Sebi gives more time to implement guidelines on share pledging for margin purposes

In October, Sebi widened the scope of the Demat Debit and Pledge Instruction (DDPI) for pledging and repledging of securities for margin purposes in a bid to curb the misuse of Power of Attorney (PoA) given by clients to stock brokers.

The DDPI serves the same purpose of PoA and significantly mitigates the misuse of PoA.

With the DDPI, clients can explicitly agree to authorise the stock broker and depository participant to access their beneficial owners’ account for the limited purpose of meeting pay-in obligations for the settlement of trades executed by them.

A client can use the DDPI or opt to complete the settlement by issuing a physical Delivery Instruction Slip (DIS) or Electronic Delivery Instruction Slip (EDIS) themselves.

In addition, Sebi has extended the deadline to January 27 for the implementation of the framework on validation of instructions for pay-in of securities from client demat account to trading member pool account against obligations received from the clearing corporations.

The framework was to come into effect from November 25.

Under it, depositories need to validate the transfer instruction for pay-in of securities from client demat accounts to trading member pool accounts against obligations received from the clearing corporations. This should be done prior to executing actual transfer of the securities for pay-in from client demat account to trading member pool account.