SEBI extends deadline to implement direct securities payout to client demat accounts

Market regulator Securities and Exchange Board of India (SEBI) on Thursday extended an earlier deadline to implement a system mandating the direct payout of securities to clients' demat accounts. This rule will take effect from November 11 now, instead of the earlier deadline of October 14. Additionally, the timings of the receipt of shares in client accounts will also be changed under the 'T+1' system of settlements.  Such shares will be credited to the accounts at 3:30 pm on the same day, instead of the existing timing of 1:30 pm the next day of settlement. 

"The final operational guidelines/implementation standards were to be issued by CCs (clearing corporations) to the market by August 05, 2024. However, the said guidelines were issued by CCs at the end of August 2024 on account of extensive consultation in Brokers’ Industry Standards Forum (Brokers’ ISF)," read a SEBI circular dated October 10. 

SEBI also stated that "based on the review meeting held by SEBI with MIIs and based on representation received from Brokers’ ISF, it has been decided that the circular shall come into effect from November 11, 2024, in order to ensure smooth implementation of pay-out of securities directly to the client’s demat account, without any disruption to the markets players and investors".

Under the new direct-payout system, clearing corporations will transfer securities straight to the accounts of investors. This is in contrast to the current system, where brokers hold securities in a pool before sending them to clients. 

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