Sebi mandates direct transfer of securities by clearing corporations to Demat accounts

This facility of direct transfer has already been available since February 1, 2001, on a voluntary basis and this has now been made mandatory.

The market regulator said it was done after extensive deliberations with the , clearing corporations (CCs) and depositories. Sebi has decided that "the securities for pay-out shall be credited directly to the respective by the CCs," the circular said.

Moreover, clearing corporations should provide a mechanism for trading members (TM) or clearing members (CM) to identify the unpaid securities and funded stocks under the facility.

In case of any shortages "arising due to inter se netting of positions between clients" -- internal shortages -- Sebi suggested TM or CM should handle such shortages through the process of auction.

Moreover, in such cases, the brokers should not levy any charges on the client over and above the charges levied by the clearing corporations.

In May 2023, Sebi specified various processes for handling of clients' securities with regard to pay-in and pay-out of securities. This was to protect clients' securities and to ensure that the stock broker segregates securities of the client or clients so that they are not vulnerable to misuse.

In another development, the capital proposed to enhance the threshold for the basic service Demat account (BSDA) to Rs 10 lakh from the current Rs 2 lakh in a bid to boost the participation of retail investors in the securities market.

A basic service Demat account, or BSDA, is a more basic version of a regular demat account. The facility was introduced by Sebi in 2012 for reducing the burden of demat charges on investors with small portfolios.

At present, an individual can hold debt securities worth up to Rs 2 lakh and other than debt securities worth up to Rs 2 lakh in a single demat account to be eligible for BSDA.

In order to further boost participation in the securities market and to facilitate ease of doing investments, the facility of BDSA has been comprehensively reviewed, Sebi said in its consultation paper.

(Inputs from Agencies)

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