SEBI develops an online system for detecting misuse of clients’ securities by brokers

Feb 14, 2020 | by Avantis RegTech Legal Research Team

Industry Specific,Secretarial Compliance

The Securities and Exchange Board of India (SEBI) on February 13, 2020, has developed an in-house online system by which it would be able to prepare client level securities holding register of the brokers. SEBI has observed that some brokers have misused clients’ securities received as collateral to meet their own settlement obligation or obligations of other clients or pledging securities with the banks and NBFCs to raise funds for their own use.

Thus, SEBI has developed the in-house capabilities to online track the movement of client securities collected by broker as collateral and raise alerts with Exchanges if diversion of clients’ securities is noticed. These reports will be generated by SEBI on a weekly basis and three such mismatch reports have already been forwarded to Exchanges for reconciliation with members.  This system is likely to timely detect the misuse of clients’ securities collected by brokers as collateral or received in pay-out of securities.

[Press Release No.: 5/2020]


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