Sebi mandates UPI-based block mechanism, 3-in-1 account facility for qualified stock brokers from February 1

In a move aimed at enhancing investor convenience, markets regulator Sebi has directed qualified stock brokers (QSBs) to provide two new options for trading starting February 1, 2025. The new options include a UPI-based block mechanism for secondary market trading or a three-in-one trading account facility, which integrates a savings account, demat account, and trading account into one solution.

This directive, outlined in a circular released by Sebi, comes after the board approved the proposal in late September. It mandates that QSBs, in addition to the current modes of trading, must offer either the UPI-based block mechanism or the three-in-one account facility to their clients.

Under the UPI block mechanism, clients will be able to trade in the secondary market using blocked funds from their bank accounts, eliminating the need to transfer funds upfront to the trading member. Meanwhile, the three-in-one account facility allows clients to have their funds in a savings account, earning interest on the balance, while also linking it to their trading and demat accounts.

Sebi’s initiative aims to provide greater flexibility and convenience to investors, enabling them to manage their funds more efficiently. The new measures will be effective from February 1, 2025, and will offer clients the option to either continue with the existing facility or opt for the new options.

Qualified stock brokers (QSBs) are selected based on factors such as the size and scale of their operations, number of active clients, total client assets, and trading volume.