The Securities and Exchange Board of India (SEBI) on January 12, 2024, issued a circular regarding the Ease of Doing Investments by Investors-Facility of voluntary freezing/blocking of Trading Accounts by Clients.
Many times, investors raise issues of suspicious activities in their trading accounts and thus, there is an urgent need to address the situation of having a facility for blocking trading accounts as it is available for blocking ATM Cards and Credit Cards.
According to consultation with the Brokers’ Industry Standards Forum (ISF) and to enhance ease of doing business and ease of investment, it has been decided that the framework for Trading Members to provide the facility of voluntary freezing/blocking the online access of the trading account to their clients on account of suspicious activities shall be laid down on or before April 01, 2024, by the ISF, under the aegis of stock exchanges, in consultation with SEBI.
The following points will be covered under the said guidelines:
• Detailed policy for voluntary freezing/blocking the online access of the trading account of the client including the following:
o Modes through which a client can request/communicate to the Trading Member for voluntarily blocking the trading accounts;
o Issuing of acknowledgement to the clients on receipt of the message;
o The time period within which the request shall be processed and the trading account shall be frozen/blocked.
• Action to be taken by the Trading Member according to the receipt of the request for freezing/blocking of the trading account;
• Process for re-enabling the client for trading/transfers;
• Intimation to be provided by the trading member to the clients w.r.t. introduction of the facility to block the trading accounts.
The Stock Exchanges shall ensure that the guidelines so issued under the aforesaid Framework are implemented by Trading Members with effect from July 01, 2024. Stock Exchanges shall also put in place an appropriate reporting requirement by Trading Members to enforce the above system. A compliance report to this effect shall be submitted to SEBI by Stock Exchanges latest by August 31, 2024.
[Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2024/4]
