Clearance securities and fund rules will go into effect from September 1 ...

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Ahmedabad. August 29, 2019, Thursday

Regulations announced by the market regulator SEBI last June for the use of client's securities and funds will come into force from September 7. Since SEBI has not granted any concession on the implementation of the regulation so far, brokers will have to take up all the unpaid positions by clients till August 8, which will likely result in market pressure for the next two days.

New rules regarding client securities and fund use by brokerage houses will go into effect from September 1st. According to these rules, shares in the trading member (TM) or clearing member (CM) in the client collateral account, client margin trading securities account and client unpaid securities account will not be allowed to transmit such shares to banks or NBFCs to raise funds. General Chat Chat Lounge

In addition to raising working capital, brokers will also have to take a position where the client's securities are pledged to banks or non-banking financial companies (NBFCs).

Sebi will have to take a position of around crores of rupees by the end of this week to comply with the rules that Sebi does not commit in the August 3 deadline.

Brokers are calling their clients to pay the full amount for the out standing margin position so that the shares can be transferred to their demat account.

As per Sebi's order, shares purchased under the Margin Trading Facility should be kept separate in the Client Margin Trading Securities account. Brokers have also been instructed to open a client unpaid securities account for securities that the client has not fully paid.

Liquidity of the stock market will be reduced if the client's securities are not available for mortgage lending and the stock market is expected to remain under pressure.

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