TaxTMI 
TaxTMI 
Handling of Client’s Unpaid Securities by Trading Members
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....R/2022/153 dated June 20, 2019 and November 11, 2022 respectively. Post introduction of these provisions, there have been regulatory developments such as introduction of mandatory pay-out of securities directly to clients' demat accounts, as well as changes in market practices. 2. Representations have been received from Brokers' Industry Standards Forum (ISF) seeking revisions to these provisions to align them with the current regulatory and market environment and to address certain operational challenges faced during implementation. 3. Accordingly, in order to enhance the ease of doing business for stockbrokers and ease of doing investment for clients, it has been decided to amend Paragraph 46 of the Master Circular as under: ....
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....ys from the pay-out date) within which the client must meet the payment obligation. 46.5 While unpaid securities pledged to CUSPA of TM may be considered for reporting client margin collection to Clearing Corporation, the TM shall not allow exposure on the basis of such securities to the client. Release of pledge on the securities 46.6 During the period in which client's funds obligation for unpaid securities continue, the TM shall, on daily basis, determine the maximum value of securities that may remain pledged in accordance with the operational guidelines issued by the exchanges from time to time. Such maximum pledge value shall be based on the client's ledger balance, the client's overall margin obligations or....
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....s at the end of the sixth trading day after pay-out, and the securities shall become available to the client as free balance without encumbrance. In this regard, it is clarified that TM may request for release of pledge any time before auto-release by depository. Prohibition on further pledging/transferring CUPSA pledged securities 46.11 Securities pledged in favor of CUSPA of TM shall not be permitted to be pledged/transferred to Banks/NBFCs for raising funds. Extension of pledge in exceptional circumstances 46.12 In exceptional circumstances, if the unpaid pledged securities cannot be liquidated by stockbroker within 5 trading days after pay-out due to- a. the security being in lower c....
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....uance of operational guidelines by stock exchanges. 7. The amended provisions of Paragraph 46.12 to 46.14 of Master Circular shall come into force with effect from six months from the date of issuance of this circular. 8. Stock exchanges/depositories are directed to: 8.1. bring the provisions of this circular to the notice of their members / participants and also disseminate the same on their websites; 8.2. make necessary amendments to the relevant Bye-laws, Rules and Regulations for the implementation of the above decision; 8.3. have in place appropriate systems and arrangements for effecting the provisions of this circular. 9. This circular is issued in exercise of powers conferred under Section 11(1) of Chapter IV of th....