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". In order to protect clients’ funds and securities and to ensure that the Stock Broker segregates securities or moneys of the client or clients and does not use the securities or moneys of a client or clients for self or for any other client, SEBI has issued various circulars from time to time. SEBI after extensive consultations with Exchanges, Depositories and Clearing Corporations (CCs) to further mitigate the risk for clients’ securities, particularly those given towards delivery/ settlement obligations has decided the following:
i) Depositories, prior to executing actual transfer of the securities for Pay-In from client demat account to TM Pool account, shall validate the transfer instruction received through any of the available channels for the purpose of Pay-in, i.e. either initiated by clients themselves or by the Power of Attorney (POA) / Demat Debit and Pledge Instruction (DDPI) holder against the client-wise net delivery obligation received from CCs.
ii) For Early Pay-In transactions, the existing facility of Block mechanism shall continue.
In order to validate the pay-in instructions a process has been put in place by the depositories. This process shall not be applicable to clients having arrangements with custodians registered with SEBI for clearing and settlement of trades. This circular shall be applicable with effect from November 25, 2022.