SEBI has asked stockbrokers to tag their demat accounts before the end of June
New Delhi:
Capital market regulator Securities and Exchange Board of India (SEBI) said Monday that all demat accounts of stock brokers, which are not tagged, must be properly tagged by the end of June.
Crediting of securities will no longer be allowed from July 1 on a demat account that is not tagged. Credits based on corporate actions will, however, be allowed, according to SEBI in a circular.
Tagging of bank and demat accounts reflects the purpose for which those bank or demat accounts are maintained and the reporting of such accounts to the exchanges and depositors.
SEBI further said that as of August, debiting securities will also not be allowed into a demat account that is not tagged.
The stockbroker will need to obtain approval from exchanges from August 1 to allow tagging of such demat accounts and exchanges in turn must grant such approval within two business days of the imposition of a fine as per their internal policies.
“All stock broker demat accounts that are not tagged must be properly tagged by June 30, 2022,” SEBI said.
The framework does not apply to the demat accounts used exclusively for banking activities by stock brokers who are also banks.
At present, stock brokers are only required to maintain demat accounts under five categories: proprietary account, pool account, unpaid client securities, margin pledging account for client securities, and client securities under margin financing.
Under the rules, naming the stock broker’s own demat accounts as “Stock Broker – Own Account” is voluntary and accounts that are not tagged would be considered proprietary.
