471
June 29 To July 5, 2019 u Taxmann’s Corporate Professionals Today u Vol. 45 u 59Moreover, it has been specified that for
reckoning the gravity of matter, factors
like nature and type of defaults under the
securities laws, age of applicant, repetitive
nature of defaults and the effect of defaults
on investors will be considered.
tightens norms on handling of SEBI
clients’ fund and securities by trad-
ing membersCIR/HO/MIRSD/DOP/CIR/P/2019/75 DATED,
20-6-2019
In order to provide clarity with regard to
maintaining an account for clients’ securities,
SEBI, after discussion with Stock exchanges,
Depositories, and Clearing Corporation has
issued new directions for Trading Members/
Clearing Corporation (TM/CM) for handling
Client unpaid Securities account. The new
norms with regard to handling of client secu-
rities by TMs/CMs are discussed hereunder:
- Opening of separate ‘Client Unpaid Secu-
rities account’ : SEBI has advised that where
the client has not paid for the securities
purchased in full, in such case the unpaid
securities should be transferred to a sepa-
rate client account titled as “Client Unpaid
Securities Account”. Such account is to be
opened latest by 31.8.2019 and intimated to
the exchange in specified format. - Strict deadline for disposal of Client unpaid
securities : SEBI has advised that securities
kept in “Client Unpaid Securities Account”
shall have to be either transferred to client
demat account upon fulfilment of clients
obligation or it should be disposed off in
the market by the member within T+5 days
reckoned from the settlement date. - Penalties on failure to transfer unpaid
securities : TM/CMs have been advised that
Client securities should not be kept in “Client
Unpaid Securities Account” beyond seven
trading days from the date of settlement. In
case of non-transfer of securities penalties
will be levied by the depositories.
4. Separate account for margin trade facility
: Securities purchased under Margin Trading
Facility, have to be kept in a separate account
titled as “Client Margin Trading Securities
Account”.
5. “Client Unpaid Securities Account” cannot
be pledged to the Banks/NBFC for raising
funds :SEBI has strictly advised that Client
Securities lying in “Client Collateral Account”,
“Client Margin Trading Securities Account”,
and “Client Unpaid Securities Account” cannot
be pledged to the Banks/NBFCs for raising
funds. SEBI has further advised that Client
securities received as collaterals shall be used
only for meeting the respective client’s margin
requirement by way of depositing the same
with Stock Exchange/Clearing Corporation/
Clearing House.
7. August, 2019 deadline for disposal of pledged
securities : SEBI has given strict timelines
for TMs/CMs with regard to pledged secu-
rities. SEBI has advised that Client Securities
already pledged shall either be unpledged
and returned to the clients upon fulfilment
of pay in obligation by 31.8.2019 or disposed
off after giving notice of 5 days to the client.
8. Closure of existing client securities accounts
: SEBI has advised that All existing client se-
curities accounts opened by the member other
than Pool Account (including early pay in
Account), ii) Client Margin Trading Securities
Account, iii) Client Collateral Account to be
closed on or before 31.8.2019 and reported
to the exchange in prescribed format.
9. Mechanism for monitoring with respect to
handling of clients securities :
Handling of unpaid clients’ securities by the
TM/CM:
SEBI has advised development of mechanism
of matching of transfer of securities with
the securities obligation as obtained from
the clearing corporation with respect to (a)
Securities transferred from the client unpaid
securities account to the pool account, (b)
Securities transferred from the client unpaid
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