Investors will soon have the option to block securities on their respective demat accounts for any sale transaction.
In a circular issued on Friday, market regulator Sebi said the new mechanism would be available from August 1.
This is linked to the early pay-in (EPI) system where a party meets the obligation before the designated due date. In such cases, margins need not be collected from the party.
With the block mechanism, shares of a client intending to make a sale transaction will be blocked in the client’s demat account in favour of the clearing corporation concerned.
If the sale transaction is not executed, the shares will remain in the client’s demat account and will be unblocked at the end of the trading day.
The proposed facility is optional and the EPI mechanism will also continue, Sebi said.
The watchdog’s latest decision comes after it received representations from clients undertaking sale transactions.
Depositories and clearing corporations will have to put in place an appropriate system to make available the block mechanism, Sebi added.
The securities lying in a demat account will be blocked either by the client using the depository’s online system or eDIS mandate or through the depository participant based on physical DIS (delivery instruction slip) given by the client or the power of attorney (PoA) holder.
