Sebi to scrap brokers pool accounts from April 2

Besides, it has also introduced a penalty of six basis points per week on the value of shares not transferred to clients within this time of six calendar days. And the proceeds of the penalties would be earmarked for investor education and awareness, Sebi board member and the head of the group Prof JR Varma said.

However, from March 5, securities would be identified, based on settlement numbers and the clearing corporation/house would have to provide the settlement-wise details of securities to the depositories and the depositories should maintain the settlement-wise records for the purpose.

Sebi chairman DR Mehta said that these interim measures were necessary in the light of the time required to make necessary changes to the software of the exchanges. The step would result in shifting of the historical balance of share in the pool account to the clients by February 12 and to kick off the process towards direct transfer of shares to client accounts.

Sebi has earlier decided that the settlement of trades were to be made directly to clients’ accounts to the maximum extent possible. Now, Sebi has decided that this system would be introduced by SEs from April 2, which means that all the shares involved in client-based orders would be transferred to client accounts directly. However, it would have some rare exceptions like if the depository participant is located in an inaccessible locations and it would take time to transfer shares, Kar said.

The above decisions would not, however, be applicable to securities lying in clearing member pool account maintained with clearing corporation/house for the purpose of `vyaj badla’ or automated lending borrowing mechanism (ALBM) transactions.

From April 2, the Sebi also decided to reduce the maximum time frame for effecting such transfers by brokers from the six calendar days to four calendar days or two working days, which ever is later.

As part of effective enforcement strategy, the regulator has also decided that any balances lying in the pool account beyond the six calendar days would not be eligible for delivery in the subsequent settlements and would not be eligible for pledging or stock lending purposes.