Naming / Tagging of demat accounts maintained by Stock Brokers
Summary
SEBI mandates that all demat accounts maintained by stock brokers must be appropriately tagged under five specific categories. Untagged accounts face restrictions on credit and debit operations starting from July 1, 2022, and August 1, 2022, respectively. Stock Exchanges and Depositories are directed to ensure compliance and submit reports to SEBI.
Text
stock brokers are required to maintain demat accounts only under the following 5 categories: Proprietary Account, Pool account, Client Unpaid Securities Account, Client Securities Margin Pledge Account, Client Securities under Margin Funding Account
naming proprietary demat accounts of the stock broker as 'Stock Broker – Proprietary Account' is voluntary and accounts which are not tagged would be deemed to be proprietary
All demat accounts of stock brokers which are untagged need to be appropriately tagged by June 30, 2022
Credit of securities shall not be allowed in any demat account left untagged from July 01, 2022 onwards. Credits on account of corporate actions shall be permitted
Debit of securities shall also not be allowed in any demat account left untagged from August 01, 2022
Stock Broker shall obtain permission from Stock Exchanges to allow tagging of such demat accounts from August 01, 2022 onwards. Stock Exchange shall grant such approval within two working days after imposing penalty as per their internal policy
This circular shall not be applicable for the demat accounts which are used exclusively for banking activities by stock brokers which are also banks
Stock Exchanges and Depositories shall coordinate and ensure compliance of this circular by the stock brokers and submit a compliance report to SEBI on July 01, 2022 and August 01, 2022
bring the provisions of this Circular to the notice of their members / participants and also disseminate the same on their websites
make amendments to the relevant Bye-laws, Rules and Regulations, as may be necessary
communicate the status of the implementation of the provisions of this Circular in their monthly development report to SEBI
This Circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of and to regulate the securities markets
Source: SecMarx — Naming / Tagging of demat accounts maintained by Stock Brokers. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.