Enhancement of operational efficiency and Risk Reduction - Pay-out of securities directly to client demat account
Summary
This circular mandates the direct payout of securities to client demat accounts by Clearing Corporations, replacing the previous pooled method. It establishes specific procedures for handling unpaid securities and funded stocks under margin trading facilities. The provisions exclude clients with SEBI-registered custodians and become effective from October 14, 2024.
Text
It has been decided that the process of securities payout directly to the client account shall now be mandatory.
The securities for pay-out shall be credited directly to the respective client’s demat account by the CCs.
CCs shall provide a mechanism for Trading Member(TM)/Clearing Members (CM) to identify the unpaid securities and funded stocks under the margin trading facility.
With regard to unpaid securities, the processes as specified at para 45 of SEBI “Master Circular for Stock Brokers” dated May 22, 2024 shall be applicable.
Funded stocks held by the TM / CM under the margin trading facility shall be held by the TM / CM only by way of pledge... Such funded stocks shall be transferred to respective client’s demat account followed by creation of an auto-pledge...
TM/CM shall handle such shortages through the process of auction as specified by CCs.
In such cases, the brokers shall not levy any charges on the client over and above the charges levied by the CCs.
The processes specified at para 4 above, shall not be applicable to clients having arrangements with custodians registered with SEBI for clearing and settlement of trades.
The provisions of this circular shall come into force with effect from October 14, 2024.
The implementation standards shall be formulated by the Broker’s Industry Standards Forum (on a pilot basis), under the aegis of the stock exchanges and in consultation with SEBI by August 05, 2024.
bring the provisions of this circular to the notice of their members / participants and also disseminate the same on their websites;
put in place appropriate systems and procedures to ensure compliance of the provisions of this circular;
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Source: SecMarx — Enhancement of operational efficiency and Risk Reduction - Pay-out of securities directly to client demat account. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.