Securities, markets regulator Sebi on Wednesday decided to make the process of direct payout of such securities to the client’s account mandatory — to enhance operational efficiency and reduce the risk to clients.
This will become effective from October 14, the Securities and Exchange Board of India (Sebi) said in a circular.
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.
After extensive deliberations with the stock exchanges, clearing corporations (CCs) and depositories, Sebi has decided that “the securities for pay-out shall be credited directly to the respective client’s demat account by the CCs”.
Moreover, clearing corrporations should provide a mechanism for trading member(TM) or 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 setting of positions between clients” — internal shortages — Sebi suggested TM or CM should handle such shortages through the process of auction.
FPI leeway
Sebi has relaxed timelines for the disclosure of material changes by foreign portfolio investors.
The regulator categorised material changes notified by FPIs into two groups. Type I group includes changes that require FPIs to seek fresh registration, or which affect any privileges or exemptions available to such foreign investors and Type II includes other material changes.
Sebi said that FPIs are required to report Type I changes within seven working days and provide supporting documents within 30 days and Type II changes require notification and supporting documents within 30 days. At present, FPIs get up to seven working days to submit information.
