The Securities and Exchange Board of India (SEBI) on June 05, 2024, issued the notification regarding the Enhancement of operational efficiency and Risk Reduction-Pay-out of securities directly to client demat account.
The following has been stated namely: -
• Reference is drawn to SEBI “Master Circular for Stock Brokers” dated May 22, 2024
• Para 41.9 of the aforesaid Mater Circular has been amended as follows: -
“41.9. Funded stocks held by the TM/CM under the margin trading facility shall be held by the TM/CM only by way of pledge. For this purpose, the TM/CM shall be required to open a separate demat account tagged ‘Client Securities under Margin Funding Account’ in which only funded stocks in respect of margin funding shall be kept/ transferred, and no other transactions shall be permitted. Such funded stocks shall be transferred to respective client’s demat account followed by creation of an auto-pledge (i.e., without the requirement of a specific instruction from the client) with suitable reason, in favor of ‘Client Securities under Margin Funding Account’.”
• In case of any shortages arising due to inter se netting of positions between clients the following measures shall be taken to streamline the processes of handling of such shortages across the market:
o TM/CM shall handle such shortages through the process of auction as specified by CCs.
o In such cases, the brokers shall not levy any charges on the client over and above the charges levied by the CCs
• The processes specified shall not be applicable to clients having arrangements with custodians registered with SEBI for clearing and settlement of trade
• The implementation standards shall be formulated by the Broker’s Industry Standards Forum (on a pilot basis), under the aegis of the stock exchanges and in consultation with SEBI by August 05, 2024.
The provisions of this circular shall come into force with effect from October 14, 2024
[Notification No. SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/75]
