SEBI Mandates Direct Pay-Out of Securities by Clearing Corporation to Demat Accounts of Clients

Circular No. SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/75, Dated: 05.06.2024

Presently, securities received in payout are pooled by the broker before being credited to the respective client demat accounts. However, direct payouts to client accounts were already made available on a voluntary basis as per the circular dated 01.02.2001. It has now been decided that the process of direct securities payout to client accounts will become mandatory.

The clearing corporation shall provide a mechanism for Trading Members (TM)/Clearing Members (CM) to identify 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 i.e., internal shortages, the following measures shall be implemented: Trading Members (TM) and Clearing Members (CM) must manage such shortages through an auction process as specified by Clearing Corporations (CCs). Additionally, brokers are prohibited from levying any charges on the client beyond those imposed by the CCs.

The provisions of this circular will come into effect on 14.10.2024. 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.

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