Securities and Exchange Board of India (SEBI) releases consultation paper proposing to introduce a blocking of funds facility for trading in secondary markets.  Aimed at protecting investors’ money from misuse and default by stock brokers. SEBI seeks comments from market participants until February 16 on operational challenges on the proposed concept, associated processes, transaction flow, and risk management.

• Allows investors to trade in secondary market based on blocked funds in one’s bank account
• Eliminates the need to transfer funds to stock broker
• Funds remain in the account of client but will be blocked in favour of clearing corporation till expiry date of the block mandate or till block is released by the clearing corporation
• Clearing corporation can debit funds from client account, limited to the amount specified in the block