Capital markets regulator Sebi on Thursday said block mechanism facility pertaining to demat accounts will not be applicable for clients having arrangements with custodians for clearing and settling trades.
In order to safeguard investors’ demat accounts, the Securities and Board of India (Sebi) in August said the facility of block mechanism will be mandatory for all early pay-in transactions from November 14.
Currently, the facility is optional for investors.
The early pay-in mechanism is used by traders to reduce their margin obligations.
Under the block mechanism, shares of a client intending to make a sale transaction will be blocked in the client’s demat account in favour of the clearing corporation concerned.
“In view of the representations received from depositories and custodians, it is clarified that the block mechanism shall not be applicable to clients having arrangements with custodians registered with Sebi for clearing and settlement of trades,” the regulator said in
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