Sebi suggests transferring securities directly to a client’s demat account, here’s why

Investor securities should be sent straight to their demat account, according to a proposal from the market regulator.


The stocks and Exchange Board of India (Sebi) has proposed that this be made mandatory in a draft circular dated May 9 to guarantee that the stock broker segregates the client’s or clients’ stocks so that they are not susceptible to misuse.

Since February 1, 2001, this facility has been made available on an optional basis. However, the regulator has suggested that it become required for securities to be paid out directly to client accounts.

Margin-trading facility allows people to buy stocks by paying just a portion of the total value.

According to the circular, the regulator discussed this matter in-depth with Depositories, Clearing Corporations (CCs), and Stock Exchanges. It further stated that the suggestion was also discussed with members from the industry in the Intermediary Advisory Committee and Broker’s Industry Standards Forum (ISF) meetings.

According to the framework, the following actions will be taken to expedite the handling of shortages throughout the market in the event that they result from clients interseneting positions, or internal shortages:In such instances, the brokers shall not impose any additional fees on the client beyond those imposed by the CCs. TM/CM will address such shortages through the auction procedure as directed by the CCs.