SEBI’s New Proposal To Settle Share Money

When buying shares, the investor will not pay through the broker. From their account it will go directly to the account of Clearing Corporation of Stock Market Authority. However, the money will remain in the investor’s account until the transaction is completed – recently the market regulator SEBI has proposed to introduce such a system. They have published a discussion paper to get the opinion of the concerned circles. If the proposal comes into force, India will be the first country in the world to introduce this rule.

According to sources, SEBI’s initiative is for two reasons. One, so that no broker can cheat the investor. Two, the depositors do not lose even a small amount of interest. In the present system, the investor has to deposit the price with the broker before or immediately after buying the shares. The broker then remits the money to the account of the clearing corporation within the specified days. In case of some shares, it is sent within two days (T+1) of the transaction day and the next day. 

Share Money
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In some cases, it is shipped within two days (T+2) of the day of purchase. As a result, the money stays in the broker’s account for two or three days before it goes to the account of the clearing corporation. The investor does not get interest on it. Instead, it enters in the account of the broker. According to sources, it is also alleged that many times the money is used for the broker’s business.

Details of the proposed system 

In the proposed system, the share price will not go to the broker’s account. Rather, after buying shares, they will go to the clearing corporation within a certain period (T+1 or T+2). However, the money will be blocked in the investor’s account until the transaction is completed. They can’t lift that money in the meantime. They will get interest only. Market expert Ashish Nandi claims that the role of brokers in the rest of the transaction process is not decreasing except for payment of money. For example, the quotation for buying shares should be paid directly to them. Transactions will also continue through them.

According to sources, SEBI’s aim is to protect the interests of investors. They want to bring new rules by March.

Mr. Ashish said, if the proposal is effective, the investor will have to download the UPI app to settle the money. The ‘Single Block Multiple Debit’ system introduced by the Reserve Bank (in this system of UPI, some money can be kept separately in the account) has to be linked with the account. However, some of the brokers claim that the tendency to invest in shares has increased among people. But not everyone is adept at using technology. They may have difficulty in this rule.

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