September 19, 2022
To,
All Depositories
All recognized Stock Exchanges and Clearing Corporations
Madam / Sir,
1. In order to protect clients’ funds and securities and to ensure that the Stock Broker segregates securities or moneys of the client or clients and does not use the securities or moneys of a client or clients for self or for any other client, SEBI has issued various circulars from time to time.
2. Further, SEBI circular no. SEBI/HO/MIRSD/DOP/P/CIR/2021/595 dated July 16, 2021, inter-alia, specifies that “Depositories may keep block on the securities in client’s demat account in respect of Intra or Inter depository transfer instruction till pay-in day. The blocked securities will be transferred only after checking against the client level net delivery obligation received from CCs.” SEBI circular no. SEBI/HO/MIRSD/DOP/P/CIR/2022/109 dated August 18, 2022 made the aforementioned facility of block mechanism mandatory for all Early Pay-In transactions
3. SEBI had extensive consultations with Exchanges, Depositories and Clearing Corporations (CCs) to further mitigate the risk for clients’ securities, particularly those given towards delivery/settlement obligations. Accordingly, the following is decided:
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