SEBI Extends Deadline for Direct Securities Payout
The Securities and Exchange Board of India (SEBI) has announced an extension for the implementation of direct securities payouts to clients’ demat accounts. Originally set for October 14, the new deadline is now November 11, 2024. This decision follows feedback from the Brokers’ Industry Standards Forum to ensure a smooth transition without market disruptions.
New Rules for Securities Settlement
SEBI’s new rules aim to credit securities directly to investors’ demat accounts after a trade, reducing the role of stockbrokers in the settlement process. Currently, securities are first credited to the broker’s pool account before being transferred to the buyer’s demat account. The new system will enhance operational efficiency and protect clients’ securities.
Changes in Pledge Handling
Under the new regulations, brokers will not handle pledges for underpaid or margin-funded securities. If a client fails to make full payment, the broker will request the Clearing Corporation to record the pledge in the client’s demat account, which will be released once fully paid.
Settlement Timing Adjustments
Once implemented, the settlement payout by exchanges and clearing corporations will occur by 3:30 pm, instead of the previous 1:30 pm on the payout day, which is the day after the trade.
Doubts Revealed
SEBI -: SEBI stands for the Securities and Exchange Board of India. It is a government organization that regulates the stock market in India to protect investors and ensure fair trading.
Direct Securities Payout -: Direct Securities Payout means that when you buy shares or stocks, they will be directly sent to your demat account without going through a stockbroker. This makes the process faster and safer.
Demat Account -: A demat account is like a bank account for your shares and stocks. Instead of holding physical share certificates, you hold them electronically in this account.
Brokers’ Industry Standards Forum -: This is a group of people from the stockbroking industry who come together to discuss and set standards for how brokers should operate. They help make sure everything runs smoothly and fairly.
Pledge Handling Procedures -: Pledge handling procedures are rules about how you can use your shares as a guarantee to borrow money. The new rules will change how this process works to make it safer and more efficient.
Settlement Timings -: Settlement timings refer to the time it takes to complete a trade, meaning when the buyer gets the shares and the seller gets the money. Adjusting these timings can help make trading faster and more reliable.