Sebi Proposes To Mandate Direct Payout Of Securities To Client’s Account
This is to protect clients' securities and to ensure that the stock broker segregates securities of the client to avoid misuse, says Sebi
In a move to enhance operational efficiency and reduce risk to client’s securities, Securities and Exchange Board of India (Sebi) has proposed to mandate direct payout of securities to the client account.
Presently, the clearing corporation credits the payout of securities in
the pool account of the broker, who then credits the same to the respective client demat accounts.
Further, a facility of direct delivery to investors was introduced in 2001.
“This is to protect clients' securities and to ensure that the stock broker segregates securities of the client so that they are not vulnerable to misuse,” said Sebi in a circular.
Sebi further said that it had a discussion with the stock exchanges, clearing corporations (CCs) and depositories.
Hence, CCs shall provide a mechanism for Trading Member (TM)/Clearing Members (CM) to identify the unpaid securities and funded stocks under the margin trading facility.
Sebi further noted that 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.
