Direct payout of securities: Zerodha's Nithin Kamath says Sebi's proposal simplifies ops

Currently, when a client buys stock, it gets credited to the broker pool account, and then the broker credits it to the customer. In the new way proposed, the shares will get directly credited to the customer's demat.

"This consultation paper, if implemented, significantly simplifies the DP operations of stock brokers," Kamath said.

"Even without this regulation, we are probably the safest financial market in terms of the security of customer assets, given that everything is in the customer's own demat. This regulation will further enhance that," he added.

The regulator in a discussion paper on Thursday said the should directly credit securities for pay-out to the respective client’s demat account.

In 2001, direct payout to client accounts was already facilitated on a voluntary basis.

The discussion paper proposed that clearing corporations should provide a mechanism for brokers to identify the unpaid securities and funded stocks under the .

Funded stocks held by the broker under the margin trading facility should be held only by way of pledge. For this purpose, the broker would be required to open a separate demat account in which only funded stocks in respect of margin funding should be kept and no other transactions would be permitted. Such funded stocks would be transferred to each client’s demat account followed by creation of an , Sebi said.