The Securities and Exchange Board of India (Sebi) has mandated that investors should receive their securities directly to their demat account from clearing corporations. The move is aimed to protect clients’ securities and to ensure that the stock broker segregates securities of the clients so that they are not vulnerable to misuse.
At present, the securities received in payout are pooled by the broker and then credited to the respective client demat accounts.
“In our current process, for all positions without dues we immediately transfer to beneficiary account of clients.The new process will be better, clearing corporation will directly crediting to the clients based on dues report submitted,” said A Balakrishnan, executive director, Geojit Financial Services.
“This will eliminate one leg and is a good move from the regulator. Auto pledge for funded stocks will give ease of doing MTF (margin trade financing) iterative steps will be reduced,” Balakrishnan said.
The new rule would come into effect from October 14. Earlier, direct payout to client accounts was done on a voluntary basis.
The regulator in the past had found that at times brokers misuse clients securities for their own purpose.
Sebi said clearing corporations should provide a mechanism for brokers to identify the unpaid securities and funded stocks under the margin trading facility.
