SEBI has issued a consultation paper on “Blocking of Funds for Trading in Secondary Market”. The paper was issued on 17th January, 2023. The objective of the paper is to solicit comments and inputs from stakeholders and members of public on introduction of facility of blocking of funds for trading in secondary markets.
This facility will provide the following benefits:
- Allow investors to trade in secondary market based on blocked funds in one’s bank account thereby eliminating the need to transfer funds to stock broker
- Provide client level settlement visibility to Clearing Corporation (CC) by direct settlement of funds and securities between client and CC.
- Safeguard clients’ assets from misuse/ brokers’ default and consequent risk to their capital
In view of the significant developments in the payment mechanisms, it was felt that the Reserve Bank of India (RBI) approved Unified Payments Interface (UPI) Mandate service of single block and multiple debits can be integrated with the secondary markets to provide a block mechanism. Through this mechanism clients will be able to block funds in their bank account for trading in secondary market, instead of transferring them up front to the trading member (TM). This will provide them enhanced protection of cash collateral.
Public comments are invited on this proposal in the format prescribed in this notification. The subject of such communication shall be “Comments on consultation paper on Blocking of Funds for Trading in Secondary Market”.
The comments shall be sent through the following modes:
a. Preferably by email to:
vishals@sebi.gov.in; or apping@sebi.gov.in or
b. By post to the following address:
General Manager, Market Regulations Department, Securities and Exchange Board of India, SEBI Bhavan, Plot No. C4-A, G Block, Bandra Kurla Complex,Bandra (East), Mumbai -400 051
