Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for transfer of securities towards deliveries / settlement obligations and pledging / repledging of securities

April 04, 2022

To,
All Depositories
All Recognised Stock Exchanges

Dear Sir/Madam,

SEBI vide circular no. CIR/MRD/DMS/13/2010 dated April 23, 2010 issued guidelines regarding execution of Power of Attorney (PoA) by the client in favor of Stock Broker / Stock Broker and Depository Participant (“POA Guidelines, 2010”).
Certain clarifications were issued vide circular no. CIR/MRD/DMS/28/2010 dated August 31, 2010. Vide SEBI circular no. SEBI/HO/MIRSD/DOP/CIR/P/2020/158 dated August 27, 2020 (“PoA Guidelines, 2020”), it was inter-alia reiterated that:

1.1. PoA is optional and should not be insisted upon by the stock broker / stock broker depository participant for opening of the client account.

1. 1.2. PoA executed in favour of stock broker / stock broker depository participant by the client shall be utilized
   1. 1.2.1. For transfer of securities held in the beneficial owner account of the client towards Stock Exchange related deliveries / settlement obligations arising out of trades executed by such a client on the Stock Exchange through the same stock broker.
   2. 1.2.2. For pledging / re-pledging of securities in favour of the trading member (TM) / clearing member (CM) for the purpose of meeting margin requirements of the client in connection with the trades executed by such
   3. a client on the Stock Exchange.
   4. 1.2.3. For the limited purposes as specified in paragraph 1(iii) and 2 of the Enclosure to the POA Guidelines, 2010.

2. While executing a PoA, authorization is given by client to the stock broker / stock broker and depository participant, to access the Beneficial Owner (BO) account of the client to meet settlement obligations of the trade executed by the client.

3. In order to make the process more transparent and simpler, the two conditions as specified in paragraphs 1.2.1 and 1.2.2 shall be made part of a separate document viz. ‘Demat Debit and Pledge Instruction’ (DDPI) (Annexure-A), under which the clients shall explicitly agree to authorize the stock broker/stock broker and depository participant to access their BO account for the limited purpose of meeting pay-in obligations for settlement of trades executed by them. 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 two purposes as mentioned in paragraph 1.2.1 and 1.2.2.

4. The client may use the DDPI or opt to complete the settlement by issuing physical Delivery Instruction Slip (DIS) or electronic Delivery Instruction Slip (eDIS) themselves. Hence, with the implementation of this circular, PoA shall no longer be executed for the conditions specified in paragraph 1.2.1 and 1.2.2.

5. The DDPI shall be indexed as part of the Voluntary Documents in Annexure-1 of SEBI circular no. CIR/MIRSD/16/2011 dated August 22, 2011 and shall be executed only if the client provides his/her explicit consent for the same, including internet based trading. The DDPI shall also be adequately stamped. The DDPI can be digitally signed by the clients.

6. The existing PoAs shall continue to remain valid till the time client revokes the same. Thus, the stock broker/stock broker and depository participant shall not directly / indirectly compel the clients to execute the DDPI or deny services to the client if the client refuses to execute the DDPI. Also, as mentioned in point no. 1.1 above, PoA is optional and should not be insisted upon by the stock broker / stock broker depository participant for opening of the client account. A clause in this regard shall be incorporated under the sub-heading ‘Additional Rights And

Obligations’ of the Rights and Obligations Document (Annexure-4 of SEBI circular
no. CIR/MIRSD/16/2011 dated August 22, 2011) and shall read as under:

“The stock broker / stock broker and depository participant shall not directly / indirectly compel the clients to execute Power of Attorney (PoA) or Demat Debit and Pledge Instruction (DDPI) or deny services to the client if the client refuses to execute PoA or DDPI.”

Accordingly, SEBI circular no. CIR/MIRSD/16/2011 dated August 22, 2011 stands amended to this extent.

To Read More….
Click the link below….

Circular : https://www.dropbox.com/s/aiw1mojpd9127gs/Execution%20of%20%E2%80%98Demat%20Debit%20and%20Pledge%20Instruction%E2%80%99%20%28DDPI%29%20for%20transfer%20of%20securities%20towards%20deliveries%20%20settlement%20obligations%20and%20pledging%20%20re-pledging%20of%20securities.PDF?dl=0