New margin pledge rules starts from September 1; SEBI

New margin pledge rules starts from September 1; SEBI

Sebi had come out with the norms in February and was scheduled to come into effect from June 1. It was extended to August 1 and thereafter to September 1.

After a meeting with brokers, depositories and clearing corporations on August 31, the capital market regulator Securities and Exchange Board of India (SEBI), has refused to extend the September 1 deadline to implement the new rules on margin pledge, Association of National Exchange Members of India (ANMI) said on Monday.

SEBI has introduced these measures to safeguard the interest of all investors and wants to have a higher degree of transparency in the stock market.

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The decision was taken after SEBI’S meeting with stock brokers’ association, depositories and clearing corporations. The meeting was held to analyse readiness to implement the new norms.

Sebi had come out with the norms in February and was scheduled to come into effect from June 1. It was extended to August 1 and thereafter to September 1.

“In today’s virtual meeting, Sebi declined to grant extension of further time in implementing margin pledge /repledge process. This came as a big surprise to ANMI and its 900 members. ANMI is holding consecutive meetings with all stakeholders and studying all options available to it in the matter,” an ANMI spokesperson said.

Tejas Khoday, co-founder and CEO Fyers said, “The new pledge mechanism will bring much-needed transparency and will prevent brokerages from misusing clients’ securities”.

As a result of Sebi’s refusal to extend the deadline, traditional brokerages with legacy systems will face huge operational challenges that can cause chaos and unintended consequences in the near future, he added.

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