Early warning mechanism to detect diversion of client securities and enable preventive regulatory actions by exchanges and depositories. Early warning mechanism requires Stock Exchanges, Clearing Corporations and Depositories to identify and share alerts indicating diversion of client securities-such as financial deterioration of brokers, suspicious pledge or demat account activity, investor complaints, RBS/Enhanced Supervision flags and inspection non cooperation-and to reconcile clearing pay in/pay out with depository transfers. Where deterioration or unauthorized transfers are established, exchanges and depositories may jointly apply preventive measures including blocking collateral, limiting proprietary trading, deactivating terminals, inspections, appointing forensic auditors, freezing client account debits, imposing concurrent audits and restricting use of powers of attorney. Implementation date: February 1, 2019.
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Early warning mechanism to detect diversion of client securities and enable preventive regulatory actions by exchanges and depositories.
Early warning mechanism requires Stock Exchanges, Clearing Corporations and Depositories to identify and share alerts indicating diversion of client securities-such as financial deterioration of brokers, suspicious pledge or demat account activity, investor complaints, RBS/Enhanced Supervision flags and inspection non cooperation-and to reconcile clearing pay in/pay out with depository transfers. Where deterioration or unauthorized transfers are established, exchanges and depositories may jointly apply preventive measures including blocking collateral, limiting proprietary trading, deactivating terminals, inspections, appointing forensic auditors, freezing client account debits, imposing concurrent audits and restricting use of powers of attorney. Implementation date: February 1, 2019.
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