SEBI listens to market: implementation of margin liability through pledge / re-pledge postponed till August 31

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- Trading-clearing members are required to close all demat accounts as client margin / collateral by 31st August: SEBI

(Commercial Representative) Mumbai, Ta. Wednesday, July 29, 2020


The Capital Markets Regulatory Authority (SEBI) has decided to provide relief in times of crisis by understanding the plight of market participants-market participants-brokers, including clearing members. Today, SEBI has decided to extend the implementation of this provision by one month with a clarification on the implementation of the circular on margin liabilities through pledges / re-pledges in the depository system.

SEBI had earlier decided to implement this provision in its circular dated February 3, 2020 regarding pledge / re-pledge in depository system from June 1, 2020. The implementation was then extended to August 1, 2020 due to the Lockdown-Coro epidemic. In view of the representations made by the trading members and clearing members on the change in their system and the need for more time in the depository system to accept client collateral as well as margin funded shares, SEBI has now extended the deadline to August 31, 2020.

According to which trading members, clearing members will now be able to accept client securities as collateral through title transfer to client collateral account as per current system. This facility will be available only till 31st August, 2020. In addition, the funded shares held under the margin facility by the trading members-clearing member were to be pledged by the trading members-clearing members from August 1, 2020.

Funded shares can now be kept in the client margin trading securities account till August 31, 2020 in connection with margin funding till August 31, 2020. Of course, all existing demat accounts tagged as client margin / collateral by trading members-clearing members will have to be closed by August 31, 2020, SEBI has clarified.

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