Trading supported by Blocked Amount in Secondary Market - to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

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Trading supported by Blocked Amount in Secondary Market - to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

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....er referred as 'UPI block facility'. 2. Under the proposed framework, funds shall remain in the account of client but will be blocked in favour of the clearing corporation ('CC') till the expiry date of the block mandate or till block is released by the CC, or debit of the block towards obligations arising out of the trading activity of the client, whichever is earlier. Further, settlement for funds and securities will be done by the CC without the need for handling of client funds and securities by the member. 3. Further, while a UPI block upon creation shall be considered towards collateral, the same shall also be available for settlement purposes. For the clients who prefer to block lump sum amount, their block can be debited multiple times, subject to available balance, for settlement obligations across days. 4. The main features of the framework are as under: 4.1. General features: 4.1.1. Availing UPI block facility shall be at the option of the investor. 4.1.2. Shall be introduced as a non-mandatory facility to be provided by the stock broker. 4.1.3. Since an investor is allowed to have trading accounts across multiple stock brokers, an investor can choose t....

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.... it can be partially debited multiple times till the exhaustion of amount or expiry/release of the block, whichever is earlier. 4.3.5. Since the CC shall directly maintain/update the client collateral value based on the blocking information received from the UPI railroads of National Payment Corporation of India ('NPCI') through the CC's sponsor bank, the stock brokers shall not allocate any collateral for clients under the facility of UPI block. Other procedures such as deemed allocation of proprietary collateral, validation of 50:50 cash collateral, risk reduction mode monitoring etc. remain unchanged. 4.3.6. The CC shall debit the UPI block created in its favor to the extent of client level obligations, and receive the same in its account, without funds going through the clearing bank account of the CM. Securities provided as early pay-in (EPI) by the clients, using the block mechanism provided by depositories shall be received by the CC as per the prevailing process. 4.4. Settlement 4.4.1. There shall be two rounds of pay-in and one round of pay-out. 4.4.2. In Round 1 Pay-in, settlement obligation shall be calculated at client level, individually, for the clients....

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....in obligations. The CCs shall provide instructions to depositories for securities pay-out to the clients, which shall be directly delivered to client's account without the need of handling of such securities pay-out by TM/CM. For all other clients and proprietary account of CM/TM, there shall be single net settlement by CC to CM as is currently being done. 4.5. Release of block 4.5.1. Client can request for release of block to TM through TM app. TM shall request CM, and CM shall request CC. In case the TM, CM and CC do not have any residual claim, the CC shall release the block through UPI. Upon release of the block, the client's bank shall unfreeze the amount in the account of the client. Information regarding release shall be shared by NPCI with CC (through CC's sponsor bank) who in-turn shall transmit it to CM and TM. Further, since the release of the block is going to result in collateral being unallocated in favour of the client, as per the existing process, the CC shall send a notification to the client regarding the collateral being removed. 4.6. Various scenarios 4.6.1. An analysis of how various scenarios i.e. (i) prefunded purchase by client, (ii) delivery sal....

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....ted from client block. In case of insufficient client block, the same shall devolve on clearing member. 4.7.2.5. In case of any devolvement on member, the short amount of client shall be maintained and in case any blocking is done in future, the block shall be debited to the extent of shortfall and provided to the clearing member. 4.7.3. Shortfall: Derivatives 4.7.3.1. CC shall debit block to the extent of pay-in requirements, irrespective of whether such debit causes a margin shortfall. In exceptional circumstances, if pay-in exceeds the margin, the residual amount shall devolve on CM. 4.7.3.2. In case of margin shortfall, TM/CM can close-out the position of the client and resultant loss shall be debited to the block or resultant profit shall be paid out to the client by the CC. Till the time TM/CM closes-out the position, the provisions related to deemed allocation of proprietary collateral shall apply. 4.7.3.3. In case obligations have devolved on CM, any pay-out resulting from close-out of positions, or any new block created by client, to the extent of devolvement, shall be provided to the CM. 5. Since the framework requires certain changes to be made in the sy....

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....is allocated as collateral). * STT and stamp duty shall be 11 paise, which shall be added to the client's obligation. The CC shall debit 100.11 towards settlement at the stipulated time. * With the successful debit from the client, the securities receivable by the client shall be provided in the client's depository account directly by the CC at the time of settlement pay-out. Scenario 2: Delivery sale by client by early pay-in * Client uses block mechanism for early pay-in of securities. * Such early pay-in information is received by the CC from depositories. * A sell order is executed on behalf of the client. * If sell order is executed after early pay-in, then no margin is applicable at any time. * If early pay-in is received subsequent to the sell order execution, the proprietary collateral of the member shall be blocked till receipt of early pay-in. * While providing pay-out to the client, the member may adjust other statutory dues (stamp duty, STT), brokerage etc. * The client shall provide securities as early pay-in through the block mechanism only. * If the early pay-in information is received from depository before trade execution, there shal....

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Trading supported by Blocked Amount in Secondary Market - to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.