Limited Purpose Clearing Corporation

About Limited Purpose Clearing Corporation: 

• It is an entity established to undertake the activity of clearing and settlement of repo transactions.
• The mechanism will be used
  • To settle disputes between clearing members;
  • Contention between the clearing members and their clients
  • Differences between the LPCC and its vendors
  • Disputes between clearing members or its clients and the LPCC.
• The disputes arising between clearing members of the LPCC will be settled by conciliation and/or by an arbitration panel consisting of three clearing members, other than the clearing members who are party to the dispute.
• The decision of the arbitration panel would be final and binding on the parties.
• In case a clearing member or the LPCC is not satisfied then the disputes would be resolved under the procedure laid down in the Payment and Settlement Systems Act, 2007.

 

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Q1) What is Repo?

Repo is short for "repurchase agreement." It is a financial transaction in which one party sells a security (usually a bond) to another party with a promise to repurchase it at a later date at an agreed-upon price.

Source: Market regulator Sebi comes out with dispute resolution mechanism for LPCC