LPCC
AND CDMDF - ECONOMY
News:
Govt. allows Indian
companies to list on foreign exchanges through IFSC
What's
in the news?
● Union
Finance & Corporate Affairs Minister Nirmala Sitharaman said that Indian
companies can now list their shares on foreign exchanges operating at GIFT
City-based International Financial Services Centre (IFSC) in Gujarat.
Limited
Purpose Clearing Corporation:
● The
Finance Minister was in Mumbai to inaugurate a Limited Purpose Clearing Corporation (LPCC) mechanism called AMC Repo
Clearing Ltd. (ARCL) and the Corporate Debt Market Development Fund (CDMDF) which
will help in the development of a vibrant corporate bond market in India.
Objective:
● The
LPCC has been set up with the purpose of clearing and settling corporate bond
repo transactions and to develop an active repo market.
Significance:
● Improve liquidity in the underlying
corporate bond market.
● Allow
market makers to access cost-effective funding for their inventory.
● Allow
bondholders to meet their short term liquidity needs without having to
liquidate their assets.
● Allow
entities with short term surpluses to deploy their funds in a safe and
efficient manner.
Corporate
Debt Market Development Fund (CDMDF):
● In
times of market dislocation, CDMDF on its part with access to ₹33,000 crore
capital, will purchase and hold eligible corporate debt securities from
participating investors (i.e., specified debt-oriented MF schemes to begin
with) and sell as markets recover.
● The
Scheme will act as a key enabler for facilitating liquidity in the corporate
debt market and help quick response in times of market dislocation.