SEBI's Revamp of Client Securities Norms: A Boost for Investor Protection

In a bid to streamline operations and bolster investor protection, the Securities and Exchange Board of India (SEBI) is proposing significant changes to the handling of clients' unpaid securities. This move is expected to enhance the ease of doing business for trading and clearing members.

The proposed changes include a mandatory five-day funding period for clients post-payout to meet payment obligations. SEBI has also outlined clear timelines for the release of pledged securities, with a same-day release for liabilities cleared by 5 PM, and next-day release for payments made after the cutoff.

The regulator also suggests the automatic release of securities not invoked or released by the sixth trading day, with solutions for operational issues between trading and clearing members. SEBI welcomes public comments on these proposals till May 15.