A stockbroking firm has deposited shares as collateral margin with a clearing corporation (like NSE Clearing Ltd.) to settle trades on behalf of multiple clients.
CS Professional · Insolvency and Bankruptcy - Law and Practice · PYQS · June 2026
A stockbroking firm has deposited shares as collateral margin with a clearing corporation (like NSE Clearing Ltd.) to settle trades on behalf of multiple clients.
Answer & Explanation:
When the broker goes into liquidation, these collateral assets cannot be used for liquidation. Assets in security collateral held by financial services providers are subject to netting and set-off in multi-lateral trading or clearing transactions and hence these shall not be used for recovery in the liquidation [Section 36(4)(b) of IBC].
Topics: Insolvency and Bankruptcy Code, 2016
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