Validation of Instructions for Pay-In of Securities from Client demat account to Trading Member (TM) Pool Account against obligations received from the Clearing Corporations
Summary
This circular mandates that depositories must validate pay-in instructions against client-wise net delivery obligations received from Clearing Corporations before executing securities transfers. It establishes a block mechanism for early pay-in transactions and defines procedures for handling matched, unmatched, or partially matching transfer instructions based on specific security details. The provisions apply to all recognized stock exchanges, clearing corporations, and depositories to protect client securities and ensure proper segregation.
Text
Depositories, prior to executing actual transfer of the securities for Pay-In from client demat account to TM Pool account, shall validate the transfer instruction received through any of the available channels for the purpose of Pay-in... against the client-wise net delivery obligation received from CCs.
For Early Pay-In transactions, the existing facility of Block mechanism shall continue.
Depositories receive the debit instruction for the purpose of Pay-In, given either by client himself using depository’s online system or eDIS mandate or through depository participant based on physical DIS / digitally signed DIS given by client or POA / DDPI holder.
CCs shall provide client-wise net delivery obligations on T day to the depositories.
Based on the obligation data provided by CCs, Depositories shall validate the depository transfer instruction details with CC obligation details based on UCC, TM ID, CM ID, Exchange ID, ISIN, quantity, settlement details etc.
In case of matching of all details like UCC, TM ID, CM ID, ISIN, quantity, settlement details etc. of the transfer instruction with the obligation data, the instruction shall be carried out by the Depositories and such securities will be debited from client’s demat account and credited to linked TM Pool account on or before the settlement day.
In case of discrepancies in details like UCC, TM ID, CM ID, ISIN etc., between instruction and obligation, such transfer instructions will be rejected by the depositories.
If the quantity in instruction is less than the obligation provided by CC, then the instruction will be carried out by the depositories.
If the quantity in instruction is more than the obligation provided by CC, then the instruction will be partially processed by the depositories (i.e., upto the matching obligation quantity).
This process shall not be applicable to clients having arrangements with custodians registered with SEBI for clearing and settlement of trades.
Depositories and CCs shall put in place appropriate systems to ensure compliance of the provisions of this circular.
This circular shall be applicable with effect from November 25, 2022.
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Source: SecMarx — Validation of Instructions for Pay-In of Securities from Client demat account to Trading Member (TM) Pool Account against obligations received from the Clearing Corporations. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.