On 19-09-2022, the Securities and Exchange Board of India(‘SEBI') issued a circular on validation of Instructions for Pay- In of Securities from Client Demat account to Trading Member (‘TM') Pool Account against obligations received from the Clearing Corporations to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets. These guidelines will come into effect from 25-11-2022.
Applicability: All depositories and recognized Stock Exchanges and CCs.
Not applicable to clients having arrangements with custodians registered with SEBI for clearing and settlement of trades.
Key Points:
To further mitigate the risk of clients' securities particularly those which are given towards delivery/ settlement obligations, SEBI declared further guidelines with consultation with Exchanges, Depositories and Clearing Corporations (‘CCs'):
Depositories, prior to executing actual transfer of the securities for PayIn from client demat account to TM Pool Account,should validate the transfer instruction received through the available channels either initiated by clients themselves or by the Power of Attorney or Demat Debit and Pledge Instruction holder against the client-wise net delivery obligation received from CCs.
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Depositories receive the debit instruction for the purpose of Pay-In, given either by client himself using depository's online system or eDIS mandate or through depository participant based on physical DIS/ digitally signed DIS given by client or POA/ DDPI holder.
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CCs must provide client-wise net delivery obligations on T Day to the depositories.
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Depositories must validate the transfer instructions with the CC based on Unique Client Code(‘UCC'), TM, Clearing Member('CM'), Exchange ID, International Securities Identification Number(‘ISIN'), quantity, settlement details.
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When the instructions are matched, they must be carried out by the Depositories and such securities will be debited from client's Demat account and credited to linked TM Pool account on or before the settlement day.
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When the instructions are unmatched, depositories will reject the transfer instructions.
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In case of discrepancies,
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If the quantity in instruction is less than the obligation provided by CC, then the instruction will be carried out by the depositories.
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If the quantity in instruction is more than the obligation provided by CC, then the instruction will be partially processed by the depositories, that is, up to the matching obligation quantity.
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