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CS Professional · IFSCA - Regulations, Listing and Compliances · India International Bullion Exchange (IIBX)

Meridian Clearing Ltd, an IIBX-recognised clearing corporation, notices that a Trading Member-cum-Client has failed to fund its pay-in on settlement day, while vault receipts for the gold are already issued in its name on a prior trade. Which approach best reflects the compliance logic of the IIBX settlement structure?

The clearing corporation handles settlement default using its risk management and default rules, withholding release of receipts and margins tied to the unpaid obligation until it is cleared. The Vault Manager and customs authorities do not decide on defaults, and later civil recovery is not the primary mechanism.

  1. AThe vault receipt is released to the defaulter and recovery is pursued later in civil court
  2. BThe clearing corporation applies its default and risk management rules, so receipts and margins linked to the unsettled obligation are not released until the obligation is metCorrect
  3. CThe Vault Manager decides independently whether to release the gold
  4. DCustoms authorities settle the default from duty collected

Explanation

Settlement guarantee rests on the clearing corporation's rules on margins and default handling. Delivery against unsettled obligations is controlled through these rules, linking pay-in and delivery. The Vault Manager and customs have no role in deciding settlement default.

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