Direct payout of securities: Sebi extends deadline to November 11

Mumbai, Oct 10, 2024

Timeline extended almost by a month for smoother implementation

The Securities and Exchange Board of India (Sebi) on Thursday extended the deadline to implement direct payout of securities to demat account from October 14 to November 11 to ensure a hassle free implementation.

The market regulator took this decision after getting representation from key institutions like clearing corporations, exchanges and stock brokers.

“Based on the review meeting held by Sebi with MIIs (market infrastructure institutions) and based on representation received from Brokers’ ISF (industry standards forum), it has been decided that the circular shall come into effect from November 11, 2024, in order to ensure smooth implementation of pay-out of securities directly to the client’s demat account, without any disruption to the markets players and investors,” Sebi said in a release.

At present, the securities are credited to the broker and then transferred to the demat account of the investor by the broker. With the changes, the securities will be directly credited to the investor’s demat account, reducing the role of the broker who till now held the shares till the time of transfer.

Further, the brokers will not be able to directly handle pledges for unpaid or margin-funded securities. If the security is not paid in full, the clearing corporation will mark the pledge directly in the client’s demat account until fully paid.

The extension was provided as the operational guidelines by clearing corporations were issued at the end of August instead of the earlier timeline of August 5.

The market regulator has also revised the timing of the payout from 1:30PM to 3:30PM under the phase-1 of the implementation, in which the equity cash segment is covered.

[The Business Standard]