SEBI issues a circular on the Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for transfer of securities towards deliveries/settlement obligations and pledging/re- pledging of securities

Oct 06, 2022 | by TeamLease RegTech Legal Research Team

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Secretarial ComplianceThe Securities Exchange Board of India (SEBI) on October 06, 2022, issued a circular on the Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for the transfer of securities towards deliveries/settlement obligations and pledging/re-pledging of securities with reference to SEBI circular no. SEBI/HO/MIRSD/DoP/P/CIR/2022/44 dated April 04, 2022. 

The following amendments have been stated:

• Para 3 of the above-mentioned circular has been amended: 

“In  order  to  make  the  process  more  transparent  and  simpler,  the following conditions shall be made part of a separate document viz. ‘Demat Debit and Pledge Instruction’(DDPI)(Annexure-A):

3.1.1 Transfer of securities held in the beneficial owner accounts of the client towards Stock  Exchange related deliveries/settlement obligations arising out of trades executed by clients on the Stock Exchange through the same stock broker.

3.1.2 Pledging/ re-pledging of securities in favour of trading member (TM)/ clearing member (CM) for the purpose of meeting margin requirements of the clients in connection with the trades executed by the clients on the Stock Exchange. 

3.1.3 Mutual Fund  transactions  being  executed  on  stock  exchange  order entry  platforms  and  which  shall  be  in  compliance  with  SEBI  circulars SEBI/HO/IMD/IMD-I  DOF5/P/CIR/2021/634  dated  October  04,  2021, SEBI/HO/IMD/IMD-I  DOF5/P/CIR/2021/635  dated  October  04,  2021, and SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/29 dated March 15, 2022, or any other circular which may be issued in this regard; and

3.1.4 Tendering shares in open offers which shall be in compliance with SEBI circular SEBI/HO/CFD/DCR-III/CIR/P/2021/615 dated August 13, 2021 or any other circular which may be issued in this regard.

The DDPI shall serve the same purpose of PoA and significantly mitigate the misuse  of  PoA.  The use  of  DDPI  shall  be  limited  only  for the  purposes  as mentioned in paragraphs 3.1.1, 3.1.2, 3.1.3 and 3.1.4.”

• Para 8 of the above-mentioned circular has been amended:

“Securities transferred on the basis of the DDPI provided by the client shall be credited to client’s TM pool  account/CM pool  account/demat  account  of clearing  corporation,  as  the  case  may  be. The  DDPI  provided  by  the  client shall be registered in the demat account of the client by TM /CM. Stock Exchanges and Depositories shall ensure that stock broker/stock broker and depository participant providing DDPI facility, has enabled its clients to revoke/cancel the DDPI provided by them.”

• Para 9 of the above-mentioned circular has been amended:

“For the clients who issue the DDPI to stock broker/stock broker and depository participant, the following provisions of the SEBI circulars issued with respect to PoA shall stand replaced with DDPI:

9.1 Paragraphs 4.2.1 and 4.2.2 of SEBI circular no. SEBI/HO/MIRSD/DOP/CIR/P/2020/158  dated  August  27,  2020,  and Paragraphs   1(i)   and 1(ii)   of Annexure to the   SEBI   circular   no. CIR/MRD/DMS/13/2010   dated   April   23,   2010,   with   effect   from September 1, 2022.

9.2 Paragraph 1(iii) to the extent applicable for Mutual Fund transactions and tendering shares in open offers, of Annexure to the SEBI circular no. CIR/MRD/DMS/13/2010 dated April 23, 2010, with effect from November 18, 2022.”

In Annexure A – Demat Debit and Pledge Instruction has been mentioned. 

This circular will be applicable from November 18, 2022

Disclaimer – Kindly find the Annexure in the provided Link/Document. 

[Circular No. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/137]


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