New Delhi: To increase operational efficiency and reduce the risk of securities of customers, market regulator SEBI on Thursday proposed to make the process of direct payment of such securities into the customer's account mandatory.
At present, the clearing corporation deposits the securities payments into the pool account of the broker, who then credits it into the demat accounts of the respective client.
In addition, the facility for direct delivery to investors was introduced in February 2001.
"It has been decided that the process of securities payment directly into the customer's account will now be mandatory," the Securities and Exchange Board of India (SEBI) said in its consultation paper.
The securities should be credited directly into the demat account of the respective customer by the clearing corporations for payment.
Further, clearing corporations should provide a mechanism for trading members (TMs)/clearing members (CMs) to identify unpaid securities and fund stocks under the margin trading facility.
In case of any shortfall “arising due to interconnectedness of positions among clients” – internal shortfall – SEBI suggested that the TM or CM should handle such shortfall through the auction process.
Furthermore, in such cases, brokers should not charge the customer any fees other than the fees charged by the clearing corporation.
In May 2023, SEBI specified various procedures for handling securities of clients with respect to redemption and payment of securities.
This was to protect the securities of clients and ensure that the stock segregated the securities of the client or clients so that they were not vulnerable to abuse.
The regulator has sought public comments on the proposal till May 30.
At present, the clearing corporation deposits the securities payments into the pool account of the broker, who then credits it into the demat accounts of the respective client.
In addition, the facility for direct delivery to investors was introduced in February 2001.
"It has been decided that the process of securities payment directly into the customer's account will now be mandatory," the Securities and Exchange Board of India (SEBI) said in its consultation paper.
The securities should be credited directly into the demat account of the respective customer by the clearing corporations for payment.
Further, clearing corporations should provide a mechanism for trading members (TMs)/clearing members (CMs) to identify unpaid securities and fund stocks under the margin trading facility.
In case of any shortfall “arising due to interconnectedness of positions among clients” – internal shortfall – SEBI suggested that the TM or CM should handle such shortfall through the auction process.
Furthermore, in such cases, brokers should not charge the customer any fees other than the fees charged by the clearing corporation.
In May 2023, SEBI specified various procedures for handling securities of clients with respect to redemption and payment of securities.
This was to protect the securities of clients and ensure that the stock segregated the securities of the client or clients so that they were not vulnerable to abuse.
The regulator has sought public comments on the proposal till May 30.
