Sebi directs demat accounts of brokers to be tagged

The Securities and Exchange Board of India (Sebi) on Monday mentioned all demat accounts of inventory brokers, that are untagged, must be appropriately tagged by June-end.

Credit of securities is not going to be allowed in any demat account left untagged from July 1 onwards. However, credit on account of company actions can be permitted, Sebi mentioned in a round.

Tagging the trades means making a doc that information all of the trades and techniques. Tagging of financial institution and demat accounts mirror the aim for which these financial institution/ demat accounts are being maintained and the reporting of such accounts to the inventory exchanges and depositories.

Sebi additional mentioned that debit of securities will even not be allowed in any demat account left untagged from August.

The inventory dealer should get hold of permission from inventory exchanges to permit tagging of such demat accounts from August 1 onwards and in flip exchanges have to grant such approval inside two working days after imposing penalty as per their inside coverage.

“All demat accounts of stock brokers which are untagged need to be appropriately tagged by June 30, 2022,” Sebi mentioned.

The framework is not going to be relevant for the demat accounts that are used completely for banking actions by inventory brokers that are additionally banks.

At current, inventory brokers are required to keep up demat accounts solely beneath 5 classes — proprietary account, pool account, shopper unpaid securities, shopper securities margin pledge account and shopper securities beneath margin funding account.

Under the foundations, naming proprietary demat accounts of the inventory dealer as ‘Stock Broker Proprietary Account’ is voluntary and accounts which aren’t tagged can be deemed to be proprietary.