SEBI modifies the SOP leading to default in repayment of funds to clients by TM/CM

Circular no. SEBI/HO/MIRSD/DPIEA/P/CIR/2022/72, dated 27.05.2022

SEBI vide circular no. SEBI/HO/MIRSD/DPIEA/CIR/P/2020/115 dated July 1, 2020 specified the Standard Operating Procedure enumerating the steps to be taken by the Stock Exchanges (SEs), Clearing Corporations (CCs) and Depositories in cases where SE/CC is of the view that Trading Member / Clearing Member is likely to default in the repayment of funds or securities to its clients.

The SEBI, in consultation with the Market Infrastructure Institutions and in order to provide equitable distribution of funds amongst investors has decided to modify the Standard Operating Procedure in cases of Trading & Clearing Member leading to default in the repayment of funds or securities to its clients.

As per the modified norms, the unencumbered deposits available with the SEs/CCs after adjusting the dues of the SE/CC and maintaining the minimum Base Capital (BMC), shall be utilised for settling the credit balance of investors.

Further, the investors having a credit balance up to Rs. 25 lakh shall be paid in full to all the investors subject to funds availability and the investors having a credit balance of more than Rs. 25 lakh shall be paid on a pro-rata basis from the remaining funds.

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