Execution of 'Demat Debit and Pledge Instruction' (DDPI) for transfer of securities towards deliveries/settlement obligations and pledging/re-pledging of securities-Clarification- (Securities and Exchange Board of India) (06 Oct 2022)
1. SEBI vide circular no. SEBI/HO/MIRSD/DoP/P/CIR/2022/44 dated April 04, 2022, issued guidelines regarding execution of 'Demat Debit and Pledge Instruction' (DDPI) for transfer of securities towards deliveries/settlement obligations and pledging/re-pledging of securities.
2. In view of the representations by and consultations with Broker Associations and Depositories, it has been decided to widen the scope of DDPI to include:
2.1. Mutual Fund transactions being executed on Stock Exchange order entry platforms; and
2.2. Tendering shares in open offers through Stock Exchange platforms.
3. Accordingly, the following amendments are being made to the said Circular:
3.1. Para 3 shall stand modified as under:
"In order to make the process more transparent and simpler, the following conditions shall be made part of a separate document viz. 'Demat Debit and Pledge Instruction' (DDPI) (Annexure-A):
3.1.1. Transfer of securities held in the beneficial owner accounts of the client towards Stock Exchange related deliveries/settlement obligations arising out of trades executed by clients on the Stock Exchange through the same stock broker.
3.1.2. Pledging/re-pledging of securities in favour of trading member (TM)/clearing member (CM) for the purpose of meeting margin requirements of the clients in connection with the trades executed by the clients on the Stock Exchange.
3.1.3. Mutual Fund transactions being executed on stock exchange order entry platforms and which shall be in compliance with SEBI circulars SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/634 dated October 04, 2021, SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/635 dated October 04, 2021 and SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/29 dated March 15, 2022 or any other circular which may be issued in this regard; and
3.1.4. Tendering shares in open offers which shall be in compliance with SEBI circular SEBI/HO/CFD/DCR-III/CIR/P/2021/615 dated August 13, 2021 or any other circular which may be issued in this regard.
The DDPI shall serve the same purpose of PoA and significantly mitigate the misuse of PoA. The use of DDPI shall be limited only for the purposes as mentioned in paragraphs 3.1.1, 3.1.2, 3.1.3 and 3.1.4."
3.2. Para 8 shall stand modified as under:
"Securities transferred on the basis of the DDPI provided by the client shall be credited to client's TM pool account/CM pool account/demat account of clearing corporation, as the case may be. The DDPI provided by the client shall be registered in the demat account of the client by TM/CM. Stock Exchanges and Depositories shall ensure that stock broker/stock broker and depository participant providing DDPI facility, has enabled its clients to revoke/cancel the DDPI provided by them."
3.3. Para 9 shall stand modified as under:
"For the clients who issue the DDPI to stock broker/stock broker and depository participant, the following provisions of the SEBI circulars issued with respect to PoA shall stand replaced with DDPI:
9.1 Paragraphs 4.2.1 and 4.2.2 of SEBI circular no. SEBI/HO/MIRSD/DOP/CIR/P/2020/158 dated August 27, 2020, and Paragraphs 1(i) and 1(ii) of Annexure to the SEBI circular no. CIR/MRD/DMS/13/2010 dated April 23, 2010, with effect from September 1, 2022.
9.2 Paragraph 1 (iii) to the extent applicable for Mutual Fund transactions and tendering shares in open offers, of Annexure to the SEBI circular no. CIR/MRD/DMS/13/2010 dated April 23, 2010, with effect from November 18, 2022."
4. Annexure-A of the SEBI circular dated April 04, 2022 is modified to the extent of para 3.1 above. All other provisions specified in SEBI circular dated April 04, 2022 shall continue to remain applicable.
5. This circular shall be applicable from November 18, 2022.
6. Stock Exchanges and Depositories are directed to:
6.1. bring the provisions of this circular to the notice of their members/participants and also disseminate the same on their websites;
6.2. ensure that existing clients are made aware of the availability of facility for execution of DDPI, through letters/SMS/emails; and
6.3. make necessary amendments to the relevant Bye-laws, Rules and Regulations for the implementation of the above decision.
7. This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 and Section 19 of the Depositories Act, 1996, to protect the interests of investors in securities and to promote the development of and to regulate the securities markets.
Tags : EXECUTION DDPI TRANSFER SECURITIES