SEBI's Guidelines for Direct Payout of Securities

What is the current procedure for the payout of securities?
Currently, whenever an investor buys a security, the securities are credited first to the broker's pool account by the clearing corporation. Later on, the broker will transfer the securities to the investor's demat account. Until this transfer is completed, the broker will hold the securities of the investor.

What are SEBI's new guidelines for the direct payout of securities?

As per the SEBI guidelines, securities will now be directly credited to the investor's demat account and will not be transferred to the broker's pool account.

Objectives: - These guidelines will reduce the broker's role and will make the process more transparent and efficient.
Direct Payout by CC: SEBI now allows the clearing corporation(CC) to directly credit securities to the investor's account.
In case of short delivery: - The clearing corporation will now handle auction settlements directly.
In cases of a pledge for unpaid or margin-funded securities: - The broker will now request the clearing corporation to mark the pledge directly in the client's demat account. The pledge will be released once the securities are fully paid for.
In case of incomplete payouts: - When the payout cannot be completed due to rejected payouts or access pay-in from a clearing member or inactive demat accounts then the clearing corporation will credit the securities to the broker's pool account.

From when is it applicable?

The guidelines will be re - implemented from 25th feb., 2025.

To know about how it impacts Jainam's clients, see What changes at Jainam due to direct payout of securities.