Block Mechanism in demat account of clients undertaking sale transactions - Clarification
Summary
This circular clarifies that the mandatory block mechanism for Early Pay-In transactions does not apply to clients with SEBI-registered custodians. It mandates Depositories and Clearing Corporations to implement appropriate systems for compliance. Stock Exchanges and Depositories are directed to amend regulations, disseminate information, and report implementation status.
Text
SEBI introduced block mechanism in demat account of clients undertaking sale transactions on optional basis for ease of operations in Early Pay-in mechanism.
The facility of block mechanism shall be mandatory for all Early Pay-In transactions.
The block mechanism shall not be applicable to clients having arrangements with custodians registered with SEBI for clearing and settlement of trades.
All other provisions in the SEBI circular dated August 18, 2022 and SEBI circular dated July 16, 2021 shall continue to remain applicable.
Depositories and Clearing Corporations shall put in place appropriate systems to ensure compliance of the provisions of this circular.
Stock Exchanges and Depositories shall bring the provisions of this circular to the notice of their members / participants and also disseminate the same on their websites.
Stock Exchanges and Depositories shall make necessary amendments to the relevant Bye-laws, Rules and Regulations for the implementation of the above decision.
Stock Exchanges and Depositories shall communicate to SEBI the status of the implementation of the provisions of this circular on November 15, 2022 and in their Monthly Development Reports.
This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Section 19 of the Depositories Act, 1996.
Source: SecMarx — Block Mechanism in demat account of clients undertaking sale transactions - Clarification. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.