The Securities and Exchange Board of India (SEBI) on Friday has issued a circular for the Block Mechanism in demat account of clients undertaking sale transactions would be available from 1st August, 2021.
SEBI has received representations from the clients undertaking sale transactions, wherein the clients give Early Pay-In (EPI) for sale trades which are yet to be executed. If the sale trade is executed, then the securities get adjusted against EPI, however, if securities remain unsold, then the securities are required to be returned back to client’s demat account, which take time and involve cost.
A facility of block mechanism in the Demat account of clients has been made available by the depositories. The securities lying in the client’s Demat account may be blocked in favour of Clearing Corporation either by the client himself using depository’s online system or eDIS mandate or through depository participant based on physical DIS given by client or Power of Attorney (POA) holder.
Further, depositories will provide the details of transfer instructions to clearing corporations for clients to avail the EPI benefit. The completion of the transaction will also be subject to whether orders match or not.
The proposed facility of block mechanism is on an optional basis and EPI mechanism will also continue, as per the Circular.
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