For Quick Alerts
For Daily Alerts

SEBI Bars Trading Members From Pledging Certain Securities Of Clients


The Securities and Exchange Board of India (SEBI) has barred trading members from pledging certain securities of clients to banks and NBFCs (non-banking finance companies) even with their authorization.

This would be applicable for clients' securities lying with the Trading Member (TM)/ Clearing Member (CM) in client collateral, client margin trading securities and client unpaid securities accounts.

SEBI Bars Trading Members From Pledging Certain Securities Of Clients

The stricter norms comes against the backdrop of crisis in the NBFC sector. The new requirements will be effective from 1 September.

"Securities lying with TM/CM in client collateral account, client margin trading securities account and client unpaid securities account shall not be permitted to be pledged/transferred to Banks/NBFCs for raising funds by TM/CM," the regulator said in a circular.

Besides, "with regard to securities that have not been paid for in full by the clients (unpaid securities), a separate client account titled - client unpaid securities account - shall be opened by the TM/CM" it added.

The regulator further said all the existing client securities accounts opened by the TM/CM other than pool account, client margin trading securities account and client collateral account shall be wound up on or before 31 August.

The closing of specified accounts as well as opening of clients' unpaid securities accounts need to be reported to respective exchanges / clearing corporation within a given time frame in a prescribed format, it said.

Non-compliance/non reporting shall attract penal action as per the bye-laws of stock exchange.

SEBI also asked exchanges and clearing corporations and depositories to put in place a monitoring mechanism with respect to handling of clients' securities.

Read more about: sebi
Story first published: Friday, June 21, 2019, 11:38 [IST]
Company Search
Get Instant News Updates
Notification Settings X
Time Settings
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more