Sebi to implement facility of ‘voluntary blocking’ of trading accounts by clients

Securities and Exchange Board of India (Sebi) has planned to offer the facility of voluntary freezing or blocking of the ‘Trading Accounts’ by clients as it is available in accounts, ATMs, and Credit Cards. In a circular on Friday, the stock market regulator said, “It has been observed that at times, suspicious activities are noticed by the investors but the facility of freezing/blocking of accounts is not available with the majority of trading members." Sebi said that there is an urgent need to implement a facility for blocking/freezing trading accounts.

The capital markets regulator said a framework will be put in place by April 1, allowing trading members to offer the facility of voluntarily blocking online access of trading accounts for clients displaying suspicious activities. Brokers' Industry Standards Forum (ISF) will lay down the framework on this matter in collaboration with stock exchanges Sebi said.

It will prescribe communication methods for clients to request such blocking, the issuance of acknowledgment upon message receipt, and the timeframe for processing the request and blocking the trading account. Further, Sebi said that action will be taken by the trading member following the receipt of a request for freezing/blocking of the trading account and the process for re enabling the client for trading.

The stock broking industry in India has moved from a call and trade type of scenario to online mode, wherein the investors use the login IDs and passwords provided to them by the trading members. "To enhance ease of doing business and ease of investment, it has been decided that the framework for trading members to provide the facility of voluntary freezing/blocking the online access of the trading account to their clients on account of suspicious activities shall be laid down on or before April 1, 2024, by the ISF," Sebi said.

In a separate circular, Sebi asked stock exchanges to put in place a mechanism for monitoring clients' funds lying with the stock brokers. This will be based on the principle that the total available funds cash and cash equivalent with the stock broker and with the clearing corporation/clearing member should always be equal to or greater than clients' funds as per the ledger balance.

This came after Sebi received representations from various stakeholders citing inefficiencies due to duplication of monitoring mechanisms and difficulties in uploading data to exchanges. Livemint tops charts as the fastest growing news website in the world to know more. Unlock a world of Benefits! From insightful newsletters to real time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away!.