SEBI’s New Rules… Protection for Investors

The Securities and Exchange Board of India has introduced a new regulatory framework for the management of unpaid client securities by trading members. The move aims to safeguard investor interests and enhance transparency in the securities market. Under the new rules, securities purchased outside the Margin Trading Facility will be directly credited to clients’ demat accounts even if payments are pending. These securities can be automatically pledged in a Client Unpaid Securities Pledge Account without requiring prior client approval.

Trading members must promptly inform clients about outstanding dues via email or SMS. If payments are not made within the stipulated period, pledged shares can be sold to recover dues. If no action is taken within five trading days, depositories will automatically release the securities on the sixth day. SEBI has also prohibited the use of such pledged securities for raising funds from banks or NBFCs. Stock exchanges have been directed to implement these rules within 30 days.