Description

NSE revises guidelines for collection of overdue amounts and withdrawal of trading facilities for members who fail to pay dues to the Exchange, effective January 1, 2026.

Summary

NSE has revised guidelines for collection of overdue amounts and withdrawal of trading facilities from members who fail to pay dues to the Exchange. The circular replaces the previous framework from May 29, 2001, introducing a structured recovery mechanism with specific timelines and thresholds. Trading members (excluding Banks and Primary Dealers) risk suspension of trading facilities if dues exceeding Rs. 5 lakhs remain unpaid after notices and grace periods. The revised guidelines take effect from January 1, 2026.

Key Points

  • Overdue amounts (more than one month old) will be recovered from excess funds available with NSE Clearing Limited
  • Recovery notice sent if funds unavailable/insufficient for one month and overdue amount exceeds Rs. 1 lakh, with one week payment deadline
  • Withdrawal notice issued if dues exceed Rs. 5 lakhs (for non-Bank/PD members), with additional one week to pay
  • Members can request up to 45 days extension for reconciliation via dl-dom-insti@nse.co.in, subject to Chief Business Development Officer approval
  • Trading facility suspended without further notice if payment not received within timelines
  • Facility restored only upon full payment of dues
  • Guidelines do not apply to Banks and Primary Dealers for withdrawal of facilities

Regulatory Changes

Previous Framework (2001):

  • Governed by NSE/F&A/2571 dated May 29, 2001

Revised Framework (Effective January 1, 2026):

  • Automatic recovery from pay-out for overdues exceeding one month on first day of each month
  • Structured three-tier notice mechanism with defined thresholds:
    • Recovery notice: Overdues > Rs. 1 lakh
    • Withdrawal notice: Overdues > Rs. 5 lakhs (non-Banks/PDs)
  • Formalized extension mechanism: Up to 45 days for reconciliation on case-by-case basis
  • Specific email channel for extension requests: dl-dom-insti@nse.co.in

Compliance Requirements

For All Trading Members (except Banks/PDs):

  • Ensure timely payment of all Exchange dues to avoid overdue status
  • Monitor monthly recovery of overdue amounts from excess funds with NSE Clearing Limited
  • Respond within one week to recovery notices for dues exceeding Rs. 1 lakh
  • Respond within one week to withdrawal notices for dues exceeding Rs. 5 lakhs
  • Submit extension requests via dl-dom-insti@nse.co.in within notice period if reconciliation time needed
  • Clear all outstanding dues promptly to avoid trading facility suspension

For Banks and Primary Dealers:

  • Subject to recovery notices for overdues exceeding Rs. 1 lakh
  • Exempted from trading facility withdrawal provisions

Important Dates

  • December 05, 2025: Circular issued (Ref No: NSE/FA/71664, Circular No: 3/2025)
  • January 1, 2026: Revised guidelines become effective
  • Monthly: Overdue amounts checked on first day of each month for recovery
  • One week: Standard timeline for payment after recovery notice
  • One week: Additional timeline for payment after withdrawal notice
  • Up to 45 days: Maximum extension period for reconciliation (subject to approval)

Impact Assessment

Operational Impact:

  • Trading members must strengthen internal payment tracking and cash flow management to avoid facility suspension
  • Automated recovery from excess funds provides NSE with immediate collection mechanism
  • Structured timeline reduces ambiguity but requires members to maintain adequate funds with NSE Clearing

Financial Impact:

  • Members with cash flow issues face risk of trading suspension if dues exceed Rs. 5 lakhs
  • Extension mechanism provides relief valve for genuine reconciliation issues (up to 45 days)
  • Banks and PDs retain trading access regardless of overdue amounts, maintaining market liquidity

Market Impact:

  • Improved ease of doing business through clear, transparent recovery framework
  • Potential reduction in trading capacity if multiple members face simultaneous suspensions
  • Strengthens Exchange’s financial controls and reduces credit risk from member defaults

Compliance Impact:

  • Members need to update internal procedures for monitoring Exchange dues
  • Finance teams must coordinate with trading desks to prevent unexpected facility withdrawal
  • Reconciliation teams must act promptly within one-week windows or secure extensions proactively

Impact Justification

Critical operational circular affecting all trading members' ability to continue trading if dues remain unpaid. High severity due to potential trading facility suspension for non-compliance with payment obligations.