Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for transfer of securities towards deliveries / settlement obligations and pledging / re-pledging of securities
Summary
This circular introduces the Demat Debit and Pledge Instruction (DDPI) as a simplified alternative to Power of Attorney for specific settlement and pledging purposes. It mandates that DDPI be used for transferring securities for delivery obligations and for pledging securities to meet margin requirements, effectively replacing PoA for these functions from July 1, 2022. The document ensures clients cannot be compelled to execute DDPI or denied services if they refuse, while directing depositories and exchanges to implement necessary procedural changes.
Text
PoA is optional and should not be insisted upon by the stock broker / stock broker depository participant for opening of the client account.
For transfer of securities held in the beneficial owner account of the client towards Stock Exchange related deliveries / settlement obligations arising out of trades executed by such a client on the Stock Exchange through the same stock broker.
For pledging / re-pledging of securities in favour of the trading member (TM) / clearing member (CM) for the purpose of meeting margin requirements of the client in connection with the trades executed by such a client on the Stock Exchange.
The two conditions as specified in paragraphs 1.2.1 and 1.2.2 shall be made part of a separate document viz. ‘Demat Debit and Pledge Instruction’ (DDPI)... under which the clients shall explicitly agree to authorize the stock broker/stock broker and depository participant to access their BO account for the limited purpose of meeting pay-in obligations for settlement of trades executed by them.
Hence, with the implementation of this circular, PoA shall no longer be executed for the conditions specified in paragraph 1.2.1 and 1.2.2.
The DDPI shall be indexed as part of the Voluntary Documents... and shall be executed only if the client provides his/her explicit consent for the same... The DDPI can be digitally signed by the clients.
Thus, the stock broker/stock broker and depository participant shall not directly / indirectly compel the clients to execute the DDPI or deny services to the client if the client refuses to execute the DDPI.
For the execution of the DDPI for fulfilling delivery / settlement obligations... the Depositories shall ensure matching and confirming the transfer of securities with client-wise net delivery obligation arising from the trade executed on the exchange...
Securities transferred on the basis of the DDPI provided by the client shall be credited only to client’s trading member pool account... Stock Exchanges and Depositories shall ensure that stock broker/stock broker and depository participant providing DDPI facility, has enabled its clients to revoke / cancel the DDPI provided by them.
For the clients who issue the DDPI to stock broker/stock broker and depository participant, the following provisions of the SEBI circulars issued with respect to PoA shall stand replaced with DDPI with effect from July 01, 2022: Paragraphs 4.2.1 and 4.2.2 of SEBI circular no. SEBI/HO/MIRSD/DOP/CIR/P/2020/158 dated August 27, 2020, and Paragraphs 1(i) and 1(ii) of Enclosure to the SEBI circular no. CIR/MRD/DMS/13/2010 dated April 23, 2010.
The word “Power of Attorney (PoA)” in the SEBI circular no. SEBI/HO/MIRSD/DOP/CIR/P/2020/28 dated February 25, 2020 and SEBI/HO/MIRSD/DOP/P/CIR/2021/595 dated July 16, 2021 shall be substituted as “Power of Attorney (PoA) (for the existing PoAs) or Demat Debit and Pledge Instruction (DDPI), as the case maybe”.
Stock Exchanges and Depositories are directed to bring the provisions of this circular to the notice of their members / participants and also disseminate the same on their websites;
You have read the preview. Create a free account to read the full document and see every order that applied it.
Free accounts include 10 searches/day with full text access.
Source: SecMarx — Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for transfer of securities towards deliveries / settlement obligations and pledging / re-pledging of securities. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.