APMumbai: The Securities and Exchange Board of India(Sebi) on Tuesday barred stock brokers from pledging clients’ funds with banks.
At present, stock brokers and clearing members pledge clients funds with banks which in turn issue bank guarantees to clearing corporations for higher amounts.
“This implicit leverage exposes the market and especially the client's funds to risks,” Sebi said in a circular.
The regulator said beginning May 1, no new bank guarantees should be created out of clients’ funds by stock brokers.
All existing bank guarantees created out of clients’ funds should be wound down by September 30, 2023.
However, this new framework would not be applicable for proprietary funds of stock brokers in any segment and stock brokers proprietary funds deposited with clearing member in the capacity of a client.
At present, stock brokers and clearing members pledge clients funds with banks which in turn issue bank guarantees to clearing corporations for higher amounts.
“This implicit leverage exposes the market and especially the client's funds to risks,” Sebi said in a circular.
The regulator said beginning May 1, no new bank guarantees should be created out of clients’ funds by stock brokers.
All existing bank guarantees created out of clients’ funds should be wound down by September 30, 2023.
However, this new framework would not be applicable for proprietary funds of stock brokers in any segment and stock brokers proprietary funds deposited with clearing member in the capacity of a client.
( Originally published on Apr 25, 2023 )
Tuesday, 25 Apr, 2023Experience Your Economic Times Newspaper, The Digital Way!
- Front Page
- Pure Politics
- Companies
- Brands & Companies
- More
- Startups Call for Exempting More from Angel Tax
The startup industry is lobbying the finance ministry to scrap, or at least increase, the ₹25-crore paid-up capital threshold for exemption from the so-called angel tax.
Vedanta Resources Clears Apr Dues, Cuts Debt by $1bLondon-based Vedanta Resources (VRL), the parent company of India-listed Vedanta Ltd (VDL), said on Monday that it had paid off loans and bonds due in April and reduced gross debt by $1 billion.
Pvt Sector Capex in Focus at ET AwardsPrime Minister Narendra Modi wants Indian industry to unleash its animal spirits, building on the investment thrust led by the Centre that’s seeing a vast infrastructure buildout across the country.
Read More News on
(What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)
...moreDownload The Economic Times News App to get Daily Market Updates & Live Business News.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share PricePick the best stocks for yourself
Powered by 
Get Unlimited Access to The Economic Times 
