SC: Hard to Believe Married Woman Was Lured Into Sex by False Marriage Promise; Case Quashed  ||  SC: Properties Acquired by Karta are Presumed to be Joint Hindu Family Assets unless Proven Otherwise  ||  SC: Trial Courts Must Record that Free Legal Aid was Offered to Accused Before Witness Examination  ||  SC: State Government Employees Cannot Claim Dearness Allowance Twice a Year Unless Rules Allow  ||  P&H High Court: Anticipatory Bail on Settlement Can be Revoked if Compromise is Broken  ||  Delhi High Court: Consenting Adults can Choose Life Partners Without Societal or Parental Approval  ||  Cal HC: Excessive Palm Sweating Alone Cannot Render Candidate Medically Unfit for CAPF Appointment  ||  Del HC: Mother's Right to Education and Personal Growth Cannot be Restricted Due To Custody Disputes  ||  SC: Under RTE Act, States Cannot Justify Low Teacher Pay by Citing Centre’s Failure to Release Funds  ||  Supreme Court: While a Child’s Welfare is Paramount, It is Not the Sole Factor in Custody Disputes    

SEBI issues stricter norms to prevent client securities misuse - (25 Feb 2020)

Capital Market

In order to prevent the misuse of client’s securities by broker, the Security and Exchange Board of India (SEBI) has issued a circular tightening the norms. The misappropriation or misuse includes use of one client's securities to meet the exposure, margin or settlement obligations of another client or of the Trading Members (TM) or Clearing Member (CM). The Regulations will come in effect from 1st June, 2020. The Circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Section 12 of the Depositories Act, 1996 read with Regulation 79 of the SEBI (Depositories and Participants) Regulations, 2018 and the relevant Bye Laws of the Depositories clearly enumerate the manner of creating pledge of the dematerialised securities. Any procedure followed other than as specified under the aforesaid provisions of law for creating pledge of the dematerialised securities is prohibited. It is clarified that, an off-market transfer of securities leads to change in ownership and shall not be treated as pledge. Transfer of securities to the demat account of the TM / CM for margin purposes (i.e. title transfer collateral arrangements) shall be prohibited. In case, a client has given a power of attorney in favour of a TM / CM, such holding of power of attorney shall not be considered as equivalent to the collection of margin by the TM / CM in respect of securities held in the demat account of the client.

With effect from June 01, 2020, TM (Trading Member) / CM (Clearing Member) shall accept collateral from clients in the form of securities, only by way of ''margin pledge'', created in the depository system in accordance with relevant provisions. TM / CM are prohibited from holding any client securities in any beneficial owner accounts of TM/CM, other than specifically tagged accounts. To devise a framework that mitigates the risk of misappropriation, SEBI had extensive consultations with Stock Exchanges, Clearing Corporation and Depositories and industry representatives of TM, CM and Depository Participants (the "DP")

Tags : CLIENT SECURITIES   MISUSE   NORMS  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved