What is Interoperability among exchanges?
Previously, trades executed on the stock exchange could only be settled and cleared through its subsidiary clearing house, i.e.,
- Trades executed on the NSE could only be settled and cleared through NSE Clearing.
- Trades executed on the BSE could only be settled and cleared through Indian Clearing Corporation Ltd. (ICCL).
As a result, while trading on multiple exchanges, you were required to comply with the margin and capital requirements of each exchange separately. This resulted in high costs and inefficient use of capital.
To do away with this inconvenience caused, SEBI decided to consolidate the clearing and settlement process via Interoperability among exchanges/clearing corporations. This means that Geojit can now settle its clients trades through any clearing corporation, irrespective of the exchange through which the trade was executed, thus lowering margin and capital requirements.
For intraday traders, this translates to being able to square-off trades across exchanges.
For example, 100 shares of HDFC Ltd bought intraday through the NSE can be squared-off on the BSE.
Geojit clears its trades through NSE Clearing