Markets regulator Sebi has issued a consultation paper on the treatment of interest income earned by the clearing corporations from cash collaterals from clearing members and upstreamed client funds. Sebi had previously mandated the upstreaming of all client funds to Clearing Corporations (CCs) at the end of the day, allowing these funds to be upstreamed only in the form of cash, fixed deposit liens, or mutual fund overnight scheme pledges. In its consultation paper, the regulator noted that clearing corporations have been holding substantial cash collaterals from Clearing members (CMs) towards settlement obligations and margin money, investing or deploying these funds to earn interest or income. However, the collaterals held by CCs, are not owned by them and are instead held in a fiduciary capacity as per regulatory requirements. To review the existing practice of interest or income earned by CCs on the cash collaterals received from CMs and upstreamed clients' funds, the matter w