To curb possible misuse of investors’ money by brokers, Sebi has proposed to stop trading members and clearing members from retaining any part of client funds at the end of day and move the entire funds to the clearing corporation on the same day.
At present, when an investor places funds with a broker a portion of such money is retained by the broker, and a part by the clearing member, before passing the remaining amount to the clearing corporation.
In its consultation paper, the regulator has proposed mandating daily upstreaming of all investor funds from stock brokers and clearing members (CMs) to Clearing Corporations (CCs). Investor funds in surplus of exchange margin requirements may in turn be placed by CCs in very low-risk and liquid overnight money market instruments.
The proposal also considers independent daily confirmation to investors around their daily funds position in the securities market ecosystem.
While the proposal could reduce the float income implicitly enjoye
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