pc
nid 92209
Apr 27, 2026
pthandapani@vixio.com
India
Securities and Exchange Board of India
financial services
130% of draft length
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1666 charsIndia's Securities and Exchange Board Launches Consultation on Handling Unpaid Client Securities
On April 24, 2026, the Securities and Exchange Board of India (SEBI) launched a consultation paper on the handling of unpaid securities of clients by trading members and clearing members. The consultation forms part of SEBI's broader initiative to ease doing investment and ease doing business in Indian securities markets.
The consultation paper addresses operational and procedural matters relating to how trading members and clearing members manage client securities that remain unpaid. This includes examining current practices, identifying inefficiencies, and proposing streamlined approaches to reduce administrative burden on market participants while maintaining investor protection standards. The consultation seeks to balance the interests of market participants with regulatory oversight and client safeguards.
Trading members, clearing members, and other market participants are invited to submit comments on the proposed framework. The consultation provides an opportunity for stakeholders to contribute their perspectives on best practices and practical considerations for handling unpaid securities. Responses can be submitted through SEBI's public comments portal. The specific deadline for submissions should be confirmed on SEBI's website, where the full consultation paper and submission guidelines are available.
**Reference:**
Securities and Exchange Board of India. Consultation Paper on Ease of Doing Investment and Ease of Doing Business – Handling of Unpaid Securities of Clients by Trading Members/Clearing Members. April 24, 2026. Available at: https://www.sebi.gov.in/sebiweb/publiccommentv2/PublicCommentAction.do?doPublicComments=yes
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2164 charsSecurities and Exchange Board of India Launches Consultation on Handling Unpaid Client Securities
The Securities and Exchange Board of India (SEBI) has released a draft circular for public comments regarding the handling of clients' unpaid securities by trading members (TM) and clearing members (CM).
The draft circular prescribes:
Maximum funding period specifications including a mandate that TMs may allow clients up to five trading days from the pay-out date to fulfill payment obligations for purchased securities. It requires TMs to formulate a policy indicating this maximum funding period, noting that TMs may require payment in a shorter duration at their discretion.
Pledge creation and re-pledging rules requiring that unpaid securities remain in the client's demat account but be pledged to a separate "client unpaid securities pledgee account (CUSPA)" opened by the TM. It stipulates that if the TM and CM are separate entities and the TM has not met its fund obligations toward the CM, the unpaid securities shall be re-pledged to a separate CUSPA opened by the CM.
Pledge release and partial release timelines mandating that pledges must be released on the same day if a client fulfills their payment obligation before 5pm, or before 5pm on the next trading day if the payment is received after the cutoff time. It also requires TMs to conduct a daily assessment of the maximum pledge value and release any excess quantity of pledged securities on the same day.
Liquidation procedures and auto-release mechanisms stating that if a client fails to pay, the TM must provide at least one day's notice before invoking the pledge and liquidating the unpaid securities. It further mandates that if a pledge is neither invoked nor released within five trading days after pay-out, depositories will automatically release the pledge at the end of the next trading day.
Exceptional extension provisions allowing TMs/CMs to request a pledge extension of up to one additional calendar week if unpaid securities cannot be liquidated within five trading days due to lower circuit conditions, trading halts, or other valid reasons beyond their control.
Feedback may be submitted via this link or by email to consultationMIRSD@sebi.gov.in by May 15, 2026.