 
    Reuters, Bloomberg, Newswire18, Ticker 
    Plant, etc.
    Plant etc
         Development Initiatives
         Development Initiatives
•   Zero Coupon Yield Curve
    Zero Coupon Yield Curve
•   Bond Indices
•     bill di
    T‐bills Indices
•   Benchmark Rates
    – MIBID/MIBOR (twice)
    – CCBID/CCBOR (twice)
    – Spot INR/USD Exchange Rate
         Other CCIL Initiatives
         Other CCIL Initiatives
• Publications
  – Weekly market update
            y
  – Monthly News Letter
  – Yearly Factbook
  ISO/ICE 27001:2005 Certified for Data Security
• ISO/ICE 27001:2005 Certified for Data Security
• Training
    2340 officers from banks have been provided 
  – 2340 ffi      f     b k h        b     id d
    training support in last 2 years
               Way Forward
               Way Forward
  Auction of Dated Securities
• Auction of Dated Securities
• Repo Trading Platform
         kS        f GS
• Buy Back System for GSecs
              Our Contribution
              Our Contribution
  Improved Transparency
• Improved Transparency
• Availability of Information to all at zero or minimum 
  cost
• Huge Savings for Members in terms of Back office 
  cost
• Netting has provided high leverage
                           p y
• Elimination of Counter‐party risk
• Higher level of Trading
  Improved Liquidity in the market
• Improved Liquidity in the market
Thank You
Thank You

								
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