Sebi proposes direct payout of securities to client's account mandatory
Currently, the clearing corporation credits the payout of securities in the pool account of the broker, who then credits the same to the respective client's demat accounts.
Market regulator Securities and Exchange Board of India (SEBI) on Thursday, May 9, proposed that investors' securities should directly go to their demat accounts.
In its draft circular, the market regulator said, "It has been decided that the process of securities payout directly to the client account shall now be mandatory."
Currently, the clearing corporation credits the payout of securities in the pool account of the broker, who then credits the same to the respective client's demat accounts.
A facility of direct delivery to investors was introduced in February 2001.
Sebi further said that the securities for payout should be credited directly to the respective client's demat account by the clearing corporations.
Moreover, clearing corporations should provide a mechanism for Trading Member(TM)/clearing members (CM) to identify the unpaid securities and funded stocks under the margin trading facility.
In case of any shortages "arising due to inter se netting of positions between clients" -- internal shortages -- Sebi suggested TM or CM should handle such shortages through the process of auction.
Moreover, in such cases, the brokers should not levy any charges on the client over and above the charges levied by the clearing corporations.
In May 2023, Sebi specified various processes for handling of clients' securities with regard to pay-in and payout of securities.
This was to protect clients' securities and to ensure that the stock broker segregates securities of the client or clients so that they are not vulnerable to misuse.
The regulator has sought comments from the public till May 30 on the proposal.
With agency inputs
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Power of Compounding: How many years will it take to reach Rs 3 crore corpus if your monthly SIP is Rs 4,000, Rs 5,000, or Rs 6,000
Power of Compounding: Salary Rs 25,000 per month; is it possible to create over Rs 2.60 crore corpus; understand it through calculations
Reduce Home Loan EMI vs Reduce Tenure: Rs 75 lakh, 25-year loan; which option can save Rs 25 lakh and 64 months and how? Know here
Top 7 Large and Mid Cap Mutual Funds with Best SIP Returns in 5 Years: No. 1 fund has turned Rs 15,000 monthly SIP investment into Rs 20,54,384; know about others
New Year Pick by Anil Singhvi: This smallcap stock can offer up to 75% return in long term - Check targets
12:07 AM IST