SEBI

SEBI introduces framework for segregation & monitoring of collateral at client level

SEBI introduces framework for segregation & monitoring of collateral at client level to reduce risk of misappropriation of clients securities
 

Segregation and Monitoring of Collateral at Client Level

SEBI, vide circular no. SEBI/HO/MIRSD/DOP/CIR/P/2020/28 dated February 25, 2020,put in place a framework of ‘Margin obligations to be given by way of Pledge/ Re-pledge in the Depository System’ to mitigate the risk of misappropriation or misuse of client’s securities available with the Trading Member (TM)/ Clearing Member (CM)/ Depository Participant (DP),including use of one client’s securities to meet the exposure, margin or settlement obligations of another client or of the TM / CM.

In light of the public comments and discussions with the stakeholders, SEBI has decided to adopt a framework for segregation and monitoring of collateral at client level.

The new framework consists of Reporting Mechanism by TMs and CMs, Collateral Valuation, blocking of margins, change of allocation, client margin reporting, settlement, withdrawal of collateral, default management process. The circular issued in this regard also includes illustrations.

Download SEBI Circular SEBI/HO/MRD2_DCAP/CIR/2021/0598 Click Here >> 

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