On October 10, 2024, the Securities and Exchange Board of India (SEBI) announced an extension for the implementation of its circular (SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/75) dated June 5, 2024, which mandates the direct pay-out of securities to clients’ demat accounts. Initially scheduled for October 14, 2024, the new effective date is now set for November 11, 2024. This extension follows the late issuance of final operational guidelines by Clearing Corporations (CCs) due to extensive consultations with the Brokers’ Industry Standards Forum. SEBI’s review meeting with Market Infrastructure Institutions (MIIs) and feedback from the Brokers’ ISF prompted the decision to delay implementation to facilitate smoother execution and minimize disruptions for market players and investors. In line with this, stock exchanges, depositories, and CCs are instructed to inform their members, establish compliance systems, and amend relevant regulations to align with the new timeline. This circular is part of SEBI’s efforts to enhance operational efficiency and reduce risks in the securities market. For further details, the circular can be accessed on the SEBI website under the ‘Legal → Circulars’ section.
Securities and Exchange Board of India
Circular No. SEBI/HO/MIRSD/MIRSD-PoD1 /P/CIR/2024/136 | Dated: October 10, 2024
To,
All recognized Stock Exchanges and Clearing Corporations All Depositories
Madam / Sir,
Sub: Extension of timeline for implementation of SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD1 /P/CIR/2024/75 dated June 05, 2024
1. In order to protect client’s securities as part of enhancement of operational efficiency and risk reduction, SEBI vide circular SEBI/HO/MIRSD/MIRSDPoD1/P/CIR/2024/75 dated June 05, 2024 mandated pay-out of securities directly to the client’s demat account. The circular was to come in to effect from October 14, 2024.2.
2. In this regard, the final operational guidelines/implementation standards were to be issued by CCs to the market by August 05, 2024. However, the said guidelines were issued by CCs at the end of August 2024 on account of extensive consultation in Brokers’ Industry Standards Forum (Brokers’ ISF). Further, based on the review meeting held by SEBI with MIIs and based on representation received from Brokers’ ISF, it has been decided that the circular shall come into effect from November 11, 2024, in order to ensure smooth implementation of pay-out of securities directly to the client’s demat account, without any disruption to the markets players and investors.3.
3. Stock Exchanges, Depositories and CCs are directed to:
3.1 bring the provisions of this circular to the notice of their members / participants and also disseminate the same on their websites;
3.2 put in place appropriate systems and procedures to ensure compliance of the provisions of this circular;
3.3 make necessary amendments to the relevant Bye-laws, Rules and Regulations for the implementation of the above decision;
4. This circular is issued in exercise of powers conferred under Section 11(1) of Chapter IV of the Securities and Exchange Board of India Act, 1992, and Section 19 of Chapter IV of the Depositories Act, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.
5. This circular is available on SEBI website at sebi.gov.in under the category: ‘Legal → Circulars’.
Yours faithfully,
Aradhana Verma
General Manager
Tel. No: 022 26449633
[email protected]
