Sebi Makes Direct Payout of Securities Mandatory
By Rediff Money Desk, New Delhi May 09, 2024 18:53
Sebi proposes mandatory direct payout of securities to client accounts to enhance efficiency and reduce risk. Clearing corporations will credit securities directly to demat accounts.

New Delhi, May 9 (PTI) To enhance operational efficiency and reduce the risk to clients' securities, markets regulator Sebi on Thursday proposed making the process of direct payout of such securities to the client's account mandatory.
Currently, the clearing corporation credits the pay-out of securities in the pool account of the broker, who then credits the same to the respective client's demat accounts.
Further, a facility of direct delivery to investors was introduced in February 2001.
"It has been decided that the process of securities payout directly to the client account shall now be mandatory," the Securities and Exchange Board of India (Sebi) said in its consultation paper.
The securities for payout should be credited directly to the respective client's demat account by the clearing corporations.
Moreover, clearing corporations should provide a mechanism for Trading Member(TM)/clearing members (CM) to identify the unpaid securities and funded stocks under the margin trading facility.
In case of any shortages "arising due to inter se netting of positions between clients" -- internal shortages -- Sebi suggested TM or CM should handle such shortages through the process of auction.
Moreover, in such cases, the brokers should not levy any charges on the client over and above the charges levied by the clearing corporations.
In May 2023, Sebi specified various processes for handling of clients' securities with regard to pay-in and pay-out of securities.
This was to protect clients' securities and to ensure that the stock broker segregates securities of the client or clients so that they are not vulnerable to misuse.
The regulator has sought comments from the public till May 30 on the proposal.
Currently, the clearing corporation credits the pay-out of securities in the pool account of the broker, who then credits the same to the respective client's demat accounts.
Further, a facility of direct delivery to investors was introduced in February 2001.
"It has been decided that the process of securities payout directly to the client account shall now be mandatory," the Securities and Exchange Board of India (Sebi) said in its consultation paper.
The securities for payout should be credited directly to the respective client's demat account by the clearing corporations.
Moreover, clearing corporations should provide a mechanism for Trading Member(TM)/clearing members (CM) to identify the unpaid securities and funded stocks under the margin trading facility.
In case of any shortages "arising due to inter se netting of positions between clients" -- internal shortages -- Sebi suggested TM or CM should handle such shortages through the process of auction.
Moreover, in such cases, the brokers should not levy any charges on the client over and above the charges levied by the clearing corporations.
In May 2023, Sebi specified various processes for handling of clients' securities with regard to pay-in and pay-out of securities.
This was to protect clients' securities and to ensure that the stock broker segregates securities of the client or clients so that they are not vulnerable to misuse.
The regulator has sought comments from the public till May 30 on the proposal.
Source: PTI
DISCLAIMER - This article is from a syndicated feed. The original source is responsible for accuracy, views & content ownership. Views expressed may not reflect those of rediff.com India Limited.
You May Like To Read
TODAY'S MOST TRADED COMPANIES
- Company Name
- Price
- Volume
- Vodafone Idea L
- 8.79 ( -3.62)
- 26358018
- Quadrant Televenture
- 0.52 ( 0.00)
- 16964278
- Srestha Finvest
- 0.66 (+ 1.54)
- 14050140
- Murae Organisor
- 1.94 (+ 4.86)
- 12219316
- Spright Agro
- 7.37 (+ 4.99)
- 11155199
MORE NEWS
Rapido Announces ESOP Liquidation Program for...
Rapido has launched its first ESOP liquidation program, allowing current and former...

Gold Futures Hit All-Time High at Rs 86,360/10g
Gold prices in India reached a record high of Rs 86,360 per 10 grams on Tuesday, driven...

Devyani International Reports Q3 Loss of Rs...
Devyani International, operator of KFC, Pizza Hut and Costa Coffee in India, reported a...