SEBI mulls mandatory ASBA-like facility offering by qualified brokers
This story was originally published at 22:52 IST on 28 August 2024
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MUMBAI – The Securities and Exchange Board of India has proposed making it mandatory for qualified stock brokers to provide the facility of blocked amount trading in the secondary market to their clients. The proposal was made in a public consultation paper released today. SEBI has invited comments from the public by Sep 12.
Currently, the blocked amount trading in secondary market, which is similar to application supported by blocked amount facility in primary market, is not mandatory for any stock broker to offer as a service to clients. For those stock brokers who offer it, the clients have the choice of opting for it or not.
The proposal in the consultation paper floated today will apply only to making it mandatory for qualified stock brokers to offer the facility to their clients. But their clients will retain the right to opt for it or not.
The blocked amount facility in secondary market trading applies only to payments made by clients to brokers through the Unified Payments Interface payment system.
There are currently 14 brokers who are shortlisted as qualified stock brokers jointly by stock exchanges. The exchanges are required to carry out higher monitoring and surveillance, and impose higher compliance requirements, for these brokers, as compared to all other brokers. The current shortlist has Finvasia Securities, NJ India Invest, Rajvi Stock Broking, 5paisa Capital, Angel One, Globe Capital Market, HDFC Securities, ICICI Securities, IIFL Securities, Kotak Securities, Motilal Oswal Financial Services, NextBillion Technology, RKSV Securities India, and Zerodha Broking.
The stock exchanges classify brokers under the qualified stock broker list based on their size and scale of operations, active client base, assets size of clients, end-of-day client margins, and broker's trading volume.
As per data in SEBI's paper, there were 54.2 mln unique clients registered with the qualified stock brokers in the cash market segment as of Jul 31, and these made up for 83% of all unique clients across all brokers in the industry. Further, the cash market gross trade value in July of the unique clients of qualified stock brokers was 15.79 trln rupees and this made up for 68% of the gross trade value of all unique clients across all brokers in the industry.
The SEBI paper also stated that qualified stock brokers could be given an option of providing 3-in-1 trading accounts to their clients in place of blocked amount facility. In a 3-in-1 trading account, the broker's client needs to maintain his bank account with specified banks, and his demat account with specified depository participants.
SEBI said in the paper that in these accounts, the clients would have their funds in their bank account earning interest on the cash balances. End
Reported by Rajesh Gajra
Edited by Ashish Shirke
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