Demat accounts managed by stockbrokers must be tagged by end of June: SEBI


SEBI, the capital markets regulator, said on Monday (21-06-2022) that all unlabeled Demat accounts held by securities brokers must be labeled by the end of June. From July 1, no title will be credited to a Demat account that has not been tagged. On the other hand, bonuses to social acts would be authorized, according to a circular issued by the Securities and Exchange Board of India (Sebi).


The reason why bank and Demat accounts are maintained, as well as the reporting of these accounts to stock exchanges and custodians, is reflected in the marking of bank and Demat accounts. The debit of securities would also be prohibited in any Demat account that has not been tagged since August, according to the Sebi.


From August 1, stockbrokers must obtain permission from exchanges to authorize the marking of such Demat accounts, and exchanges must issue such authorization within two business days after applying a penalty in accordance with their internal policy. . “By June 30, 2022, all untagged stockbroker Demat accounts must be properly labeled,” Sebi said.


Demat accounts, which are used exclusively for banking by securities brokers who are also banks, will be exempt from the framework. Only five types of Demat accounts are now required by stockbrokers: Proprietary, Pool, Client Outstanding Securities, Client Securities Margin Pledge Account, and Client Securities Under Margin Funding Account.


According to the guidelines, marking a stockbroker’s private Demat accounts as a “stockbroker’s proprietary account” is optional, and accounts that are not marked would be considered proprietary.

Dolores W. Simon